ACCURAY INC Fair Value Disclosure

Note 6. Fair Value Measurements

Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as follows:

Level 1— Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2— Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

Level 3— Unobservable inputs that cannot be corroborated by observable market data and require the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Items Measured at Fair Value on a Recurring Basis
 

Warrant Liabilities

The Penny Warrants (as defined in Note 7) are accounted for as a liability with the changes in fair value of the warrants are recognized in the statement of operations and comprehensive income (loss). The fair value of the Penny Warrants at issuance date was based on the closing listed stock price on June 6, 2025, and remeasured based on the listed market price of

such warrants at June 30, 2025. The estimated fair value of the Penny Warrants liabilities represent Level 2 measurements because the fair value of the warrant is being implied based on market trades of the stock.

Other Fair Value Disclosures

At June 30, 2025, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of $43.5 million. The fair value of the forward contract based upon the June 30, 2025 exchange rate was $43.3 million, which it considers to be a Level 2 fair value measurement. At June 30, 2024, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of $88.0 million. The fair value of the forward contract based upon the June 30, 2024 exchange rate was $87.7 million, which it considers to be a Level 2 fair value measurement.

The Company’s convertible debt is measured on a recurring basis using Level 2 based upon observable inputs. The Company's Term Loan Facilities due 2030 (as defined in Note 7) reflect the bank quoted market rates, which the Company considers to be a Level 2 fair value measurement. The Company believes that the carrying value of the Prior Term Loan Facility and Revolving Credit Facility approximates its estimated fair value based on the effective interest rate, compared to the current market rate available to the Company at quarter-end.

The carrying value and fair value of the Term Loan Facilities due 2030 excludes $21.0 million for the fair value of the warrants issued to the lenders to purchase the Company’s common stock.

The Premium Warrants (as defined in Note 7) met all of the criteria for equity classification and were recorded at their relative fair value in additional paid-in capital at the time of issuance. The fair value of $12.8 million is not subject to remeasurement and was estimated using a Black-Scholes method, which incorporates significant unobservable inputs, including expected volatility, risk-free interest rate and expected term. As these inputs are not observable in the market, the fair value measurement of the Premium Warrants represent a Level 3 measurement.