What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-09-07 compared with 2022-08-17 · 637 added, 958 removed, 1046 unchanged (60% of the section changed)

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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.

One fourth of the aggregate RSUs vest annually over a period of four years.

We did not receive any proceeds from this issuance.

The issuance of such securities was exempt from registration under the Securities Act, in reliance upon Section 4(a)(2) of the Securities Act, for transactions by an issuer not involving a public offering.

Other than as noted above and as previously reported to the Securities and Exchange Commission (SEC) on our Current Reports on Form 8-K, there were no sales of unregistered equity securities by us during the year ended June 30, 2022.

Issuer Purchases of Equity Securities

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

Stock Performance Graph

The graph set forth below compares the cumulative total stockholder return on our common stock between June 30, 2018 and June 30, 2023, with the cumulative total return of (i) the S&P Healthcare Index and (ii) the Nasdaq Composite Index, over the same period.

This graph assumes the investment of $100.00 on June 30, 2017 in our common stock, the S&P Healthcare Index and the Nasdaq Composite Index, and assumes the reinvestment of dividends, if any.

This graph assumes the investment of $100 on June 30, 2018 in our common stock, the S&P 500 Health Care Index and the Nasdaq Composite Index, and assumes the reinvestment of dividends, if any.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Accuray Incorporated, the NASDAQ Composite Index and the S&P Health Care Index 6/14 6/15 6/16 6/17 6/18 6/19 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Accuray Incorporated NASDAQ Composite S&P Health Care *$100 invested on 6/30/14 in stock or index, including reinvestment of dividends.

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See “Special Note Regarding Forward‑Looking Statements”

for more information.

This section generally discusses the results of our operations for the year ended June 30, 2023, compared to the year ended June 30, 2022.

For a discussion of the year ended June 30, 2022 compared to the year ended June 30, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

in our Annual Report on Form 10-K for the year ended June 30, 2022, as filed with the SEC on August 17, 2022.

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.

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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).

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:

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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.

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

Current Economic Conditions

We are subject to risks and uncertainties caused by events with significant macroeconomic impacts, including, but not limited to, rising inflation, actions taken to counter inflation, including rising interest rates, foreign currency exchange rate fluctuations, instability in the banking sector, the COVID-19 pandemic, and geopolitical concerns, such as the Russian invasion of Ukraine and increasing tension between China and the U.S., including with respect to Taiwan.

We are also continuing to navigate supply chain and inflation challenges and foreign exchange, all of which continues to have a negative impact on our results of operations.

We expect that our customers’

business and our business will continue to be adversely impacted, directly or indirectly, by macroeconomic and geopolitical issues, including supply chain issues, inflation, labor, foreign currency exchange rate fluctuations, uncertainty and volatility in the banking and financial services sector, tightening credit markets, the effects of

the COVID-19 related restrictions, and other factors that may emerge.

In addition, rising inflation and the ongoing supply chain challenges and attendant heightened logistics costs have materially affected our gross margins and net income (loss), and we expect 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 fiscal year 2024, if not longer.

The extent of the ongoing impact of these macroeconomic events on our business, our markets and on global economic activity however, is uncertain and the related financial impact cannot be reasonably estimated with any certainty at this time.

Our past results may not be indicative of our future performance, and historical trends including conversion of backlog to revenue, income (loss) from operations, net income (loss), net income (loss) per share and cash flows may differ materially.

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.

We also continue to evaluate our operating expenses, including our real estate needs and continue to assess our operations and how and to what extent we will continue to utilize our current real estate assets.

The risks related to our business, including further discussion of the impact and possible future impacts of the current economic conditions on our business and the COVID-19 pandemic, are further described in the section titled “Risk Factors”

in Part I, Item 1A of this Annual Report on Form 10-K.

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.

We report our customer revenues in four geographic regions:

the Americas, EIMEA, Asia Pacific and Japan.

The Americas region includes the United States, Canada and Latin America.

The EIMEA region includes Europe, India, the Middle East and Africa.

The Asia Pacific region consists of Asia, Australia and New Zealand.

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.

In addition to our offices in the United States, we have international offices in Morges, Switzerland;

Hong Kong, China;

Shanghai, China and Tokyo, Japan and direct sales staff in most countries in Western Europe, Japan, India and Canada.

In addition, we have distributors in Eastern Europe, Russia, the Middle East, the Asia Pacific region, and Latin America.

Our systems have been 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.

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During the year ended June 30, 2023, we delivered Class A devices to China and recognized system revenue related to such devices of approximately $32.6 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.

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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.

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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 regulatory submission to the National Medical Products Administration (“NMPA”) has been completed and we expect to receive NMPA clearance in the first half of calendar year 2024 and take orders shortly thereafter.

For more information on the JV, see Note 11, “Joint Venture, ”

of the Notes to the Consolidated Financial Statements.

Restructuring

In the second quarter of fiscal year 2023, we announced a cost savings initiative designed to reduce operating costs.

This cost savings initiative resulted in the reduction of our global workforce by 4.5%.

We recorded $2.7 million in restructuring charges during the fiscal year 2023.

These charges are cash-based charges, primarily related to severance expenses and other one-time termination benefits.

At June 30, 2023, we do not have any remaining accruals related to the restructuring charges.

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

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

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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);

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.

Less than 30 months have passed since the contract met all the criteria above.

Our backlog includes contractual agreements with our customers for the purchase of our CyberKnife or TomoTherapy platforms, including the Radixact Systems and related upgrades.

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.

cancellations, age-outs and age-ins, and foreign currency fluctuations.

We cannot provide assurance that we will convert backlog into recognized revenue, primarily due to factors outside of our control, such as:

Orders could be cancelled for reasons such as, changes in customers’

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

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;

Orders are considered aged-out and removed from reported backlog if we have not been able to recognize revenue on an agreement after 30 months.

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

Age-ins represent orders that previously aged-out but have been recognized as revenue in the current period;

Orders include amounts not denominated in U.S.

Dollars and therefore, fluctuations in the U.S.

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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):

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Order backlog at the end of the period

As of June 30, 2023, the portion of our order backlog that represented upgrades sold through service contracts, totaled $0.6 million, as compared to $0.2 million as of June 30, 2022.

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.

Gross orders decreased by $21.2 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to decreases in EIMEA, partially offset by an increase in Asia Pacific and China.

CyberKnife platform gross orders decreased by $45.5 million and TomoTherapy platform gross orders increased by $24.3 million.

Gross orders were unfavorably impacted by $12.0 million due to foreign exchange rate fluctuations during the year ended June 30, 2023, as compared to the year ended June 30, 2022.

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.

Our book to bill ratio for the year ended June 30, 2023, was 1.3 as compared to 1.5 for the year ended June 30, 2022.

A book-to-bill ratio greater than 1.2 indicates strong demand for our products.

This metric allows management to monitor our business development efforts to ensure we grow our backlog and our business over time.

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

Net orders increased by $15.6 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, resulting from a reduction in the age-out of orders, a reduction in the cancellation of orders and an increase in the age-ins of orders, partially offset by a decrease in gross orders and unfavorable foreign exchange rate fluctuations.

In recent years, the percentage of gross orders received from our distribution partners in the international markets represented 76%, 71%, and 82% of gross orders for fiscal year ended June 30, 2023, 2022 and 2021, respectively.

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Results of Operations

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

Fiscal 2023 results compared to fiscal 2022

Net revenue by sales classification is as follows:

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):

Products revenue as a percentage of net revenue

Service revenue as a percentage of net revenue

a) Includes sales of products to the JV, an equity method investment, of $55,658 during the year ended June 30, 2023, $45,545 during the year ended June 30, 2022, and $12,033 during the year ended June 30, 2021, respectively.

b) Includes sales of services to the JV, an equity method investment, of $10,919 during the year ended June 30, 2023, $10,332 during the year ended June 30, 2022, and $12,360 during the year ended June 30, 2021, respectively.

Products net revenue increased by $18.5 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to an increase in Tomo Therapy platform sales, partially offset by a decrease in CyberKnife platform sales.

Product revenues were unfavorably impacted by $7.0 million due to foreign exchange rate fluctuations during the year ended June 30, 2023, as compared to the year ended June 30, 2022.

Services net revenue decreased by $0.8 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to a $4.9 million decrease in revenue from contract services that was largely driven by unfavorable foreign exchange rate fluctuations, partially offset by $4.1 million increase in revenue from training, spare parts, upgrades and installation activity.

Service revenues were unfavorably impacted by $10.8 million due to foreign exchange rate fluctuations during the year ended June 30, 2023, as compared to the year ended June 30, 2022.

Net revenue by geographic region, which is based on the shipping location of our customer, is as follows:

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)

(Dollars in thousands)

Asia Pacific, excluding China

Revenue derived from sales outside of the Americas region was $325.3 million during the year ended June 30, 2023, as compared to $303.9 million during the year ended June 30, 2022.

Revenue derived from sales outside the Americas region increased primarily due to an increase from system sales in EIMEA and Japan, and an increase from services in EIMEA, Asia Pacific, and China, mostly offset by a decrease from sales of systems in China, which was largely due to COVID-19-related restrictions that occurred during the first quarter of fiscal year 2023.

Revenues from the Americas region decreased by $3.7 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to a decrease from service revenue, partially offset by an increase from sales of systems.

Gross profit by sales classification is as follows:

Years Ended June 30,

(Dollars in thousands)

Products gross profit

Services gross profit

Research and development expenses

Selling and marketing expenses

General and administrative expenses

Loss on equity method investment

Total gross profit as a percentage of net revenue

The overall gross profit decreased by $6.0 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, due to a decrease in products gross profit, which was largely driven by unfavorable foreign exchange rate fluctuations, inflation, and an unfavorable product mix in the sales of our systems, partially offset by an increase in service gross profit driven by lower headcount and improved parts efficiency.

Operating Expenses

Years Ended June 30,

(Dollars in thousands)

Research and development

Selling and marketing

General and administrative

Total operating expenses

Research and development as a percentage of net revenue

Selling and marketing as a percentage of net revenue

General and administrative as a percentage of net revenue

Total operating expenses as a percentage of net revenue

Research and development expenses decreased by $0.6 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to a reduction in outside services and consulting, partially offset by an increase in employee compensation and benefits, which includes severance payments in the second quarter of fiscal year 2023, and lower research and development credits from our equity method investment.

Selling and marketing expenses decreased by $3.5 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to lower employee compensation and benefits due to lower headcount as a result of our cost savings initiatives during the first half of fiscal year 2023, and a decrease in outside services.

General and administrative expenses increased by $3.9 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to higher external consulting fees related to the implementation of a new enterprise resource planning system, a $2.0 million bad debt reserve in the fourth quarter of fiscal year 2023 related to the unplanned U.S.

bankruptcy of one customer, and employee compensation and benefits, as a result of an increase in headcount.

Income on equity method investment

Years Ended June 30,

(Dollars in thousands)

Income on equity method investment

Income on equity method investment increased by $2.3 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, due to an increase in the sales of systems by our JV.

Other expense, net

Years Ended June 30,

(Dollars in thousands)

Interest expense

Foreign currency transaction loss

Loss on debt extinguishment

Total other expense, net

Other expense, net, increased by $1.4 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to an increase in interest expense as a result of higher interest rates on our Credit Facility, partially offset by a decrease in foreign currency transaction losses.

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.

(Dollars in thousands)

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.

Provision for income taxes decreased by $0.9 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to lower deferred tax liability on Switzerland withholding taxes as compared to the prior year.

Liquidity and Capital Resources

At June 30, 2023, we had $89.4 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.

Cash from operations could be affected by various risks and uncertainties, including, but not limited to, the ongoing recovery from the COVID-19 pandemic, inflation, actions taken to counter inflation, foreign currency exchange rate fluctuations and instability in the banking sector and the risks included in Part I, Item 1A titled “Risk Factors.”

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

We continue however, to critically review our liquidity and anticipated capital requirements in light of the significant uncertainty created by macroeconomic conditions and ongoing recovery from the COVID-19 pandemic.

Our liquidity and cash flows have been and could continue to be materially impacted by current macroeconomic factors, including facility closures, supply chain disruptions, rising inflation, increased volatility in the financial markets, instability in the banking sector, tightening of credit markets which could impact debt availability, and the COVID-19 pandemic.

These factors have and could continue to negatively impact our business operations and cash flows for the foreseeable future, including reductions in revenue, decreases in gross margin and delays in payments from customers, as well as declines or delays in the conversion of backlog to revenue.

For example, certain of our revenue may not be collectible to the extent our customers suffer financial difficulty and, in fiscal 2023, we increased our bad debt reserve to account for potentially uncollectible revenue.

Accordingly, there remain uncertainties as to how the COVID-19 pandemic and the current macroeconomic environment will impact our business, results of operations, access to sources of liquidity and financial condition in the future.

As a result, we are unable to predict with certainty the impacts of these factors on our ability to maintain compliance with the financial covenants contained in the credit and security agreements related to our credit facilities.

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.

Concurrently, with the issuance of the notes, 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 “Existing Credit Agreement”), which provides for a five-year $80 million term loan facility (the "Term Loan Facility") and a $40 million revolving credit facility (the “Revolving Credit Facility”).

In October 2022, we entered into an amendment with respect of our Existing Credit Agreement to change the requirements of the financial maintenance covenants under the Existing Credit Agreement for the fiscal quarter ending December 31, 2022

through the end of the fiscal quarter ending June 30, 2023.

As of June 30, 2023, we had an outstanding balance under the Term Loan Facility of $69.1 million and Revolving Credit Facility of $10.0 million.

The weighted average effective interest rate on the outstanding balances under the Term Loan Facility was 7.26% and Revolving Credit Facility was 8.27% during the twelve months ended June 30, 2023.

See Note 9, " Debt" to the Notes to the consolidated financial statements for further information regarding the Existing Credit Agreement and 3.75% Convertible Senior Notes due 2026.

Also see Note 8, "Commitments and Contingencies " to the Notes to the consolidated financial statements for further information regarding our cash commitments related to our debt.

We may also experience other, unexpected impacts to our business, including matters discussed in the Part I, Item 1A titled “Risk Factors.”

While we were in compliance with such covenants for the period ended June 30, 2023, 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.

Following June 30, 2023, our financial maintenance covenants under the Existing Credit Agreement will become more stringent and, as a result could be more difficult to comply with.

These restrictions could adversely affect our ability to finance our future operations or capital needs, withstand a future downturn in our business or the economy in general, engage in business activities, including future opportunities that may be in our interest, and plan for or react to market conditions or otherwise execute our business strategies.

Our ability to comply with the covenants and other terms governing the Credit Facilities will depend in part on our future operating performance.

If we fail to comply with such covenants and terms, we may be in default and the maturity of the related debt could be accelerated and become immediately due and payable.

In addition, because substantially all of our assets are pledged as a security under the Credit Facilities, if we are not able to cure any default or repay outstanding borrowings, such assets are subject to the risk of foreclosure by our lenders.

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 amendments 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.

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Additionally, the undistributed earnings of our foreign subsidiaries at June 30, 2023, 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.

Future repatriation of our foreign earnings could be subject to income taxes.

As of June 30, 2023, we had $8.5 million of cash and cash equivalents at our foreign subsidiaries.

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

Years Ended June 30,

1 unchanged sentence

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.

Net cash 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 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.

Net cash provided by operating activities was $15.5 million during the year ended 2023, resulting primarily from a $20.2 million increase in non-cash items and a $4.6 million increase from the net changes in assets and liabilities, offset by a net loss of $9.3 million.

Non-cash items primarily consisted of consisted of share-based compensation expense of $10.1 million, depreciation and amortization expense of $4.5 million, provision for inventories write-down of $4.4 million, and $2.3 million for provision for credit losses, partially offset by income from our equity method investment of $2.6 million.

The major contributors to the increase in net changes of assets and liabilities during the year ended 2023 were as follows:

an $18.5 million decrease in accounts receivable primarily due to an increase in collections;

and a $2.9 million increase in accounts payable primarily due to the timing of payments;

partially offset by a $6.9 million increase in inventories primarily due to increased costs for parts;

a $4.7 million decrease in customer advances due to delivery of orders, and a $2.6 million decrease in deferred revenue primarily due to the timing of revenue recognition.

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.

Net cash used in investing activities was $12.7 million during the year ended 2023, primarily due to the purchase of property and equipment, which included $5.7 million for the implementation of a new enterprise resource planning system in which the costs were capitalized.

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.

Net cash used in financing activities during the year ended 2023 was due to the scheduled payment of $6.0 million of the principal amount outstanding on our Term Loan Facility and a $2.9 million repayment of our 3.75% Convertible Senior Notes due 2022, primarily offset by a $5.0 million drawdown on our Revolving Credit Facility and $2.2 million in proceeds from the issuance of common stock to employees from employee stock plans.

Operating Capital and Capital Expenditure Requirements

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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.

Servicing and maturity of our current future indebtedness, including interest rates;

The impact of inflation on our expenses;

The unpredictable impact of the macroeconomic environment and the COVID-19 pandemic, including on collections, supply chain, 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.

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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.

goods or services and acquisition and licensing of intellectual property.

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

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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.

See Note 5, “Leases”

to the Notes to the consolidated financial statements for further information.

We are experiencing rising costs for certain materials, including increased logistics costs, that have adversely affected our gross margins, which have had a material effect on our business, financial condition and results of operations for fiscal year 2023.

Continued pressure from inflationary factors, such as further increases in the cost of materials for our products, interest rates, overhead costs and logistics costs could further exacerbate these effects and harm our business, operating results, and financial condition.

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.

GAAP”).

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.

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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.

The economic uncertainty in the current environment caused by the COVID-19 pandemic however, 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.

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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.

Management believes the critical accounting policies and estimates are those related to revenue recognition and the assessment of stand-alone selling price ("SSP"), allowance for credit losses, valuation of inventories, and the valuation of equity method investments.

Revenue Recognition and the Assessment of Stand-Alone Selling Price

Our revenue is primarily derived from new system and upgrade sales of CyberKnife and TomoTherapy platforms and services, which include post-contract customer support (“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.

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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 generally do not request collateral from our customers but will request advance payments or letter’s of credit when deemed necessary.

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”).

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 its own or with other resources that are readily available to the customer.

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.

If the 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.

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 credit losses.

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.

Valuation of Inventories

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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.

Valuation of Equity Method Investments

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

Ltd., our joint venture in China.

Our 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.

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.

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 years ended June 30, 2023, and 2022, there was one customer that represented 10% or more of total net revenue.

We had one customer as of June 30, 2023 and two customers as of June 30, 2022, 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 with such customer.

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.

Foreign Currency Exchange Rate Risk

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

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

Future fluctuations in the value of the U.S.

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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.

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, 2023, we had open currency forward contracts to purchase or sell foreign currencies with stated, or notional value, of approximately $61.5 million.

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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.

Our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not limited to the Credit Facilities and our 3.75% Convertible Senior Notes due 2026.

The interest rates on the 3.75% Convertible Senior Notes due 2026 are fixed and the interest rate on the Credit Facilities are at variable rates, which are tied to a “prime rate”

and the Secured Overnight Financing Rate (“SOFR”).

As of June 30, 2023, borrowings under the Term Loan Facility totaled $69.1 million, net of issuance cost, with an annual interest rate of 3.0% plus 90-day term SOFR, and borrowings under the Revolving Credit Facility totaled $10.0 million with an annual interest rate of 3.0% plus 90-day term SOFR.

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

Refer to Note 9, 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.

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

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 248)

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’

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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’

We have audited the accompanying consolidated balance sheets of Accuray Incorporated (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’

equity, and cash flows for each of the three years in the period ended June 30, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, 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.

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, 2023, 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 September 7, 2023 expressed an unqualified opinion.

Basis for opinion

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San Jose, California

August 17, 2022

September 7, 2023

Accuray Incorporated

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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)

Accounts receivable, net of allowance for credit losses of $ 3,079 and $ 1,000 as of June 30, 2023 and June 30, 2022, respectively (a)

Prepaid expenses and other current assets (b)

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Accrued compensation

Operating lease liabilities, current

Operating lease liabilities

Other accrued liabilities

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Long-term liabilities:

Operating lease liabilities, non-current

Operating lease liabilities

Long-term other liabilities

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5,000,000 shares;

issued and outstanding

no shares issued and outstanding

Common stock, $ 0.001 par value;

200,000,000 shares as of

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

200,000,000 shares as of June 30, 2023 and June 30, 2022, respectively;

issued and outstanding:

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

96,534,609 and 93,499,500 shares at June 30, 2023 and June 30, 2022, respectively

Additional paid-in-capital

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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.

(a) Included accounts receivable from the joint venture, an equity method investment, of $ 10,304 and $ 24,828 at June 30, 2023, and June 30, 2022 , respectively.

(b) Included other receivable from the joint venture, an equity method investment, o f $ 100 and $ 861 at June 30, 2023, and June 30, 2022 , respectively.

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

Accuray Incorporated

Consolidated Statements of Oper ations and Comprehensive Income (Loss)

Consolidated Statements of Oper ations and Comprehensive Loss

(in thousands, except per share amounts)

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Income from operations

Income (loss) on equity method investment

Income on equity method investment

Other expense, net

Income (loss) before provision for income taxes

Loss before provision for income taxes

Provision for income taxes

Net income (loss)

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)

Net loss per share - basic

Net loss per share - diluted

Weighted average common shares used in computing net loss per share:

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

Comprehensive loss

(a) Includes sales of products to the joint venture, an equity method investment, of $ 55,658 during the year ended June 30, 2023, $ 45,545 during the year ended June 30, 2022, and $ 12,033 during the year ended June 30, 2021 , respectively.

(b) Includes sales of services to the joint venture, an equity method investment, of $ 10,919 during the year ended June 30, 2023, $ 10,332 during the year ended June 30, 2022, and $ 12,360 during the year ended June 30, 2021 , respectively.

(c) Includes cost of revenue from sales to the joint venture, an equity method investment, of $ 37,772 during the year ended June 30, 2023, $ 35,237 during the year ended June 30, 2022, and $ 13,310 during the year ended June 30, 2021, respectively.

(d) Includes charge backs to the joint venture, an equity method investment, related to research and development of $ 1,463 during the year ended June 30, 2023, $ 2,336 during the year ended June 30, 2022, and $ 430 during the year ended June 30, 2021, respectively.

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

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Consolidated Statement o f Stockholders’

(in thousands, except share amounts)

(in thousands)

Comprehensive

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Balance at June 30, 2020

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

Issuance of common stock to employees

Repurchase of common stock

Share-based compensation

Tax withholding upon vesting of restricted

Tax withholding upon vesting of restricted stock units

Extinguishment of allocated cost related to convertible note exchange

Bifurcation of conversion option upon issuance of convertible notes

Cumulative translation adjustment

Foreign currency translation adjustment

Change in defined benefit pension obligation

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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

Issuance of common stock to employees

Tax withholding upon vesting of restricted stock units

Share-based compensation

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Balance at June 30, 2022

Issuance of common stock to employees

Tax withholding upon vesting of restricted stock units

Share-based compensation

Cumulative translation adjustment

Change in defined benefit pension obligation

Balance at June 30, 2023

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

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Cash flows from operating activities

Net income (loss)

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

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

Depreciation and amortization

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Provision for credit losses

Non-cash revenue transactions related to joint venture

Non-cash revenue transactions related to the 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

(Gain) loss on disposal of property and equipment

Income on equity method investment

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

Accounts receivable

Prepaid expenses and other assets

Deferred cost of revenue, short and long-term

Deferred cost of revenue

Accounts payable

Operating lease liabilities, net

Operating lease liabilities, net of operating lease right-of-use assets

Accrued liabilities

Customer advances

Deferred revenues, short and long-term

Deferred revenues

Net cash provided by (used in) operating activities

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Purchase of intangible assets

Additional investments in joint venture

Additional investments in the joint venture

Net cash used in investing activities

Cash flows from financing activities

Proceeds from employee stock plans

Proceeds from exercise of options

Proceeds from the issuance of common stock to employees

Taxes paid related to net share settlement of equity awards

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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

Proceeds from the issuance of the Term Loan Facility

Debt issuance costs

Repayment of convertible notes

Paydown under Term Loan Facility

Borrowings under the Revolving Credit Facility

Repayments under the Revolving Credit Facility

Stock repurchase

Net cash provided by (used in) financing activities

Net cash used in financing activities

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

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Cash, cash equivalents and restricted cash at end of period

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

Accuray Incorporated

Consolidated Statements of Cash Flows (continued)

(in thousands)

Years Ended June 30,

Supplemental Disclosure of Cash Flow Information

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Supplemental non-cash disclosure:

Non-cash effect of pension settlement accounting

Prior convertible note exchanged

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Unpaid purchase of property and equipment at end of year

Receivable for the sale of property and equipment

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.

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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 is incorporated in Delaware and on July 31, 2023, it moved its principal place of business from Sunnyvale, California to Madison, Wisconsin.

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

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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”).

All significant intercompany 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 (“U.S.

GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Reclassifications

Certain amounts on the consolidated statements of cash flows and consolidated statements of stockholders equity in prior periods have been reclassified to conform to current year presentation.

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.

The Company is subject to risks and uncertainties caused by events with significant geopolitical and macroeconomic impacts, including, but not limited to, the COVID-19 pandemic, the Russian invasion of Ukraine, inflation, actions taken to counter inflation, foreign currency exchange rate fluctuations and instability in the banking sector.

The Company is also continuing to navigate supply chain and inflation challenges and foreign exchange continues to be a significant headwind that affects the Company’s results of operations.

These ongoing supply chain challenges and heightened logistics costs have adversely affected the Company's gross margins and net income or loss, and the Company’s current expectations are that gross margins and net income or loss will continue to be adversely affected by increased material costs and freight and logistic expenses through at least fiscal year 2024, if not longer.

Furthermore, certain parts required for the manufacturing 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 or (loss).

The Company expects that the business of its customers and its own business will continue to be adversely impacted, directly or indirectly, by macroeconomic and geopolitical issues, including supply chain issues, inflation, labor, foreign currency exchange rate fluctuations, uncertainty and volatility in the banking and financial services sector, tightening credit markets, the effects of the COVID-19 related restrictions, and other factors that may emerge.

The Company continues to critically review its liquidity and anticipated capital requirements in light of the significant uncertainty created by geopolitical and macroeconomic conditions.

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.

The Company however, is unable to predict with certainty the impact of geopolitical and macroeconomic conditions, 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 9 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, 2023.

Following June 30, 2023, our financial maintenance covenants under the Existing Credit Agreement will become more stringent and, as a result could be more difficult to comply with.

These restrictions could adversely affect the Company’s ability to finance its future operations or capital needs, withstand a future downturn in its business or the economy in general, engage in business activities, including future opportunities that may be in its interest, and plan for or react to market conditions or otherwise execute its business strategies.

The Company’s ability to comply with the covenants and other terms governing the Credit Facilities will depend in part on its future operating performance.

In addition, because substantially all of the Company’s assets are pledged as a security under the Credit Facilities, if the Company is not able to cure any default or repay outstanding borrowings, such assets are subject to the risk of foreclosure by the Company’s lenders.

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.

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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.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company.

A ctual results could differ materially from those estimates.

Foreign Currency

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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’

Resulting translation adjustments are excluded from the determination of net income or loss and are recorded in accumulated other comprehensive income (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

Cash, Cash Equivalents and Restricted Cash

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.

Restricted cash primarily consists of cash that is temporarily held in bank accounts which are under the control of the lender to the Credit Facilities, ce rtificates 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.

Fair Value Measurements

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

See Note 7, Fair Value Measurements, of the consolidated financial statements for further information.

Concentration of Credit Risk and Other Risks and Uncertainties

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

The Company’s cash and cash equivalents are primarily 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.

The Company maintains an allowance for doubtful accounts based upon the expected collectability of all accounts receivable.

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

The Company h ad one customer that represented 10 % or more of total net revenue for the years ended June 30, 2023, 2022, and 2021 , respectively.

The Company had one customer a s of June 30, 2023 and two customers as of June 30, 2022 , respectively, that each accounted for more than 10 % of accounts receivable, net.

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.

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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.

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

The Company applies the practical expedient to not adjust for a material 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.

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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.

Accordingly, implied trade-ins and

upgrades discounts are not considered separate performance obligations in system sales agreements.

During fiscal years 2023, 2022 and 2021, no fair value has been assigned to any of the systems that were traded-in.

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.

If the SSP is not directly observable, then the Company estimates 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.

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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.

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

Service contracts 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.

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

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

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

Deferred Revenue

Deferred Revenue and Customer Advances

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

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

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

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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.

Costs for the development of new software products and the substantial enhancements to existing software products for internal use are capitalized when it is considered probable that the software will be fully developed and used to perform its intended function.

Capitalized costs for the development of internal use software are included in property, plant and equipment, net on the consolidated balance sheets.

Capitalized costs for internal use software are amortized on a straight-line basis over its estimated useful life, which is generally five years.

Costs related to the preliminary project stage, post-implementation, training and maintenance are expensed as incurred.

Costs for the development of software the Company plans to sell, lease or market on its own or as part of another product is capitalized once technological feasibility is achieved.

The Company will capitalize costs until the product is ready to be sold, at which time, it will amortize the capitalized costs over the estimated useful life.

As of June 30, 2023, the Company has $ 2.9 million in capitalized costs for software to be sold and it is included in other assets on the consolidated balances sheets.

Impairment of Long‑Lived Assets

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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, 2023, 2022 and 2021 .

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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 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 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 market value of the Company’s common stock on the date of grant.

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

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

Share-based compensation expense for MSUs is based on a Monte Carlo simulation model to estimate the grant date fair value.

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.

Share‑based compensation expense for stock options, RSUs, and the ESPP awards is recognized on a straight‑line basis over the service period of the award.

Share-based compensation expense for PSUs is recognized on a straight-line basis over the period of time for the performance conditions to be satisfied and only for those awards expected to vest.

Forfeitures are recorded as they occur.

Loss Contingencies

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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):

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period.

Dilutive potential common shares include outstanding share awards.

Potentially dilutive shares of the Company’s common stock are excluded from the computation of diluted net loss per share for loss periods presented because including them would have been anti-dilutive.

Dilutive earnings per share is the same as basic earnings per share for the periods in which the Company had a net loss because the inclusion of outstanding common stock would be anti-dilutive.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share attributable to stockholders is as 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

Net loss used to compute basic and diluted loss per share

Weighted average shares used to compute basic and diluted loss per share

Basic and dilutive net loss per share

Anti-dilutive share-based awards, excluded

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.

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 Senior Notes

due 2026 and the 3.75 % Convertible Senior Notes due 2022 (collectively, the “Notes”) are included in the calculation of diluted net income (loss) per share only if their inclusion is dilutive for periods during which the Notes were outstanding.

The shares of common stock issuable upon conversion of the outstanding principal amount of the Notes as of June 30, 2023, 2022 and 2021 were 17.1 million, 17.6 million and 17.6 million, respectively, and were not included in the basic and diluted net loss per common share as the effect of adding the shares were anti-dilutive.

See Note 9, Debt, of the consolidated financial statements for more information about the Notes.

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.

Operating leases are included in the line items right-of-use assets, lease liabilities, current, and lease liabilities, 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.

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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.

The Company elected a practical expedient to account for lease and non-lease components together as a single lease component.

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 has an equity investment in CNNC Accuray (Tianjin) Medical Technology Co.

Ltd., the Company’s JV.

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

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.

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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.

The JV's 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.

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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.

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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.

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.

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

The Company’s Term Loan Facility (as defined below) and Revolving Credit Facility (as defined below) previously applied the Eurodollar rate London Interbank Offer Rate (“LIBOR”) to the variable component of the interest rate, but has moved away from the Eurodollar rate LIBOR in connection with reference rate reform.

In October 2022, the Company began using the Secured Overnight Financing Rate (“SOFR”) to calculate the variable component of the interest rate for its Term Loan Facility and Revolving Credit Facility.

The change to using SOFR did not have a material impact on the Company's financial statements.

Contract Balances

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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)

It can take two or more 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 –

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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

(1) Included in accounts receivable on the consolidated balance sheets

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

(3) Included in other assets on the consolidated balance sheets

During the year ended June 30, 2023, contract assets changed primarily due to the timing of billings that occurred after revenues were recognized, and changes in transactions with payment terms exceeding 12 months.

During the year ended June 30, 2023, contract liabilities changed due to the timing of revenue recognition as a result of changes in shipping timing, transaction price, reduced customer deposits for system sales, and for which the warranty was deferred.

During the years ended June 30, 2023 and June 30, 2022, the Company recognized revenues of $ 84.9 million and $ 81.2 million, respectively, which were included in the deferred revenue balances at June 30, 2022 and June 30, 2021, respectively.

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As of June 30, 2023, total remaining performance obligations amounted to $ 1,061.7 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’

Of this total amount, $ 72.2 million related to long-term warranty and non-cancellable post-warranty services, which is the estimated revenue expected to be recognized over the remaining service period and warranty period for systems that have been delivered (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)

The following table represents the Company's expected revenue recognition based on the remaining performance obligations related to long-term warranty and non-cancellable post-warranty services as of June 30, 2023 (in thousands):

Long-term warranty and service

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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.

The Company recognized expenses related to the amortization of capitalized contract costs of $ 3.6 million, $ 3.3 million and $ 2.8 million, during the years ended June 30, 2023, 2022 and 2021, respectively.

The Company incurred impairment losses related to capitalized contract costs of $ 0.8 million, $ 0.6 million and $ 0.6 million for the years ended June 30, 2023, 2022 and 2021 , respectively.

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.

Consolidated Balance Sheets

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.

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

The Company’s financing receivables, consisting of its accounts receivable with contractual maturities of more than one year, are included in other assets on 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.

The Company performs a credit analysis for all new orders 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.

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

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.

The Company performs an assessment each quarter on the allowance for credit losses related to its financing receivables.

The Company did no t have any additions to the allowance for credit losses during the years ended June 30, 2023 and 2022.

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

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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):

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Finished goods

Total inventories

The Company's inventories on the consolidated balance sheets are net of reserves.

Prepaid and Other Current Assets

Prepaid and other current assets consisted of the following (in thousands):

Value added tax receivables

Prepaid commissions

Capitalized contract costs

Other prepaid assets

Other current assets

Total prepaid and other current assets

Property and Equipment, net

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

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

Furniture and fixtures

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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.

Total property and equipment, net

At June 30, 2023 , construction in progress includes $ 7.5 million in capitalized costs for the development of internal use software.

Depreciation expense related to property and equipment was $ 4.4 million, $ 5.4 million and $ 6.2 million, during the years ended June 30, 2023, 2022 and 2021, respectively.

Other assets consisted of the following (in thousands):

Capitalized contract costs

Long-term accounts receivable

Capitalized software costs to be sold

Other long-term assets

Total other assets

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

Value added tax liabilities

Commissions due to third parties

Refunds due to customers

Accrued consulting

Accrued royalties

Other liabilities

Total other accrued liabilities

Accumulated Other Comprehensive Income (Loss)

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

Cumulative Translation Adjustment

Balance at June 30, 2021

Other comprehensive loss

Other comprehensive income (loss)

Balance at June 30, 2022

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Years Ended June 30,

(in thousands)

Interest expense

Foreign currency transaction loss

Gain on contribution to joint venture

Foreign currency exchange loss

Loss on debt extinguishment

Other expense, net

Total other expense, net

Restructuring

In the second quarter of fiscal year 2023, the Company announced a cost savings initiative designed to reduce operating costs.

This cost savings initiative resulted in the reduction of the Company’s global workforce by 4.5 %.

The Company recorded $ 2.7 million in restructuring charges during the fiscal year 2023.

These charges are cash-based charges, primarily related to severance expenses and other one-time termination benefits.

At June 30, 2023 , the Company does not have any remaining accruals related to the restructuring charges.

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.

Some of the Company’s leases are non-cancellable operating lease agreements with various expiration dates through June 2035.

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

In August 2022, the Company entered into a material lease agreement to extend the lease terms at its administrative and manufacturing facilities in Madison, Wisconsin through 2035.

Operating lease costs during the years ended June 30, 2023, 2022, and 2021, were $ 9.4 million, $ 9.2 million and $ 9.1 million, respectively, not including short-term operating lease costs during the years ended June 30, 2023, 2022, and 2021, of $ 0.4 million, $ 0.4 million and $ 0.2 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities during the years ended June 30, 2023, 2022, and 2021, w ere $ 9.4 million, $ 9.8 million and $ 9.7 million, respectively.

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

Beginning balance operating lease right-of-use assets

Lease assets added

Amortization for the year

Ending balance operating lease right-of-use asset

Beginning balance operating lease obligation

Lease liability added

Ending balance operating lease right-of-use assets

Beginning balance operating lease obligations

Lease liabilities added

Repayment and interest accretion

Ending balance operating lease obligation

Current portion of operating lease obligation

Noncurrent portion of operating lease obligation

Ending balance operating lease obligations

Current portion of operating lease obligations

Noncurrent portion of operating lease obligations

Maturities of operating lease liabilities as of June 30, 2023, are presented in the table below (in thousands) :

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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.

Weighted average remaining lease term (in years)

Weighted average discount rate

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):

The Company's carrying amount of its goodwill is as follows (in thousands):

As of June 30,

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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.

In the second quarter of fiscal year 2023 , the Company performed its annual goodwill impairment test and determined that there was no impairment to its goodwill.

The Company monitors its recorded goodwill for indicators of impairment every fiscal quarter.

Purchased Intangible Assets

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

The Company’s carrying amount of acquired intangible assets, net, consisted of the following (in thousands):

As of June 30, 2023

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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 .

Other intangibles

Total intangible assets

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, 2023, and 2022.

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.

Amortization expense related to purchased intangible assets during the years ended June 30, 2023, 2022, and 2021, was $ 0.2 million, $ 0.1 million and $ 0.2 million, respectively.

The estimated future amortization expense of purchased intangible assets as of June 30, 2023 is as follows (in thousands):

Year Ending June 30,

Total estimated future amortization expense

Derivative Financial Instruments

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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.

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

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.

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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):

The notional amount of the Company's outstanding forward currency exchange contracts consisted of the following:

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):

The Company entered into the foreign exchange forward contracts on June 30, 2023 and June 30, 2022, and therefore, there was no amount recorded on the balance sheets.

Gains and losses on the Company's foreign currency forward contracts are recorded in Other expense, net, on the Company's consolidated statements of operations.

The following table provides information about the gain or loss associated with the Company’s derivative financial instruments not designated as hedging instruments (in thousands):

Years ended June 30,

Foreign currency exchange gain (loss) on forward contracts

Foreign currency transactions gain (loss)

Fair Value Measurements

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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.

At June 30, 2023, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of $ 61.5 million.

The fair value of the forward contract based upon the June 30, 2023 exchange rate was $ 61.2 million, which it considers to be a Level 2 fair value measurement.

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

The fair value of the forward contract based upon the June 30, 2022 exchange rate was $ 68.3 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 Revolving Credit Facility (as defined below) and the Term Loan Facility (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):

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

June 30, 2023

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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):

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

See Note 9, Debt , of the consolidated financial statements for more information.

Future minimum long‑term principal payments and interest on the 3.75 % Convertible Senior Notes due 2026 and Credit Facilities (as defined below), including short-term portion, as of June 30, 2023, 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.

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

Purchase Commitments

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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, 2023.

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

As of June 30, 2023 and June 30, 2022, the Company had various bank guarantees totaling approximately $ 1.3 million and $ 1.2 million, respectively, primarily related to a bidding process with customers.

Royalty Agreements

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.

In connection with such agreements, the Company recorded royalty costs of $ 2.3 million, $ 1.9 million and $ 1.9 million for the years ended June 30, 2023, 2022 and 2021, respectively, which were recorded in cost of revenue or deferred cost of revenue.

The Company had approximately $ 2.4 million and $ 2.4 million accrued liabilities as of June 30, 2023 and 2022, respectively, related to this agreement.

Software License Indemnity

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

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.

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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.

The Company's outstanding debt as of June 30, 2023 and June 30, 2022 is as follows (in thousands):

June 30, 2023

June 30, 2022

Principal Amount

Unamortized Debt Costs

Net Carrying Amount

Principal Amount

Unamortized Debt Costs

Net Carrying Amount

3.75% Convertible Senior Notes due 2026

3.75% Convertible Senior Notes due 2022

Term Loan Facility

Revolving Credit Facility

Short-term debt

Long-term debt

3.75% Convertible Senior Notes due July 2026

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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”).

The aggregate principal amount of the 3.75 % Convertible Notes due 2026 totaling $ 97.1 million was 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.

2 unchanged sentences

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.

The conversion rate, and therefore, 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,”

2 unchanged sentences

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

A summary of interest expense on the New Credit Facilities and the Notes is as follows (in thousands):

As of June 30, 2023 and June 30, 2022 , the if-converted value of the 3.75 % Convertible Notes due 2026 did not exceed the outstanding principal amount.

3.75% Convertible Senior Notes due July 2022

As of June 30, 2022, the $ 2.9 million aggregate principal amount of the 3.75 % Convertible Senior Notes due July 2022 (the “

3.75 % Convertible Notes due 2022”) remained outstanding.

In July 2022, the remaining outstanding $ 2.9 million (principal and interest) of the 3.75 % Convertible Senior Notes due 2022 was repaid in cash.

Credit Facilities

On May 6, 2021, the Company entered into a senior secured credit agreement (the “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 “Term Loan Facility”) and a $ 40 million revolving credit facility (the “Revolving Credit Facility”

and, together with the Term Loan Facility, the “Credit Facilities”).

In fiscal year 2023, interest on the borrowings under the Credit Facilities is payable in arrears on the applicable interest payment date, at an annual interest rate of reserve-adjusted, 90-day term SOFR ( subject to a 0.50 % floor) plus a margin between 2.50 % and 3.25 % margin, determined by the Consolidated Senior Net Leverage Ratio (as defined in the Credit Agreement).

During the year ended June 30, 2023 , the weighted average effective interest rate on the Term Loan Facility was 7.26 % and Revolving Credit Facility was 8.27 %.

The Credit Agreement requires the Company to pay the Lenders an unused commitment fee equal to the average unused portion of the Revolving Credit Facilit y.

The Company pays a rate of 0.25 % to 0.40 % per annum of the average unused portion of the Revolving Credit Facility, determined by the Consolidated Senior Net Leverage Ratio (as defined in the Credit Agreement).

If all or a portion of the loans under the Term Loan Facility are prepaid, then the Company will be required to pay a fee equal to 1 % of the aggregate amount of the loans so prepaid, subject to certain exceptions.

The 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 Credit Agreement) to be less than a certain specified ratio for each fiscal quarter during the term of the 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 Credit Agreement.

In October 2022, the Company entered into an amendment with respect of the Credit Agreement to change the requirements of the financial maintenance covenants under the Credit Agreement for the fiscal quarter ending December 31, 2022 through the end of the fiscal quarter ending June 30, 2023.

As of June 30, 2023, the Company was in compliance with its covenants under the Credit Agreement.

The 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 Credit Agreement contains customary representations and warranties and events of default.

A summary of interest expense on the Credit Facilities and the Notes is as follows (in thousands):

Year ended June 30,

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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, 2023 , 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.

the 2016 Equity Incentive Plan ( “2016 Plan”) and the 2007 Incentive Award Plan (“2007 Plan”).

The 2016 Plan permits the granting of stock options, stock appreciation rights, restricted stock awards, performance shares, performance units, and RSUs.

Only employees of the Company are eligible to receive incentive stock options.

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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.

Service‑based RSUs granted 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.

RSUs granted to the Board of Directors vest over one year.

PSUs granted generally vest at the end of a three year performance period and the amount of shares that vest are based on the Company's actual performance relative to predefined performance conditions.

The Board of Directors has the discretion to use different vesting schedules.

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General and administrative

The amount of capitalized share‑based compensation costs as components of inventory was insignificant at June 30, 2022, 2021 and 2020.

The following table summarizes the share‑based compensation charges for the Company’s equity awards (in thousands):

Years ended June 30,

Stock options

Restricted stock units

Performance stock units

Employee stock purchase plan

Market stock units

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:

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0.59 % - 1.27 %

1.14 % - 1.53 %

Dividend yield

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54.7 % - 55.6 %

47.3 % - 48.9 %

Determining Fair Value of Stock Options

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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.

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

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.

The expected volatility is derived from the Company’s historical stock volatility over a period approximately equal to the expected term of the options.

The risk‑free interest rate is based on the U.S.

Treasury constant maturity rate on the date of grant.

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 is presented below (in thousands except per share and term amounts):

Balance at June 30, 2022

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Exercisable at June 30, 2023

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 aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of Accuray common stock of $ 3.87 and $ 1.96 on June 30, 2023 and June 30, 2022 , respectively, The amount represents what would have been received by the option holders had all option holders exercised their options and sold the shares received upon exercise as of that date.

There were no options granted during the year ended June 30, 2023.

The grant date fair value of options granted during the years ended June 30, 2022 and 2021 was $ 0.9 million and $ 3.7 million, respectively.

There were no options exercised during the year ended June 30, 2023.

T he total intrinsic value of options exercised during the years ended June 30, 2022 and 2021 was $ 0.3 million and $ 0.2 million, respectively, and the total cash received from option exercises during the y ears ended June 30, 2022 and 2021 was $ 1.2 million and $ 2.2 million, respectively.

Tax benefits from tax deductions for exercised options and disqualifying dispositions in excess of the deferred tax asset, attributable to share 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, 2023, 2022 and 2021.

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.

As of June 30, 2023, there wa s $ 1.6 million of unre cognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 2 .0 years.

The following table summarizes information about outstanding and exercisable options at June 30, 2023 (in thousands, except years and exercise price):

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$ 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):

Restricted Stock, Performance Stock and Market Stock Units

The following table summarizes the activity of RSUs and PSUs (in thousands, except fair value per share):

Unvested Restricted Stock

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Unvested at June 30, 2023

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.

As of June 30, 2023, there was $ 10.7 million of unrecognized compensation cost related to the RSUs, which is expected to be recognized over a weighted average period of 2.

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.

The grant date fair value of the RSUs granted was $ 7.2 million, $ 12.0 million and $ 7.1 million for the years ended June 30, 2023, 2022 and 2021, respectively.

The aggregate fair market value of the RSUs that vested during the years ended June 30, 2023, 2022 and 2021 , was $ 4.5 million, $ 6.4 million and $ 5.8 million, respectively.

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.

The grant date fair value of PSUs granted wa s $ 2.4 million, $ 3.7 million and $ 1.3 million for the years ended June 30, 2023, 2022 and 2021 , respectively.

There were no PSUs that vested during the years ended June 30, 2023, 2022 and 2021.

As of June 30, 2023, there was $ 1.5 million of unrecognized compensation cost related to the PSUs, which is expected to be recognized over a weighted average period of 1.6 years.

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.

The Compensation Committee approved no MSU grants during the years ended June 30, 2023, 2022 and 2021.

As of June 30, 2023 , 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.

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 six month 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.

Employees may purchase up to 2,500 shares per each six month offering 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.

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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.

The Company issued 1.3 million, 1.1 million and 1.2 million shares under the ESPP during fiscal 2023, 2022 and 2021, respectively , at a weighted average purchase price per share of $ 1.75 , $ 2.51 and $ 1.90 , respectively.

As of June 30, 2023, total unrecognized compensation cost related to th e ESPP plan was $ 0.9 million, which the Company expects to recognize over a weighted average period of 0.9 years.

Common Stock Available For Issuance

In November 2022, the number of shares of common stock available for issuance under the Company's 2016 Equity Incentive Plan increased by 4.0 million shares, and increased the number of authorized shares of the Company's common stock that may be issued under its Amended and Restated 2007 Employee Stock Purchase Plan by 2.5 million shares.

At June 30, 2023 , the Company had 2.7 million shares of common stock reserved for issuance under the stock incentive plans and 4.9 million shares of common stock reserved for issuance under the employee stock purchase plan.

Joint Venture

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(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.

As of June 30, 2023 , the Company owned a 49 % interest in the JV, which is reported as an investment in joint venture on the Company’s consolidated balance sheets.

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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.

The following table shows the reconciliation between the carrying value of the Company's investment in the JV and its proportional share of the underlying equity in net assets of the JV (in thousands):

Carrying value of investment in joint venture

Deferred intra-entity profit margin

Equity method goodwill

Proportional share of equity investment in joint venture

As of June 30, 2023, the Company’s carrying value of the investment in the JV for the Company's proportional share of the JV's currency translation adjustment was not material.

At June 30, 2022 , the Company’s carrying value of the investment in the JV was increased for the Company's proportional share of the investee's currency translation adjustment by $ 1.0 million.

No i mpairment was identified as of June 30, 2023 and June 30, 2022.

Summarized financial information of the JV is as follows (in thousands):

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March 31, 2022

Twelve Months Ended

March 31, 2021

Net income attributable to the Company

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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):

Total liabilities and stockholders' equity

The following table shows the activity of the Company’s deferred intra-entity profit margin from sales (in thousands):

Years Ended June 30,

Total worldwide

Previously deferred intra-entity profit margin from sales - recognized

Intra-entity profit margin from sales - deferred

Total change in deferred intra-entity profit margin from sales

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 loss before provision for income taxes

The provision for income taxes consisted of the following (in thousands):

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Debt extinguishment

Other non-deductible permanent items

Research and development credits

Foreign taxes

2 unchanged sentences

Change in valuation allowance

Other non-deductible permanent items

Total provision for income taxes

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.

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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.

Net deferred tax liabilities

As of June 30, 2023, the Company h ad $ 294.1 million and $ 125.1 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 2024 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.

In addition, as of June 30, 2023 , the Company had federal and state research and development tax credits of $ 27.9 million and $ 22.6 million, respectively.

If not utilized, the federal research credits will begin to expire in 2024, the California research credits have no expiration date and the other state research credits will begin to expire in 2024.

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.

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.

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.

Certain income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFC’s United States shareholder.

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.

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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.

One of the provisions under the Tax Cuts and Jobs Act that became effective in tax years beginning after December 31, 2021 required the capitalization and amortization of research and experimental expenditures.

The change in this United States tax law did not have an impact on the Company's consolidated financial statements.

The Company will continue to evaluate the impact of this tax law change on future periods.

At June 30, 2023, t he Company has $ 1.5 million of deferred tax liability related to withholding tax expected to be paid on the remittance of unrepatriated distributable reserves in France, Japan and Switzerland.

At June 30, 2023, the Company has undistributed earnings of certain foreign subsidiaries of $ 19.8 million that it has indefinitely invested, and on which it has not recognized deferred taxes.

The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands):

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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.

As of June 30, 2023 and 2022, the Company’s cumulative accrued interest and penalties related to uncertain tax positions, was not material.

The Company files income tax returns in the United States federal, various states, and foreign jurisdictions.

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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.

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.

The tax audit in Japan was completed in fiscal year 2023 with a tax assessment of $ 0.1 million for the 2019 to 2021 fiscal periods.

The Company is under the early stages of audit by the Indian tax authorities for the fiscal year 2021.

Retirement Plans

Employee Benefit Plan

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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

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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)

Net actuarial gain

Prior service credit

Accumulated other comprehensive income

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):

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Expected returns on assets

Amortization of prior service cost

Amortization of net loss

Settlement charges

Amortization of prior service cost (credit)

Amortization of net gain

Gain on settlement

Net periodic benefit costs

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Net (gain) loss arising during the year

Prior service cost

Amortization of prior service cost

Prior service cost (credit)

Amortization of prior service cost (credit)

Amortization of net gain

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Total recognized in other comprehensive (gain) loss

Total recognized in net periodic benefit costs and other

comprehensive loss

Total recognized in net periodic benefit costs and other comprehensive income (loss)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during fiscal year 2024 related to the Company’s defined benefit pension plan are as follows (in thousands):

Prior service credit

Prior service cost

Accumulated other comprehensive income

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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.

Contributions and Future Benefit Payments

The Company made contributions of approxim ately $ 1.3 million, $ 1.2 million and $ 1.1 million to the defined benefit pension plan during fiscal years 2023, 2022 and 2021, respectively.

The Company expects total contributions to the defined benefit pension plan for fiscal year 2024 will be approximately $ 1.2 million.

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Year Ending June 30,

Total estimated future benefit payments

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.

Collective Foundation based in Lausanne, Switzerland at the end of fiscal years 2023 and 2022.

In fiscal 2023 and 2022, the risks of death and disability are reinsured with Zurich Life Insurance.

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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 .

In fiscal 2023 and 2022 , the guaranteed interest rate for mandatory retirement savings was 1.5 % and 1.0 %, respectively .

The technical administration and management of the savings account are guaranteed by the Copré

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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.

Disaggregation of Revenues

The Company disaggregates its revenues from contracts by geographic region, as the Company believes this best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors.

The Company reports its customer revenues in four geographic regions:

the Americas, EIMEA, Asia Pacific and Japan.

The Americas region primarily includes the United States, Canada, and Latin America.

The EIMEA region includes Europe, India, the Middle East and Africa.

The Asia Pacific region consists of Asia, Australia and New Zealand.

Additionally, the Company typically recognizes revenue at a point in time for product revenue and recognizes revenue over time for service revenue.

Revenues attributed to a country or region are 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.

Asia Pacific, excluding China

Total revenues

The following summarizes countries that represent more than ten percent of the Company’s revenues (in thousands):

Years ended June 30,

United States

Rest of world

Total revenues

Disaggregation of Property and Equipment, Net

Information regarding geographic areas in which the Company has property and equipment, net is as follows (in thousands):

Asia Pacific, excluding China

Total property and equipment, net

Property and equipment, net in the Americas region is located in the United States.

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.

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 its disclosures in the consolidated financial statements.

CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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OTHE R INFORMATION

Securities Trading Plans of Directors and Executive Officers

During the fourth quarter of fiscal 2023, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement”

or a “non-Rule 10b5-1 trading arrangement,”

each as defined in Regulation S-K Item 408.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

5 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, 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.

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, 2023, and our report dated September 7, 2023 expressed an unqualified opinion on those financial statements.

Basis for opinion

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San Jose, California

August 17, 2022

September 7, 2023

DIRECTORS, EXECUTIVE O FFICERS AND CORPORATE GOVERNANCE

42 unchanged sentences

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.

5 unchanged sentences

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

Description of the Registrant’s Securities

Office Lease between Old Sauk Trails Park Limited Partnership and TomoTherapy Incorporated, dated October 22, 2001.

First Amendment to Lease between Old Sauk Trails Park Limited Partnership and TomoTherapy Incorporated, dated May 1, 2004.

Incorporated by Reference

Exhibit Description

Second Amendment to Lease between Old Sauk Trails Park Limited Partnership and Accuray, Inc FKA TomoTherapy, Inc., dated October 19, 2016.

Third Amendment to Lease between Old Sauk Trails Park Limited Partnership and Accuray Incorporated, dated March 27, 2020.

Fourth Amendment to Lease Deming Way Property Group LLC and Accuray Incorporated, dated August 19, 2022.

Accuray Incorporated 1998 Equity Incentive Plan and forms of agreements relating thereto .

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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.

5 unchanged sentences

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.

Incorporated by Reference

Exhibit Description

Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Sandeep Chalke .

7 unchanged sentences

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, 2023.

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 Suzanne Winter, dated January 1, 2023

Executive Employment Agreement by and between Registrant and Michael Hoge, dated January 1, 2023.

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 Ali Pervaiz, dated January 1, 2023.

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.

First Amendment to Credit Agreement among Registrant, as the Borrower, the several banks and other financial institutions or entities party hereto, and Silicon Valley Bank, as administrative agent, issuing lender and swingline lender, dated as of October 28, 2022.

Form of Exchange Agreement, dated as of May 6, 2021, between the Registrant and each signatory thereto.

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Consent of Grant Thornton LLP, independent registered public accounting firm.

Incorporated by Reference

Exhibit Description

Power of Attorney (incorporated by reference to the signature page of this annual report on Form 10‑K).

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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.

thereunto duly authorized, in the City of Madison, State of Wisconsin, on September 7, 2023.

ACCURAY INCORPORATED

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President, Chief Executive Officer and Director (Principal Executive Officer)

August 17, 2022

September 7, 2023

/s/ Ali Pervaiz

Chief Financial Officer (Principal Financial Officer)

August 17, 2022

/s/ Franco Palomba

Franco Palomba

September 7, 2023

/s/ Gina Corradetti

Gina Corradetti

Chief Accounting Officer and Controller (Principal Accounting Officer)

August 17, 2022

September 7, 2023

/s/ Joseph E.

Chairperson of the Board and Director

August 17, 2022

/s/ Elizabeth Dávila

Elizabeth Dávila

August 17, 2022

September 7, 2023

/s/ Beverly A.

August 17, 2022

/s/ Richard R.

August 17, 2022

/s/ Mika Nishimura

September 7, 2023

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