3D SYSTEMS CORP

NOTE 1 - BASIS OF PRESENTATION

3D Systems Corporation (“3D Systems” or the “Company” or “we,” "our" or “us”) markets our products and services through subsidiaries in North America and South America (collectively referred to as “Americas”), Europe and the Middle East (collectively referred to as “EMEA”) and Asia Pacific and Oceania (collectively referred to as “APAC”). We provide comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics and metals, materials, software, and services, including maintenance, advanced manufacturing and applications engineering. Our solutions support advanced applications intwo key industry verticals: Healthcare Solutions (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have over 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.

Consolidated Entities

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all majority-owned and wholly-owned subsidiaries and entities in which a controlling interest is maintained. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 ( the “2024 Annual Report on Form 10-K”). The Company believes that the disclosures included in this Form 10-Q are adequate to make the information presented not misleading. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments, consisting of adjustments of a normal recurring nature, necessary to present fairly the Company's financial position, results of operations, and cash flows for the periods presented. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates and assumptions.

Our annual reporting period is the calendar year. The Company's results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year.

Summary of Significant Accounting Policies

There have been no significant changes to our accounting policies since those disclosed in the Company's 2024 Annual Report on Form 10-K.

Finance Leases

As of March 31, 2025 and December 31, 2024, short-term finance lease obligations of $1.5 million in both periods are included in Accrued and other liabilities and long-term finance lease obligations of $10.3 million and $10.5 million, respectively, are included in Other liabilities on our Condensed Consolidated Balance Sheets.

Amortization of Intangible Assets

Amortization expense related to our intangible assets with finite lives was $0.6 million and $2.0 million for the three months ended March 31, 2025 and 2024, respectively.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures." The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, while permitted to be adopted on a retrospective basis. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Upon adoption, this ASU is expected to result in the inclusion of additional tax-related disclosures in the footnotes to our consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." The amendments in this ASU require public entities to provide disaggregated disclosure of expenses included within relevant income statement expense captions, as well as additional disclosures about selling expenses. This update is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently in the process of evaluating the effects of this ASU on our consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments," related to induced conversions of convertible debt instruments. The amendments in this ASU clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or retrospective basis. The Company is currently in the process of evaluating the effects of this ASU on our consolidated financial statements.

NOTE 2 - REVENUES

Contract Assets

In certain circumstances, contract assets are recorded to include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customers, and right to payment is subject to contractual performance obligations rather than subject only to the passage of time. Contract assets were $1.0 million and $0.3 million as of March 31, 2025 and December 31, 2024, respectively, and are included in Prepaid expenses and other current assets on the accompanying Condensed Consolidated Balance Sheets.

Contract Liabilities

Our contract liabilities consist of deferred revenue generally related to maintenance and service contracts, post-sale support and extended warranty sales, where we generally receive up-front payment and recognize revenue over the service or support term. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue. The current portion of deferred revenue is recorded within Accrued and other liabilities and the non-current portion of deferred revenue is recorded within Other long-term liabilities on our Condensed Consolidated Balance Sheets.

Our contract liabilities consisted of the following:

During the three months ended March 31, 2025, the Company recognized $14.0 million of revenue related to the Company's contract liabilities at December 31, 2024. The change in contract liabilities from December 31, 2024 to March 31, 2025 was primarily due to the timing of cash receipts and sales of extended service contracts.

Collaborative Arrangements

The Company enters into collaborative arrangements with customers that provide for cost reimbursement of certain expenses and potential milestone payments.

The Company recognized $2.8 million and $2.0 million of products revenue, and $2.5 million and $2.1 million in product cost of sales, related to collaborative arrangements during the three months ended March 31, 2025 and March 31, 2024, respectively.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied as of the end of the period. As of March 31, 2025, the Company had $5.8 million of remaining performance obligations, primarily related to maintenance and service contracts, post-sale support and extended warranties. We expect approximately 90% to be recognized as revenue within the nexttwo years, and the remaining thereafter. We have excluded performance obligations with an original expected duration of one year or less.

Revenue Concentration

Revenue, by the geographic region in which a sale originated, was as follows:

(a) Includes total sales in the United States of $50.9 million and $59.9 million for the three months ended March 31, 2025 and 2024, respectively.

(b) Includes total sales in Germany of $17.0 million and $14.2 million for the three months ended March 31, 2025 and 2024, respectively.

For the three months ended March 31, 2025 and 2024, one customer accounted for 12.0% and 16.3% of our consolidated revenue, respectively. We expect to maintain our relationship with this customer.

NOTE 3 - INVENTORIES

NOTE 4 - ASSETS HELD FOR SALE

In December 2024, the Company entered into a definitive agreement with Hexagon AB for the sale of its Geomagic software business ("Geomagic"), which was included in our Industrial Solutions segment. On April 1, 2025, the Company completed the sale of Geomagic and received $119.4 million in cash, which reflected applicable purchase price adjustments under the Asset Purchase Agreement and Business Transfer Agreement. The Company estimates it will record a pre-tax gain of approximately $125 million from the sale of Geomagic in the second quarter of 2025.

No loss was recognized to measure the disposal group at the lower of its carrying value or fair value less costs to sell. The disposal group has not been presented as a discontinued operation in the accompanying condensed consolidated financial statements because the sale of Geomagic does not represent a strategic shift that will have a major effect on the Company’s operations.

The Company determined that the associated assets and liabilities met the held for sale criteria. The following table summarizes the assets and liabilities of Geomagic:

NOTE 5 - INVESTMENTS AND NOTE RECEIVABLE

The Company holds various investments in equity and note receivable that are reported in Other assets and Prepaid expenses and other assets on our Condensed Consolidated Balance Sheets. The following table summarizes our investment balances:

During the three months ended March 31, 2025, the Company purchased additional shares of an equity method investment in Enhatch Inc. ("Enhatch") for $0.6 million. As of March 31, 2025, the Company owns approximately 72% of Enhatch's outstanding common stock and approximately 41% of Enhatch's outstanding voting stock.

Note Receivable - Related Party

In February 2023, we became a shareholder in a joint venture, National Additive Manufacturing Innovation ("NAMI") Joint Venture, formed with the Saudi Arabian Industrial Investments Company ("Dussur") for purposes of expanding the use of additive manufacturing within the Kingdom of Saudi Arabia and surrounding geographies, including the Middle East and North Africa.

During December 2024, the Company entered into a short-term, non-interest bearing loan agreement with NAMI whereby NAMI borrowed $2.0 million to finance its working capital and capital expenditures requirements. The loan matures on June 30, 2025 and is being accounted for at cost, which approximates fair value as of March 31, 2025. The carrying value of the related party notes receivable was $2.0 million as of March 31, 2025 and December 31, 2024.

Additionally, during the three months ended March 31, 2025 and 2024, the Company entered into related party transactions for immaterial amounts with the companies that they also hold investments in. These transactions included immaterial purchases from and sales to these companies, which resulted in immaterial outstanding related party receivable and payable balances as of March 31, 2025 and 2024.

Other Asset

The Company provided financing of $1.0 million to Hull Legacy Media Corporation, a production company co-owned by Charles W. Hull, our EVP, Chief Technology officer of our Regenerative Medicine business and related party of the Company. The financing is recorded in Other assets on our Condensed Consolidated Balance Sheets as of March 31, 2025.

Variable Interest Entities ("VIEs")

The Company concluded that three of its investments are VIEs. These investments are not consolidated because we concluded that the Company is not the primary beneficiary. As of March 31, 2025, our maximum exposure to losses associated with the VIEs is limited to the $21.6 million carrying value of our investments in the VIEs, $3.0 million of which is included in Prepaid expenses and other current assets, with the remaining in Other assets on our Condensed Consolidated Balance Sheets. We have no other investments in unconsolidated entities that have been determined to be a VIE.

NOTE 6 - BORROWINGS

Convertible Notes

The Company previously issued 0% Convertible Senior Notes due November 15, 2026 (the "Notes"), pursuant to an Indenture dated November 16, 2021 (the “Indenture”) between the Company and The Bank of New York Mellon, N.A., as trustee (the "Trustee").

The annual effective interest rate of the Notes is 0.594% when including purchasers' discounts and commissions and offering expenses incurred by the Company. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes will mature on November 15, 2026, unless earlier redeemed, repurchased or converted in accordance with their terms.

The related principal, unamortized deferred issuance costs and carrying values were as follows:

(a) The Notes have an initial conversion rate of 27.8364 shares of Common Stock per $1 principal amount of Notes (which is subject to adjustment in certain circumstances). This is equivalent to an initial conversion price of approximately $35.92 per share. The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture.

Prior to August 15, 2026, the Notes will only be convertible upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The Notes are redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, on or after November 20, 2024 and before the 41st scheduled trading day immediately preceding the maturity date, but only if the last reported sale price per share of the Common Stock has been at least 130% of the conversion price then in effect for a specified period of time.

The Company incurred $0.3 million and $0.4 million of debt issuance cost accretion for the three months ended March 31, 2025 and 2024, respectively.

In addition, in connection with the repurchase of a portion of the Notes in March 2024 (as further discussed below), the Company wrote off $1.8 million of debt issuance costs during the three months ended March 31, 2024. Debt issuance cost accretion of $1.0 million and $1.1 million is expected to be incurred for the remaining nine months of 2025 and the year ended December 31, 2026, respectively.

As of March 31, 2025, the Company was in compliance with all of the covenants included in the Indenture.

Debt Extinguishment

In March 2024, the Company repurchased $110.5 million of the Notes for $87.2 million, including transaction expenses. The repurchased Notes were retired upon receipt, and the retirement of the debt obligations was accounted for as an extinguishment of debt. The repurchase of the Notes at a discount resulted in the recognition of a gain of $21.5 million, after transaction expenses and the write-off of related debt issuance costs, which is reported in Other (loss) income, net on the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2024.

NOTE 7 - STOCK-BASED COMPENSATION

2015 Incentive Plan

The Company is authorized to grant shares of restricted stock, restricted stock units (“RSU”), stock appreciation rights, cash incentive awards and options to purchase shares of Common Stock to employees and non-employee directors pursuant to its 2015 Incentive Plan (the “2015 Plan”). The 2015 Plan also designates measures that may be used for performance awards and market-based awards. The vesting period for awards granted under the 2015 Plan is generally determined by the Board of Directors at the date of the grant. Generally, the awards vest one third each year, over 3 years.

dp polar Earnout

On October 4, 2022 the Company acquired dp polar. The acquisition agreement included an earnout arrangement for $2.2 million incremental to the acquisition purchase price, which would be settled via the issuance of 250 thousand shares of the Company's Common Stock. The dp polar earnout was settled subsequent to March 31, 2025 through the issuance of 250 thousand shares of the Company's Common Stock in April 2025 pursuant to the earnout agreement.

Stock-Based Compensation Activity and Expense

The following table shows the stock-based compensation expense recognized:

Included in stock-based compensation expense recognized for the three months ended March 31, 2025 and 2024 are $0.5 million and $1.6 million, respectively, of accrued expense pertaining to annual incentive compensation for which settlement would ultimately occur using shares of Common Stock. There wasno stock-based compensation expense relating to the dp polar earnout arrangement for the three months ended March 31, 2025 and the three months ended March 31, 2024 included $0.2 million of related expense.

As of March 31, 2025, there was $14.9 million of unrecognized stock-based compensation expense related to all unvested share-based payment awards that the Company expects to recognize over a weighted-average period of 2 years.

NOTE 8 - INCOME TAXES

We maintain the exception under ASC 740-270-30-36(b), “Accounting for Income Taxes,” for jurisdictions that do not have reliable estimates of ordinary income. Accordingly, we have used a year-to-date methodology in determining the effective tax rate for the three months ended March 31, 2025 and 2024.

For the three months ended March 31, 2025 and 2024, the Company’s effective tax rate was (1.9)% and (9.5)%, respectively. The differences between the U.S. statutory tax rate and the effective tax rates for the three months ended March 31, 2025 and 2024 are primarily driven by the recognition of a full deferred tax asset valuation allowance in various jurisdictions.

NOTE 9 - NET LOSS PER SHARE

Basic net loss per share is calculated by dividing net loss attributable to 3D Systems’ Common Stock stockholders by the weighted average number of shares of Common Stock outstanding during the applicable period. Diluted loss per share incorporates the additional shares issuable upon the assumed exercise of stock options, the vesting of restricted stock and RSUs, and the assumed conversion of debt, except in such case when (1) the inclusion of such shares or potential shares would be anti-dilutive or (2) when the vesting of restricted stock or RSUs is contingent upon one or more performance conditions that have not been met as of the balance sheet date.

(a) Equity awards are deemed anti-dilutive for the three months ended March 31, 2025 and 2024 because we reported a net loss for these periods.

(b) Includes 250 thousand shares of Common Stock related to the dp polar earnout arrangement issued in April 2025.

The following table presents the potentially dilutive shares that have been excluded from the computation of diluted net loss per share attributable to Common Stock stockholders because their effect is considered anti-dilutive.

For the three months ended March 31, 2025, the table above excludes the following: (1) an estimate of 250 thousand shares that were contingently issuable under the dp polar earnout arrangement and were subsequently issued in April 2025 and (2)146 thousand shares for the payment of accrued incentive compensation that is expected to be settled in shares. This share estimate is based on the liabilities recorded at March 31, 2025 for the fiscal year 2025 incentive compensation arrangement, divided by the Company's year-to date average share price of $3.42 per share.

For the three months ended March 31, 2024, the table above excludes the following: (1) an estimate of 166 thousand shares that are contingently issuable under the dp polar earnout arrangement and (2) an estimate of 324 thousand shares for the payment of accrued incentive compensation that is expected to be settled in shares. This share estimate is based on the liabilities recorded at March 31, 2024 for the fiscal year 2024 incentive compensation arrangement, divided by the Company's year-to-date average share price of $4.92 per share.

The Company previously issued 0% Convertible Senior Notes due November 15, 2026, as discussed in Note 6. The Notes’ impact to diluted weighted average shares outstanding is required to be calculated using the if-converted method as prescribed in ASC 260. The Notes will increase the diluted weighted average shares outstanding when the average share price over a quarterly or annual reporting period is greater than $35.92 per share, the conversion price of the Notes. For the three months ended March 31, 2025 and 2024, the Notes were anti-dilutive on a stand-alone basis because the average share price during these periods did not exceed the conversion price, and because we reported a net loss for each of the respective periods.

NOTE 10 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in the balances of accumulated other comprehensive loss, net of tax, by component are as follows:

NOTE 11 - SEGMENT INFORMATION

Our chief operating decision maker ("CODM"), who is our President and Chief Executive Officer, is responsible for reviewing segment performance and making decisions regarding resource allocation. Our CODM regularly reviews the results of our business throughtwo reportable segments: Healthcare Solutions and Industrial Solutions, which are based on the industry verticals they serve. For Healthcare Solutions, those industry verticals include dental, medical devices, personalized health services and regenerative medicine. For Industrial Solutions, those industry verticals include aerospace, defense, transportation and general manufacturing.

The CODM evaluates each segment’s performance based on gross profit, which is also utilized in the annual budgeting and forecasting processes, as well as in quarterly reviews of budget-to-actual results and period-over-period variances. All internal segment reporting and discussions with the CODM are now based on segment gross profit. Prior period segment results have been revised to conform with current period presentation.

The CODM does not review disaggregated asset information on the basis of the Company's segments; therefore, such information is not presented.

Revenue, cost of sales and gross profit for each of our reportable segments were as follows:

Depreciation and amortization included in the measurement of gross profit by segment were as follows:

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The Company has certain purchase commitments under agreements with remaining terms in excess of one year primarily related to printer assemblies, inventory, capital expenditures, and software licenses. As of March 31, 2025, such purchase commitments totaled $14.4 million, with $8.1 million of the purchase obligations expected to be due within the next twelve months.

Indemnification

In the normal course of business, we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant, and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.

To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences while the director or officer is, or was, serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments that we could be required to make under these indemnification obligations is unlimited; however, we have directors and officers insurance coverage that may enable us to recover future amounts paid, subject to a deductible and the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.

Other Commitments

Government Settlement

Beginning in October 2017, the Company undertook an internal investigation relating to possible violations of U.S. export control laws, including the International Traffic in Arms Regulations administered by the Directorate of Defense Trade Controls of the Department of State (“DDTC”) and the Export Administration Regulations administered by the Bureau of Industry and Security of the Department of Commerce (“BIS”). In February 2023, the Company settled these matters with the U.S. Department of Justice (“DOJ”), DDTC and BIS. As a part of these settlement agreements, the Company agreed to pay $15.0 million in civil monetary penalties to these agencies, with an additional $10.0 million suspended penalty amount to be allocated to remedial compliance measures required by DDTC. The penalty amounts subject to payment were broken down as follows: DDTC, $10.0 million (payable inthree installments over athree-year period); BIS, $2.8 million; and DOJ, $2.3 million.

During the three months ended March 31, 2025, we paid the final installment penalty of $3.0 million in accordance with the DDTC settlement agreement. The original $10.0 million suspended penalty has not been recognized as a liability, as it will be recognized as incurred for remedial compliance measures during thethree-year term of the settlement agreement. The application of the Company’s spend on remedial compliance measures as a reduction to the original $10.0 million suspended penalty must be approved by DDTC, which approval will be sought on an annual basis in accordance with the terms of the settlement agreement. As of March 31, 2025, the approved suspended penalty balance remaining is $5.1 million. Any portion not expended for compliance measures at the end of thethree-year term of the settlement agreement will be paid by the Company to DDTC.

Letter of Credit

On June 2, 2023, we issued $1.2 million of guarantees in the form of a standby letter of credit as security for a long-term real estate lease. The letter of credit has a maturity date of June 2025 and includes automaticone-year extensions, which are not to continue beyond July 1, 2033. The first automaticone-year extension occurred in June 2024, and the letter of credit now has a current maturity date of June 2025. As of March 31, 2025, the letter of credit was reduced to $0.8 million. We have not recorded any liability for this guarantee, as we believe that the likelihood of having to perform under the letter of credit is remote. In connection with this transaction, we pledged an equal amount of cash to the issuing bank of this letter of credit. The cash pledged is recorded as restricted cash and included in Other assets on our Condensed Consolidated Balance Sheets.

Litigation

SEC Investigation

On April 15, 2022, the Company was informed that the SEC is conducting a formal investigation of the Company related to, among other things, allegations that had been brought against the Company in a securities class action lawsuit that was brought against the Company in 2021 and settled in January 2024. The Company has subsequently received subpoenas from the SEC for the production of documents and information related to its investigation as a follow on to a previous voluntary request for documents. The most recent SEC subpoena was received by the Company in August 2024, and requested additional documents and information relating to its continuing investigation of the Company. The Company completed its submission of this additional information to the SEC by the end of November 2024. The Company is continuing to cooperate with the SEC in connection with its formal investigation.

Termination of Volumetric Milestones Related to Potential Earnout Payments

Following the acquisition of Volumetric in 2021, the Company could have been required to pay up to $355.0 million of acquisition-related earnout payments to the former owners of Volumetric if the Company were to achieve seven non-financial, science-based milestones prior to either December 31, 2030 or December 31, 2035. Due to the loss of funding from the Company's key strategic partner for kidney and liver research and development efforts, the Company notified the former owners of Volumetric on February 24, 2024 that it was terminating thefour milestones that related to those kidney and liver research and development efforts, as achievement was no longer financially viable. As a result of the termination of thefour milestones, the Company's maximum liability for acquisition-related earnout payments was reduced to $175.0 million, which would have been payable if each of thethree remaining non-financial, science-based milestones was achieved within the timeframes set forth in the Volumetric acquisition agreement.

On March 29, 2024, the former owners of Volumetric notified the Company that they were initiating dispute resolution under the provisions of the acquisition agreement in an effort to recover the $355.0 million. The parties did not reach a resolution during the 30-day negotiation period following this notice and now have entered into non-binding mediation in accordance with the terms of the acquisition agreement.

On April 29, 2024, two key employees from Volumetric ("Volumetric Key Employees"), who were required to be employed at the time of achievement of each non-financial, science-based milestone outlined in the Volumetric acquisition agreement for each related acquisition earnout payment to become payable, resigned from their positions with the Company. As a result of the resignation of the Volumetric Key Employees, all parties to which the remaining three milestone-based earnout payments totaling $175.0 million were potentially payable were notified that such amount was no longer eligible to be earned. While the Volumetric Key Employees claim that their terminations were for good reason, which would preserve the rights to milestone-based earnout payments under the Volumetric acquisition agreement, the Company vigorously denies this claim. Presently, no lawsuit has been filed by the former owners of Volumetric to which milestone-based earnout payments were potentially payable, and there is no reasonable estimate or range of estimates of potential financial liability associated with this matter.

On August 21, 2024, the Company proposed a settlement of $1.8 million with the former shareholders and Volumetric Key Employees during mediation and this amount is recorded within Accrued and other liabilities on our Condensed Consolidated Balance Sheets as of March 31, 2025. The former shareholders have not responded to the settlement offer. On December 13, 2024, the Company received a Notice of Claim for Indemnification from VBI Stockholders’ Representative, LLC., which claims to be the successor Stockholders’ Representative under the acquisition agreement. The Notice repeated the former shareholders’ and Volumetric Key Employees' claims of breach. On January 10, 2025, the Company served a Notice of Objection which denied all liability. The delivery of this Notice of Objection triggered a 45-day negotiation period under the terms of the acquisition agreement. As of May 12, 2025, the Company has not heard anything further from the former shareholders and Volumetric Key Employees regarding this matter.

Intrepid Automation

On May 19, 2021, 3D Systems, Inc. initiated a lawsuit in the Superior Court of the State of California for the County of San Diego against five former employees and Intrepid Automation, Inc. (collectively, the “Intrepid Parties”) alleging theft of trade secrets, unfair competition, breach of contract, and related claims (“2021 Lawsuit”). In June 2021, this lawsuit was removed to the United States District Court for the Southern District of California. In September 2022, the Intrepid Parties filed counterclaims against 3D Systems, Inc. In September 2022, the Company filed a motion to dismiss these counterclaims; this motion was granted in part in May 2023. The Intrepid Parties filed amended counterclaims in May 2023 alleging theft of trade secrets, fraudulent inducement, breach of contract, unfair competition, and related claims; this amended complaint sought damages in excess of $20 million as well as injunctive relief. These counterclaims were partially dismissed in March 2024 in response to a second motion to dismiss filed by the Company. The parties filed motions for summary judgment in April and May 2024. In March 2025, the Court granted the Intrepid Parties’ motion, dismissing the Company’s claims against the Intrepid Parties, but denied the Company’s motion for summary judgment with respect to the counterclaims brought by the Intrepid Parties in the 2021 Lawsuit. On April 17, 2025, the Company filed motions asking the Court to reconsider its dismissal of the Company's claims or granting a partial final judgment so that the Company may appeal the dismissal.

On December 4, 2024, Intrepid Automation, Inc. (“Intrepid”) filed a lawsuit in the United States District Court for the Southern District of California against 3D Systems Corporation and 3D Systems, Inc. alleging infringement of U.S. patents 11,014,301 and 11,338,511 (“2024 Lawsuit”); this complaint seeks unspecified damages and injunctive relief.

The Company intends to defend itself vigorously against the 2024 Lawsuit and the counterclaims in the 2021 Lawsuit.

We are involved in various other legal matters incidental to our business. Although we cannot predict the results of the litigation with certainty, we believe that the disposition of all of these various other legal matters will not have a material adverse effect, individually or in the aggregate, on our consolidated results of operations, consolidated cash flows or consolidated financial position.

Contingencies

Warranty

Changes in accrued product warranty liability balance are summarized as follows:

NOTE 13 - FAIR VALUE MEASUREMENTS

Fair value is the exchange price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize use of unobservable inputs. The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:

•Level 1 - Inputs are based on quoted prices in active markets for identical assets and liabilities.

•Level 2 - Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.

•Level 3 - One or more inputs are unobservable and significant.

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities that are measured and recorded in the consolidated financial statements at fair value on a recurring basis:

(a) There were no transfers among the levels within the fair value hierarchy during the three months ended March 31, 2025 or the year ended December 31, 2024.

Cash equivalents, including money market funds, are valued utilizing the market approach for measuring the fair value of financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value as of March 31, 2025 and December 31, 2024 because of the relatively short duration of these instruments.

Fair Value of Financial Instruments

The following table summarizes the carrying amount and fair value of our financial instruments:

The estimated fair value of the convertible notes was determined using the quoted market price in a market with limited activity, which is considered a Level 2 fair value measurement.

NOTE 14 - RESTRUCTURING AND EXIT ACTIVITIES COSTS

2025 Restructuring Plans

In March 2025, the Company authorized the next phase of its multi-faceted cost savings and restructuring initiative (the “2025 Restructuring Plan”). The 2025 Restructuring Plan includes initiatives to deliver sustainable growth and profitability, enabled by a streamlining of both infrastructure and business processes, while consistently investing in core research and development activities to support long-term growth opportunities.

The Company expects to incur approximately $12 million to $20 million in pre-tax restructuring and other related costs, primarily for severance and other termination benefits and facility exit costs by the end of the second fiscal quarter of 2026. The charges under the 2025 Restructuring Plan are expected to be primarily cash charges.

Additionally, in May 2025, the Company announced an incremental cost reduction initiative focused on labor force reductions in response to the uncertain macroeconomic environment that is expected to deliver significant cost savings in the second half of the year.

Restructuring and other related charges were as follows:

(a) Primarily relates to the 2025 Restructuring Plan

(b) Primarily relates to the 2023 Restructuring Plan

The restructuring and other related charges were primarily cash charges. These charges are reflected in the following captions in the accompanying Condensed Consolidated Statements of Operations as follows:

Restructuring and other related charges recorded in cost of sales by reportable segment were as follows:

The activity in the restructuring accrual related to 2025 Restructuring Plan was as follows:

2023 Restructuring Plan

In 2023, the Company initiated a restructuring plan aimed at improving operational efficiency and driving long-term value creation (the "2023 Restructuring Plan"). Key initiatives included in-sourcing certain European metal printer platforms to the Company’s Riom, France facility, co-locating engineering and manufacturing functions to accelerate the development-to-production cycle, reducing headcount across all areas of the organization, and exiting select leased facilities to streamline the Company’s geographic footprint. Substantially all restructuring activities related to 2023 Restructuring Plan were completed as of the year ended December 31, 2024.