ACCURAY INC

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of December 31, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to the material weaknesses in our internal control over financial reporting that were disclosed in our Annual Report on Form 10-K for the year ended June 30, 2024 (“2024 Annual Report”) and discussed further below, as of December 31, 2024, our disclosure controls and procedures, as defined in Rule 13a-15(e), were not effective at a reasonable assurance level in ensuring (i) that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer and Chief Financial Officer, has also concluded that as of June 30, 2024 and September 30, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses in our internal control over financial reporting which were disclosed in 2024 Annual Report.

Management’s Report on Internal Control over Financial Reporting

As disclosed in our 2024 Annual Report, management concluded that our internal control over financial reporting was not effective as a result of the material weaknesses detailed below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

A deficiency was identified associated with the risk assessment component of the COSO framework. This specifically related to the implementation of the SAP S/4HANA ERP system on August 1, 2023, which contributed to two material weaknesses within our system of internal control over financial reporting at the control activity level;

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The system was not designed and did not maintain effective controls to ensure that all manual journal entries consistently enforced segregation of duties in the approval process prior to being posted to the general ledger system.

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The system was not designed to and did not maintain effective controls to ensure the existence of inventory at the Madison manufacturing warehouse locations because its controls relied on a cycle count program that, due to limitations associated with the system, was not sufficiently precise.

Remediation of Previously Disclosed Material Weakness

As noted above, management identified a material weakness within our system of internal control over financial reporting due to our SAP S/4HANA ERP system not being designed for and not maintaining effective controls to ensure that all manual journal entries consistently enforced segregation of duties in the approval process prior to being posted to the general ledger system. Remediation of this material weakness was completed during the three months ended December 31, 2024 and included establishing new controls and procedures to ensure segregation of duties is maintained between the creation, posting and approval of manual journal entries. As of December 31, 2024, these control activities have been appropriately designed and implemented, and have operated effectively for a sufficient period of time to conclude that the previously identified material weakness has been remediated.

Remediation Efforts to Address the Material Weakness Existing in the Current Period

Management is committed to addressing and remediating the remaining cycle count material weakness described above and has developed a plan to enhance the design and operating effectiveness of our internal controls over financial reporting. Remediation measures, which are currently ongoing, include enhancing the ERP system reports to allow for full capture of inventory with proper count timing required for an effective cycle count program, inclusive of reinforcement for proper cycle count process through policy statements, regular communications and in periodic reviews and meetings with managers and staff.

Implementation of the above remediation measures are subject to oversight by the Audit Committee of our Board of Directors, and while remediation measures are currently in place, this identified material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and we have concluded through testing that the newly implemented controls are designed and operating effectively.

Notwithstanding the existing material weakness, management has concluded that the Company’s consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented with accounting principles generally accepted in the United States of America.

Changes in Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, and has concluded that other than the changes described above under "Remediation of Previously Disclosed Material Weakness" and the material weakness identified with corresponding remediation measures described above, there were no significant changes in our internal control over financial reporting that have been materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Control Over Financial Reporting

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. These inherent limitations, however, are known features of the financial reporting process, therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

PART II. OTHER INFORMATION