Good day, ladies and gentlemen. Welcome to today's conference call to discuss Nano Dimension's Second Quarter 2019 Financial Results. My name is Alison and I'm your operator for today's call. On the call with us today are Amit Dror, CEO; and Yael Sandler, CFO.

Before we begin, may I remind our listeners that certain information provided on this call may contain forward-looking statements and the Safe Harbor statement outlined in today's earnings press release also pertains to this call.

If you have not received a copy of the press release, please view it in the Investor Relations section of the company's website. Please note, this event is being recorded. Amit will begin the call with a business update, followed by Yael, who will provide an overview of the financials. We will then open the call for the question-and-answer session.

I would now like to turn the call over to Nano Dimension's CEO, Amit Dror. Amit, please go ahead..

Thank you, Alison and thank you all for joining us this morning. The second quarter was one of the challenging quarters in the company's history, and yet one with satisfying and important progress on the product side. Revenues for the second quarter of 2019 amounted at $1.16 million with 5 system sold which was below our expectations.

While we're not pleased with the financial results for this quarter, management has taken immediate actions to reduce operational expenses, increased search for strategic alternatives and expedite the introduction of our next-generation products. These actions are directed to get the company's growth back on-track.

We believe that the delay in sales ramp-up has to do with customers' desire for additional applications, as well as improved reliability of the system. During the second quarter, we presented new and exciting applications and offered capabilities that have never been seen before in additive manufacturing and the printed electronics world.

For example, one of our prospects asked for a specific solution of a new sensor packaging, another prospect asks for proof that his energy converting device can be created with a 3D printed package. Both received a successful applicable solution and acquired a DragonFly system.

As part of our ongoing customer support efforts, we're maintaining close relationships with our customers and resellers. By doing it successfully we gained important feedback that over the last year guided us through the developments of our next-generation system, the DragonFly LDM, Lights-Out Digital Manufacturing System.

I'd like to take a moment and explain the far-reaching meaning that the DragonFly LDM upholds, both technologically and version [ph]. The DragonFly LDM augments the capabilities of the DragonFly Pro System with new proprietary state-of-the-art technology that enables 24/7 uninterrupted 3D printing of electronics.

It introduces improvement that includes the optimization of overall equipment effectiveness and significantly improves workflow and production processes of 3D printed electronics.

Additional features of the LDM includes long, uninterrupted printing for increased uptime and improved yields, simpler and faster operation with minimal maintenance, and a new automatic printed self-cleaning system. On the application side, it supports 3D printed multi-layer PCBs, capacitors, [indiscernible] sensors, antennas and more.

In terms of market strategy and potential, the DragonFly LDM extends 3D printing for electronics beyond prototyping to true in-house life-add [ph] digital manufacturing, enabling lower volume manufacturing, as well as one-off prototypes of printed electronics.

This makes the new and improved system more attractive to a wider range of customers from different industries.

Before I'll proceed to explain the business and financial meaning of the new system, I would like to add that new opportunities the LDM provides were made possible thanks to our high level of attentiveness to our customers' needs and our close relationship with customers that enabled open communication.

In fact, HENSOLDT, a global defense and security pioneer company, and Nano Dimension's customer since 2017 was the first to deploy and test the new system's capabilities. During the joint LDM campaign, HENSOLDT contributed by generating reference circuits to outline the advantages of the new LDM system.

The comparison of the actual printing time showed that LDM system achieved more than 40% higher printing time than the previous system. It also showed that the operation and maintenance became easier.

Presenting the new system with results from the field with a reputable customer was well accepted by other customers and resellers and we already started receiving purchase orders for LDM systems and LDM upgrades. I would like to demonstrate the many positive effects the new LDM system may have to our business and sales efforts.

First, we're content with our fast reaction from the time of noticing what we believe are the causes to the delay in sales ramp-up until addressing the problem and presenting the LDM system as a corrective solution. Since we introduced the LDM system less than a month ago, we already successfully sold several LDM upgrades and systems.

We continue to offer support to our existing customers who purchase the DragonFly Pro system. They're eligible for an upgrade for a onetime fee that will allow them to enjoy the advantages the LDM technology offers.

Our recent experience of launching a new system, gaining important positive feedback and validating -- and validation from our customers was positive and important that together with the ability to sell the new systems shortly after the launch and providing support and upgrade to our customer base and network channels emphasizes the significant progress the company has made over the past couple of years.

Today more than ever, I strongly believe in our technology, which is second to none. And in the disruptive changes, it is leading in the electronics industry. In parallel to action for elevating growth, we implemented changes to reduce our operational expenses.

These actions include organization restructuring, as well as a decrease in headcount of approximately 20%. These actions are expected to reduce the company's cash burn in the coming periods.

In parallel to our sales efforts to boost growth and actions taken to tighten our operational expenses, we recently announced that we're conducting a review of strategic alternatives.

The company retains Stifel Bank as its exclusive financial advisor to assist in its review of strategic alternatives and identification of potential strategic shareholders. I will now hand the call over to our CFO, Yael Sandler to review our financial results in detail.

Yael?.

Thank you, Amit. Good everyone and thank you again for joining us this morning. In the second quarter of 2019, we presented revenues of $1.161 million compared to $1.689 million in the first quarter of this year and $1.088 million in the second quarter of 2018.

As Amit mentioned, we believe that that the delaying sales impact has to do with customer desire for additional applications and features, which we started to present over the recent period.

During the second quarter, we increased the level of our inventory and we expect this level of about $4 million to be translated to cash generation over the coming period.

Research and development expenses for the second quarter of 2019 was $2.322 million compared to $2.152 million in the first quarter and $2.063 million in the second quarter of 2018. The increase compared to both the first quarter of this year and the second quarter of previous year was mainly attributed to an increase in payroll and related expenses.

Those expenses are expected to reduce as we implement changes to reduce our operational expenses in the coming period. Sales and marketing expenses for the quarter were $1.507 million compared to $1.364 million in the first quarter of 2019 and $1.086 million in the second quarter of 2018.

The increase compared to both the first quarter of this year and the second quarter of 2018 was mainly attributed to an increase in payroll and related expenses, as well as marketing and advertising expenses.

General and administrative expenses for the first quarter -- for the second quarter of 2019 were $1.023 million compared to $1.791 million in the first quarter and $609,000 in the second quarter of 2018.

The decrease compared to the first quarter is attributed to our February 2019 public offering, in which we issued warrants and rights to purchase that were classified as financial liability, resulting in issuance expenses of approximately $1.224 million that were recognized as general and administrative expense in the first quarter of this year.

The increase compared to the second quarter of 2018 was mainly attributed to an increase in professional services expenses. In February 2019, we closed the public offering in the United States with gross proceeds of approximately $12 million in which we issued ADSs warrants and rights to purchase.

The rights to purchase and warrants contained a cashless exercise mechanism on engagement that we will not have an effective registration statement in time of exercise and therefore under IFRS accounting are classified as financial liability that is measured at fair value through profit and loss.

The difference between the fair value as at March and the fair value as of the end of June was recognized as finance income in the amount of approximately $3.694 million in the second quarter.

We reported a net loss of $1.188 million or $0.01 per share for the second quarter, compared to a loss of $1.476 million or $0.01 per ordinary share for the first quarter and $3.770 or $0.04 per share in the second quarter of 2018.

The CapEx for the second quarter was about $250,000 and our depreciation and amortization expenses for the quarter were about $690,000. Share-based payment for the quarter were about $100,000. We ended the second quarter with $5.290 million in cash compared to $3.753 million on the end of 2018.

Then increase mainly reflects the proceeds received from our public offering in the first quarter of this year less the cash used in operations during the first half. We ended the second quarter with about $5 million of product inventory, which we expect to turn into cash in the ordinary course.

Now I will turn back over Amit for final remarks before the Q&A..

Thank you, Yael. We're trying to be focused on increasing our sales and optimizing our expenses and moving forward we're better armed with our next generation DragonFly LDM system. We also increased our efforts in searching for strategic alternatives, as we believe that this can help generating more growth opportunities.

We proudly continue to lead the field of 3D printed electronics and although the road can be bumpy, we have full confidence in our technology advantages and superiority. And we gain strength from the feedback we receive from our partners and customers. Now I will turn the call back over to the operator and we will be pleased to take your questions.

Operator?.

Thank you. [Operator Instructions] Our first question today will come from Aaron Martin of AIGH. Please go ahead..

Hi, Amit. Hi, Yael.

A couple of questions about the new LDM system and you said that a couple of customers have purchased new systems or new systems and upgrades, is that correct?.

Correct..

And what is the plan here with the LDM in regards to you know, the increase in sales that you're -- is it coming from new customers that you were now able to get with the LDM system? Is it upgrades from existing customer base? What -- in the near term and the longer term where does the sales ramp come from?.

So maybe I should start by referring to the current purchases we received. Several of them were related to upgrades. The LDM could also be sold as a kit on top of the existing DragonFly Pro and we already had several of our existing customers and resellers who acquired an upgrade.

The advantages, as described widely throughout the call, are what we see as key elements and key features with benefits that our prospects, existing customers and also based on the understanding of our resellers are key in order to scale up sales. Whether it's the 24/7 printing, whether it's the higher quality, the improved uptime.

So understanding that we're bringing to the market the next evolutionary stage of the DragonFly Pro, you know, with the DragonFly LDM that's why we believe we could scale up the sales.

It's also important to note and I'm not sure if I mentioned that this system is more suitable for production and that means that a significant focus we put with our application engineers and sales team with customers to get them to the next level from prototyping to manufacturing is something which is much simpler and definitely more achievable with the DragonFly LDM..

Okay.

And because it's an upgrade kit so then your current inventory there's no issues there of obsolete because you can use all the current DragonFly inventory with the upgrade kits?.

Collect..

Okay. Switching over to the operating expense side, you talked about cuts.

Can you sort of give us the magnitude of the cuts that we're talking about?.

In terms of headcount, we decreased the 20% in a headcount not in expenses but in terms of number of employees.

As of record, we have about 75 employees overall globally in the company, and our expenses will decrease, it will have an effect in the next quarter and more so in the fourth quarter of this year as we are working all the time to decrease it; so I don't want to say a number because maybe [indiscernible]..

But I would like to add a couple of sentences to your answer and to say that we understand that we should intend to put more focus on improving our gross margin while both, providing a better product which just help that can be presented to the market with more value and therefore at a higher price on one end.

And then on the other hand, we can put more focus on reducing our expenses..

And cost of goods..

Exactly; whether is related to cost of goods and whether it's related to R&D and other aspects related to company's operations. So, you know, we developed the above. We feel comfortable saying that the process of reducing OpEx will continue..

In the past we've talked about revenue numbers for the year. Obviously, with tough quarter, the second quarter -- the picture doesn't look exactly the same.

Are you known [ph] to be putting out the different guidance, how do we look at Q3 and Q4 with the LDM ramp?.

Aaron, it would be fair to say that we don't have a clear number to share, that's why we mentioned the guidance and the explanation of what the value of the new product is rather than using numbers.

On top of that, we know from past experience and parallel products of other companies that considering the seasonality of capital equipment purchasing by customers, the sales in the second half are expected to grow more significantly in comparison with the first half..

Okay, we appreciate the work you've done..

Thank you..

And ladies and gentlemen, this will conclude the question-and-answer session. And we'll also conclude the Nano Dimension second quarter 2019 financial results conference call. We thank you for attending today's presentation today. And you may now disconnect your lines..

Thank you..