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Item 5. Market for Registrant’s Common Equity

2022-08-17 compared with 2021-08-17 · 1971 added, 30 removed, 33 unchanged (98% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stock Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol “ARAY.”

We have never paid cash dividends on our common stock.

1 unchanged sentence

There are no current plans to pay cash dividends to common stockholders in the foreseeable future.

As of August 12, 2021, there were 183 registered stockholders of record of our common stock.

Because many of our shares of common stock are held by brokers or other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders and believe the number of registered stockholders of record underestimates our total number of stockholders.

In April 2021, we granted 53,191 shares of restricted stock units (“RSUs”) to an employee, with a grant-date fair value of $4.70 per restricted stock unit.

As of August 15, 2022, there were 176 stockholders of record of our common stock.

Because many of our shares of common stock are held by brokers or other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders and believe the number of stockholders of record underestimates our total number of stockholders.

In May 2022, we granted 312,500 shares of restricted stock units (“RSUs”) to an employee, with a grant-date fair value of $2.08 per restricted stock unit.

Each restricted stock unit represents the right to receive one share of our common stock upon vesting.

4 unchanged sentences

Issuer Purchases of Equity Securities

The following table presents information with respect to the Company’s repurchases of common stock during the quarter ended June 30, 2021.

Total Number of Shares Purchased (in millions) (1)

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Programs

(in millions) (1)

Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Programs

(in millions) (1)

(1) On May 5, 2021, the Board of Directors authorized a repurchase of an aggregate amount of our common stock not to exceed $18 million.

On May 7, 2021, we completed a repurchase of 3,108,369 shares of our common stock for an aggregate amount of $14.1 million in privately negotiated transactions with a financial intermediary .

No further purchases of common stock is intended to be made under this authorization.

The Company had no repurchases of its common stock during the quarter ended June 30, 2022.

Stock Performance Graph

7 unchanged sentences

We caution that the stock price performance shown in the graph above is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with, and are qualified by reference to, our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Form 10‑K.

The consolidated statements of operations for the years ended June 30, 2021, 2020 and 2019, and the consolidated balance sheet data at June 30, 2021 and 2020 are derived from, and are qualified by reference to, the consolidated financial statements that have been audited by our independent registered public accounting firm, which are included elsewhere in this Form 10‑K.

The consolidated statements of operations data for the years ended June 30, 2018 and 2017 and the consolidated balance sheet data at June 30, 2019, 2018 and 2017 is derived from our audited consolidated financial statements not included in this Form 10‑K.

MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our consolidated financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this report.

The following discussion contains forward‑looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward‑looking statements.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report on Form 10‑K, particularly in “Risk Factors.”

See “Special Note Regarding Forward‑Looking Statements.”

Accuray Incorporated is a radiation therapy company that develops, manufactures, sells and supports market-changing solutions that are designed to deliver radiation treatments for even the most complex cases, while making commonly treatable cases even more straightforward, to meet the full spectrum of patient needs.

We believe in comparison to conventional linear accelerators, our treatment delivery, planning, and data management solutions provide better accuracy, flexibility, and control;

fewer treatments with shorter treatment times;

and the technology to expand beyond cancer, making it easier for clinical teams around the world to provide treatments that help patients get back to living their lives, faster.

Our innovative technologies, the CyberKnife ® and TomoTherapy ® platforms, including the Radixact ® System, our next generation TomoTherapy platform, are designed to deliver advanced treatments, including stereotactic radiosurgery (SRS), stereotactic body radiation therapy (SBRT), intensity modulated radiation therapy (IMRT), image-guided radiation therapy (IGRT), and adaptive radiation therapy (ART).

The CyberKnife and TomoTherapy platforms have complementary clinical applications with the same goal:

to empower our customers to deliver the most precise and accurate treatments while still minimizing dose to healthy tissue, helping to reduce the risk of side effects that may impact patients’

quality of life.

Each of these systems serves patient populations treated by the same medical specialty, radiation oncology, with advanced capabilities.

The CyberKnife platform is also used by neurosurgeons specializing in radiosurgery to treat patients with tumors in the brain and spine, and neurologic disorders.

In addition to these products, we also provide services, which include post-contract customer support (warranty period services and post warranty services), installation services, training, and other professional services.

The CyberKnife Platform

The CyberKnife platform is the only robotic, full-body stereotactic radiosurgery (SRS) and stereotactic body radiation therapy (SBRT) delivery device on the market.

The latest generation is the CyberKnife S7 System, which combines speed, advanced precision, and real-time artificial intelligence (AI)-driven motion tracking and synchronized treatment delivery for all SRS and SBRT treatments, in as little as 15 minutes.

The platform is designed to treat cancerous and benign tumors throughout the body, as well as neurologic disorders.

The use of SRS and SBRT with the CyberKnife platform to treat tumors throughout the body has grown significantly in recent years.

SRS and SBRT are performed on an outpatient basis in a limited number of treatment sessions - typically 1-5 fractions.

They enable the treatment of patients who might not otherwise be treated with radiation, who may not be good candidates for surgery, or who desire a non-surgical treatment option.

The CyberKnife S7 System includes disease-specific tracking and treatment delivery solutions for brain, spine, lung and prostate tumors, improvements in treatment speed as compared to earlier systems, more options to configure the treatment room, and expanded number of nodes leading to more coverage and minimizing dose to healthy tissue.

The system has the option of fixed collimators plus the Iris Variable Aperture Collimator and/or InCise Multileaf Collimator (MLC).

With the addition of the InCise MLC, the CyberKnife S7 System enables treatment of larger tumors previously thought untreatable with radiosurgery and SBRT.

The InCise MLC and IMRT planning tools enable expansion of indications that can be treated with a CyberKnife platform to include many IMRT indications.

Using our Synchrony® real-time target tracking with dynamic delivery technology and computer controlled robotic mobility, the CyberKnife platform is designed to deliver radiation from a wide array of beam angles and autonomously track, detect and correct for even the slightest tumor and patient movement in real time throughout the entire treatment.

This design is intended to enable the CyberKnife platform to deliver high dose radiation with precision and accuracy, which minimizes damage to surrounding healthy tissue and eliminates the need for invasive head or body immobilization frames.

The Accuray Precision® Treatment Planning System (TPS) with the VOLO Optimizer software on the CyberKnife S7 System enables customers to significantly improve operational efficiency by reducing both the time to create high quality treatment plans and the time it takes to deliver patient treatments.

The next-generation TPS with the optimizer facilitates the development of clinically optimal treatment plans up to 90 percent faster than before and the delivery of the treatment up to an estimated 50 percent faster than before the availability of this software.

We believe the CyberKnife platform offers clinicians and patients significant benefits over other vendors’

radiation therapy systems in the market.

The long-term success of the CyberKnife platform is dependent on a number of factors including the following:

Continued adoption of our CyberKnife platform, including the CyberKnife M6 System and CyberKnife S7 System, in markets where they are available;

Greater awareness among doctors and patients of the benefits of radiosurgery delivered with the CyberKnife platform, including its robotic architecture and Synchrony technology and VOLO optimizer;

Continued evolution in clinical studies demonstrating the safety, efficacy and other benefits of using the CyberKnife platform to treat tumors in various parts of the body;

Change in medical practice leading to utilization of stereotactic body radiation therapy more regularly as an alternative to surgery or other treatments;

Continued advances in our technology that improve the quality of treatments and ease of use of the CyberKnife platform;

Receipt of regulatory approvals in various countries which are expected to improve access to radiosurgery with the CyberKnife S7 System in such countries;

Medical insurance reimbursement policies that cover CyberKnife platform treatments;

Our ability to expand sales of CyberKnife M6 and S7 Systems in countries throughout the world where we do not currently sell or have not historically sold a significant number of any CyberKnife platform configurations.

The Radixact System, the Next-Generation TomoTherapy Platform

The Radixact System, the next generation TomoTherapy platform, allows for fully integrated radiation treatment planning, delivery and data management, enabling clinicians to deliver ultra-precise treatments to more than 50 patients per day.

The platform’s ring gantry architecture enables precise and efficient treatments with a high degree of dose conformity, while the high-speed binary MLC effectively modulates and shapes the radiation beam as it is emitted.

The combination of the ring gantry and the MLC enable treatment to be delivered continuously in a 360 degree helical pattern around the patient’s body (TomoHelical).

Additionally, the TomoDirect feature provides the TomoTherapy platform with added versatility, enabling the delivery of high quality, fixed angle beams.

The two treatment delivery modes - TomoHelical and TomoDirect - provide flexibility in the types of indications that can be treated with radiation, from the simplest to the most complex cases, multiple tumors and recurrent tumors.

Our Synchrony real-time target tracking with dynamic delivery for the Radixact System adds intrafraction motion synchronization capabilities to this device, enabling real-time tracking, visualization and correction for tumor motion during treatment, with the goal of improving dose accuracy and treatment times as compared to conventional radiation therapy systems.

Synchrony can be used on the Radixact System to adapt treatment delivery for tumors that move as a result of bodily processes, including respiration and digestion, as well as patient movement.

Treatments are truly personalized, as delivery is adapted to the individual’s unique movements throughout treatment delivery.

If movement changes during treatment, delivery is adapted for that unique change.

The Radixact System seamlessly integrates with ClearRT helical kVCT high-fidelity imaging, providing clinicians with an option to produce exceptional diagnostic-like quality CT images, quickly and cost-effectively, to improve patient care.

ClearRT imaging provides the largest imaging field of view available on a radiation delivery system at 50 cm (diameter) by 135 cm (long), and speed, as evidenced by its ability to capture a 1-meter image in only 1 minute.

ClearRT delivers enhanced imaging capabilities compared to conventional linear accelerator systems that rely on cone-beam CT (CBCT) imaging and as an alternative to MR-based radiation therapy systems that can be complex and cost prohibitive to use.

The TomoTherapy platform integrates into a single system all of the key elements for radiation therapy, including treatment planning, CT image guided patient positioning, treatment delivery, quality assurance and adaptive planning.

The imaging and treatment planning capabilities of many traditional systems are more modular or require cumbersome add ons or separate treatment planning systems that result in clinicians taking more steps between scanning, planning and treatment of patients.

Conversely, the integrated imaging and treatment features of the Radixact System allows clinicians to scan, plan and treat cancer patients efficiently.

Treatment plans as well as daily images can be easily accessed remotely, enabling clinical teams to collaboratively work together, regardless of location, ensuring higher quality plan development and delivery.

We believe the TomoTherapy platform offers clinicians and patients significant benefits over other vendors’

radiation therapy systems in the market.

The long-term success of the TomoTherapy platform is dependent on a number of factors including the following:

Continued adoption of our TomoTherapy platform, including the Radixact System, in markets where it is available;

Greater awareness among doctors and patients of the unique benefits of radiation therapy using the TomoTherapy platform, including its ring gantry architecture that enables treatment delivery from multiple 360 degree rotations around the patient, and ClearRT helical kVCT imaging for the Radixact System, designed to produce exceptional diagnostic-like quality CT images, quickly and cost-effectively;

Advances in our technology that improve the quality of treatments and ease of use of TomoTherapy platform;

Greater awareness among doctors of the now-established reliability of TomoTherapy platform;

Our ability to expand sales of TomoTherapy platform in countries throughout the world where we do not currently sell or have not historically sold a significant number of any TomoTherapy platform configurations.

Sale of Our Products

Generating revenue from the sale of our platforms is a lengthy process.

Selling our platforms, from first contact with a potential customer to a signed sales contract that meets our backlog criteria (as discussed below) varies significantly and generally spans between six months and two years.

The length of time between receipt of a signed contract and revenue recognition is generally governed by the time required by the customer to build, renovate or prepare the treatment room for installation of the platform.

In the United States, we primarily market directly to customers, including hospitals and stand-alone treatment facilities, through our sales organization we also market to customers through sales agents and group purchasing organizations.

Outside the United States, we market to customers directly and through use of distributors and sales agents.

In addition to our offices in the United States, we have sales and service offices in Europe, India, Asia, and South America.

As of June 30, 2022, our systems were named in 100 out of 118 Class A user licenses awarded in the 13th five year plan by the China National Health Commission to purchase radiation therapy devices.

The Chinese Ministry of Health requires a tender process following the license awards for all participating end user hospitals prior to being able to take receipt of a Class A device.

This tender process defines the transactional terms and conditions related to each hospital’s equipment order and does not put us in a competitive bidding situation that would result in changes in the specific device for which the hospital has received the Class A user license.

During the year ended June 30, 2022, we delivered Class A devices to China and recognized system revenue related to such devices of approximately $65.1 million in the same period.

We currently anticipate system revenue related to the remaining Class A user licenses awarded to date in the next 12 to 18 months.

Despite the challenges and uncertainties in China and around the world, including those created by the COVID-19 pandemic, we continue to believe that China remains the world’s fastest growing market for radiation oncology systems and the pandemic does not affect the long-term demand for radiotherapy equipment in China.

Joint Venture

In January 2019, our wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd.

(the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co.

(the “JV”), to manufacture and sell radiation oncology systems in China.

The JV aims to be uniquely positioned to serve China, which we believe is the world’s largest growth market for radiation oncology systems.

China represents a significantly underserved market for linacs based on the country’s population and cancer incidence rates on both an absolute and relative country basis.

Accuray Asia has a 49% ownership interest in the JV and the CIRC Subsidiary has a 51% ownership interest in the JV.

In July 2019, the JV broke ground on its facility based in Tianjin, China, which serves as its headquarters and home of its manufacturing, sales organization and service operations.

The JV has received its Radiation Safety License from the China Ministry of Environmental Protection, along with its license to do business in China and Medical Device Operating Permit, enabling the JV to sell, install and provide further service to our radiation therapy devices in China.

The JV has also completed construction of its manufacturing facility and has obtained the Quality Management System certification with ISO13485 standard.

With the receipt of the necessary permits and licenses to operate, the JV has begun selling products in China, much like a distributor.

In the long term, we anticipate that the JV will manufacture and sell a locally branded “Made in China”

radiotherapy device in the Class B license category, or Class B device, which would replace our current offering in that category.

We believe this strategy will allow us to best maximize both near and longer-term opportunities in China.

Required testing for the Class B device is ongoing and the National Medical Products Administration ("NMPA") submission is expected to finish in the fourth calendar quarter of 2022 as the due date has been extended as a result of the COVID-19 travel restrictions.

We apply the equity method of accounting to our ownership interest in the JV as we have the ability to exercise significant influence over the JV but lack controlling financial interest and are not the primary beneficiary.

We recognize revenue on sales to the JV in the current period, eliminating 49% of profit to the extent goods sold have not been sold through by the JV to an end customer at the end of such reporting period.

We deferred $5.4 million and $2.1 million of intra-entity profit margin as of June 30, 2022 and June 30, 2021, respectively.

During the year ended June 30, 2022, we recognized $1.4 million of previously deferred intra-entity profit margin from sales and recorded intra-entity profit margin deferral of $4.7 million from sales executed during the period.

Our consolidated accumulated deficit includes $1.0 million of accumulated gains related to our equity method investment.

As of June 30, 2022, we had carrying value of $12.9 million in the JV and owned a 49% interest in the entity.

Our proportional share of the underlying equity in net assets of the JV was approximately $14.6 million.

The difference between the carrying value of the equity investment and our proportional share of the underlying equity in net assets of the JV of $1.7 million, adding back $5.4 million of eliminated intra-entity profit, constitutes equity method goodwill of $4.7 million at June 30, 2022 that is subject to impairment analysis.

No impairment was identified as of June 30, 2022.

COVID-19 and Economic Conditions

In fiscal year 2020, an outbreak of a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (“COVID-19”) was surfaced in Wuhan, China and was subsequently recognized as a pandemic by the World Health Organization.

The COVID-19 pandemic severely restricted the level of economic activity around the world and while conditions have improved, the pace and degree of recovery varies significantly.

In response to this pandemic, governments and private industry have taken preventative or protective actions at varying levels, such as imposing restrictions on travel and business operations, which has resulted in the temporary or permanent closure of certain businesses, as well as advising or requiring individuals to limit or forego their time outside of their homes, particularly in group settings.

The COVID-19 pandemic has adversely impacted our business operations as well as those of our customers and partners.

In addition, across the healthcare industry, resources are being prioritized for the treatment and management of the pandemic and away from non-urgent or elective procedures.

Some of our customers, which include hospitals, major academic medical centers, and other related entities, have incurred losses during the COVID-19 pandemic due to significantly reduced patient volume.

The public health actions being undertaken to reduce the spread of the virus have created and may continue to create significant disruptions with respect to demand for our products and services;

the operating procedures and workflow of our customers, particularly hospitals;

our ability to continue to manufacture our products;

and the reliability of our supply chain.

Our financial results have also been affected by the COVID-19 pandemic in various ways.

The COVID-19 pandemic has continued to adversely impact the pace at which our backlog converts to revenue in the near-term.

This is primarily the result of pandemic-related delays in the timing of deliveries and installations which has adversely affected our revenue.

We have experienced such delays in deliveries and installations since the third quarter of fiscal year 2020 and expect that such delays will continue to some degree , which could have a negative impact on our revenue.

We have also experienced disruptions in sales and delays in customer payments as a result of changes to and redirection of customer resources to the response to the COVID-19 pandemic and closures of customer facilities.

We have also received requests from a few customers to extend payment terms or temporarily suspend service and corresponding payment obligations and while we have only received a small number of requests thus far, there can be no guarantee that more customers will not ask for the same.

In addition, the global supply chain is continuing to be affected by the COVID-19 pandemic as well as other geopolitical uncertainty as disruptions in parts of our supply chain have resulted in delays in the receipt of certain components for our products as well as increased pricing pressure for such parts.

These ongoing supply chain challenges and heightened logistics costs have affected our gross margins and net income (loss), and our current expectations are that gross margins and net income (loss) will continue to be adversely affected by increased material costs and freight and logistic expenses at least through the remainder of the calendar year of 2022, if not longer.

Furthermore, certain parts required for the manufacture and servicing of our products, such as electronic components, are scarce and becoming increasingly difficult to source even at increased prices.

If such parts become unavailable to us, we would not be able to manufacture or service our products, which would adversely impact revenue, gross margins, and net income (loss).

As a result, we are carefully monitoring the pandemic and related economic impact on our financial condition and results of operations.

We intend to continue to execute on our strategic plans and operational initiatives.

However, given the uncertainty regarding the spread, severity and potential resurgence of COVID-19, the impact of new COVID-19 variants, vaccination deployment efforts, how long the pandemic and associated health measures will last, as well as the related economic impacts, including supply chain issues and inflation, and other factors identified in Part I, Item 1A “Risk Factors”

in this Form 10-K, the related financial impact cannot be reasonably estimated with any certainty at this time, although the impacts are expected to continue and may significantly affect our business.

We expect that the impacts on our customers’

business and our business will continue through this period of economic uncertainty as supply chain issues, inflation and other factors continue to worsen or emerge.

Accordingly, management is carefully evaluating our liquidity position, communicating with and monitoring the

actions of our customers and suppliers, and reviewing our near-term financial performance as the uncertainty related to these factors continues to unfold.

As of June 30, 2022, backlog totaled $563.7 million, of which $0.2 million represented upgrades sold through service contracts.

As of June 30, 2021, backlog totaled $616.4 million.

In order for the product portion of a system sales agreement to be counted as backlog, it must meet the following criteria:

The contract is properly executed by both the customer and us.

A customer purchase order that incorporates the terms of our contract quote will be considered equivalent to a signed and executed contract.

The contract has either cleared all its contingencies or contained no contingencies when signed;

We have received a minimum deposit or a letter of credit;

or the sale is to a customer where a deposit is deemed not necessary or customary (i.e.

sale to a government entity, a large hospital, group of hospitals or cancer care group that has sufficient credit, customers with trade-in of existing equipment, sales via tender awards, or indirect channel sales that have signed contracts with end-customers);

The specific end customer site has been identified by the customer in the written contract or written amendment;

Less than 2.5 years have passed since the contract met all the criteria above.

Although our backlog includes only contractual agreements with our customers for the purchase of our CyberKnife or TomoTherapy platforms, including the Radixact Systems and related upgrades, we cannot provide assurance that we will convert backlog into recognized revenue due primarily to factors outside of our control.

The amount of backlog recognized into revenue is primarily impacted by three items:

cancellations, age-outs and foreign currency fluctuations.

Orders could be cancelled for reasons including, without limitation, changes in customers’

needs, priorities or financial condition, changes in government or health insurance reimbursement policies, or changes to regulatory requirements.

In addition to cancellations, after 2.5 years, if we have not been able to recognize revenue on a contract, we remove the revenue associated with the contract from backlog and the order is considered aged out.

Contracts may age-out for many reasons, including but not limited to, inability of the customer to pay, inability of the customer to adapt their facilities to accommodate our products in a timely manner, or inability to timely obtain licenses necessary for customer facilities or operation of our equipment.

Our backlog also includes amounts not denominated in U.S.

Dollars and therefore fluctuations in the U.S.

Dollar as compared to other currencies will impact revenue.

Generally, strengthening of the U.S.

Dollar will negatively impact revenue.

Backlog is stated at historical foreign currency exchange rates, and revenue is released from backlog at current exchange rates, with any difference recorded as a backlog adjustment.

The COVID-19 pandemic has adversely impacted the pace of new orders and the pace at which our backlog converts to revenue in the near-term and we expect this to continue.

Although the extent to which the COVID-19 pandemic will impact individual markets could vary based on a number of factors, we have seen and expect to continue to see a higher than normal level of age-outs in the coming quarters as a result.

A summary of gross orders, net orders, and order backlog is as follows (in thousands):

Years Ended June 30,

(in thousands, except per share data)

Consolidated Statements of Operations Data:

Cancellations

Currency impacts and other

Order backlog at the end of the period

Gross Orders and Book to Bill Ratio

Gross orders are defined as the sum of new orders recorded during the period adjusted for any revisions to existing orders during the period.

Our book to bill ratio is defined as gross orders for the period divided by product revenue for the period.

Gross orders increased by $6.3 million for the year ended June 30, 2022, as compared to the year ended June 30, 2021.

This was primarily due to an increase in CyberKnife platform orders and upgrades of $8.9 million and $2.0 million, respectively.

TomoTherapy platform orders decreased by $5.8 million while upgrades increased by $2.1 million.

In addition, gross order activity during the year ended June 30, 2021 was adversely impacted by the COVID-19 pandemic, particularly in the Americas region.

Our book to bill ratio for June 30, 2022 was 1.5 as compared to 1.8 for June 30, 2021.

Gross orders decreased by $51.4 million for the year ended June 30, 2021, as compared to the year ended June 30, 2020.

This was primarily due to a decline in China Class A system orders as the prior year order volume reflected significant pent-up demand from our end users and distributor, which was triggered by the announcement of the China Class A system quotas back in 2018.

In addition, gross order activity during the year ended June 30, 2021 was adversely impacted by the COVID-19 pandemic, particularly in the Americas region.

Accordingly, TomoTherapy platform order and upgrades order volume decreased by $48.3 million and $4.1 million, respectively, as compared to the prior year.

CyberKnife platform orders decreased by $5.9 million while upgrades increased by $1.4 million.

The decrease in CyberKnife platform orders was primarily due to the normalization of China Class A system orders for the year ended June 30, 2021 as compared to prior fiscal year where we experienced higher volumes of orders due to significant pent-up demand.

Our book to bill ratio for June 30, 2021 was 1.8 as compared to 2.3 for June 30, 2020.

Net orders are defined as gross orders less cancellations, age-outs, foreign exchange and other adjustments during the period.

Net orders decreased by $24.6 million for the year ended June 30, 2022, as compared to the year ended June 30, 2021, resulting from an increase in age-outs of $35.0 million and an unfavorable impact of foreign currency exchange rates of $7.9 million offset by an increase in age-ins of $8.2 million, an increase in gross orders of $6.3 million, and a decrease in cancellations of $3.8 million.

The age-outs for the year ended June 30, 2022 were $183.8 million.

There were $34.9 million of age-ins.

Age-ins represent orders that previously aged-out but have been recognized as revenue in the current period, compared to $148.8 million of age-outs and $26.6 million of age-ins in the same period last fiscal year.

There were $11.3 million of cancellations in year ended June 30, 2022 as compared to $15.1 million of cancellations in the year ended June 30, 2021.

Cancellations are outside of our control and are difficult to

however, we continue to work closely with our customers to minimize the impact of cancellations on our business.

Foreign currency impacts and other adjustments decreased net orders by $4.7 million for the year ended June 30, 2022 compared to an increase in net orders by $3.2 million for the year ended June 30, 2021.

Net orders decreased by $88.7 million for the year ended June 30, 2021, as compared to the year ended June 30, 2020, resulting from a decrease of gross orders of $51.4 million, an increase in age-outs of $47.2 million, an increase in cancellations of $1.2 million, partially offset by an increase in age-ins of $6.1 million and a favorable impact of foreign currency exchange rates of $4.9 million.

The age-outs for the year ended June 30, 2021 were $122.1 million.

There were $6.1 million of age-ins.

Age-ins represent orders that previously aged-out but have been recognized as revenue in the current period, compared to $81.1 million of age-outs and $20.5 million of age-ins in the same period last fiscal year.

There were $15.1 million of cancellations in year ended June 30, 2021 as compared to $13.9 million of cancellations in the year ended June 30, 2020.

Cancellations are outside of our control and are difficult to forecast;

however, we continue to work closely with our customers to minimize the impact of cancellations on our business.

Foreign currency impacts and other adjustments increased net orders by $3.2 million for the year ended June 30, 2021 compared to a decrease in net orders by $1.7 million for the year ended June 30, 2020.

In recent years, the percentage of gross orders received from our distribution partners in the international markets represented 71%, 82%, and 76% of gross orders for fiscal year ended June 30, 2022, 2021 and 2020, respectively.

We anticipate that distributor orders from international markets will continue to represent a significant portion of our gross orders in the foreseeable future.

International orders are affected by foreign currency fluctuation as well as government programs that stimulate the purchase of healthcare products, both of which could affect the demand for our products and timing of orders from period to period.

In addition, our order-to-revenue conversion cycle for international distributor orders has been generally longer compared to that of direct channel sales and could cause fluctuations in our age-outs from period to period.

Results of Operations

Fiscal 2022 results compared to 2021 (in thousands, except percentages)

Years Ended June 30,

(Dollars in thousands)

Net revenue (a)

Products gross profit

Services gross profit

Research and development expenses

Selling and marketing expenses

General and administrative expenses

(Gain) loss on equity method investment

Other expense, net

Provision for income taxes

Net income (loss)

(*) Expressed as a percentage of total net revenue, except for product and services gross profits which are expressed as a percentage of related product and services revenue.

(a) Includes sales to the JV, an equity method investment of $55,877 and $24,393 for fiscal years ended June 30, 2022 and 2021, respectively.

Product Net Revenue

Product net revenue increased by $38.1 million for the year ended June 30, 2022 or 22%, as compared to the year ended June 30, 2021, primarily due to an increase in unit volume sales due to strong performance in the Americas region due to pent-up demand post-COVID coupled with an increase in system average product revenue.

The increase is driven by an increase in revenue from the Americas, EMEA, and China regions offset by a unit volume decline in the Japan region.

Service Net Revenue

Service net revenue decreased by $4.4 million, or 2%, as compared to the year ended June 30, 2021, primarily due to a decrease in service contract revenue of $3.6 million driven by the strong US dollar that reduced the dollar value of all foreign currency service contract revenue, primarily in Japan and Europe, slightly offset by an increase in installation revenue.

Net revenue by geographic region, based on the shipping location of our customer, is as follows (in thousands, except percentages):

Years Ended June 30,

Europe, Middle East, India and Africa

Asia Pacific, excluding Japan and China

The overall gross profit for the year ended June 30, 2022 increased by $0.4 million, relatively flat as compared to the year ended June 30, 2021, due to an increase in product gross profit of $12.9 million, or 17%, driven by an increase in product revenue as a result of higher shipments offset by a decrease in service gross profit of $12.4 million or 15% driven by $8.0 million increase in service cost mainly due to higher part consumption and $4.4 million lower service revenue.

Research and development expenses

Research and development expenses increased by $5.0 million, or 10%, for the year ended June 30, 2022, as compared to the year ended June 30, 2021.

The increase was driven by an increase of $4.3 million in compensation and employee benefits expenses mainly due to additional headcount and an increase of $1.2 million in outside services offset by a decrease of $0.5 million in operational cost due to a decrease in materials costs for research and development projects.

Selling and marketing expenses

Selling and marketing expenses increased $6.8 million, or 16%, for the year ended June 30, 2022, as compared to the year ended June 30, 2021.

The increase was primarily driven by an increase of $4.1 million in compensation and benefits cost due to an increase in headcount, an increase of $2.0 million in marketing expenses due to a greater number of in-person tradeshows as compared to virtual tradeshows in the previous year and an increase of $1.3 million in traveling expenses.

General and administrative expenses

General and administrative expenses increased by $2.7 million, or 6%, for the year ended June 30, 2022, as compared to the year ended June 30, 2021.

The increase was primarily due to an increase of $1.3 million in operating cost due to increases in insurance premiums and higher bad debt expense and an increase of $0.9 million in outside services related to consulting fees and our reinstatement of compensatory fees for our board of directors in fiscal 2022.

Income on equity method investment, net

Income (loss) on equity method investment was an income of $0.2 million as compared to an income of $0.9 million during the year ended June 30, 2021.

Other expense, net

Other expense, net decreased by $17.3 million for the year ended June 30, 2022, as compared to the year ended June 30, 2021.

The decrease was primarily related to lower interest cost due to lower interest rates on our debt in fiscal 2022 and the loss on extinguishment of old convertible notes in fiscal 2021.

The impact of these items was partially offset by higher foreign currency exchange gain.

Provision for income taxes

The provision for income taxes was higher in fiscal 2022 as compared to fiscal 2021 primarily driven by a change in our permanent reinvestment assertion with respect to undistributed earnings in France, Japan and Switzerland.

Fiscal 2021 results compared to 2020 (in thousands, except percentages)

Years Ended June 30,

Products gross profit

Services gross profit

Research and development expenses

Selling and marketing expenses

General and administrative expenses

Loss on equity method investment

Other expense, net

Provision for income taxes

(*) Expressed as a percentage of total net revenue, except for product and services gross profits which are expressed as a percentage of related product and services revenue.

Product Net Revenue

Product net revenue increased by $9.3 million for the year ended June 30, 2021 or 6%, as compared to the year ended June 30, 2020, primarily due to an increase in unit volume sales coupled with an increase in system average product revenue of $18.8 million.

The increase is driven by an increase in revenue from China, offset by a unit volume decline in the Americas, EMEA and Japan regions partly as a result of the impact of COVID-19 pandemic

on revenue conversion timing with our customers in those regions and a decrease in system upgrades of $9.5 million due to the timing of release of ClearRT that was anticipated by customers during the fourth quarter of fiscal 2021.

Service Net Revenue

Service net revenue increased by $4.0 million, or 2%, as compared to the year ended June 30, 2020, primarily due to an increase in service contract revenue of $2.8 million, a reduced cost of service of $2.6 million, and an increase in upgrade and installation revenue of $1.8 million, offset by a decrease in training revenue and revenue from service parts.

Net revenue by geographic region, based on the shipping location of our customer, is as follows (in thousands, except percentages):

Years Ended June 30,

Europe, Middle East, India and Africa

Asia Pacific, excluding Japan and China

The overall gross profit for the year ended June 30, 2021 increased by $9.8 million, or 7%, as compared to the year ended June 30, 2020, due to an increase in service gross profit of $6.7 million, or 9%, driven by an increase in service contract revenue of $4.0 million including, upgrades and installation services, from an increase in the number of installed systems, coupled with a reduced cost of service of $2.6 million and an increase in product gross profit of $3.1 million, or 4%, which was driven by higher revenue from system unit sales volume coupled with an increase in system average product revenue.

Research and development expenses

Research and development expenses increased by $2.9 million, or 6%, for the year ended June 30, 2021, as compared to the year ended June 30, 2020.

The increase was driven by an increase of $2.5 million in compensation and employee benefits expenses mainly due to reinstatement of bonuses to employees in fiscal year 2021, which were suspended in fiscal year 2020 due to the COVID-19 pandemic and an increase of $2.2 million in outside services offset by a decrease of $0.7 million in travel expenses due to decreased travel as a result of travel restrictions in connection with the COVID-19 pandemic and a decrease of $0.5 million in facilities expenses.

Selling and marketing expenses

Selling and marketing expenses decreased $4.4 million, or 9%, for the year ended June 30, 2021, as compared to the year ended June 30, 2020.

The decrease was primarily driven by a decrease of $3.0 million due to the lower cost of key trade shows that were held virtually because of the COVID-19 pandemic, a decrease of $2.0 million in travel expenses, a decrease of $0.9 million in marketing promotion and materials and $0.2 million lower consulting expense, offset by an increase of $1.7 million in compensation and employee benefits mainly due to the reinstatement of bonuses to employees in fiscal year 2021, which were suspended in fiscal year 2020 due to the COVID-19 pandemic.

General and administrative expenses

General and administrative expenses increased by $1.6 million, or 4%, for the year ended June 30, 2021, as compared to the year ended June 30, 2020.

The increase was primarily due to an increase of $2.6 million in compensation and employee benefits mainly due to the reinstatement of bonuses to employees in fiscal year 2021, which were suspended in fiscal year 2020 due to the COVID-19 pandemic, and an increase of $1.7 million this fiscal year compared to prior fiscal year due to the conclusion of a foreign indirect tax audit in fiscal year 2020 offset by a decrease in expense for allowance for credit losses of $1.6 million and a decrease in outside services and consulting of $1.2 million.

Income on equity method investment, net

Income (loss) on equity method investment was an income of $0.9 million as compared to a loss of $0.1 million during the year ended June 30, 2020.

Other expense, net

Other expense, net increased by $21.0 million for the year ended June 30, 2021, as compared to the year ended June 30, 2020.

The increase was primarily due to the non-cash gain of $13.0 million related to the value of the Accuray systems contributed to the JV in exchange for 49% equity interest that was recorded in fiscal year 2020, an increase of $5.7 million due to loss on extinguishment of debt and a $4.3 million due to loss on the exchange of our 3.75% Convertible Notes due 2022 that was treated as an extinguishment of old notes.

The impact of these items was offset by an increase of $0.4 million in net foreign currency exchange gain, a decrease of $1.2 million in interest expense and a $0.2 million payment received for building improvements to a facility that was vacated in 2020.

Provision for income taxes

The provision for income taxes was lower in fiscal 2021 as compared to fiscal 2020 due to lower foreign earnings in fiscal 2021.

We also released income tax benefits in fiscal 2020 related to final tax assessments from the Swiss tax authorities for the fiscal period 2018 that otherwise would have reflected a much higher income tax expense for us in fiscal 2020.

Share-Based Compensation Expense

In fiscal 2022, 2021 and 2020, we recorded share‑based compensation expense of $10.6 million, $9.3 million, and $8.2 million, respectively, related to awards under our stock incentive plans.

Share‑based compensation expense was recorded net of estimated forfeitures.

As of June 30, 2022, we had approximately $14.5 million of unrecognized compensation expense, net of estimated forfeitures, related to unvested stock options, shares under our Employee Stock Purchase Plan, or ESPP, stock options and restricted stock units, or RSUs, which we expect to recognize over a weighted average period from 0.6 to 2.4 years.

Liquidity and Capital Resources

At June 30, 2022, we had $88.7 million in cash and cash equivalents.

Cash from operations could be affected by various risks and uncertainties, including, but not limited to supply chain disruptions, rising interest rates and inflation, world events, including the Russian-Ukraine war, continuing uncertainty associated with COVID-19 and the risks included in Part I, Item 1A titled “Risk Factors.”

Also refer to Note 10, Debt to the consolidated financial statements for discussion of the New Credit Facilities and the Notes as of June 30, 2022.

Based on our cash and cash equivalents balance, available debt facilities, current business plan and revenue prospects, we believe that we will have sufficient cash resources and anticipated cash flows to fund our operations for at least the next 12 months.

However, w e continue to critically review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 pandemic.

In May 2021, we issued $100.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2026 under an indenture between us and The Bank of New York Mellon Trust Company, N.A., as trustee.

$97.1 million aggregate principal amount of the 3.75% Convertible Notes due 2026 were issued to certain holders of 3.75% Convertible Notes due 2022 in exchange for $82.1 million aggregate principal amount of 3.75% Convertible Notes due 2022 outstanding and $2.9 million aggregate principal amount were issued for cash.

Concurrently, in May 2021, we entered into a senior secured credit agreement with Silicon Valley Bank, individually as a lender and agent, and

the other lenders (the “Credit Agreement”), which provides for a new five-year $80 million term loan facility and a $40 million revolving credit facility (the “Revolving Credit Facility”).

The initial borrowings under the Credit Agreement, including $25 million under the Revolving Credit Facility, were funded on May 14, 2021, and as of June 30, 2022 we had an outstanding balance under the Revolving Credit Facility of $5.0 million.

Our liquidity and cash flows has been and could continue to be materially impacted by the diversion of customer resources to the response to the COVID-19 pandemic as well as delays in payments from customers and could be further impacted by additional and prolonged delays in payments from customers, the potential risk mitigation measures, facility closures, or other reasons related to the COVID-19 pandemic.

There remain uncertainties as to how the COVID-19 pandemic is likely to materially impact our liquidity in the future.

In addition, we are unable to predict with certainty the impact of the COVID-19 pandemic on our ability to maintain compliance with the debt covenants contained in the credit and security agreements related to our Credit Facilities, including financial covenants regarding the fixed charge coverage ratio and the consolidated senior net leverage ratio.

While we were in compliance with such covenants for the year ended June 30, 2022, failure to meet the covenant requirements in the future could cause us to be in default and the maturity of the related debt could be accelerated and become immediately payable.

This may require us to obtain waivers or amendments to the credit and security agreement in order to maintain compliance and there can be no certainty that any such waiver or amendment will be available, or what the cost of such waiver or amendment, if obtained, would be.

If we are unable to obtain necessary waivers or amendment and the debt under such credit facility is accelerated, we would be required to obtain replacement financing at prevailing market rates, which may not be favorable to us.

There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated.

Additionally, the undistributed earnings of our foreign subsidiaries at June 30, 2022 for all countries except Japan, France and Switzerland are considered to be indefinitely reinvested and unavailable for distribution in the form of dividends or otherwise.

Repatriation of the Company’s foreign earnings from Japan, France and Switzerland are subject to income taxes.

As of June 30, 2022, we had approximately $55.1 million of cash and cash equivalents at our foreign subsidiaries.

When such funds are repatriated, there will be additional foreign tax withholdings imposed depending on the country from which the funds were repatriated.

In addition, the long sales cycle, together with delays in the shipment of CyberKnife and TomoTherapy platforms or customer cancellations that have increased in light of the COVID-19 pandemic have affected our ability to recognize revenue, which could adversely affect our cash flows.

Years Ended June 30,

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, cash

equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and

restricted cash

The COVID-19 pandemic has negatively impacted the global economy, disrupted our global supply chains and created significant volatility and disruption of financial markets all of which could negatively impact our business operations and cash flows for the foreseeable future, including reductions in revenue and delays in payments from customers.

The challenges posed by COVID-19 on our business are expected to evolve rapidly.

An extended period of global supply chain and economic disruption and volatility in the financial markets, could materially affect our business, results of operations, access to sources of liquidity and financial condition.

Cash Flows From Operating Activities

Net cash used in operating activities was $2.4 million in fiscal 2022, resulting primarily from changes in working capital of $22.6 million and a net loss of $5.3 million offset by $25.5 million of non cash items.

The net change in working capital was primarily due to increases of $22.9 million in inventories, $12.5 million in accounts receivable, $6.0 million in prepaid expenses and other assets, and decreases of $0.8 million in operating lease liabilities and $1.4 million in deferred revenues, offset by increases of $11.7 million in accounts payable, $6.7 million in accrued liabilities, $1.2 million in customer advances and decrease of $1.5 million in deferred costs.

Non-cash items primarily consisted of share-based compensation expense of $10.6 million, depreciation and amortization expense of $5.5 million, a write-down of inventory of $3.5 million, profit elimination in transactions with the JV of $3.3 million, and provision for deferred income tax of $1.8 million.

Net cash provided by operating activities was $38.5 million in fiscal 2021, resulting primarily from non cash items of $39.4 million and changes in working capital of $7.6 million offset by, a net loss of $6.3 million.

Non-cash items primarily consisted of the loss on extinguishment of debt of $4.3 million related to the exchange of our 3.75% Convertible Notes due 2022 for our 3.75% Convertible Notes due 2026 and $5.7 million related to refinancing of our credit facilities with new lenders, depreciation and amortization expense of $6.4 million, share-based compensation expense of $9.3 million, inventories write-down of $6.9 million, non-cash interest expense on debt of $4.9 million, amortization of debt issuance cost of $1.4 million and intra-entity profit elimination from transactions with the JV of $0.3 million, offset by an in-kind system upgrade contribution to the JV of $1.4 million and an income on equity method investment of $0.9 million ;

The net change in working capital of $7.6 million was primarily due to an increase of $8.1 million in compensation related accrued liabilities due to bonus accrual, a decrease in accounts receivable of $5.2 million and a decrease of $1.7 million in inventories offset by a decrease of $4.0 million in accounts payable, a decrease of $1.6 million in customer advances, deferred revenue and deferred cost of revenue, an increase of $1.0 million in prepaid expenses and other assets and a decrease of $0.7 million in net operating lease liabilities.

Net cash used in operating activities was $1.5 million in fiscal 2020, resulting primarily from a net negative change in working capital of $21.2 million offset by non cash items of $15.9 million and a net income of $3.8 million.

Non-cash items primarily consisted of the gain on contribution to the JV of $13.0 million, offset by depreciation and amortization expense of $7.5 million, share-based compensation expense of $8.2 million, non-cash interest expense on debt of $4.2 million, inventories write-down of $4.2 million, provision of bad debt of $1.8 million, intra-entity profit elimination from transactions with the JV of $1.8 million, amortization of debt issuance cost of $1.3 million, deferred tax benefit of $0.4 million and a loss on equity method investment of $0.1 million;

The net change in operating assets and liabilities of $21.2 million was primarily due to an increase of $23.2 million in inventories due to slower than anticipated conversion of our order backlog to revenue, a decrease of $16.6 million in compensation related accrued liabilities and reduction in bonus accrual, a decrease of $6.8 million in accounts payable and a decrease of $0.2 million in net operating lease liabilities offset by receivable collection and a decrease in accounts receivable of $19.0 million, a decrease of $4.4 million in prepaid expense and other assets and an increase of $1.5 million in customer advances, deferred revenue and deferred cost of revenue.

Cash Flows From Investing Activities

Net cash used in investing activities was $4.7 million in fiscal 2022, which primarily related to the purchase of property and equipment of $4.7 million.

Net cash used in investing activities was $2.4 million in fiscal 2021, which primarily related to the purchase of property and equipment of $2.3 million and an additional investment in the JV of $0.1 million.

Net cash used in investing activities was $3.7 million in fiscal 2020, which primarily consisted of purchases of property and equipment.

Cash Flows From Financing Activities

Net cash used in financing activities during fiscal 2022 was $15.4 million, which was primarily due to $15.0 million of repayments under Revolving Credit Facility and $4.0 million paydown in debt offset by $2.3 million in proceeds from employee stock plans and proceeds from options exercises.

Net cash used in financing activities during fiscal 2021 was $28.8 million, primarily due to the repayment of all outstanding obligations and termination of the Prior Revolving Credit Facility and Prior Term Loan of $105.4 million, the prepayment during the year of $10.0 million of the principal amount outstanding on our Prior Term Loan, the amendment fee of $0.5 million related to our Prior Credit Facilities, the repurchase of our common stock of $14.1 million, the paydown on our New Revolving Credit Facility of $5.0 million, $0.1 million net cost related to the exchange of our 3.75% Convertible Notes 3.75% due 2022 for our 3.75% Convertible Notes due 2026 and $0.3 million in taxes paid related to net settlement of equity awards, offset by net proceeds from New Revolving Credit Facility and New Term Loan Facility of $103.7 million, proceeds from employee stock plans of $2.2 million and proceeds from exercises of stock options of $0.9 million.

Net cash provided by financing activities during fiscal 2020 was $26.7 million, which was primarily due to a net draw of $24.7 million, net, drawn against our Prior Term Loan Facility and $2.5 million in proceeds from our employee stock purchase plan offset by $0.3 million, net repayments under our Prior Revolving Credit Facility and $0.2 million in taxes paid related to the net share settlement of equity awards.

Operating Capital and Capital Expenditure Requirements

Our future capital requirements depend on numerous factors.

These factors include but are not limited to the following:

Revenue generated by sales of our products and service plans;

Our ability to generate cash flows from operations;

Costs associated with our sales and marketing initiatives and manufacturing activities;

Facilities, equipment and IT systems required to support current and future operations;

Rate of progress and cost of our research and development activities;

Costs of obtaining and maintaining FDA and other regulatory clearances of our products;

Effects of competing technological and market developments;

Number and timing of acquisitions and other strategic transactions;

Servicing and maturity of our current future indebtedness;

The impact of inflation of our expenses;

The unpredictable impact of the COVID-19 pandemic, including on collections, supply chains and logistics.

We believe that our current cash and cash equivalents balance will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.

If these sources of cash and cash equivalents are insufficient to satisfy our liquidity requirements, or we believe market conditions are favorable, we may seek to sell additional equity or debt securities or enter into additional credit facilities.

The sale of additional equity or convertible debt securities could result in dilution to our stockholders.

If additional funds are raised through the issuance of debt securities, these securities could have rights senior to those associated with our common stock and could contain covenants that would restrict our operations.

Additional financing may not be available at all, or in amounts or on terms acceptable to us.

If we are unable to obtain this additional financing, we may be required to reduce the scope of our planned product development and marketing efforts.

Operating and Capital Expenditure Requirements and Contractual Obligations

Our purchase commitments and obligations include all open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers, for which we have not received the goods or services and acquisition and licensing of intellectual property.

A majority of these purchase obligations are due within a year.

Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services.

Our long-term material cash requirements include lease obligations.

Off Balance Sheet Arrangements

At June 30, 2022 we had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of approximately $68.3 million.

The fair value of the underlying currency based upon the June 30, 2022 exchange rate was approximately $68.3 million.

At June 30, 2021 we had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of approximately $54.2 million.

The fair value of the underlying currency based upon the June 30, 2022 exchange rate was approximately $54.2 million.

We did not have any off balance sheet arrangements for the year ended June 30, 2020.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as revenue and expenses during the reporting periods.

We evaluate our estimates and judgments on an ongoing basis.

We base our estimates on historical experience and on various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities.

However, the economic uncertainty in the current environment caused by the COVID-19 pandemic could limit our ability to accurately make and evaluate our estimates and judgments.

Actual results could therefore differ materially from those estimates if actual conditions differ from our assumptions.

All of our significant accounting policies and methods used in the preparation of our consolidated financial statements are described in Note 1, The Company and its Significant Accounting Policies, to the consolidated financial statements.

The methods, estimates and judgments that we use in applying our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain.

Management believes the critical accounting policies and estimates are those related to revenue recognition, assessment of recoverability of goodwill, valuation of inventories, convertible notes, impairment of investments and allowance for credit losses.

C oncentration of Credit and Other Risks

Our cash and cash equivalents are deposited with several major financial institutions.

At times, deposits in these institutions exceed the amount of insurance provided on such deposits.

We have not experienced any losses in such accounts and do not believe that we are exposed to any significant risk of loss on these balances.

For the year ended June 30, 2022 there was one customer that represented 10% or more of total net revenue and for the years ended June 30, 2021 and 2020, there were one and no customers, respectively, that represented 10% or more of total net revenue.

We had two customers as of June 30, 2022 and two customers as of June 30, 2021, respectively, that each accounted for more than 10% of our total accounts receivable, net.

We perform ongoing credit evaluations of our customers and maintain reserves for potential credit losses.

Accounts receivable are deemed past due in accordance with the contractual terms of the agreement.

Accounts receivable balances are charged against the allowance for doubtful accounts once collection efforts are unsuccessful.

Single-source suppliers presently provide us with several components.

In most cases, if a supplier was unable to deliver these components, we believe that we would be able to find other sources for these components subject to any regulatory qualifications, if required.

Revenue Recognition

Our revenue is primarily derived from sales of CyberKnife and TomoTherapy platforms and services, which include PCS contracts (warranty period services and post-warranty services), installation services, training and other professional services.

We record our revenue net of any value added or sales tax.

We recognize revenue for certain performance obligations at the point in time when control is transferred, such as delivery of products.

We recognize revenue for certain other performance obligations over a period of time as control of the goods or services is transferred, such as PCS and construction contracts.

Payments received in advance of system shipment are recorded as customer advances and are deferred until product shipment when they are recognized in revenue.

We assess the probability of collection based on a number of factors, including past transaction history with the customer and creditworthiness of the customer.

We generally do not request collateral from our customers.

We frequently enter into sales arrangements that contain multiple performance obligations.

For sale arrangements that contain multiple performance obligations, we account for individual products and services separately if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on relative its own or with other resources that are readily available to the customer.

The stand-alone selling price (“SSP”).

The SSP is determined based on observable prices at which we separately sell the products and services.

If a SSP is not directly observable, then we will estimate the SSP considering market conditions, entity-specific factors, and information about the customer or class of customer that is reasonably available.

Product Revenue

The majority of product revenue is generated from sales of CyberKnife and TomoTherapy platforms, including Radixact Systems.

Revenue is recognized once the performance obligations are satisfied by transferring control of the product to a customer, which is generally upon delivery.

We record revenue from sales of systems, product upgrades and accessories to our customers based on the general terms and conditions of the executed sales and distribution agreements as well as the specific terms and conditions executed for each sale, and once the performance obligations are satisfied by transferring control of the product to a customer.

We record revenue considering all discounts given to, or expected by, customers.

As a result, management may make estimates of potential future product returns or trade ins and other allowances related to product revenue in the current period.

In general, we do not allow returns from customers and all discounts and allowances are clearly identified in the terms and conditions of each sale.

We derive some product revenue from sales to the JV.

Service Revenue

Service revenue is generated primarily from PCS, installation services, training and professional services.

Service revenue is recognized either ratably over the contractual period as control and benefit transfer to the customer or when service is performed, depending on specific terms and conditions in agreements with customers.

We derive some service revenue from sales to the JV.

Costs associated with service revenue are expensed when incurred, except when those costs are related to system upgrades purchased within a service contract.

In those cases, the costs of such upgrades are recognized at the time control and benefit of the upgrade transfers to the customer.

Assessment of Recoverability of Goodwill

Goodwill represents the excess of the purchase price over the fair value of tangible and identified intangible net assets of businesses acquired.

Goodwill is not amortized, but is evaluated for impairment on an annual basis and when impairment indicators are present.

We have one operating segment and one reporting unit.

Therefore, our consolidated net assets, including existing goodwill are considered to be the carrying value of the reporting unit.

We estimate the fair value of the reporting unit based on the closing price of our common stock on the trading day closest to the annual review date multiplied by the outstanding shares on that date.

If the carrying value of the reporting unit is in excess of its fair value, an impairment may exist, and we must perform the second step of the analysis, in which the implied fair value of the goodwill is compared to its carrying value to determine the impairment charge, if any.

If the estimated fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired and no further analysis is required.

Valuation of Inventories

The valuation of inventory requires us to estimate obsolete or excess inventory as well as damaged inventory.

The determination of obsolete or excess inventory requires us to estimate the future demand for our products.

We regularly review inventory quantities on hand and adjust for excess and obsolete inventory based primarily on historical usage rates and our estimates of product demand to support future sales and service.

If our demand forecast for specific products is greater than actual demand and we fail to reduce purchasing and manufacturing output accordingly, we could be required to write off inventory beyond the current reserve, which would negatively impact our gross margin.

Convertible Notes

We account for convertible notes in accordance with applicable guidance which specifies that an issuer of such instruments should separately account for the liability and equity component of the conversion option.

The amount recorded as debt is based on the fair value of the debt component as a standalone instrument, determined based on an implied credit spread interest rate for nonconvertible debt.

This implied credit spread was derived from the trading history of our convertible notes and a range of estimated market volatility.

The difference between the debt recorded at inception and its principal amount is accreted to principal during the estimated life of the note.

ASC 470-50, provides guidance on modifications to or exchanges of line-of-credit or revolving arrangements which should be evaluated based on borrowing.

We adopted ASU 2020-06 in fiscal year 2022, using the modified retrospective method, which no longer accounts for the liability and equity component separately.

Impairment of Investments

We have an equity investment in CNNC Accuray (Tianjin) Medical Technologies Co.

Ltd., the Company’s joint venture in China.

The Company’s equity method investment is held at cost and adjusted for impairment when it would be deemed to be impaired.

We monitor this investment for events or circumstances indicative of a potential

impairment, and we make appropriate reductions in carrying value if we determine that an impairment charge is required, based primarily on the financial condition or near term prospects of the investee.

Allowance for Credit Losses

We evaluate the creditworthiness of our customers prior to authorizing shipment for all major sale transactions.

On a quarterly basis, we evaluate aged items in the accounts receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts.

If our evaluation of our customers’

financial conditions does not reflect our future ability to collect outstanding receivables, additional provisions may be needed and our operating results could be negatively affected.

QUANTITATIVE & QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions.

Foreign Currency Exchange Rate Risk

A portion of our net sales are denominated in foreign currencies, most notably the Euro and the Japanese Yen.

Future fluctuations in the value of the U.S.

Dollar may affect the price competitiveness of our products outside the United States.

For direct sales outside the United States, we sell in both U.S.

Dollars and local currencies, which could expose us to additional foreign currency risks, including changes in currency exchange rates.

Our operating expenses in countries outside the United States, are payable in foreign currencies and therefore expose us to currency risk.

To the extent that management can predict the timing of payments under sales contracts or for operating expenses that are denominated in foreign currencies, we may engage in hedging transactions to mitigate such risks in the future.

We expect the changes in the fair value of the net foreign currency assets arising from fluctuations in foreign currency exchange rates to be materially offset by the changes in the fair value of the forward contracts.

As of June 30, 2022, we had open currency forward contracts to purchase or sell foreign currencies with stated, or notional value of approximately $68.3 million.

The purpose of these forward contracts is to minimize the risk associated with foreign exchange rate fluctuations.

We have developed a foreign exchange policy to govern our forward contracts.

These foreign currency forward contracts do not qualify as cash flow hedges and all changes in fair value are reported in earnings as part of other expenses, net.

We have not entered into any other types of derivative financial instruments for trading or speculative purpose.

Our foreign currency forward contract valuation inputs are based on quoted prices and quoted pricing intervals from public data and do not involve management judgment.

Interest Rate Risk

We maintain an investment portfolio of various holdings, types and maturities.

These securities are generally classified as available for sale and consequently are recorded on the balance sheet at fair value with unrealized gains and losses reported as a separate component of accumulated other comprehensive income.

At any time, a sharp rise or decline in interest rates could have a material adverse impact on the fair value of our investment portfolio.

Likewise, increases and decreases in interest rates could have had a material impact on interest earnings for our portfolio.

We do not currently carry investments that are sensitive to interest rate risk.

Our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not limited to the New Credit Facilities and Notes.

The interest rates on the Notes are fixed and the interest rate on the New Credit Facilities are at variable rates, which are tied to a “prime rate”

As of June 30, 2022, borrowings under the New Term Loan Facility totaled $78.7 million net of issuance cost with an annual interest rate of 3.0% plus 90-day LIBOR, and borrowings under the New Revolving Credit Facility totaled $5.0 million with an annual interest rate of 3.0% plus 90-day LIBOR.

If the amount outstanding under the New Credit Facilities remained at this level for the next 12 months and interest rates increased or decreased by 50 basis point change, our annual interest expense would increase or decrease, respectively, approximately $0.4 million.

Refer to Note 10, Debt to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion regarding our debt obligations.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations or financial condition.

Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs.

Our inability or failure to do so could harm our business, results of operations or financial condition.

Equity Price Risk

On August 7, 2017, we issued approximately $85.0 million aggregate principal amount of 3.75% Convertible Notes due 2022.

Upon conversion, we can settle the obligation by issuing our common stock, cash or a combination thereof at an initial conversion rate equal to 174.8252 shares of common stock per $1,000 principal amount of the 3.75% Convertible Notes due 2022, which is equivalent to a conversion price of approximately $5.72 per share of common stock, subject to adjustment.

There is no equity price risk if the share price of our common stock is below $5.72 upon conversion of the 3.75% Convertible Notes due 2022.

As of June 30, 2022 the remaining outstanding principal amount of 3.75% Convertible Notes due 2022 is $2.9 million for every $1 that the share price of our common stock exceeds $5.72, we expect to issue an additional $0.5 million in cash or shares of our common stock, or a combination thereof, if all of the 3.75% Convertible Notes due 2022 are converted.

On May 13, 2021, we issued approximately $100.0 million aggregate principal amount of 3.75% Convertible Notes due 2026.

Upon conversion, we can settle the obligation by issuing our common stock, cash or a combination thereof at an initial conversion rate equal to 170.5611 shares of common stock per $1,000 principal amount of the 3.75% Convertible Notes due 2026, which is equivalent to a conversion price of approximately $5.86 per share of common stock, subject to adjustment.

There is no equity price risk if the share price of our common stock is below $5.86 upon conversion of the 3.75% Convertible Notes due 2026.

For every $1 that the share price of our common stock exceeds $5.86, we expect to issue an additional $17.1 million in cash or shares of our common stock, or a combination thereof, if all of the 3.75% Convertible Notes due 2026 are converted.

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

ACCURAY INCORPORATED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Stockholders’

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Accuray Incorporated

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Accuray Incorporated (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), stockholders’

equity, and cash flows for each of the three years in the period ended June 30, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated August 17, 2022 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Determination of standalone selling price

As described further in note 1 to the financial statements, the Company’s contracts with customers often include multiple performance obligations.

The Company applies the five steps of Financial Accounting Standards Board Topic 606, Revenue from Contracts with Customers , in the determination of revenue to be recognized, with step four related to the allocation of the transaction price to multiple performance obligations.

The transaction price of each contract is allocated to individual performance obligations based upon relative stand-alone selling price (“SSP”).

The SSP of performance obligations is determined based on observable prices at which the Company separately sells the products and services.

If the SSP is not directly observable, the Company will estimate the SSP considering market conditions, entity specific factors, and information about the customer or class of customer that is reasonably available.

We identified the determination of the SSP of performance obligations as a critical audit matter.

The principal consideration for our assessment that the determination of the SSP of performance obligations represents a critical audit matter is that the estimates made in determining SSP involve significant judgments.

Evaluating the appropriateness of these estimates requires a high degree of auditor judgment and an increased extent of effort.

Our audit procedures related to the determination of the SSP of performance obligations included the following, among others:

We tested the design and operating effectiveness of internal controls over the Company’s determination of the SSP of performance obligations, including controls covering the validation of the completeness and accuracy of underlying data used in the analysis.

We evaluated the appropriateness of the overall methodology used by management, including considering whether the methodology maximized the use of observable inputs available.

For products and services where the SSP is directly observable, we evaluated the completeness and accuracy of the data used by management in determining the SSP.

We recalculated the pricing inputs within the analysis and agreed selected data to executed sales agreements and considered the appropriateness of sales excluded from the analysis.

We tested management’s process by evaluating key assumptions for performance obligations that do not include directly observable sales or for performance obligations that do not include sufficient directly observable sales.

Specifically, we:

o considered how management determined the disaggregation of distinct customer groups;

o determined the appropriateness of discount rates applied to list prices based on the Company’s pricing strategy for customer groups, including comparing the discount rates to internal pricing policies;

o recalculated and validated the inputs used in the calculation;

o made inquiries of staff members outside of the accounting department to determine if there are factors that could have indicated a change in the Company’s go-to market strategy;

o compared the SSP indicated by management’s analysis to performance obligations within bundled arrangements for a sample of items;

o compared SSP at the performance obligation level to the prior year and evaluated the reasons for significant relative fluctuations.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2006.

San Jose, California

August 17, 2022

Accuray Incorporated

Consolidated B alance Sheets

(in thousands, except share and per share amounts)

Current assets:

Cash and cash equivalents

Restricted cash

Accounts receivable, net of allowance for credit losses of $ 1,000 and

$ 1,048 as of June 30, 2022 and June 30, 2021, respectively (a)

Prepaid expenses and other current assets (b)

Deferred cost of revenue

Total current assets

Property and equipment, net

Investment in joint venture

Operating lease right-of-use assets, net

Intangible assets, net

Restricted cash

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Accounts payable

Accrued compensation

Operating lease liabilities, current

Other accrued liabilities

Customer advances

Deferred revenue

Short-term debt

Total current liabilities

Long-term liabilities:

Operating lease liabilities, non-current

Long-term other liabilities

Deferred revenue

Long-term debt

Total liabilities

Commitments and contingencies (Note 9)

Stockholders’

Preferred stock, $ 0.001 par value;

5,000,000 shares;

issued and outstanding

Common stock, $ 0.001 par value;

200,000,000 shares as of

June 30, 2022 and June 30, 2021, respectively;

issued and outstanding:

93,499,500 and 90,821,661 shares at June 30, 2022 and June 30, 2021,

Additional paid-in-capital

Accumulated other comprehensive income

Accumulated deficit

Total stockholders' equity

Total liabilities and stockholders’

(a) Included accounts receivable from the China joint venture of $ 24,828 and $ 8,822 at June 30, 2022 and June 30, 2021, respectively.

(b) Included other receivable from the China joint venture o f $ 861 a t June 30, 2022 and $ 187 at June 30, 2021, respectively.

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

Accuray Incorporated

Consolidated Statements of Oper ations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

Years Ended June 30,

Total net revenue

Cost of revenue:

Cost of products

Cost of services

Total cost of revenue (c)

Operating expenses:

Research and development

Research and development (d)

Selling and marketing

1 unchanged sentence

Total operating expenses

Income (loss) from operations

Income from operations

Income (loss) on equity method investment

3 unchanged sentences

Net income (loss)

Income (loss) per share

Weighted average common shares used in

computing net income (loss) per share

As of June 30,

Net income (loss) per share - basic

Net income (loss) per share - diluted

Weighted average common shares used in computing net income

(loss) per share:

Net income (loss)

Foreign currency translation adjustment

Change in defined benefit pension obligation

Comprehensive income (loss)

(a) Includes sales to the China joint venture, an equity method investment of $ 45,545 for the year ended June 30, 2022, $ 12,033 for the year ended June 30, 2021 and $ 11,202 for the year ended June 30, 2020, respectively.

(b) Includes sales to the China joint venture, an equity method investment of $ 10,332 for the year ended June 30, 2022, $ 12,360 for the year ended June 30, 2021 and $ 7,851 for the year ended June 30, 2020, respectively.

(c) Includes cost of revenue from sales to the China joint venture, an equity method investment of $ 35,237 for the yea r ended June 30, 2022, $ 13,310 for the year ended June 30, 2021 and $ 13,174 for the year ended June 30, 2020, respectively.

(d) Includes chargeback to the China joint venture, an equity method investment related to research and development project of $ 2,336 and $ 430 for the year ending June 30, 2022 and June 30, 2021, respectively

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

Accuray Incorporated

Consolidated Statement o f Stockholders’

(in thousands, except share amounts)

Comprehensive

Stockholders’

Income (Loss)

Balance at June 30, 2019

Issuance of restricted stock

Issuance of common stock under employee

stock purchase plan

Share-based compensation

Tax withholding upon vesting of restricted

Cumulative translation adjustment

Change in defined benefit pension obligation

Balance at June 30, 2020

Exercise of options, net

Issuance of restricted stock

Issuance of common stock under employee

stock purchase plan

Repurchase of common stock

Share-based compensation

Tax withholding upon vesting of restricted

Extinguishment of allocated cost related to convertible note exchange

Bifurcation of conversion option upon issuance of convertible notes

Cumulative translation adjustment

Change in defined benefit pension obligation

Balance at June 30, 2021

Cumulative adjustment due to adoption of ASU No.

Exercise of options, net

Issuance of restricted stock

Issuance of common stock under employee

stock purchase plan

Share-based compensation

Cumulative translation adjustment

Change in defined benefit pension obligation

Balance at June 30, 2022

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

Accuray Incorporated

Consolidated Statem ents of Cash Flows

(in thousands)

Consolidated Balance Sheet Data:

Years Ended June 30,

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

Share-based compensation

Amortization of debt issuance costs

Accretion of interest on debt

Provision for credit losses

Non-cash revenue transactions related to joint venture

Provision for write-down of inventories

Loss on disposal of property and equipment

(Income) loss on equity method investment

Release (deferral) of equity method investment intra-entity profit on sales

Loss on extinguishment of debt

Gain on contribution to joint venture

Provision (benefit) for deferred income taxes

Changes in assets and liabilities:

Accounts receivable, short and long-term

Prepaid expenses and other assets

Deferred cost of revenue, short and long-term

Accounts payable

Operating lease liabilities, net

Accrued liabilities

Customer advances

Deferred revenues, short and long-term

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchases of property and equipment, net

Purchase of intangible assets

Additional investments in joint venture

Net cash (used in) investing activities

Cash flows from financing activities

Proceeds from employee stock plans

Proceeds from exercise of options

Taxes paid related to net share settlement of equity awards

Convertible senior notes exchange and issued, net of issuance costs

Paydown and repayment of prior term loan and prior revolving credit facility

Proceeds from New Debt, net of costs

Repayments under the New Term loan

Borrowings (repayments) under the New Revolving Credit Facility, net

Stock repurchase

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental Disclosure of Cash Flow Information

Cash paid for income taxes

Cash paid for interest

Supplemental non-cash disclosure:

Non-cash effect of pension settlement accounting

Prior convertible note exchanged

New convertible note exchanged

Unpaid purchase of property and equipment at end of year

Transfers from inventory to property and equipment

Equity method investment, in exchange for non-cash contributions of assets to China

Joint Venture (including gain of $ 12,964 )

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

Accuray Inc orporated

Notes to Consolidated Financial Statements

The Company and its Significant Accounting Policies

Accuray Incorporated (together with its subsidiaries, the “Company”

or “Accuray”) designs, develops and sells advanced radiosurgery and radiation therapy systems for the treatment of tumors throughout the body.

The Company is incorporated in Delaware and has its principal place of business in Sunnyvale, California.

The Company has primary offices in the United States, Switzerland, China, Hong Kong and Japan and conducts its business worldwide.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant inter-company transactions and balances have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Risks and Uncertainties

The Company is subject to risks and uncertainties as a result of a novel strain of coronavirus, severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, which causes coronavirus disease 2019 (“COVID-19”) and has resulted in a worldwide pandemic.

The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as the effects of and response to the pandemic are rapidly evolving and new information is regularly coming to light, particularly as new COVID-19 variants emerge.

The Company's customers are diverting resources to treat COVID-19 patients and deferring non-urgent and elective procedures.

Some customers, which include hospitals, major academic medical centers, and other related entities, have incurred significant losses during the COVID-19 pandemic due to reduced patient volume.

These impacts on the Company's customers may adversely affect their ability to meet their financial and other contractual obligations, including to the Company.

Furthermore, global economic uncertainty, including labor shortages and disruptions in the global supply chain, related to the COVID-19 pandemic may result in an incremental adverse impact on revenue, net income (loss) and cash flow and may require significant additional expenditures or cost-cutting to mitigate such impacts.

Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole.

The magnitude and overall effectiveness of these actions remain uncertain.

The Company’s financial results have also been affected by the COVID-19 pandemic in various ways.

The COVID-19 pandemic is adversely impacting the pace at which the Company’s backlog converts to revenue.

This is primarily the result of pandemic-related delays in the timing of deliveries and installations, which has adversely affected our revenue.

The Company has experienced such delays in deliveries and installations since the third quarter of fiscal year 2020 and expects that such delays in will continue, which could have a negative impact on revenue.

The Company has experienced disruptions in its sales cycle as well as delays in customer payments and service agreements.

The Company has also received requests from a few customers to extend payment terms or temporarily suspend service and corresponding payment obligations.

While the Company has only received a small number of requests thus far, there can be no guarantee that more customers will not ask for the same in the future.

In addition, as the COVID-19 pandemic continues to impact the global supply chain, disruptions in parts of our supply chain have resulted in delays in the receipt of certain components for our products as well as increased pricing pressure for such parts.

These ongoing supply chain challenges and heightened logistics costs have adversely affected the Company's gross margins and net income (loss), and the Company’s current expectations are that gross margins and net income (loss) will continue to be adversely affected by increased material costs and freight and logistic expenses through at least the remainder of the calendar year of 2022, if not longer.

Furthermore, certain

parts required for the manufacture and servicing of the Company's products, such as electronic components, are scarce and becoming increasingly difficult to source even at increased prices.

If such parts become unavailable to the Company, it would not be able to manufacture or service our products, which would adversely impact revenue, gross margins, and net income (loss).

As a result, the Company is carefully monitoring the pandemic and the potential length and depth of the resulting economic impact on our financial condition and results of operations.

There remain uncertainties around the spread, severity and potential resurgence of COVID-19, the impact of new COVID-19 variants, vaccination deployment efforts, and how long the pandemic and associated health measures will last, the related financial impact cannot be reasonably estimated at this time, although the impacts are expected to continue and may significantly affect the Company’s business.

The Company continues to critically review its liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 pandemic.

Based on the Company’s cash and cash equivalents balance, available debt facilities, current business plan and revenue prospects, the Company believes that it will have sufficient cash resources and anticipated cash flows to fund its operations for at least the next 12 months.

However, the Company is unable to predict with certainty the impact of the COVID-19 pandemic, including its effect on global supply chain and logistics, will have on its ability to maintain compliance with the debt covenants contained in the credit agreement related to its Credit Facilities (as such terms are defined in Note 10 below), including financial covenants regarding the consolidated fixed charge coverage ratio and consolidated senior net leverage ratio.

The Company was in compliance with such covenants at June 30, 2022.

Failure to meet the covenant requirements in the future could cause the Company to be in default and the maturity of the related debt could be accelerated and become immediately payable.

This may require the Company to obtain waivers or amendments to the credit agreement in order to maintain compliance and there can be no certainty that any such waiver or amendment will be available, or what the cost of such waiver or amendment, if obtained, would be.

If the Company is unable to obtain necessary waivers or amendment and the debt under such credit facility is accelerated, the Company would be required to obtain replacement financing at prevailing market rates, which may not be favorable to the Company.

There is no guarantee that the Company would be able to satisfy its obligations if any of its indebtedness is accelerated .

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic.

Key estimates and assumptions made by the Company relate to revenue recognition and the assessment of stand-alone selling price (“SSP”), assessment of recoverability of goodwill, valuation of the Company's equity method investment in the JV, valuation of inventories, annual performance related bonuses, allowance for credit losses and loss contingencies.

Actual results could differ materially from those estimates.

Foreign Currency

The Company’s international subsidiaries use their local currencies as their functional currencies.

For those subsidiaries, assets and liabilities are translated at exchange rates in effect at the balance sheet date and income and expense accounts at the average exchange rate.

Resulting translation adjustments are excluded from the determination of net income (loss) and are recorded in accumulated other comprehensive loss as a separate component of stockholders’

Net foreign currency exchange transaction gains or losses are included as a component of other expense, net, in the Company’s consolidated statements of operations and comprehensive income (loss).

Fair Value Measurements

The carrying values of the Company’s financial instruments including cash equivalents, restricted cash, accounts receivable and accounts payable are approximately equal to their respective fair values due to the relatively short‑term nature of these instruments.

Also refer to Note 8, Fair Value Measurements, for further details.

Cash and Cash Equivalents

Working capital

The Company considers currency on hand, demand deposits, time deposits, and all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Cash and cash equivalents are held in various financial institutions in the United States and internationally.

Concentration of Credit Risk and Other Risks and Uncertainties

The Company’s cash and cash equivalents are mainly deposited with several major financial institutions.

At times, deposits in these institutions exceed the amount of insurance provided on such deposits.

The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant risk on these balances.

The Company ha d one customer t hat represented 10 % or more of total net revenue for the year ended June 30, 2022 and one and no customer that represented 10 % or more of total net revenue for the years ended June 30, 2021 and 2020, respectively.

The Company had two customers as of June 30, 2022 and two customers as of June 30, 2021, respectively that each accounted for more than 10 % of accounts receivable, net.

The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses.

Accounts receivable are deemed past due in accordance with the contractual terms of the agreement.

Accounts are charged against the allowance for credit losses once collection efforts are unsuccessful.

Historically, such losses have been within management’s expectations.

Single‑source suppliers presently provide the Company with several components.

In most cases, if a supplier was unable to deliver these components, the Company believes that it would be able to find other sources for these components subject to any regulatory qualifications, if required.

Restricted Cash

Restricted cash primarily consists of cash that is temporarily held in bank accounts which are under the control of the lender to the New Credit Facility, certificates of deposit held as guarantees in connection with customer contracts and corporate leases as well as funds held as guarantees for Value‑Added Tax (VAT) obligations in a foreign jurisdiction.

Inventories are stated at the lower of cost (on a first‑in, first‑out basis) or net realizable value.

Excess and obsolete inventories are written down based on historical sales and forecasted demand, as judged by management.

Revenue Recognition

The Company’s revenue consists of product revenue resulting from the sale of systems, system upgrades and service revenue.

The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and its customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable.

The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any discounts and taxes collected from customers that are remitted to government authorities.

The Company’s revenue is primarily derived from sales of CyberKnife and TomoTherapy platforms and services, which include post-contract customer support (“PCS”), installation services, training and other professional services.

The majority of the Company's revenue arrangements consist of multiple performance obligations, which can include system, upgrades, installation, training, services, construction, and consumables.

For bundled arrangements, the Company accounts for individual products and services separately if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

The Company’s products are generally sold without a right of return, and the Company’s contracts generally provide a fixed transaction price.

The Company may offer incentives in the form of discounts, including volume system discounts, which are included in the contract and used to calculate the final fixed price of the arrangement.

These discounts may pertain to all performance obligations in a specific contract or may be allocated to a specific performance obligation.

The Company reviews payment terms extending beyond one year.

If it is determined that a material financing component exists, we recognized as interest income over time.

The Company applies the practical expedient to not adjust for a significant financing component if the gap between payment and delivery was expected, at the contract inception, to be less than one year.

The Company offers customers the opportunity to trade in their older systems for a discount off the purchase of a new system.

The Company generally does not provide specific trade-in prices or upgrade rights at the time of purchase of the original system.

Trade-in or upgrade transactions are based on the then fair value of the system and are separately negotiated taking into consideration circumstances existing at the time of the trade-in or upgrade.

Accordingly, implied trade-ins and upgrades discounts are not considered separate performance obligations in system sales agreements.

When systems are traded in, historically, the Company was able to recondition (re-new) the traded-in systems and resell them.

In such transactions, the Company would estimate the stand-alone selling price of the traded-in system and include such amount as additional transaction price in the new bundled system sale.

During fiscal year 2020, however, demand for reconditioned systems decreased, and no fair value has been assigned to any of the systems that were traded-in during fiscal year 2021 and 2022.

These trade-in systems may be used for spare parts harvesting in certain cases.

Such spare parts generally require reconditioning.

The SSP of performance obligations is determined based on observable prices at which the Company separately sells the products and services.

If the SSP is not directly observable, then the Company will estimate the SSP considering market conditions, entity-specific factors, and information about the customer or class of customer that is reasonably available.

The contract consideration allocation is based on the SSP at contract inception.

The consideration (net of any discounts) is allocated among separate products and services in a bundle based on their relative SSPs.

Contract modifications typically add additional goods or services or change pricing.

For such modifications, the most recent SSP is used for reallocation to the remaining performance obligations.

The Company recognizes revenue for certain performance obligations at the point in time when control is transferred, such as delivery of products and upgrades.

Service revenue is recognized over the term of the service period as the customer benefits from the services throughout the service period.

Revenue related to services that are not part of a service contract and performed on a time-and-materials basis are recognized when performed.

Service contracts recognized over time comprise a single stand-ready performance obligation satisfied over time as our customers simultaneously receive and consume benefits from the Company's performance.

This performance obligation constitutes a series of services that are substantially the same and provided over time using the same measure of progress.

Revenues derived from these arrangements are recognized over time using an output method based upon the passage of time as this provides a faithful depiction of the pattern of transfer of control.

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer when the Company expects to generate future economic benefits from the related revenue-generating contracts.

The Company capitalizes incremental contract acquisition costs, and amortizes such costs over a five year period, the period which the Company expects to benefit, based on historical service renewal rates, and expectations of future customer renewals.

Most of the Company’s contract costs are associated with its internal sales force compensation program and a portion of its employee bonus program.

The Company capitalizes and amortizes the incremental costs of obtaining a contract, primarily related to certain bonuses and sales commissions.

The capitalized bonuses and sales commissions are amortized over a period of five years commencing upon the initial transfer of control of the system to the customer.

The pattern of amortization is commensurate with the pattern of transfer of control of the performance obligations to the customer.

The amortization of these contract assets is included in cost of sales, research and development, sales and marketing, and general and administrative expenses based on department headcount allocations in the consolidated statements of operations.

The Company elected to use the practical expedient and expense as incurred commissions related to service renewals and upgrades because the amortization period be one year or less.

The Company invoices its customers based on the billing schedules in its sales arrangements.

Payment terms vary from 30 to 90 days, or longer, from the date of invoice.

Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative standalone selling price of the related performance obligations satisfied and the contractual billing terms.

Deferred revenue for periods presented primarily relates to service contracts where the service fees are billed up-front, generally quarterly or annually, prior to services being performed.

The associated deferred revenue is generally recognized over the term of the service period.

The Company did not have any significant impairment losses on its contract assets for any period presented.

Deferred Revenue

Deferred revenue primarily consists of unfulfilled obligations from open contracts for which performance has already started including short-shipped items, deferred warranty, training, maintenance services and other unperformed or incomplete performance obligations.

Service contracts outside of the warranty period, for maintenance services, in general, are considered month-to-month contracts.

Deferred revenue includes deferred warranty expected to be recognized over the remaining warranty period for system already installed.

Customer Advances

Customer advances represent payments made by customers in advance of product shipment.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight‑line method over the estimated useful lives of the related assets.

Leasehold improvements are depreciated on a straight‑line basis over the remaining term of the lease or the estimated useful life of the asset, whichever is shorter.

Machinery and equipment are depreciated over five years .

Furniture and fixtures are depreciated over four years .

Computer and office equipment and computer software are depreciated over three years .

Repairs and maintenance costs, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred.

Software Capitalization Costs

Costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized.

No costs associated with the development of software have been capitalized as the Company believes its current software development process is essentially completed concurrent with the establishment of technological feasibility.

Impairment of Long‑Lived Assets

The Company reviews long‑lived assets, including intangible assets, equity method investment in the JV, property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable using pretax undiscounted cash flows.

Impairment, if any, is measured as the amount by which the carrying value of a long‑lived asset exceeds its fair value.

Goodwill is not amortized, but is evaluated for impairment on an annual basis and when impairment indicators are present.

The Company has assessed that it has one operating segment and one reporting unit, and the consolidated net assets, including existing goodwill and other intangible assets, are considered to be the carrying value of the reporting unit.

The Company estimates the fair value of the reporting unit based on the Company’s closing stock price on the trading day closest to the annual review date multiplied by the outstanding shares on that date.

If the carrying value of the reporting unit is in excess of its fair value, an impairment may exist, and the Company must perform the second step of the analysis, in which the estimated fair value of the goodwill is compared to its carrying value to determine the impairment charge, if any.

If the estimated fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired and no further analysis is required.

The Company adopted the new accounting guidance that simplifies the testing for goodwill impairment in the first quarter of fiscal 2019.

There was no impairment of goodwill identified in the fiscal years ended June 30, 2022, 2021 and 2020 .

Shipping and Handling

The Company’s billings for shipping and handling for product shipments to customers are included in cost of products.

Shipping and handling costs incurred for inventory purchases are capitalized in inventory and expensed in cost of products.

Advertising Expenses

The Company expenses the costs of advertising and promoting its products and services as incurred.

Advertising expenses were approximatel y $ 0.2 million, $ 0.2 million and $ 0.2 million for the years ended June 30, 2022, 2021 and 2020 , respectively, and are included in selling and marketing expense in the consolidated statements of operations.

Research and Development Costs

Costs related to research, design and development of products are charged to research and development expense as incurred.

These costs include direct compensation, benefits, and other headcount related costs for research and development personnel;

costs for materials used in research and development activities;

costs for outside services and allocated portions of facilities and other corporate costs.

The Company has entered into research and clinical study arrangements with selected hospitals, cancer treatment centers, academic institutions and research institutions worldwide.

These agreements support the Company’s internal research and development capabilities.

Share‑Based Compensation

The Company issues share‑based compensation awards to employees and directors in the form of stock options, restricted stock units (RSUs), performance units (PSUs), market stock units (MSUs) and employee stock purchase plan (ESPP) awards (collectively, awards).

The exercise price of stock options granted is equal to the fair market value of the Company’s common stock on the date of grant.

The Company measures and recognizes compensation expense for all stock‑based awards based on the awards’

Share‑based compensation for RSUs and PSUs is measured based on the value of the Company’s common stock on the grant date.

The Company uses the Monte Carlo simulation model to estimate the grant date fair value of MSUs.

Share‑based compensation for employee stock options and ESPP awards are measured on the date of grant using a Black‑Scholes option pricing model.

Awards vest either on a vesting schedule or in a lump sum.

The Company determines the fair value of each award as a single award and recognizes the expense on a straight‑line basis over the service period of the award, which is generally the vesting period.

Stock options expire ten years from the date of grant.

Share‑based compensation expense for stock options, RSUs, PSUs and the ESPP awards is based on awards ultimately expected to vest, and the expense is recorded net of estimated forfeitures.

With respect to Performance Stock Units that are based on our corporate financial performance targets, or PSUs, the number of PSUs that will ultimately be awarded is contingent on the Company’s actual level of achievement compared to the corporate financial target performance targets.

The Company recognizes expense for MSUs net of estimated forfeitures and does not adjust the expense for subsequent changes in the expected outcome of the market‑based vesting conditions.

Loss Contingencies

The Company is involved in various lawsuits, claims and proceedings that arise in the ordinary course of business.

The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated.

Significant judgment is required to determine both probability and the estimated amount.

The Company reviews these provisions quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

Net Income (Loss) Per Common Share

Basic and diluted net income (loss) per share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of common shares outstanding during the year.

Potentially dilutive outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for loss periods presented because including them would have been antidilutive.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share attributable to stockholders follows (in thousands):

Years Ended June 30,

Net income (loss) used to compute basic and diluted loss

Weighted average shares used to compute basic income (loss)

Weighted average shares used to compute diluted income (loss)

The potentially dilutive shares of the Company’s common stock resulting from the assumed exercise of outstanding stock options, the vesting of Restricted Stock Units (RSU), Market Stock Units (MSU) and Performance Stock Units (PSU), and the purchase of shares under the Employee Stock Purchase Program (ESPP), as determined under the treasury stock method, are excluded from the computation of diluted net income (loss) per share when their effect would have been anti‑dilutive.

Additionally, the outstanding 3.75 % Convertible Notes due July 2022 (the “

3.75 % Convertible Notes due 2022”) and the 3.75 % Convertible Notes due June 2026 (the “

3.75 % Convertible Notes due 2026”

and together with the 3.75 % Convertible Notes due 2022, the “Notes”) are included in the calculation of diluted net income per share only if their inclusion is dilutive for periods during which the notes were outstanding.

The following table sets forth all potentially dilutive securities excluded from the computation in the table above when their effect would have been anti‑dilutive (in thousands):

As of June 30,

Stock options

RSUs, PSUs and MSUs

Outstanding Convertible Notes—Diluted Share Impact

Due to the optional cash settlement feature and management’s intent to settle the principal amount thereof in cash, the shares of common stock issuable upon conversion of the outstanding principal amount of the 3.75 % Convertible Notes due 2022 and 3.75 % Convertible Notes due 2026 outstanding as of June 30, 2022, totaling approximately 0.5 million s hares and 17.1 million shares of the Company’s common stock, respectively, as of June 30, 2022, the effect of adding the shares were antidilutive and were not included in the basic and diluted net loss per common share table above.

The shares of common stock issuable upon conversion of the outstanding principal amount of the 3.75 % Convertible Notes due 2022 outstanding as of June 30, 2021 and 2020, totaled approximately 0.5 million and 14.9 million shares, respectively, of the Company’s common stock and the effect of adding the shares were antidilutive and were not included in the basic and diluted net income (loss) per common share table above.

The Company is the lessee in a lease contract when the Company obtains the right to use the asset.

Operating leases are included in the line items right-of-use asset, lease obligation, current, and lease obligation, long-term in the consolidated balance sheet.

Right-of-use asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated statements of operations.

The Company determines the lease term by agreement with lessor, including lease renewal and extension.

As the leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

Equity Method Investment

In 2020, the Company adopted a new accounting policy related to equity method investments in connection with its equity investment in CNNC Accuray (Tianjin) Medical Technology Co.

Ltd., the Company’s joint venture in China (the “JV”).

The equity method investment that the Company holds in the JV for which the Company has the ability to exercise significant influence over the JV but lacks a controlling financial interest in the JV.

The equity method investment is measured at cost and adjusted for impairment, if any, for the Company’s share of the JV's income or loss and intra-entity profits.

The Company recognizes its proportionate share of income or loss from the JV on a one-quarter lag due to the timing of the availability of the JV’s financial records.

Profit earned by the Company from the JV is eliminated through cost of goods sold until it is realized;

such profits would generally be considered realized when the inventory has been sold through to third parties .

Equity method goodwill is not amortized, but is evaluated for impairment on an annual basis and when impairment indicators are present.

Our impairment analysis considers qualitative and quantitative factors that may have a significant impact on the JV's fair value.

Qualitative factors include the investee's financial condition and business outlook, industry and sector performance, operational and financing cash flow activities, and other relevant factors affecting the JV.

When indicators of impairment exist, we prepare quantitative assessments of the fair value of our non-marketable equity investments, which require judgment and the use of estimates, including discount rates, investee revenue and costs, and comparable market data, among others.

The Company is required to estimate its income taxes in each of the tax jurisdictions in which it operates prior to the completion and filing of tax returns for such periods.

This process involves estimating actual current tax expense together with assessing temporary differences in the treatment of items for tax purposes versus financial accounting purposes that may create net deferred tax assets and liabilities.

The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax bases of the Company’s assets and liabilities and their financial statement reported amounts.

In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses, research and development credit carryforwards and other deferred tax assets.

The Company records a valuation allowance to reduce its deferred tax assets to the amount the Company believes is more likely than not to be realized.

Because of the uncertainty of the realization of the deferred tax assets, the Company has recorded a full valuation allowance against its domestic and certain foreign net deferred tax assets.

The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations.

Management regularly assesses the Company’s tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which the Company does business.

The Company anticipates there will be no material changes in uncertain tax positions in the next 12 months.

Accumulated Other Comprehensive Income (Loss)

The components of comprehensive income (loss) consist of net income (loss), changes in foreign currency exchange rate translation and net changes related to a defined benefit pension plan.

The changes in foreign currency exchange rate translation and net changes related to the defined benefit pension plan are excluded from earnings and reported as a component of stockholders’

The foreign currency translation adjustment results from those subsidiaries not using the United States dollar as their functional currency since the majority of their economic activities are primarily denominated in their applicable local currency.

Accordingly, all assets and liabilities related to these operations are translated at the current exchange rates at the end of each period, whereas revenues and expenses are translated at average exchange rates in effect during the period.

The resulting cumulative translation adjustments are recorded directly to the accumulated other comprehensive loss account in stockholders’

Recent Accounting Pronouncements

Accounting Pronouncement Recently Adopted

In August 2020, the FASB issued ASU No.

2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

Under ASU No.

2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital.

Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives.

The new guidance also requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share.

The Company adopted this standard effective July 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted.

The Company applied the provisions of this guidance to our 3.75 % convertible senior notes due June 2026 (“2026 Notes”).

Upon adoption, the Company recorded an increase to Accumulated deficit of $ 0.8 million, a decrease to Additional paid-in capital of $ 25.6 million and an increase to Debt of $ 24.8 million.

There was no impact to diluted loss per share as the inclusion of potential shares of common stock related to the 2026 Notes would have been anti-dilutive.

For further information, see Note 10, Debt.

Accounting Pronouncements Not Yet Effective

In March 2020, the FASB issued an update (ASU 2020-04) establishing Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform.

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

The Company’s New Term Loan Facility and

New Revolving Credit Facility applies Eurodollar rate LIBOR to the variable component of the interest rate, if a Benchmark transition event, or an early opt-in election, as applicable occurred a transition to the use of the Secured Overnight Financing Rate ("SOFR") to replace such rate.

This accounting standard update was effective upon issuance and may be applied prospectively through December 31, 2022.

The Company is currently evaluating the impact of the guidance and our options related to the practical expedients.

In April 2021, the FASB issued ASU 2021-04, which included Topic 260 “Earnings Per Share”.

This guidance clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options due to a lack of explicit guidance in the FASB Codification.

The ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting ASU 2021-04 on its consolidated financial statements.

In October 2021, the FASB issued ASU No.

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The amendment addresses how to account for contract assets recognized under Topic 606 in a business combination.

This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022.

The Company is currently evaluating the impact ASU 2021-08 will have on its financial statements.

Contract Balances

The timing of revenue recognition, billings, and cash collections results in trade receivables, unbilled receivables, and deferred revenues on the consolidated balance sheets.

The Company may offer longer or extended payments of more than one year for qualified customers in some circumstances.

At times, revenue recognition occurs before the billing, resulting in an unbilled receivable, which represents a contract asset.

The contract asset is a component of accounts receivable and other assets for the current and non-current portions, respectively.

When the Company receives advances or deposits from customers before revenue is recognized, this results in a contract liability.

It can take up to two and half years from the time of order to revenue recognition due to the Company’s long sales cycle.

Changes in the contract assets and contract liabilities are as follows:

(Dollars in thousands)

Unbilled accounts receivable –

Interest receivable –

Long-term accounts receivable (3)

Interest receivable –

non-current (3)

Customer advances

Deferred revenue –

(1) Included in accounts receivable on consolidated balance sheets

(2) Included in prepaid expenses and other current assets on consolidated balance sheets

(3) Included in other assets on consolidated balance sheets

During the years ended June 30, 2022 and June 30, 2021, the Company recognized revenues of $ 81.2 million and $ 107.3 million, respectively, which were included in the deferred revenue balances at June 30, 2021 and June 30, 2020, respectively.

Remaining Performance Obligations

Remaining performance obligations represent deferred revenue from open contracts for which performance has already started and the transaction price from executed contracts for which performance has not yet started.

Service contracts in general are considered month-to-month contracts.

As of June 30, 202 2, total remaining performance obligations amounted to $ 1,104.4 million.

Of this total amount, $ 69.1 million related to long-term warranty and service, such as non-cancellable post contract services and system warranty, which is expected to be recognized over the remaining service period and warranty period for systems that have been delivered, respectively.

The following table represents the Company's remaining performance obligations related to long-term warranty and non-cancellable post warranty services as of June 30, 2022 and the estimated revenue expected to be recognized (the time bands reflect management’s best estimate of when the Company will transfer control to the customer and may change based on timing of shipment, readiness of customers’

facilities for installation, installation requirements, and availability of products).

The Company has elected the practical expedient to not disclose the unsatisfied performance obligations of contracts with an original expected duration of one year or less.

Fiscal years of revenue recognition

(Dollars in thousands)

Long-term warranty and service

For the remaining $ 1,035.3 million of performance obligations (open systems sales, upgrades, training and other miscellaneous items), the Company estimates 25 % to 28 % will be recognized in the next 12 months, and the remaining portion will be recognized thereafter.

The Company’s historical experience indicates that some of its customers will cancel or renegotiate contracts as economic conditions change or when product offerings change during the long sales cycle.

The Company anticipates a portion of its open contracts may never result in revenue recognition primarily due to the long sales cycle and factors outside of its control including changes in customers' needs or financial condition, changes in government or health insurance reimbursement policies or changes to regulatory requirements.

Based on historical experience and management's best estimate, approximately 16 % of the Company’s $ 983.2 million open system sales contracts may never result in revenue.

Capitalized Contract Costs

As of June 30, 2022 and 2021, the balance of capitalized costs to obtain a contract was $ 11.4 million and $ 8.9 million, respectively.

The Company has classified the capitalized costs to obtain a contract as a component of prepaid expenses and other current assets and other assets with respect to the current and non-current portions of capitalized costs, respectively, on the consolidated balance sheets.

The Company incurred a $ 0.6 million and $ 0.6 million impairment loss for the years ended June 30, 2022 and 2021, respectively.

During the years ended June 30,

2022 and 2021 the Company recognized $ 3.3 million and $ 2.8 million, respectively, in expense related to the amortization of the capitalized contract costs.

Supplemental Financial Information

Consolidated Balance Sheet

Accounts receivable, net

Accounts receivable, net consisted of the following (in thousands):

Accounts receivable

Unbilled fees and services

Allowance for credit losses

Accounts receivable, net

The Company received payme nt or had credits of $ 0.3 million, added $ 0.6 million and wrote off $ 0.3 million from the allowance for credit losses in fiscal 2022.

The Company received payment or had credits of $ 0.8 million, added $ 0.7 million and wrote off $ 0.2 million from the allowance for credit losses in fiscal 2021.

Financing receivables

A financing receivable is a contractual right to receive money, on demand or on fixed or determinable dates, that is recognized as an asset in the Company’s balance sheet.

The Company’s financing receivables, with contractual maturities of more than one year, totaled $ 2.8 million and $ 3.4 million at June 30, 2022 and 2021, respectively, and are included in Other Assets in the consolidated balance sheets.

The Company evaluates the credit quality of a customer at contract inception and monitors credit quality over the term of the underlying transactions.

The Company performs a credit analysis for all new customers and reviews payment history, current order backlog, financial performance of the customers and other variables that augment or mitigate the inherent credit risk of a particular transaction.

Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the contract term and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits.

The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near‑term risk of non‑payment.

The Company performed an assessment of the allowance for credit losses related to its financing receivables.

Based upon such assessment, the Company recorded adjustments of zero and $ 3.4 million to the allowance for credit losses related to such financing receivables during the years ended June 30, 2022 and 2021, respectively.

A summary of the Company’s financing receivables is presented as follows (in thousands):

June 30, 2022

June 30, 2021

Financing receivable

Allowance for credit losses

The Company added and wrote off no amount f rom the allowance for credit losses in fiscal year 2022.

The Company added $ 0.2 million and wrote off $ 3.6 million in fiscal year 2021.

Actual cash collections may differ from the contracted maturities due to early customer buyouts, refinancing, or defaults.

Inventories consisted of the following (in thousands):

Raw materials

Work-in-process

Finished goods

Property and Equipment, net

Property and equipment consisted of the following (in thousands):

Furniture and fixtures

Computer and office equipment

Leasehold improvements

Machinery and equipment

Construction in progress

Accumulated depreciation

Property and equipment, net

Depreciation and amortization expense related to property and equipment for the years ended June 30, 2022, 2021 and 2020 was $ 5.4 million, $ 6.2 million and $ 7.3 million, respectively.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component (in thousands):

Balance at June 30, 2020

Other comprehensive loss

Balance at June 30, 2021

Other comprehensive loss

Balance at June 30, 2022

Consolidated Statements of Operations

Other expense, net consisted of the following (in thousands):

Years Ended June 30,

(in thousands)

Interest expense

Foreign currency transaction loss

Gain on contribution to joint venture

Loss on Debt Extinguishment

Other expense, net

Total other expense, net

The Company has operating leases for corporate offices and warehouse facilities worldwide.

Additionally, the Company leases cars, copy machines and laptops that are considered operating leases.

Some of the Company's leases are non-cancellable operating lease agreements with various expiration dates through September 2026.

Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments.

Operating lease costs for the twelve mon ths ended June 30, 2022 and 2021 were $ 9.2 million and $ 9.1 million, respectively, not including short-term operating lease costs for the twelve months ended June 30, 2022 and 2021 of $ 0.4 million and $ 0.2 million, respectively.

For the twelve months ended June 30, 2022 and 2021, cash paid for amounts included in the measurement of operating lease liabilities was approximately $ 9.8 million and $ 9.7 million, respectively.

Operating lease liabilities arising from obtaining operating right-of-use assets totaled $ 3.2 million and $ 1.1 million, respectively for the years ended June 30, 2022 and 20 21.

Operating lease right-of-use assets and operating lease obligation are represented in the table below (in thousands):

Beginning balance operating lease right-of-use asset

Lease asset added

Amortization for the year

Ending balance operating lease right-of-use asset

Beginning balance operating lease obligation

Lease liability added

Repayment and interest accretion

Ending balance operating lease obligation

Current portion of operating lease obligation

Noncurrent portion of operating lease obligation

Maturities of operating lease liabilities as of June 30, 2022 are presented in the table below (in thousands) :

Year Ending June 30,

Total operating lease payments

imputed interest

Present value of operating lease liabilities

The weighted average remaining lease term for the Company’s operating leases was 2.59 years and the weighted average discount rate was 6.07 % as of Jun e 30, 2022.

Goodwill and Purchased Intangible Assets

Goodwill as of June 30, 2022 and 2021 and changes in the carrying amount of goodwill for the respective periods are as follows (in thousands):

As of June 30,

Balance at the beginning of the period

Currency translation adjustment

Balance at the end of the period

In fiscal year 2022, the Company performed its annual goodwill impairment test and determined that there was no impairment to goodwill.

The Company will continue to monitor its recorded goodwill for indicators of impairment.

Purchased Intangible Assets

The Company’s intangible assets associated with purchased patent license are as follows (in thousands):

As of June 30, 2022

As of June 30, 2021

Patent license

During fiscal year 2017, the Company purchased a patent license with a useful life of seven years .

During the fiscal year 2020, the Company purchased a patent license for $ 0.2 million with a useful life of two years .

The Company did not identify any triggering events that would indicate potential impairment of its definite‑lived intangible and long‑lived assets as of June 30, 2022 and 2021.

Amortization expense related to purchased intangible assets was $ 0.1 million, $ 0.2 million and $ 0.2 million for the years ended June 30, 2022, 2021 and 2020, respectively.

The estimated future amortization expense of purchased intangible assets as of June 30, 2022 is as follows (in thousands):

Year Ending June 30,

Derivative Financial Instruments

The Company utilizes foreign currency forward contracts with reputable financial institutions to manage its exposure of fluctuations in foreign currency exchange rates on certain intercompany balances and foreign currency denominated cash, customer receivables and liabilities.

The Company does not use derivative financial instruments for speculative or trading purposes.

These forward contracts are not designated as hedging instruments for accounting purposes.

Principal hedged currencies include the Euro, Japanese Yen, Swiss Franc, and U.S.

The periods of these forward contracts range up to approximately three months and the notional amounts are intended to be consistent with changes in the underlying exposures.

The Company intends to exchange foreign currencies for U.S.

Dollars at maturity.

The Company enters into forward currency exchange contracts to hedge its overseas operating expenses and other liabilities when deemed appropriate.

As of June 30, 2022 and 2021, the Company had the following outstanding forward currency exchange contracts (in notional amount):

As of June 30,

(In thousands and U.S.

Canadian Dollar

British Pound

The Company entered into the foreign exchange forward contracts on June 30, 2022 and June 30, 2021, respectively, and therefore, there was no amount recorded on the balance sheets.

The following table provides information about gain (loss) associated with the Company’s derivative financial instruments (in thousands):

Years ended June 30,

Foreign currency exchange gain (loss) on forward contracts

Foreign currency transactions gain (loss)

Fair Value Measurements

Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as follows:

Level 1—

Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2—

Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets in non-active markets;

Inputs other than quoted prices that are observable for the asset or liability;

Inputs that are derived principally from or corroborated by other observable market data.

Level 3—

Unobservable inputs that cannot be corroborated by observable market data and require the use of significant management judgment.

These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Assets and Liabilities That Are Measured at Fair Value

At June 30, 2022, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of approximately $ 68.3 million.

The fair value of the forward contract based upon the June 30, 2022 exchange rate was approximately $ 68.3 million, which it considers to be a Level 2 fai r value measurement.

At June 30, 2021, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of approximately $ 54.2 million.

The fair value of the forward contract based upon the June 30, 2021 exchange rate was approximately $ 54.2 million, which it considers to be a Level 2 fair value measurement.

The Company’s debt is measured on a recurring basis using Level 2 inputs based upon observable inputs of the Company’s convertible debt.

The Revolving Credit Facility (as defined below) and the Term Loan (as defined below) reflects the bank quoted market, which the Company considers to be a Level 2 fair value measurement.

The Company believes that the carrying value of these financial instruments approximate its estimated fair value based on the effective interest rate compared to the current market rate available to the Company and analyzed at quarter-end.

The following table summarizes the carrying value and estimated fair value of the Term Loan, the Revolving Credit Facility, the 3.75 % Convertible Notes due 2022 and the 3.75 % Convertible Notes due 2026 (in thousands):

June 30, 2022

June 30, 2021

3.75 % Convertible Notes Due 2022

3.75 % Convertible Notes Due 2026

Term Loan Facility

Revolving Credit Facility

Commitments and Contingencies

Long‑term Debt Commitments

The Company is required to make semi‑annual interest payments on the 3.75 % Convertible Notes due 2022 and 3.75 % Convertible Notes due 2026, and monthly interest payments on the New Revolving Credit Facility and New Term Loan Facility.

See Note 10, Debt , for details.

Future minimum long‑term principal and interest on the Notes and New Credit Facilities (as defined below), including short-term portion, as of June 30, 2022 are as follows (in thousands):

Year Ending June 30,

(1) These amounts represent principal and interest cash payments over the contractual life of the debt obligations, including anticipated interest payments that are not recorded on the Company’s consolidated balance sheet.

Any conversion, premium, redemption or purchase of the Notes that would impact cash payments noted in the preceding table.

Purchase Commitments

The Company’s purchase commitments and obligations include all open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers, for which the Company has not received the goods or services and acquisition and licensing of intellectual property.

A majority of these purchase obligations are due within a year.

Although open purchase orders are considered enforceable and legally binding, the terms generally allows the Company the option to cancel, reschedule, and adjust its requirements based on the Company’s business needs prior to the delivery of goods or performance of services, and hence, these purchase orders have not been included in the table above.

Indemnities and Commitments

The Company enters into standard indemnification agreements with its landlords and all superior mortgagees and their respective directors, officers’

agents, and employees in the ordinary course of business.

Pursuant to these agreements, the Company will indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the landlords, in connection with any loss, accident, injury, or damage by any third‑party with respect to the leased facilities.

The term of these indemnification agreements is from the commencement of the lease agreements until termination of the lease agreements.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited;

however, historically the Company has not incurred claims or costs to defend lawsuits or settle claims related to these indemnification agreements.

The Company has not recorded any liability associated with its indemnification agreements as it is not aware of any pending or threatened actions that represent probable losses as of June 30, 2022.

As of June 30, 2022 and June 30, 2021, the Company had various bank guarantees totaling approximately $ 1.2 million and $ 1.2 million, respectively, related to a bidding process with customers.

Royalty Agreement

The Company enters into software license agreements with third parties that may require royalty payments for each license used.

In connection with such agreements, the Company recorded royalty costs o f $ 1.9 million, $ 1.9 million and $ 2.5 million for the years ended June 30, 2022, 2021 and 2020 , respectively, which were recorded in cost of revenue or deferred cost of revenue.

The Company had approximately $ 2.4 million and $ 2.3 million accrued liabilities at June 30, 2022 and 2021, respectively, related to this agreement.

Software License Indemnity

Under the terms of the Company’s software license agreements with its customers, the Company agrees that in the event the software sold infringes upon any patent, copyright, trademark, or any other proprietary right of a

third‑party, it will indemnify its customer licensees against any loss, expense, or liability from any damages that may be awarded against its customer.

The Company includes this infringement indemnification in all of its software license agreements and selected managed services arrangements.

In the event the customer cannot use the software or service due to infringement and the Company cannot obtain the right to use, replace or modify the license or service in a commercially feasible manner so that it no longer infringes, then the Company may terminate the license and provide the customer a refund of the fees paid by the customer for the infringing license or service.

The Company has not recorded any liability associated with this indemnification, as it is not aware of any pending or threatened actions that represent probable losses as of June 30, 2022.

From time to time, the Company is involved in legal proceedings arising in the ordinary course of its business.

The Company records a provision for a loss when it believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated.

Currently, management believes the Company does not have any probable and reasonably estimable losses related to any current legal proceedings and claims.

Although occasional adverse decisions or settlements may occur, management does not believe that an adverse determination with respect to any of these claims would individually or in the aggregate materially and adversely affect the Company’s financial condition or operating results.

Litigation is inherently unpredictable and is subject to significant uncertainties, some of which are beyond the Company’s control.

Should any of these estimates and assumptions change or prove to have been incorrect, the Company could incur significant charges related to legal matters that could have a material impact on its results of operations, financial position, and cash flows.

3.75% Convertible Senior Notes due July 2022

In August 2017, the Company issued $ 85.0 million aggregate principal amount of its 3.75 % Convertible Senior Notes due 2022 (the “

3.75 % Convertible Notes due 2022”) under an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee.

$ 53.0 million aggregate principal amount of the 3.75 % Convertible Notes due 2022 were issued to certain holders of the Company’s then outstanding 3.50 % Convertible Notes due 2018 and 3.50 % Series A Convertible Notes due 2018 (together, the “Prior Existing Notes”) in exchange for approximately $ 47.0 million aggregate principal amount of the Prior Existing Notes and $ 32.0 million aggregate principal amount of the 3.75 % Convertible Notes due 2022 were issued to certain other qualified new investors for cash.

The net proceeds of the cash issuance were used to repurchase approximately $ 28.0 million of Prior Existing Notes.

Holders of the 3.75 % Convertible Notes due 2022 did not convert their notes at any time and was repaid in cash subsequent to June 30, 2022.

Upon conversion, the Company will have the right to pay cash, or deliver shares of common stock of the Company or a combination thereof, at the Company’s election.

The initial conversion rate is 174.8252 shares of the Company’s common stock per $ 1,000 principal amount (which represents an initial conversion price of approximately $ 5.72 per share of the Company’s common stock).

The conversion rate, and thus the conversion price, is subject to adjustment as further described below.

Holders of the 3.75 % Convertible Notes due 2022 who convert their notes in connection with a “make-whole fundamental change,”

as defined in the indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate.

Additionally, in the event of a “fundamental change,”

as defined in the indenture, holders of the 3.75 % Convertible Notes due 2022 may require the Company to purchase all or a portion of their note at a fundamental change repurchase price equal to 100 % of the principal amount of the 3.75 % Convertible Notes due 2022, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

In May 2021, the Company exchanged approximately $ 82.1 million aggregate principal amount of 3.75 % Convertible Notes due 2022 for approximately $ 97.1 million aggregate principal amount of 3.75 % Convertible Notes due 2026 (as defined below).

As of June 30, 2022 and June 30, 2021, $ 2.9 million aggregate principal amount of 3.75 % Convertible Notes due 2022 remained outstanding.

The exchange was treated as extinguishment of debt.

The Company recorded a loss on the extinguishment of debt of $ 4.3 million, primarily comprised of the write-off of

deferred costs associated with the 3.75 % Convertible Notes due 2022.

The extinguishment of the equity component of $ 14.5 million was recognized as reduction to additional paid in capital.

The $ 14.5 million is the difference between the settlement consideration paid of $ 96.0 million and the fair value of the liability component of $ 81.5 million.

3.75% Convertible Senior Notes due July 2026

In May 2021, the Company issued $ 100.0 million aggregate principal amount of its 3.75 % Convertible Senior Notes due 2026 (the “

3.75 % Convertible Notes due 2026”) under an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee.

$ 97.1 million aggregate principal amount of the 3.75 % Convertible Notes due 2026 were issued to certain holders of the Company’s outstanding 3.75 % Convertible Notes due 2022 in exchange for approximately $ 82.1 million aggregate principal amount of 3.75 % Convertible Notes due 2022 and $ 2.9 million of 3.75 % Convertible Notes due 2026 were issued to certain other qualified new investors for cash (such transactions the “Exchange and Subscription Transactions”).

Holders of the 3.75 % Convertible Notes due 2026 may convert their notes at any time on or after March 6, 2026 until the close of the business day immediately preceding the maturity date.

Prior to June 6, 2026, holders of the 3.75 % Convertible Notes due 2026 may convert their notes only under certain circumstances.

Upon conversion, the Company will have the right to pay cash, or deliver shares of common stock of the Company or a combination thereof, at the Company’s election.

The initial conversion rate is 170.5611 shares of the Company’s common stock per $ 1,000 principal amount (which represents an initial conversion price of approximately $ 5.86 per share of the Company’s common stock).

The conversion rate, and thus the conversion price, is subject to adjustment as further described below.

Holders of the 3.75 % Convertible Notes due 2026 who convert their notes in connection with a “make-whole fundamental change,”

as defined in the indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate.

Additionally, in the event of a “fundamental change,”

as defined in the indenture, holders of the 3.75 % Convertible Notes due 2026 may require the Company to purchase all or a portion of their note at a fundamental change repurchase price equal to 100 % of the principal amount of the 3.75 % Convertible Notes due 2026, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

As of June 30, 2022 and June 30, 2021, $ 100.0 million aggregate principal amount of 3.75 % Convertible Notes due 2026 was outstanding.

The aggregate principal amount of $ 100.0 million, including $ 2.9 million which were issued to new qualified investors for cash in the 3.75 % Convertible Notes due 2026, was allocated between liability component of $ 74.1 million and equity component of $ 25.9 million recognized as addition paid in capital, reduced by $ 0.7 million of 3.75 % Convertible Notes due 2026 issuance cost allocated to additional paid in capital.

Upon adoption of ASU No.

2020-06 on July 1, 2021, the Company recorded an increase to Accumulated deficit of $ 0.8 million, a decrease to Additional paid-in capital of $ 25.6 million, an increase to Debt, current of $ 24.8 million.

There was no impact to diluted loss per share as the inclusion of potential shares of common stock related to the 3.75 % Convertible Notes due 2026 would have been anti-dilutive.

The Company reversed the separation of the debt and equity components and accounted for the 3.75 % Convertible Notes due 2026 wholly as debt.

The Company also reversed the amortization of the debt discount, with a cumulative adjustment to retained earnings on the adoption date.

Debt issuance costs related to the 3.75 % Convertible Notes due 2022 and the 3.75 % Convertible Notes due 2026 were comprised of discounts, issuance costs and third party costs of $ 25.6 million.

Prior to the adoption of ASU No.

2020-06, the Company allocated the total amount incurred to the liability and equity components of the 3.75 % Convertible Notes due 2022 and the 3.75 % Convertible Notes due 2026 based on their relative values.

Issuance costs attributable to the liability component were $ 0.8 million and were amortized to interest expense using the effective interest method.

Issuance costs attributable to the equity component were netted with the equity component in stockholders’

Upon adoption of ASU No.

2020-06 on July 1, 2021, the Company reversed the allocation of the issuance costs to the equity component and accounted for the entire amount as debt issuance cost that will be amortized as interest expense for each of the respective terms of the 3.75% Convertible Notes due 2022 and the 3.75% Convertible Notes due 2026, respectively, with a cumulative adjustment to retained earnings on the adoption date.

As of June 30, 2022, the if-converted value of the 3.75% Convertible Notes due 2022 and the 3.75% Convertible Notes due 2026 did not exceed the outstanding principal amount.

Prior Revolving Credit Facility

On June 14, 2017, the Company entered into a credit and security agreement with a lender (the “Prior Credit Agreement”).

The Prior Credit Agreement provided the Company with a revolving credit facility in the initial amount of $ 52.0 million (the “Prior Revolving Credit Facility”).

Availability for borrowings under the Prior Revolving Credit Facility was subject to a borrowing base that was calculated as a function of the value of the Company’s eligible accounts receivable and eligible inventory, and the Company was required to maintain a minimum drawn balance of at least 30 % of such availability.

Interest on the borrowings under the Prior Revolving Credit Facility was payable monthly in arrears at an annual interest rate of reserve-adjusted, 90-day LIBOR plus 4.50 % and had initial maturity date of June 14, 2021.

In December 2017, concurrently with the Prior Term Loan Agreement (as defined below), the Company entered into an amendment to the Credit Agreement (the “Prior Amendment”

and, collectively with the Prior Credit Agreement, the “Amended Prior Credit Agreement”).

The Prior Amendment reduced the maximum borrowings under the Prior Revolving Credit Facility to $ 32.0 million and extended the maturity date of the Prior Revolving Credit Facility to December 15, 2022.

In May 2019, the Company amended the Amended Prior Credit Agreement to, among other things, decrease the interest rate from 90-day LIBOR plus 4.50 % to 90-day LIBOR plus 3.50 % and extend the maturity date to May 30, 2024 and update the calculation of the deferred revolving loan origination fee such that it is based on the amount of time elapsed from the effective date of the May 2019 amendment.

The Company accounted for the amendment as a modification of existing debt and deferred an insignificant amount of offering costs on the consolidated balance sheet as of June 30, 2019.

The Amended Prior Credit Agreement was further amended in August 2019 to, among other things, revise or add financial covenants, including the fixed charge coverage ratio, minimum net revenue, minimum consolidated cash balance and minimum consolidated domestic cash balance tests.

Other significant terms remained unchanged.

The Company accounted for the amendment as a modification of existing debt and deferred an insignificant amount of offering costs on the consolidated balance sheet.

On May 6, 2021, the Company entered into an amendment to the Amended Prior Credit Agreement to amend the Prior Revolving Credit Facility to, among other things and subject to certain conditions, permit the Company to consummate the Exchange and Subscription Transactions and related agreements.

On May 14, 2021, the initial borrowings under the New Credit Agreement (as defined below), plus available cash on hand, were used to repay all outstanding obligations and terminate all commitments under the Amended Prior Credit Agreement.

The Prior Revolving Credit Facility was terminated on May 14, 2021.

The Company incurred a loss on the extinguishment of debt as a result of repaying all amounts outstanding on the Prior Revolving Credit Facility.

The loss on the extinguishment of debt of $ 1.4 million was primarily comprised of the write-off of deferred costs associated with the Prior Credit Facilities.

Prior Term Loan

In December 2017, the Company entered into a credit and security agreement with a lender (the “Prior Term Loan Agreement”).

The Prior Term Loan Agreement provided for an initial term loan of $ 40.0 million with an additional tranche of $ 20.0 million undrawn and available through December 31, 2018, if specified conditions were met (the “Prior Term Loan”).

In connection with the Prior Amendment, the Company used a portion of the net proceeds from the initial advance to repay a portion of the outstanding borrowings under the Prior Revolving Credit Facility.

Interest on the Prior Term Loan was payable monthly in arrears at an annual interest rate of 6.75 % plus 90-day LIBOR .

The Prior Term Loan Agreement would have matured December 15, 2022 and, if prepaid, had fees equal to 3 %, 2 %, and 1 % of the prepayment amount if such termination occurred within the first year, the second year, and the third year of funding, respectively.

The term of the loan was 60 months with interest only for the first 24 months followed by straight-line amortization of principal for the remaining months.

In addition, the Company paid an annual administrative fee of 0.25 % and a final payment of 4.0 % of the Prior Term Loan amount.

In December 2018, the Company drew an additional $ 5.0 million under the Prior Term Loan Agreement and in connection therewith entered into the second amendment to the Prior Term Loan Agreement (“Prior Amendment 2”)

which, among other things, (i) extended the term loan tranche 2 commitment termination date for the remaining $ 15.0 million unfunded commitment from December 31, 2018 to June 30, 2019 ;

(ii) provided that term loan tranche 2 may be drawn in two separate advances;

and (iii) updated the calculation of the prepayment fee such that it is based on the amount of time elapsed from the effective date of Prior Amendment 2.

In May 2019, the Company amended the Prior Term Loan Agreement to, among other things, increase the loan tranche 2 commitment by $ 0.5 million, extend the maturity date to May 30, 2024, decrease the annual interest rate from 6.75 % plus 90-day LIBOR to 5.50 % plus 90-day LIBOR , and modify the calculation prepayment fee such that it is based on the amount of time elapsed from the effective date of the May 2019 amendment.

The Company accounted for the amendment as a modification of existing debt and recorded approximately $ 1.5 million of debt discount costs associated with the amendment against long-term debt on the consolidated balance sheets as of June 30, 2019.

In August 2019, the Company amended the Prior Term Loan Agreement to, among other things, increase the loan commitment by $ 25 million in the form of a new tranche (“Tranche 3”), increase the annual interest rate from 5.50 % plus 90-day LIBOR to 6.75 % plus 90-day LIBOR , and revise or add financial covenants, including the fixed charge coverage ratio, minimum net revenue, minimum consolidated cash balance and minimum consolidated domestic cash balance tests.

Other significant terms remain unchanged.

The Company borrowed in full Tranche 3, or $ 25 million, on the date of the amendment.

The Company accounted for the amendment as a modification of existing debt, at the same time, the Company recorded approximately $ 1.6 million of debt discount costs associated with the amendment against long-term debt.

On May 6, 2021, the Company entered into an amendment to the Prior Term Loan Agreement to amend the Prior Term Loan Facility to, among other things and subject to certain conditions, permit the Company to consummate the Exchange and Subscription Transactions and related agreements.

The Prior Term Loan Facility was terminated on May 14, 2021.

The Company incurred a loss on the extinguishment of debt as a result of repaying all amounts outstanding on the Prior Term Loan Facility.

The loss on the extinguishment of debt of $ 4.3 million was primarily comprised of the write-off of deferred costs associated with the Prior Credit Facilities.

New Credit Facilities

On May 6, 2021, the Company entered into a senior secured credit agreement (the “New Credit Agreement”) with Silicon Valley Bank, individually as a lender and agent (“Agent”), and the other lenders from time to time parties thereto (together with Silicon Valley Bank as a lender, the “Lenders”), which provides for a new five-year $ 80 million term loan (the “New Term Loan Facility”) and a $ 40 million revolving credit facility (the “New Revolving Credit Facility”

and, together with the New Term Loan Facility, the “New Credit Facilities”).

The initial borrowings under the New Credit Agreement, including $ 25 million under the New Revolving Credit Facility, were funded on May 14, 2021.

Interest on the borrowings under the New Credit Facilities is payable in arrears on the applicable interest payment date at an annual interest rate of reserve-adjusted, 90-day LIBOR (subject to a 0.50 % floor) plus, initially, 3.00 % and after the Agent receives copies of the consolidated financial statements of the Company for the fiscal quarter ending June 30, 2021:

3.25 % if the Consolidated Senior Net Leverage Ratio (as defined in the New Credit Agreement) is greater than or equal to 3.00:1.00;

3.00 % if the Consolidated Senior Net Leverage Ratio is greater than or equal to 2.00:1.00 but less than 3.00:1.00;

2.75 % if the Consolidated Senior Net Leverage Ratio is greater than or equal to 1.00:1.00 but less than 2.00:1.00;

and 2.50 % if the Consolidated Senior Net Leverage Ratio is less than 1.00:1.00.

The New Credit Agreement requires the Company to pay the Lenders an unused commitment fee equal to, initially, 0.35 % per annum of the average unused portion of the New Revolving Credit Facility and after the Agent receives copies of the consolidated financial statements of the Company for the fiscal quarter ending June 30, 2021:

0.40 % per annum of the average unused portion of the Revolving Credit Facility if the Consolidated Senior Net Leverage Ratio is greater than or equal to 3.00:1.00;

0.35 % per annum of the average unused portion of the New Revolving Credit Facility if the Consolidated Senior Net Leverage Ratio is greater than or equal to 2.00:1.00 but less than 3.00:1.00;

0.30 % per annum of the average unused portion of the New Revolving Credit Facility if the Consolidated Senior Net Leverage Ratio is greater than or equal to 1.00:1.00 but less than 2.00:1.00;

and 0.25 % per annum of the average unused portion of the New Revolving Credit Facility if the Consolidated Senior Net Leverage Ratio is less than 1.00:1.00.

If all or a portion of the loans under the New Term Loan Facility are prepaid, then the Company will be required to pay a fee equal to 1 % of the of the aggregate amount of the loans so prepaid, subject to certain exceptions.

The New Credit Agreement contains restrictions and covenants applicable to the Company and its subsidiaries.

Among other requirements, the Company may not permit the Fixed Charge Coverage Ratio (as defined in the New Credit Agreement) to be less than a certain specified ratio for each fiscal quarter during the term of the New Credit Agreement or the Consolidated Senior Net Leverage Ratio to be greater than a certain specified ratio for each fiscal quarter during the term of the New Credit Agreement.

The New Credit Agreement also contains customary covenants that limit, among other things, the ability of the Company and its subsidiaries to (i) incur indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions, (iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate, (vii) voluntarily repay or prepay certain indebtedness and (viii) enter into transactions with affiliates, in each case subject to certain exceptions.

The New Credit Agreement contains customary representations and warranties and events of default.

As of June 30, 2022, $ 5.0 million of aggregate principal amount was outstanding under the New Revolving Credit Facility, $ 76.0 million aggregate principal amount was outstanding under the New Term Loan Facility and $ 1.0 million of associated unamortized debt costs.

As of June 30, 2021, $ 20.0 million of aggregate principal amount was outstanding under the New Revolving Credit Facility, $ 80 million aggregate principal amount was outstanding under the New Term Loan Facility and $ 1.3 million of associated unamortized debt costs.

The following table presents the carrying value of the New Credit Facilities and the Notes as of June 30, 2022 (in thousands):

Notes Due 2022

Notes Due 2026

Principal amount of the Notes

Unamortized debt costs

Unamortized debt discount

Net carrying amount

Short-term debt

Long-term debt

Total stockholders’ equity

A summary of interest expense on the New Credit Facilities and the Notes is as follows (in thousands):

Year ended June 30,

Interest expense related to contractual interest coupon

Interest expense related to amortization of debt discount

Interest expense related to amortization of debt issuance costs

Interest expense related to extinguishment of debt

Shareholders’

At June 30, 2022, the Company had 1.6 million s hares of common stock reserved for issuance under the stock incentive plans and the employee stock purchase plan.

Share Repurchase

On May 5, 2021, the Board of Directors authorized a repurchase of an aggregate amount of the Company common stock not to exceed $ 18 million.

On May 7, 2021, the Company completed a repurchase of 3,108,369 shares of its common stock for an aggregate amount of $ 14.1 million.

The Company’s common stock is reduced by an amount equal to the number of shares being repurchased multiplied by the par value of such shares.

The excess amount that is repurchased over its par value is first allocated as a reduction to additional paid-in capital based on the initial public offering price of the Company’s common stock.

Stock Incentive Plan and Employee Stock Purchase Plan

As of June 30, 2022 , the Company had two outstanding stock incentive plans:

the 2016 Equity Incentive Plan, or the 2016 Plan and the 2007 Incentive Award Plan, or the 2007 Plan.

The 2016 Plan permits the granting of stock options, stock appreciation rights, restricted stock awards, performance shares, performance units, and restricted stock units, or RSUs.

The vesting of RSUs granted under the 2016 Plan are primarily service‑based (over the requisite service period) while the vesting of performance units granted under the 2016 Plan are primarily performance‑based, or PSUs, or market‑based, or MSUs.

Only employees of the Company are eligible to receive incentive stock options.

Non‑employees may be granted non‑qualified stock options.

Stock options granted under the 2016 Plan have an exercise price of at least 100 % of the fair market value of the underlying stock on the grant date.

The stock options have 10 year contractual terms and generally become exercisable for 25 % of the option shares one year from the date of grant and then ratably over the following 36 months.

Service‑based RSUs granted under the equity plans generally vest 25 % of the share units covered by the grant on each of the first through fourth anniversaries of the date of the grant, subject to the continued service of the grantee through each such date.

However, certain of the outstanding RSUs under our equity plans vest 50 % upon the first anniversary year of the grant date, and 50 % upon the second anniversary year of the grant date.

The Board of Directors has the discretion to use different vesting schedules.

As of June 30, 2022, the 2007 Plan continued to remain in effect;

however, the Company can no longer grant equity awards under such plans.

The following table summarizes the share‑based compensation charges included in the Company’s consolidated statements of operations and comprehensive income (loss) (in thousands):

Years ended June 30,

Cost of revenue

Research and development

Selling and marketing

General and administrative

The amount of capitalized share‑based compensation costs as components of inventory was insignificant at June 30, 2022, 2021 and 2020.

Stock Options

The fair value of each option is estimated at the date of grant using the Black‑Scholes option pricing formula with the following assumptions:

Years Ended June 30,

Risk–free interest rate

2.71 % - 3.21 %

0.59 % - 1.27 %

1.14 % - 1.53 %

Dividend yield

Expected term

Expected volatility

54.1 % - 57.3 %

54.7 % - 55.6 %

47.3 % - 48.9 %

Determining Fair Value of Stock Options

The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below.

Each of these inputs is subjective and generally requires significant judgment to determine.

Valuation and Amortization Method —The Company estimates the fair value of its stock options using the Black‑Scholes option‑pricing model.

This fair value is then amortized over the requisite service periods of the awards.

Expected Term —The Company estimates the expected term of stock option by taking the average of the vesting term and the contractual term of the option, as illustrated by the simplified method.

Expected Volatility —The expected volatility is derived from the Company’s historical stock volatility over a period approximately equal to the expected term of the options.

Risk‑Free Interest Rate —The risk‑free interest rate is based on the U.S.

Treasury yield curve on the date of grant.

Dividend Yield —The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts.

A summary of option activity under the Company’s incentive plan during the fiscal years is presented below (in thousands except per share and term amounts):

Balance at June 30, 2019

Options granted

Options exercised

Options forfeited/expired

Balance at June 30, 2020

Options granted

Options exercised

Options forfeited/expired

Balance at June 30, 2021

Options granted

Options exercised

Options forfeited/expired

Balance at June 30, 2022

Vested or Expected to vest at June 30, 2022

Exercisable at June 30, 2022

The aggregate intrinsic value in the table above represents the total pre‑tax intrinsic value (the difference between the fair value of the Company’s common stock on June 30, 2022 of $ 1.96 and the exercise price of the options that would have been received by option holders if all options exercisable had been exercised on June 30, 2022).

The total intrinsic value of options exercised in the years ended June 30, 2022, 2021 and 2020 was approximately $ 0.3 million, $ 0.2 million and $ 0 million, respectively.

During the years ended June 30, 2022, 2021 and 2020 , the Company recognized $ 2.6 million, $ 2.4 million and $ 2.0 million, respectively, of share‑based compensation expense for stock options granted to employees.

Tax benefits from tax deductions for exercised options and disqualifying dispositions in excess of the deferred tax asset attributable to stock compensation costs for such options are credited to additional paid‑in capital.

The benefits are recognized against income taxes.

Realized excess tax benefits related to stock options exercises was zero for each of the years ended June 30, 2022, 2021 and 2020.

As of June 30, 2022, there was approximatel y $ 3.1 million of unrecognized compensation cost net of estimated forfeitures, related to unvested stock options, which is expected to be recognized over a weighted average period of 2.4 years.

The following table summarizes information about outstanding and exercisable options at June 30, 2022 (in thousands, except years and exercise price):

Options Outstanding

Options Exercisable

Range of Exercise Prices

$ 1.96 –

$ 2.60 –

$ 2.97 –

$ 4.10 –

$ 4.46 –

$ 4.52 –

Total Outstanding

Restricted Stock

The following table summarizes the activity of RSUs, PSUs and MSUs (in thousands, except fair value per share):

Unvested Restricted Stock

Unvested at June 30, 2019

Cancelled/Forfeited

Unvested at June 30, 2020

Cancelled/Forfeited

Unvested at June 30, 2021

Cancelled/Forfeited

Unvested at June 30, 2022

As of June 30, 2022, there was approximately $ 11.0 million of unrecognized compensation cost, net of estimated forfeitures, related to restricted stock, which is expected to be recognized over a weighted average period of 2.2 years.

Restricted Stock Units

The Company recognized $ 6.7 million, $ 5.4 million and $ 4.9 million of share‑based compensation expense, net of estimated forfeitures, related to RSUs during the years ended June 30, 2022, 2021 and 2020 .

The weighted average grant date fair value per share of RSUs granted was $ 3.75 , $ 4.16 and $ 2.74 for the years ended June 30, 2022, 2021 and 2020, respectively.

The aggregate fair market value of RSUs that vested during the year ended June 30, 2022 was $ 6.4 million.

Performance Stock Units

The Compensation Committee approved the grant of 937,000 , 280,000 and 419,000 PSUs to select employees of the Company in the years ended June 30, 2022, 2021 and 2020, respectively.

No PSUs vested in the years ended June 30, 2022 and June 30, 2021.

During the years ended June 30, 2022, 2021 and 2020, 642,000 , 419,000 and zero PSUs were cancelled, respectively.

The Company recognized zero share‑based compensation expense, net of estimated forfeitures, related to PSUs during the years ended June 30, 2022, 2021, and 2020.

Market Stock Units

The Compensation Committee approved the performance equity program, referred to as the Market Stock Unit (MSU) program, or MSU program, in October 2012.

The Company’s MSU Program uses the Russell 2000 index as a performance benchmark and requires that the Company’s total stockholder return match or exceed that of the Russell 2000.

Based on a sliding scale of how much the Company’s total stockholder return outperforms the Russell 2000 benchmark, the participating executives can earn up to a maximum of 150 % of the target number of shares over two measurement periods.

The Company uses a Monte Carlo simulation to calculate the fair value of the award on the grant date.

The Compensation Committee approved no grants of MSUs in the years ended June 30, 2022 and 2021 .

Of these MSUs, no shares vested in the years ending June 30, 2022, 2021 and 2020 , respectively, due to the non-achievement of the requisite performance target against the Russell 2000 index while zero , 0.2 million and 0.5 million MSUs were cancelled in the years ended June 30, 2022, 2021 and 2020, respectively.

The Company recognized zero , $ 0.1 million and $ 0.2 million of share‑based compensation expense, net of estimated forfeitures, related to MSUs during the years ended June 30, 2022, 2021 and 2020, respectively.

There were no MSUs granted during the years ended June 30, 2022, 2020 and 2019.

As of June 30, 2022 , there was no unrecognized compensation cost related to MSUs.

Employee Stock Purchase Plan

Under the Company’s Amended and Restated 2007 Employee Stock Purchase Plan, or ESPP, qualified employees are permitted to purchase the Company’s common stock at 85 % of the lower of the fair market value of the common stock on the commencement date of each offering period or the fair market value on the specified purchase date.

Employees’

payroll deductions may not exceed 10 % of their salaries.

Employees may purchase up to 2,500 shares per period provided that the value of the shares purchased in any calendar year may not exceed $ 25,000 , as calculated pursuant to the purchase plan.

The Company estimates the fair value of ESPP shares at the date of grant using the Black‑Scholes option pricing model.

The weighted average assumptions were as follows:

Years Ended June 30,

Risk–free interest rate

0.10 % - 2.16 %

0.04 % - 0.10 %

0.17 % - 1.60 %

Dividend yield

Expected term

Expected volatility

35.49 % - 54.33 %

36.10 % - 65.58 %

45.46 % - 75.21 %

The risk‑free rate for the expected term of the ESPP option was based on the U.S.

Treasury Constant Maturity rate for each offering period;

expected volatility was based on the historical volatility of the Company’s common stock;

and the expected term was based upon the offering period of the ESPP.

For the years ended June 30, 2022, 2021 and 2020, the Company recognized $ 1.3 million, $ 1.4 million and $ 1.1 million, respectively, of compensation expense related to its ESPP.

The Company issued 1.1 million, 1.2 million and 1.1 million shares under the ESPP during fiscal 2022, 2021 and 2019, respectively, at a weighted average price per share o f $ 4.33 , $ 1.90 and $ 2.16 , respectively.

As of June 30, 2022, total unrecognized compensation cost related to the ESPP plan was $ 0.4 million , which the Company expects to recognize over a weighted average per iod of 0.6 years.

Joint Venture

In January 2019, the Company’s wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd.

(the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co.

(the “JV”), to manufacture and sell radiation oncology systems in China.

In exchange for the 49 % equity interest in the JV, the Company, through Accuray Asia, made in-kind capital contributions of two full radiation oncology systems in the quarter ended December 31, 2019 and one system upgrade in the quarter ended September 30, 2020, all of which was not to be sold and only be used for training purposes by the JV.

The investments are reported as an Investment in joint venture on the Company’s consolidated balance sheets.

The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary.

The Company recognizes the 49 % proportionate share of the JV income or loss on a one-quarter lag due to the timing of the availability of the JV’s financial records.

The Company recognizes revenue on sales to the JV in the current period of control transfer, eliminating a portion of profit to the extent goods sold have not been sold through by the JV to an end customer by the end of each reporting period.

During the years ended June 30, 2022 and 2021, respectively, the Company recognized $ 1.4 million and $ 1.8 million of previously deferred intra-entity profit margin from sales and recorded intra-entity profit margin deferrals of $ 4.7 million and $ 2.1 million fro m sales recognized during the period.

The Company’s consolidated accumulated deficit at June 30, 2022 includes $ 1.0 million of cumulative income related to the Company’s equity method investment.

As of June 30, 2022, the Company had a carrying value of $ 13.9 million in the JV and owned a 49 % interest in the entity.

The Company’s proportional share of the underlying equity in net assets of the JV was approximately $ 14.6 million.

Under the equity method of accounting, the carrying value of the investment is adjusted for the Company's proportional share of the investee's currency translation adjustment of $ 1.0 million.

The difference between the carrying value of the equity investment and the Company’s proportional share of the underlying equity in net assets of the JV of $ 1.7 million adding back $ 5.4 million of eliminated intra-entity profit constitutes equity method goodwill of $ 4.7 million at June 30, 2022 that is subject to impairment analysis.

No i mpairment was identified as of June 30, 2022.

Summarized financial information of the JV is as follows (in thousands):

Statement of Operations Data:

Twelve Months Ended

March 31, 2022

Twelve Months Ended

March 31, 2021

Net income attributable to the Company

Summarized Balance Sheet Data:

March 31, 2022

March 31, 2021

Current assets

Non current assets

Liabilities and Stockholders' Equity

Current liabilities

Non current liabilities

Stockholder's equity

Income (loss) before provision for income taxes on the accompanying statements of operations and comprehensive loss included the following components (in thousands):

Years Ended June 30,

Total worldwide

The provision for income taxes consisted of the following (in thousands):

Years Ended June 30,

Total current

Total deferred

Total provision for income taxes

A reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the accompanying consolidated statements of operations and comprehensive loss is as follows (in thousands):

Years Ended June 30,

federal taxes (benefit):

At federal statutory rate

State tax, net of federal benefit

Share-based compensation expense

Debt extinguishment

Other non-deductible permanent items

Foreign taxes

Deferred Tax on foreign earnings

Global Intangible Low-Taxed Income

Change in valuation allowance

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s net deferred tax assets (liabilities) were as follows (in thousands):

Deferred tax assets:

Federal and state net operating losses

Accrued expenses and reserves

Lease liability

Deferred revenue

Share-based compensation expense

Capitalized research and development

Fixed assets/intangibles

Section 163(j) interest

Total deferred tax assets

Deferred tax liabilities:

Contract acquisition costs

Right of use assets

Deferred tax on foreign earnings

Total deferred tax liabilities

Valuation allowance

Net deferred tax assets (liabilities)

As of June 30, 2022, the Company h ad approximately $ 324.0 million and $ 131.1 million in federal and state net operating loss carryforwards, respectively.

The federal and state carryforwards expire in varying amounts beginning in 2025 for federal and 2023 for state purposes.

In addition, as of June 30, 2022 , the Company had federal and state research and development tax credits of approximately $ 25.5 million and $ 22.1 million, respectively.

If not utilized, the federal research credits will begin to expire in 2023, the California research credits have no expiration date and the other state research credits will begin to expire in 2023.

Under the Internal Revenue Code ("IRC") Sections 382 and 383, annual use of our net operating loss and research tax credit carryforwards to offset taxable income may be limited based on cumulative changes in ownership.

Although ownership changes have occurred in the prior years, the carryovers should be available for utilization by the Company before they expire, provided the Company generates sufficient future taxable income.

During the current period, an analysis of the impact of this provision through March 31, 2022 has been performed and it was determined that no ownership change has occurred after December 2009.

Based on the available objective evidence and history of losses, the Company has established a 100 % valuation allowance against its combined domestic net deferred tax assets because of uncertainty surrounding the realization of such deferred tax assets.

Beginning fiscal year 2019, for U.S.

federal tax purposes, certain income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFC’s U.S.

The income required to be included in gross income is referred to as global intangible low tax income (“GILTI”) and is defined under IRC Section 951A as the excess of the shareholder’s net CFC tested income over the net deemed tangible income return.

The GILTI inclusion amount has been absorbed by net operating losses.

The Company has made a policy decision to record GILTI tax as a current-period expense when incurred.

The recorded income tax expense for fiscal year 2022 includes $ 1.7 million of Swiss withholding tax expected to be paid on the remittance of unrepatriated distributable reserves in France, Japan and Switzerland.

At June 30, 2022, we have undistributed earnings of certain foreign subsidiaries of approximately $ 18.1 million that we have indefinitely invested, and on which we have not recognized deferred taxes.

The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands):

Years Ended June 30,

Balance at beginning of year

Tax positions related to current year:

Tax positions related to prior years:

Balance at end of year

The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations.

Management regularly assesses the Company’s tax positions with respect to legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which the Company does business.

The reduction in prior year's tax positions primarily relates to lapses of applicable statutes of limitations.

The Company anticipates there will be no material changes in uncertain tax positions in the next 12 months.

As of June 30, 2022, the amount of gross unrecognized tax benefits was $ 19.8 million of which $ 19.6 million would not affect income tax expense before consideration of any valuation allowance.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

As of June 30, 2022 and 2021, the Company had approximately $ 0.06 million and $ 0.05 million, respectively, of cumulative accrued interest and penalties related to uncertain tax positions.

The Company files income tax returns in the United States federal, various states, and foreign jurisdictions.

Due to tax attributes being carried forward and utilized during open years, the statute of limitations remains open for the U.S.

federal jurisdiction and domestic states for tax years from 2002 and forward.

The statutes of limitation with

respect to the foreign jurisdictions where the Company files income tax returns vary from jurisdiction to jurisdiction and range from 3 to 10 years and the material foreign jurisdictions are France, Switzerland and Japan.

The Company is also subject to examination of its income tax returns by the Internal Revenue Service (IRS) and other foreign tax authorities, and in some cases the Company has received additional tax assessments which have not been significant.

Currently, the Company is under the early stages of audit by the Japanese tax authorities for the fiscal periods 2019, 2020 and 2021.

Employee Benefit Plan

The Company’s employee savings and retirement plan is qualified under Section 401(k) of the United States Internal Revenue Code.

Employees may make voluntary, tax‑deferred contributions to the 401(k) Plan up to the statutorily prescribed annual limit.

The Company makes discretionary matching contributions to the 401(k) Plan on behalf of employees up to the limit determined by the Board of Directors.

The Company contributed $ 2.3 million, $ 1.1 million and $ 2.0 million to the 401(k) Plan during the years ended June 30, 2022, 2021 and 2020, respectively.

Defined Benefit Pension Obligation

The Company has established a defined benefit pension plan for its employees in its Switzerland subsidiary.

The plan provides benefits to employees upon retirement, death or disability.

The Company uses June 30 as the year‑end measurement date for this plan.

T he unfunded liability of $ 0.1 million was recognized in long‑term other liabilities in the accompanying balance sheet as of June 30, 2022.

Actuarial gain of $ 4.3 million was reco gnized in other comprehensive loss in fiscal 2022.

Obligations and Funded Status

The following table presents the funded status of the defined benefit pension plan (in thousands):

Change in benefit obligation:

Benefit obligation—beginning of fiscal year

Interest cost

Plan participants’

contributions

Plan amendment

Actuarial (gain)/loss

Foreign currency changes

Benefit and expense payments

Benefit obligation—end of fiscal year

Change in plan assets:

Plan assets—beginning of fiscal year

Employer contributions

Actual return on plan assets

Plan participants’

contributions

Foreign currency changes

Benefit and expense payments

Plan assets—end of fiscal year

Funded status

Amounts recognized within the consolidated balance sheets:

Long-term other liabilities

Net amount recognized

The following table presents the amounts recognized in accumulated other comprehensive loss (before tax) for the defined benefit pension plan (in thousands):

Net actuarial loss (gain)

Prior service cost

Accumulated other comprehensive income (loss)

The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for this defined benefit pension plan where accumulated benefit obligation exceeded the fair value of plan assets (in thousands):

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss

The following table shows the components of the Company’s net periodic benefit costs and the other amounts recognized in other comprehensive loss, before tax, related to the Company’s defined benefit pension plan (in thousands):

Year ended June 30,

Net Periodic Benefit Costs:

Interest cost

Expected returns on assets

Amortization of prior service cost

Amortization of net loss

Settlement charges

Net periodic benefit costs

Other Amounts Recognized in Other Comprehensive Loss:

Net (gain) loss arising during the year

Prior service cost

Amortization of prior service cost

Amortization of net gain

Effect of settlement

Total recognized in other comprehensive (gain) loss

Total recognized in net periodic benefit costs and other

comprehensive loss

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during fiscal year 2023 related to the Company’s defined benefit pension plan are as follows (in thousands):

Prior service credit

Accumulated other comprehensive income

The assumptions used to determine net periodic benefit cost and to compute the expected long‑term return on assets for the Company’s defined benefit pension plan were as follows:

Net Periodic Benefit Costs:

Discount rate

Rate of compensation increase

Expected long-term return on assets

The assumptions used to measure the benefit obligation for the Company’s defined benefit pension plan were as follows:

Benefit Obligation:

Discount rate

Rate of compensation increase

Estimated Contributions and Future Benefit Payments

The Company made contributions of approxima tely $ 1.2 million, $ 1.1 million and $ 1.3 million to the defined benefit pension plan during fiscal years 2022, 2021 and 2020 respectively.

The Company expects total contributions to the defined benefit pension plan for fiscal year 2023 will be approximately $ 1.3 million.

Estimated future benefit payments expected to be paid by the defined benefit pension plan at June 30, 2022 are as follows (in thousands):

Year Ending June 30,

The plan assets are invested in insurance contracts with Copré

Collective Foundation based in Lausanne, Switzerland at the end of fiscal years 2022 and 2021, respectively.

In fiscal 2022 and 2021, the risks of death and disability are reinsured with Zurich Life Insurance.

The Copré

Foundation for Occupational Benefits defines and is responsible for the asset strategy and invests the plan assets for the Company.

In fiscal 2022 and 2021 the guaranteed interest rate for mandatory retirement savings was 1.00 % for both years .

The technical administration and management of the savings account are guaranteed by the Copré

Foundation for Occupational Benefits.

Insurance benefits due are paid directly to the entitled persons by the Copré

Foundation for Occupational Benefits.

Accuray International Sàrl has committed itself to pay the annual contributions and costs due under the pension fund regulations.

The contract of affiliation between the Company and the Copré

Collective Foundation can be terminated by either side.

In the event of a termination, recipients of retirement and survivors’

benefits would remain with the collective foundation.

The Company commits itself to transfer its active insured members and recipients of disability benefits to the new employee benefits institution, thus releasing the Copré

Collective Foundation from all obligations.

Segment Disclosure

The Company has one operating and reporting segment (oncology systems group), which develops, manufactures and markets proprietary medical devices used in radiation therapy for the treatment of cancer patients.

The Company’s Chief Executive Officer, its Chief Operating Decision Maker, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.

The Company does not assess the performance of its individual product lines on measures of profit or loss, or asset based metrics.

Therefore, the information below is presented only for revenues and long‑lived tangible assets by geographic areas.

Revenues attributed to a country or region is based on the shipping addresses of the Company’s customers.

The following summarizes revenue by geographic region (in thousands):

Years ended June 30,

Europe, Middle East, India and Africa

Asia Pacific, excluding Japan and China

Revenues attributed to a country or region is based on the shipping addresses of the Company’s customers.

The following summarizes revenue by geographic region (in thousands):

Information regarding geographic areas in which the Company has long‑lived tangible assets is as follows (in thousands):

Europe, Middle East, India and Africa

Asia Pacific, excluding Japan and China

Restructuring Charges

The Company incurred no restructuring charges for the years ended June 30, 2 022 and 2021.

On May 27, 2020, the Company informed affected employees of a cost saving initiative designed to reduce operating costs through the elimination of approximately 3 percent of its global workforce.

These restructuring charges of $ 1.1 million were recorded in cost of goods sold and operating expenses in the consolidated statements of operations, of which $ 0.5 million was paid during fiscal 2020 and $ 0.6 million is accrued in the consolidated balance sheet as of June 30, 2020.

The remainder was paid in fiscal year 2021.

Subsequent Events

The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.

CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

CONTROL S AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a‑15(e) of the Exchange Act) as of June 30, 2022.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by our Annual Report on Form 10‑K, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a‑15(f) of the Exchange Act.

Under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the guidelines established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) 2013.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of June 30, 2022.

The effectiveness of our internal control over financial reporting as of June 30, 2022 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report included herein.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2022, and has concluded that there was no change during such quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.

Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.

Internal control over financial reporting also can be circumvented by collusion or improper management override.

Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process.

Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

OTHE R INFORMATION

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Accuray Incorporated

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Accuray Incorporated (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended June 30, 2022, and our report dated August 17, 2022 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

San Jose, California

August 17, 2022

DIRECTORS, EXECUTIVE O FFICERS AND CORPORATE GOVERNANCE

Directors, Executive Officers and Corporate Governance

The information in our 2022 Proxy Statement regarding directors and executive officers appearing under the headings “Proposal One—Election of Directors,”

“Executive Officers”

and “Delinquent Section 16(a) Reports”

is incorporated herein by reference.

In addition, the information in our 2022 Proxy Statement regarding the director nomination process, the Audit Committee financial expert and the identification of the Audit Committee members appearing under the heading “Corporate Governance and Board of Directors Matters”

is incorporated herein by reference.

There have been no material changes to the procedures by which stockholders may recommend nominees to our Board of Directors.

EXECUTI VE COMPENSATION

The information in our 2022 Proxy Statement appearing under the headings “Executive Compensation,”

“Compensation Committee Report,”

“Compensation Discussion and Analysis,”

“Compensation of Non‑Employee Directors”

and “Corporate Governance and Board of Directors Matters—Compensation Committee Interlocks and Insider Participation”

is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL O WNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information in our 2022 Proxy Statement appearing under the heading “Security Ownership of Certain Beneficial Owners and Management”

and “Equity Compensation Plan Information”

is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATE D TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information in our 2022 Proxy Statement appearing under the headings “Certain Relationships and Related Transactions”

and “Corporate Governance and Board of Directors Matters—Director Independence”

is incorporated herein by reference.

PRINCIPAL ACCO UNTING FEES AND SERVICES

The information in our 2022 Proxy Statement appearing under the headings “Proposal Five—Ratification of Appointment of Independent Registered Public Accounting Firm—Audit and Non‑Audit Services”

and “Proposal

Five—Ratification of Appointment of Independent Registered Public Accounting Firm—Audit Committee Pre‑Approval Policies and Procedures”

is incorporated herein by reference.

EXHIBITS AND FINA NCIAL STATEMENT SCHEDULES

(a) We have filed the following documents as part of this report:

Consolidated Financial Statements (as set forth in Item 8)

Report of Independent Registered Public Accounting Firm (PCAOB ID 248 )

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Stockholders’

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Consolidated Financial Statement Schedules

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this Annual Report on Form 10‑K.

The following exhibits are incorporated by reference or filed herewith.

Incorporated by Reference

Exhibit Description

Amended and Restated Certificate of Incorporation of Registrant.

001‑33301

Amended and Restated Bylaws of Registrant.

001‑33301

Indenture by and between Registrant and the Bank of New York Mellon Trust Company, N.A., dated as of February 13, 2013.

001‑33301

Indenture by and between Registrant and the Bank of New York Mellon Trust Company, N.A., dated as of April 24, 2014.

001‑33301

Indenture between Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee, dated as of August 7, 2017.

Form of Common Stock Certificate.

333‑138622

Form of 3.75% Convertible Senior Note due 2022 (included in Exhibit 4.3).

First Supplemental Indenture, dated as of December 4, 2017, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee .

Indenture, dated as of May 13, 2021, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee .

Form of 3.75% Convertible Senior Note due 2026 (included in Exhibit 4.7)

Industrial Complex Lease by and between Registrant and MP Caribbean, Inc., dated July 9, 2003, as amended by the First Amendment to Industrial Complex Lease effective as of December 9, 2004 and the Second Amendment to Industrial Complex Lease effective as of September 25, 2006.

333‑138622

Third Amendment to Industrial Complex Lease dated January 16, 2007.

001‑33301

Fourth Amendment to Industrial Complex Lease by and between the Registrant and BRCP Caribbean Portfolio, LLC, dated September 18, 2007.

001‑33301

Fifth Amendment to Industrial Complex Lease by and between the Registrant and BRCP Caribbean Portfolio, LLC, dated April 1, 2008 .

001‑33301

Sixth Amendment to Industrial Complex Lease by and between the Registrant and I & G Caribbean, Inc., dated December 18, 2009.

001‑33301

Seventh Amendment to Lease by and between the Registrant and DWF III Caribbean, LLC, dated June 20, 2014.

001‑33301

Eighth Amendment to Lease by and between the Registrant and DWF III Caribbean, LLC, dated October 31, 2014.

011‑33301

Ninth Amendment to Lease by and between Google LLC and Accuray Incorporated, dated March 4, 2019.

011‑33301

Accuray Incorporated 1998 Equity Incentive Plan and forms of agreements relating thereto .

333‑138622

Accuray Incorporated 2007 Incentive Award Plan .

001‑33301

Form of Performance Stock Unit Grant Notice and Performance Stock Unit Agreement.

001‑33301

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement.

001‑33301

Form of Stock Option Grant Notice and Stock Option Agreement.

001‑33301

Form of Market Stock Unit Grant Notice and Award Agreement.

001‑33301

Accuray Incorporated Amended and Restated 2016 Equity Incentive Plan and forms of award agreements thereunder.

001‑33301

Amended and Restated 2007 Employee Stock Purchase Plan.

Accuray Incorporated Performance Bonus Plan, as amended on September 22, 2016 .

001‑33301

Accuray Incorporated Company Bonus Plan .

001‑33301

Stand-Alone Inducement Restricted Stock Unit Agreement between Registrant and Shigeyuki Hamamatsu, effective September 29, 2017.

Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Patrick Spine.

Form of Accuray Incorporated Stand-Alone Inducement Performance Unit Agreement for Patrick Spine.

Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Patrick Spine.

Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Suzanne Winter.

Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Suzanne Winter.

Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Jim Dennison .

Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Jim Dennison .

Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for J.P.

Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for J.P.

Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Sandeep Chalke.

Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Sandeep Chalke .

TomoTherapy Incorporated 2000 Stock Option Plan, as amended, and forms of option agreements thereunder.

333‑174952

TomoTherapy Incorporated 2002 Stock Option Plan, as amended, and forms of option agreements thereunder.

333‑174952

TomoTherapy Incorporated 2007 Equity Incentive Plan, as amended, and forms of option agreements thereunder.

333‑174952

Form of Indemnification Agreement by and between Registrant and each of its directors and executive officers.

001‑33301

Development and OEM Supply Agreement by and between TomoTherapy Incorporated and Analogic Corporation, dated January 27, 2003.

333‑140600

Amended and Restated Renewal Executive Employment Agreement by and between the Registrant and Joshua H.

Levine, dated January 1, 2020.

001‑33301

Executive Employment Agreement by and between Registrant and Shigeyuki Hamamatsu, dated January 1, 2021 .

001‑33301

Change in Control Agreement between Registrant and Shigeyuki Hamamatsu, dated September 21, 2017.

001‑33301

Executive Employment Agreement by and Between Registrant and Patrick Spine, dated January 1, 2021 .

Executive Employment Agreement by and Between Registrant and Jesse Chew, dated January 1, 2021 .

Amended and Restated Executive Employment Agreement by and Between Registrant and Suzanne Winter, dated July 1, 2022.

Executive Employment Agreement by and between Registrant and Michael Hoge, dated January 1, 2021 .

Offer Letter by and between Registrant and Brandy Green, dated August 10, 2021.

Retention Package Letter by and between Registrant and Brandy Green, dated April 27, 2022.

Executive Employment Agreement by and between Registrant and Ali Pervaiz, dated May 9, 2022.

Executive Employment Agreement by and between Registrant and Sandeep Chalke, dated May 2, 2022.

Consulting Agreement by and between Registrant and Joshua H.

Levine, dated July 1, 2022.

Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as a lender and as agent, and the other lenders from time to time parties thereto, dated June 14, 2017.

Form of Exchange/Repurchase Agreement between Registrant and each signatory thereto, dated July 27, 2017 .

Form of Subscription Agreement between Registrant and each signatory thereto, dated July 27, 2017.

Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as a lender and as agent, and the other financial institutions or other entities from time to time parties thereto, dated December 15, 2017.

Amendment No.

1 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Funding IV Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time parties thereto, dated December 15, 2017.

Amendment No.

1 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as a lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated July 12, 2018.

Amendment No.

2 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Funding IV Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated July 12, 2018.

Amendment No.

2 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated December 28, 2018.

Amendment No.

3 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Funding X Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated December 28, 2018.

Amendment No.

3 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated May 30, 2019.

Amendment No.

4 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Funding IV Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated May 30, 2019 .

Amendment No.

4 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated August 30, 2019.

Amendment No.

5 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Funding IV Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated August 30, 2019.

Amendment No.

5 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Financial Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated July 3, 2020 .

Amendment No.

6 to Credit and Security Agreement by and among the Registrant, TomoTherapy Incorporated, any additional borrowers that may be added thereto, MidCap Funding IV Trust, individually as lender and as agent, and the other financial institutions or other entities from time to time party thereto, dated July 3, 2020 .

Credit Agreement among the Registrant, as the Borrower, the several lenders from time to time party thereto, and Silicon Valley Bank, as administrative agent, lead arranger, issuing lender and swingline lender, dated as of May 6, 2021.

Form of Exchange Agreement, dated as of May 6, 2021, between the Registrant and each signatory thereto.

Form of Subscription Agreement, dated as of May 6, 2021, between the Registrant and each signatory thereto .

List of subsidiaries.

Consent of Grant Thornton LLP, independent registered public accounting firm.

Power of Attorney (incorporated by reference to the signature page of this annual report on Form 10‑K).

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.

Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Management contract or compensatory plan or arrangement.

Confidential treatment has been granted with respect to portions of this exhibit.

Certain portions of this exhibit have been omitted because they are both not material and would be competitively harmful if publicly disclosed.

The certification attached as Exhibit 32.1 that accompanies this Annual Report on Form 10‑K is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Accuray Incorporated under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Annual Report on Form 10‑K, irrespective of any general incorporation language contained in such filing.

Form 10‑K, irrespective of any general incorporation language contained in such filing.

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned;

thereunto duly authorized, in the City of Sunnyvale, State of California, on the 17th day of August 2022.

ACCURAY INCORPORATED

/s/ Suzanne Winter

Suzanne Winter

President and Chief Executive Officer

/s/ Ali Pervaiz

Senior Vice President and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Suzanne Winter and Ali Pervaiz, and each of them, as his true and lawful attorneys‑in‑fact and agents, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10‑K, and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys‑in‑fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys‑

fact and agents, and any of them or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following and on the dates indicated.

/s/ Suzanne Winter

Suzanne Winter

President, Chief Executive Officer and Director (Principal Executive Officer)

August 17, 2022

/s/ Ali Pervaiz

Chief Financial Officer (Principal Financial Officer)

August 17, 2022

/s/ Franco Palomba

Franco Palomba

Chief Accounting Officer and Controller (Principal Accounting Officer)

August 17, 2022

/s/ Joseph E.

Chairperson of the Board and Director

August 17, 2022

/s/ Elizabeth Dávila

Elizabeth Dávila

August 17, 2022

/s/ Beverly A.

August 17, 2022

/s/ Richard R.

August 17, 2022

/s/ Mika Nishimura

Mika Nishimura

August 17, 2022

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity