3D SYSTEMS CORP

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2023, which is the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023 to ensure that information required to be disclosed by the Company in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the United States Securities and Exchange Commission’s (“SEC”) rules and forms and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures due to the material weaknesses described below.

Notwithstanding the existence of the material weaknesses described below, management believes that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented, in conformity with generally accepted accounting principles.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2023. The Company’s internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management’s assessment of and conclusion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, did not include the internal controls of Wematter AB (“Wematter”), which was acquired on July 1, 2023. We began consolidating the results of Wematter in the 2023 consolidated financial statements of the Company as a result of the acquisition, which represented approximately 0.7% of the Company’s total assets as of December 31, 2023, and 0.0% of the Company’s total revenue for the year ended December 31, 2023. Due to the timing of this acquisition and as permitted by SEC guidance, management excluded Wematter from its December 31, 2023 assessment of the Company’s internal control over financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

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 a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) the Internal Control - Integrated Framework (2013). Based on its assessment, management has concluded that the Company did not maintain effective internal controls over financial reporting as of December 31, 2023. Specifically, management concluded that the Company did not effectively design, implement and maintain formal accounting policies, procedures and controls over significant accounts and disclosures in order to achieve complete, accurate and timely financial accounting, reporting and disclosures with respect to:

1. The revenue process, including the review of contract terms input into the Company's information systems that support the determination of revenue recognition, the accounting for, and the monitoring of the timing of revenue recognition;

2. The financial close, accounting, and reporting processes, as specifically related to management’s review of internally prepared reports and analyses utilized in these processes in reviewing certain financial statement disclosures;

3. Management’s review of the accounting treatment for certain technical matters related to certain transactions and financial statement accounts; and

4. The maintenance of an effective control environment; specifically, as it relates to: (a) senior management's commitment to the control environment principles, and (b) maintaining sufficient qualified resources with the appropriate level of knowledge, experience, and training necessary to support accounting and financial reporting processes and controls.

Although these material weaknesses did not result in a material misstatement of our consolidated financial statements for the periods presented, there is a possibility they could lead to a material misstatement of account balances or disclosures. Accordingly, management has concluded that these control deficiencies constitute material weaknesses.

Management’s Plan for Remediation

Certain of the material weaknesses described above (items 1 and 2) were initially identified at December 31, 2020 and continued to exist at December 31, 2023. The remediation plan we commenced in January 2021 served to address a number of the control deficiencies previously identified; however, additional deficiencies were identified in the year ended December 31, 2023, indicating the resulting material weaknesses were not fully remediated.

The ongoing remediation plan is designed to improve our internal control over financial reporting and remediate the related control deficiencies that led to these material weaknesses. In response to these deficiencies, management, with the oversight of the Audit Committee of the Board of Directors, has identified and is implementing steps to remediate the material weaknesses described above.

During the three years ended December 31, 2023, the Company completed the implementation of the following remedial measures designed to address the material weaknesses initially identified at December 31, 2020, and to continue to improve our internal control over financial reporting:

•Established a formal controls governance committee in the first quarter of 2022 to manage and enhance the oversight and execution of internal controls. The controls governance committee consists of members of senior leadership, which meets monthly or more frequently as needed.

•Retained an external firm with expertise in the design and execution of internal controls over financial reporting to examine our overall internal controls framework, including the design of our controls and procedures and implementation of our remediation activities.

•Retained an external firm with deep expertise in internal controls monitoring and testing to perform Internal Audit activities.

•Retained an external firm with technical accounting expertise to support the Finance function.

•Enhanced the global control environment, including expanded internal controls testing of additional business process and information technology controls in 2022 and 2023.

•Implemented software platforms to manage and administer account reconciliations and ownership of individual control points.

•Conducted extensive cross-functional internal controls training for all levels of the Company.

•Enhanced the design of our internal disclosure processes to provide greater representation across functions and improve opportunities to identify matters requiring accounting disposition or disclosures.

•Hired new senior leadership at the Chief Accounting Officer and Chief Financial Officer levels with leadership experience and appropriate technical expertise to continue enhancements to the Company’s controls framework and strengthen the Company’s level of technical expertise.

•Initiated a robust finance transformation initiative designed to improve and enhance the financial close process, with an emphasis on process improvements and the implementation and enhancement of key technologies designed to improve the automation and execution of internal controls in the accounting environment.

Ongoing internal control remediation efforts with respect to (a) the two material weaknesses initially identified at December 31, 2020 and (b) the additional material weaknesses identified at December 31, 2023 are expected to include the following:

•Perform a comprehensive evaluation of our key business processes and internal controls in areas where we have identified material weaknesses in order to enhance the design of certain controls and improve our overall control environment, with an emphasis on those business processes related to order entry and revenue accounting.

•Perform additional education and training on process requirements for control performers to address effective execution of management review control activities.

•Enhance review processes to support the design and timely execution of control activities related to changes or updates within IT systems impacting key internal control processes.

•Hire and retain financial professionals with relevant knowledge and experience in financial reporting and technical accounting matters.

•Enhance senior leadership’s oversight and monitoring of the internal control environment and effectiveness of the Company’s remediation activities.

We are committed to the remediation of all material weaknesses and expect to successfully implement enhanced control processes. However, as we continue to evaluate and work to improve our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. Therefore, we cannot assure you as to the timing, scope, or costs of the ongoing remediation process. Moreover, we cannot assure you that additional material weaknesses will not arise in the future as we work to improve our control environment.

Attestation Report of Independent Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by BDO USA, P.C., an independent registered public accounting firm, as stated in their report included in Item 8 of this Form 10-K.

Changes in Internal Control Over Financial Reporting

Other than the management remediation plan described above, there were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.