Good day, ladies and gentlemen. Welcome to today's conference call to discuss Nano Dimension's First Quarter 2020 Financial Results. My name is Andrew, and I'm your operator for today's call. On the call with us today are Yoav Stern, President and 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. Yoav will begin the call with a business update, followed by a question-and-answer session, at which time Yael will answer questions regarding the first quarter 2020 financial results. [Operator Instructions].

Please note, this event is being recorded. I would now like to turn the conference over to Nano Dimension's President and CEO, Yoav Stern. Yoav, please go ahead..

Cash we conserve today will be worth more when corona days are starting to phase out. Two, don't hold back on building the North American sales distribution go-to-market organization and not holding back cash from them. The other things we're holding back. Last, but not least, we had the first user group ever initiated.

I started -- I found out when I came to this company a few months ago that we never had user groups. I met with the American Army, the American Army told me how come you don't have user group. User group is the main important tool to meet all users that -- especially in a company that you're bringing such new technology to the market.

So I close it with a note. Today, we had the first user group in Europe. We had 55 participants, 3 hours conference, people from Italy, Germany, Russia, Eastern Europe, 55 people present, all of them from our customers, that's not including people that were post listening from the company.

The user group that was virtual included discussion by customers about their experience with the machine, including things that the company discovered that the customers are more advanced than us in developing applications of the machines, which is exactly what I was hoping for.

Now the customers are telling us, you don't know that you can do this and that, I don't want to get you into technical details. You can do this and that with your machine. Here is what we did with your machine. Our people were overwhelmed. It was a very successful meeting. So it's good news, especially under consideration of a time like that.

And obviously, I can with this -- it's not that I invented this idea. User group is a tool. It was this company did not to use it. So I'm not an inventor. I just applied it, and our European organization put it together, and we're going to do user group like this much more frequent.

In a funny way, it's very easy to bring people together in a conference call for 3 hours all on video than bringing together physically as we used to user groups in other companies. There is an advantage to get together to have dinners together as well, but it becomes, for sure, more expensive and logistically a nightmare to do it.

So you can't do it too many times. User group on a video is something you can do twice a month, and that's what we're going to -- and it's not costing us almost anything. So it's very good news, and I'm very encouraged it happened to this morning, early 12:00 O'clock in the morning, New York time.

So I couldn't hold it back just to tell you that, that was the case, and it's very encouraging. I'll stop here, spoke for 15 minutes, and I will open this up for Q&A, both to me and to Yael, which is waiting for your questions. And if you will direct them to me, I will either answer myself or ask Yael to answer. Please..

[Operator Instructions]. The first question comes from Brian Herman of ViewTrade Securities..

Question about the machines. It looks to me like you have two machines, the Pro and the LDM.

Can you talk a little bit about the difference in capabilities of each? And is the difference an upgrade? Or is it an entirely different machine?.

No. The first machine that the company put in the market was the DragonFly Pro, which was presented to the market practically in early 2018 and was sold during 2019 into beginning -- in the middle of 2019. That machine had a major flaw.

And the flaw in that machine was that the printing heads, if you don't work with the machine very, very precisely according to company's instructions and deviate a little bit or if the machine was not working constantly by the conditions and the spec and stopped, you had clogged printing heads, which needed machine to stop, having somebody decided to clean it up.

And therefore, the claim that the machine is a digital manufacturing piece that worked 24/7 did not actually materialize. And you had to have a person around the machine because every 2, 3 hours, you have to deal with that. That was resolved with the development effort during 2018, which culminated in August by "a new machine" called DragonFly LDM.

The DragonFly Pro is totally upgradable to DragonFly LDM. The new machine -- the difference between the older machine and the new machine is the new machine had an automatic system, which is both a combination of hardware and software in the process that cleans the printing head as it prints, every few seconds.

There's a printing mechanism, very sophisticated that make sure that the head is clean. So the machine can work actually almost 24/7 practically and there's no need to stop or to clean or to have a person there beside to make sure it's not clogging. So summarizing the answer, the machines are upgradable. The cost for an upgrade was $30,000 to $50,000.

Your next question will be, how many people upgraded. More than 50% by now has upgraded. The upgrade is going on a quarterly-by-quarterly basis. Every quarter, we're getting 2, 3 upgrades. And we hope to complete all the upgrades for all the machines that are working and interested, which is probably 90% of the machines in the market.

If not the corona, we probably would have finished already. With the corona, it may take the next quarter or two to finish them. I hope I answered your question..

Yes, you did. And how many machines are out in the market in total? Then I'll let you go to the next question..

57, 58..

[Operator Instructions]. This concludes our question-and-answer session. I would like to turn the conference back over to Yoav Stern for any closing remarks..

Can you just wait another 30 seconds to see if somebody maybe comes up with a question and maybe still thinking about it?.

Yes, sir. And we have a follow-up from Brian Herman of ViewTrade Securities..

I just wanted to give everybody else the opportunity to ask, but I'll jump back in.

On the 57 or 58 machines out into the market, how many different customers does that represent?.

Between 30 to 40. But if your next question is, how many customers have more than 1 machine, just few. There's also machines out of the market that are in the hands of resellers, distributors. Resellers, which we are getting rid, got rid of. We are replacing resellers with direct sales force.

The resellers was the biggest mistake of this company since the last 2 years, which is why the sales went up from year to year just by 39%, where there -- I think they could have gone up by 114% from 39%. Resellers clogged the channel, did not resell. So we are converting it.

So they have about 14 or 15 machines with resellers, which we -- which are part of the 57. Those machines we'll come to an agreement with the resellers that we will resell it for them and have an arrangement that will make us make money and them make money..

Right. Makes a lot of sense.

The OEM -- so is this the type of thing where an OEM manufacturer, a third-party manufacturer of multilayer microchips, will start using your machines in their facilities? Or is it more of a corporate initiative to do R&D in-house?.

By the way, it's not microchips. Microchips is semiconductors. This is different. Semiconductors is people like Intel and AMD, and it's a different industry. It's an adjacent industry, but it's silicon. It's very -- much, much, much more expensive, much more intensive in development. So we're not competing there.

We are in the PCB special devices, which are much less expensive but getting closer to the semiconductors because the performance requested are becoming higher and higher. So yes, we have -- our machines are for two purposes.

First, for proof-of-concept and prototyping and are used by research institutes, et cetera, and by a very large and very high-tech companies that have in-house research in electronics, and they need a lot of designs to bring to the market faster. Our machine is a digital fabrication machine. So that's the first use.

The second use is going into early production, which we're in the process of getting the machine now that is 24/7 to be used for early production.

And we're going to -- and we're seeing after the corona, a very, very strong trend of large corporation who are wanting to move back production from the Far East to the continent, and we are positioned there with the digital machine.

It's -- basically, it's a rolling fabrication facility for PCBs -- sophisticated PCBs because we do 20 layers, 2 layers or 50 layers easily digitally.

So the next stage, the next years of our machine, which we are looking for the next 1.5 years to get into is when people start to use it as a fabrication machine for early production and short run production, and you have a digital fabrication facility that you roll these machines into a warehouse, it's all working, and there's no waste because it's all closed process.

Everything is within the machine. So that's the second large breakthrough that we hope we'll see in the next few quarters beyond the prototyping and proof-of-concept..

Would it ever be used in permanent production lines of printed circuit boards?.

Yes. The answers is, would it ever, yes. Any more questions, please..

We're standing by sir to see if any other questions come in. Currently we do not have any other questions..

Okay. So I will use this opportunity to, again, say thank you very much for everybody for your support and attention today and in general, your support a few weeks ago and now and moving forward. You all know that you can feel free to call me personally. And I hope to be talking to you soon, and I wish you best of health and stay safe..

Thank you..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..