Ladies and gentlemen, thank you for standing by. All participants are at present in listen-only mode. Welcome to today’s conference call to discuss Nano Dimension’s Third Quarter 2021 Results. On the call with us today are Yoav Stern, Chairman 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 second quarter 2021 financial results. As a reminder, this conference is being recorded, November 24, 2021. I would now like to hand over the call to Mr. Yoav Stern. Mr. Stern, would you like to begin?

Sure. Thank you very much. Hi, everybody. Thanks for participating. I will speak focusing on subjects that I think are interesting, and of course, let you ask questions where you want to direct me to other subjects. So, first of all, definitely this quarter and these nine months have been the best quarter and nine months since at least I came into this company, which was a little bit more than a year and a half ago. But when I came to this company, within two months, Corona started. So, yes, we have great advancement, things are moving forward. But as compared to last year, which was a lousy year. More importantly than that though, and that’s where the real movements being seen or can be seen, and I'm eager to show you that, like in many other companies versus it’s specifically ours, you don’t necessarily see everything in the numbers, yet. We announced DragonFly IV, which saw a half a year delay, but it was a very successful release. We participated in a Productronica show in Germany last week, which didn't happen for two years because there were no shows and even last week, when all Germany started to struggle with a new wave, half of the people didn’t arrive. We still had DragonFly IV released and immediately received two purchase orders already achieved within a few days. There was great excitement about the performance of the machine, and we were at the top of the show with a relatively large amount of leads. We’re very excited about it. Importantly, a few weeks before the show, we announced and completed the acquisition of Essemtec, which was showcased at the event along with our name combined with theirs. We purchased Essemtec for $15 million to $19 million, which can rise higher but no more than $4 million higher, and it’s a business close to $25 million which is profitable and growing, which is what we like to pay. Our M&A activities will not allow ourselves to glide into what we believe are overly high payments resulting from many things in the market, which we can discuss if you ask me. We are being selective; we are buying and building, and we’ll continue to do so, and we’re very proud and fortunate to have the Essemtec team from Switzerland join us. They’re going to continue to grow, and we expect to merge our technologies where synergies will become a major component of breakthroughs in printing three-dimensional electronic devices while mounting components in the process of printing in a clean, non-intrusive way to the environment. So we continue with M&A along these lines, similar lines, and you will probably hear quite a bit of news in the coming months about this subject. A few words on issues that I think you would be asking about, and I’m going to preempt your questions so that those who intended to ask can get answers now and/or ask follow-on questions, but I’ll try to be helpful as possible. The price of the share, you can have lots of theories about why the price dropped when the news is so good. But my experience shows that when you have a year when people made money in many investments in the public markets and one of your shares went down, when you get toward the end of the year, people sell the shares that are on the way or were down compared to what they purchased them for in order to take the tax losses, offsetting against the money they made in our shares and not paying taxes at the end of the year. They have to do that to evade wash sales. So even people who want to hold our shares and have a smaller amount may also be doing that, which is causing certain price pressure. Based on the volumes I see as the share went down, they are very low volumes. So I don’t see or I can’t guess about any other reasons other than that. But my guess is as good as anyone else's. I’ve seen these things happen before in very similar situations. To you and we have many loyal shareholders that we admire and work for. We have some other shareholders that are obviously a bit frustrated because of the price of the share. As I said earlier, and I repeat in every call and every newsletter, an investment in us is a long-term investment, and people who expect quarterly results to have a major or immediate effect in the short-term are going to be disappointed. That’s how I originally identified the shareholders who joined us and invested in the company. So for those sending emails claiming that there are buyout options and offerings, there’s no buyout offer for the company by any company, and we’re not going to buy shares from the market with money that was invested in the company by shareholders, who I personally met, who invested so that we as a team can perform the upside, which will be three or four times their investment, but over a few years, not over a few quarters. So we don’t intend to buy shares from the market with the money given to us by investors. When we’re profitable in the future and we accumulate profit, we may choose to buy shares in the company, but it’s not going to happen anytime soon. So if there are going to be questions about it, I answered them. Other than that, I’m going to refer to you guys to ask questions that will direct us to your specific interests, please.

Thank you, sir. The first question is from Puneet Maheshwari of Xenca Capital. Please go ahead.

Hi, Mr. CEO. I have a question regarding the sale of the current DragonFly IV. In one of the WebEx, one of the executives who joined from Amazon mentioned that one of the top four players is interested in buying the machines. They visited the machine a couple of years back, and the technology was not up to speed. I believe in two years we have made great strides, and let us launch. How are we with one of those customers? Did they show interest, and if you can elaborate further on how was the reception of the machine in the recent launch? Thank you.

I didn’t meet any customer that didn’t want the machine two years ago and wants it now. So the answer to your first question is I don’t know. The people that I meet, and we meet that are interested in the machine now are very excited about it. There are two sides, which were with customers that had machines. The previous machines were very successful, and the customers are very happy with the performance of the new machines.

Okay. Thank you. That’s it for me. Yeah.

The next question is from Jeff Rice of SmallCap Investments. Please go ahead.

Good day, Mr. Stern. Great results on this earnings report. From what I’m seeing, it looks like Nano Dimension is ranking out to be more of an AI and robotics company versus just a manufacturing company. I was wondering if you could elaborate on that, especially with the robotic arm you mentioned? And then my second question, just to touch on what you said earlier, I know that you said, no buyout on the table now, which I agree with. The current share price doesn’t make any sense. Also, I know you previously said, if someone offered the price that made sense, then obviously, that’s a different story. But what about if someone like Hensoldt or L3Harris wanted to take minority ownership? Would that be a possibility? I appreciate the insight. Thank you, sir.

What was the second question? Can you repeat that? Sorry, the line was not so good. Can you repeat it?

Yes, sir. I was wondering, let’s say one of our partners, L3Harris or Hensoldt or SEMICON, if they wanted to take minority ownership to invest in Nano Dimension to have a small stake in the company, would you be open to that?

Okay. I’ll take your two questions. Thank you very much. The second question: I don’t know when they will offer me. I will consider it and I’ll bring it to the Board, and we’ll decide, but nobody has offered this to me until now. On the first question, yes, you’re absolutely right; we are very much tilting into becoming a deep learning artificial intelligence-led industrial machine, three-dimensional machine company. We believe that the whole additive manufacturing, both electronics and AME (Additive Manufacturing of Electronics) manufacturing industry, while developing better and better machines, more accurate machines with higher yields, et cetera, which is the holy grail of moving seriously into production, must also include an artificial robotic brand or, if you want to call it, a machine learning brand that will be able to overcome the inherent conflict and problems in production. Production is an analog process; it’s not a digital process, ever. At the end of the day, something cuts something, or something drops, or something melts something to add to it. All these are analog processes, which by definition cannot be totally accurate—like zero or one. So being non-accurate, having deviations, having statistical formulas and combinations of some things within the limitations and some without the limitations, the yield is affected by a statistical process. To overcome that, you need to have a brand that is analyzing real-time statistics and is able to decide in real-time what to do with deviations—either it can correct them or it’s deviations that are too wild and must stop the process and restart a new part. We believe that the holy grail of manufacturing through additive processes with minimum ecological impact, reducing cost of material, and reducing time to market can be achieved not only by machines, but by machines that are led with deep learning and machine learning—not even artificial intelligence in the regular manner, but the more advanced artificial intelligence where processes and algorithms are self-learning and self-correcting. That’s the reason we purchased DeepCube about six months ago. We are very advanced in integrating it into many aspects of our machines, and acquisitions, and we’re very excited about it. Thank you very much for the question.

The next question is from Rich Brun. Please go ahead.

Hello. Hi. Good morning and congratulations on the progress you have made with leadership at Nano Dimension. Based on your observations today, what do you think is the single greatest challenge for Nano Dimension? Is it the quality of the materials, the consistency, the production capabilities, the software development, or do we still have COVID lingering on that hindering our progress, and what is Nano Dimension doing about it?

The last item you mentioned, COVID, it is there. It is lingering. It is challenging. But it is not a big challenge. It’s not a long-term challenge. If you look at the history of pandemics in the world, and I’m not an expert on that; I’m just reading a lot. An average pandemic lasts three to five years. So everybody that thought, including myself, that the pandemic will disappear within a year—reality is in our face. But it’s also changing. I wouldn’t even define it as a challenge. It’s a quarterly challenge, semi-yearly challenge. We’ll get through it. So, we’ll sell a little differently or sell a little slower; that’s not the point. Other challenges include technological challenges in material development, which I’ve said for a long time. We have a great advantage in material development. I believe that the secret sauce in the whole additive manufacturing industry is materials. As much as people try to be proud, which they should be proud of the very sophisticated machines being developed—because that’s what you see, you see a machine that’s moving and doing, making miracles and robotic and automated without people involved—it’s true. But that’s not the major challenge. The major challenges are materials. In all the additive manufacturing industry, the challenge between having materials that are easily adjustable or easily deposited that fit the deposition process of additive manufacturing are not necessarily the same materials that fit the end product with the type of performance needed in the field. Many times, there’s a conflict between materials that are easy to use when creating the product and the materials needed when the product is performing. That is true for all additive manufacturing, specifically for additive manufacturing electronics. However, since I came here a year and a half ago, just to give you an example, the materials that were only working within zero degrees Celsius to 45 degrees Celsius, by now we have expanded from zero degrees Celsius to 100 degrees Celsius, and soon we are going below zero degrees Celsius and above 100 degrees Celsius. We’re making excellent progress. In parallel, we’re pursuing M&A, which balances that risk as well—purchasing Essemtec, which is generating beautiful revenue and great gross margin, is complementary to what we’re doing, but it has no dependency on materials at all. Actually, I shouldn’t say at all; they have a little bit of dependency on soldering materials and glues, but it’s minor compared to building parts for materials; it just involves assembling parts using glues or soldering paste. So this balances the rest of the materials in other parts of the business. Thank you for the question.

Okay. So with that challenge on materials, is it something that can be solved through aggressive research and development or through acquisition?

Yes, both.

Both. Okay. And just one thing, I see that you added the Type NG for the acquisition strategy. I don’t know if that’s specific to DeepCube or if we are also seeking opportunities in that direction when it comes to the Type NG acquisition.

What types? Sorry?

Type NG. I noticed on your presentation there’s a Type NG acquisition strategy.

Yeah. No, we don’t have... If you want to call it Type NG, we’re looking for companies today. Yes, you’re right, that are in additive manufacturing, which is adjacent to additive manufacturing electronics like DeepCube, which we purchased, and like Essemtec—except Essemtec is within electronics, while Fabrica is adjacent to electronics. But those companies are selling their machines through our distribution channels. They are similar to ours. More importantly, the application of machine learning and deep learning machines is very, very similar to how we’re using it for the AME machines without additional investments. So we’ll be able to leverage the knowledge and systems of machine learning we have by applying them to companies in additive manufacturing, which was not the case before we had the DeepCube Group. Once we had it, during due diligence, that’s the reason we purchased it—we realized that we could expand our market segment and not stay only in additive manufacturing electronics, but also in additive manufacturing of micromechanical products, et cetera. Those are the additional points you’re right to identify.

All right. Thank you. And I just want to encourage investors that I was on the tourists, right, no fast action, trust the process. Thank you.

Thank you.

The next question is from Eric Marcus. Please go ahead.

Good morning, Mr. Stern, or I guess good afternoon in Israel right now. Thank you for your opening comments. I’m going to address my questions to some of those early comments. With all due respect, I’m a long-term shareholder and a long-time senior tech executive. My concern stems from the fact that right now, Nano’s market cap is about $1.1 million, but the cash on hand is $1.3 billion. So the logical extension there is that the market is not valuing the company above zero dollars. That’s very concerning as a shareholder. I want to really understand how the company is going to protect shareholder interests. I understand your comment reasoning that shareholders are selling to take tax losses at year-end, but that really does not address the 50% loss in share value we’ve seen in just the last five months. There are things that could be done beyond what is being done today. For example, what about a joint venture with a large PCB client, forward integrating into a fab plant? What about supporting the new global marketing VP, which I think is a wonderful acquisition, with a well-thought-out $100 million marketing strategy instead of the $25 million a year currently being put into marketing? What about looking at a significant acquisition—not just a $25 million to $40 million acquisition, but something very significant over $100 million in the AI, robotics, or additive manufacturing business? I don’t understand why senior management is allowing the share price to simply go into free fall when there are aggressive things that could be done to address shareholder value. I would appreciate your comments, Mr. Stern.

What is the question please?

Do you want me to repeat it again, sir?

No, you gave me a lot of good ideas, but asking what are you asking me?

I want to know what you’re willing to do to stop the free fall of the stock shares. I want to know what aggressive proactive actions instead of sitting on $1.3 billion, while the market is evaluating your company at negative value. What are you prepared to do to protect shareholder interests? I’ve given you three ideas. I’d like to know what your ideas are. What are you going to do to protect shareholders?

We are going to use part of your ideas, and we have more ideas to develop the business of the company, and we’re going to continue to do so. I’m not going to describe more ideas because of competitive reasons concerning competition and M&A. But your ideas, the three that you mentioned, are actually very good ideas, and all of them are in the works.

I’m just very concerned about management appearing to sit on the sidelines for the last six months while the stock price is in free fall.

Okay, sir. I don’t know where you’re sitting. But I’m getting up every day at 8 and I’m going back to sleep at 7. Out of that 24 hours, I’m working probably 95%. I traveled within the Corona to at least 10 countries around the world and you can buy more stock; that will make the stock go up. Next question, please.

The next question is from Byron Meo of 1031 Private Exchange Group. Please go ahead.

Hi. Thank you. I’d like to know roughly about how much money went into the production of the DragonFly IV. This is a three-part question. And then, what does it sell for? And what is the lifespan before it’s replaced by a next-generation type in your expectations?

You’re asking what the price to manufacture a DragonFly IV is and what the—what do you call it—the selling price?

Yeah. Obviously, it took a lot of money and research and development that goes into it and gets capitalized and the expense of the machine; there’s a spell for that. So I’m trying to figure out what kind of profit you can generate from machines. Obviously, you have to keep advancing the technology to stay ahead of the game. I think one of the reasons why the stock is selling below the cash buy is because people are questioning cash burn and profitability; you’re not the only company selling it that. A lot of the biotechs are selling it that way. So I’d like to kind of analyze the cash burn and the profitability from the development of the DragonFly IV.

Well, you can analyze it from the development of the DragonFly because we invested much more in R&D than we needed for the development of the DragonFly IV. Regarding DragonFly IV, the time of development was about a year, and the money invested in that is a very low amount of millions of dollars. We invest much more than we invested in DragonFly because we’re developing a set of generations of products moving forward that will take between a year to three years to bring to market. And therefore, back to your question, the DragonFly IV is sold with a gross margin above 60%, which is beautiful and very attractive for a machine like that. It will return the investment easily. The issue is that the amount of money spent on R&D is not based on the DragonFly IV revenue; it is based on a long-term plan. As I explained before, more similar to what you said about the biotech companies, we have enough money to develop our long-term product strategy, including new products, and we are not in a position to be under any cash flow pressure or cash flow that depends on machine learning profitability. Eventually, this business will get the company as a whole to a profitable return on investment position, but it’s not going to happen in the next year. I can tell you that.

No. I understood that all along to be at 2023 type or 2024 the inflection points and all that.

Yeah. But I think the cash burn—you’ve hired a lot of people, you’ve hired a lot of researchers. What is the cash burn on a yearly basis where you are presently outside of your cost of goods? $70 million.

There is a follow-up question from Jeff Rice of SmallCap Investments. Please go ahead.

Hi. Thank you, again, Mr. Stern. I wanted to interject here. I understand everyone’s question on the share price; no one, I imagine, is happier right now. We’ve participated in the $12.80 offering for the $500 million. Okay? So that’s down over 65% from before. Now, on the long-term vision, I expect us to at least double or triple our investment and profit. While we’re down about $300,000 or $400,000 personally, I expect us to come out on the other side making about $400,000 to $500,000. One thing we could do is maybe get some insider buys for management. Some form shows confidence that, hey, we back you guys, and we’re going to buy in; we’re going to stop the bleeding and we’re going to reverse this. Now, none of the things that we can do is also have more conference calls and get everyone on the same page because there’s a lot of anger and hostility; that return on these other things are only getting worse?

What? Sorry, I didn’t understand the last sentence.

That when—we all need to get on the same page and maybe communicate better instead of arguing with each other. I know everyone is frustrated right now.

Who is arguing? I had a conference call just 10 days ago. How long do you—every how long do you want to have a conference call?

It’s not an automatic interval.

So, I’m asking, do you want me to answer you or do you want me? What do you want me to do?

What I want you to do is just stock back over that. That’s what I want you to do.

What? I can’t hear you. Your line was not so clear. It was not clear before either.

I want you to get the stock back to double digits.

I’m not getting this stock anywhere, sir. I am the CEO of the company. I am running the business. I am meeting with investors; I’m communicating with investors and shareholders. And the stock is being bought and sold, and projects the value or price; so with all due respect, sir.

It’s negative right now.

There is no protection against hostile takeover because the amount of shares and volumes being traded. If somebody goes to buy aggressively to get a certain amount of shares and gain control, all of you will gain a lot because the stock price will go back to double digits. By the way, if it will be hostile and they want to replace management, including myself, then in the process, the stock will return and all of you will make money. I am the last one that will hold it; I mean, I am a shareholder of a public company. My purpose is to make sure, beyond running the company and making sure constituencies are happy, including customers and employees, is first and foremost that the shareholders will make money, including myself. So I’m here to oppose any takeover; people can offer to buy the company or buy shares in the market before an offer; the price will go back.

Okay. Thank you, sir. I appreciate it.

There is another follow-up question from Byron Meo of 1031 Private Exchange Group. Please go ahead.

Yeah. I’d like to just comment that in sympathy with what’s going on with this particular company. I follow all the 3D companies, and if you look at 3D, if you look at desktop metal, even though they print different things, the whole growth industry has taken a huge hit. Desktop came public at 2010, went to 34 or something like that, and it’s now $7 or $8 or $7 or $6.5. So what’s going on between the growth phase and the macroenvironment stuff. I don’t have any control over, but what I do have control over is the use of the cash, the cash burn, and the move towards profitability as the countries get squeezed. One question I did have was, as we just went into a lockdown, Germany is contemplating going into another lockdown. Do you forecast at least another six months of tumultuousness because of this, or do you think this is not going to be as severe as the last one?

My guess—thanks for the question. My guess is as good as yours. I just came back from Germany and Austria while they were on their way to lockdown. It did not prevent me from traveling there and being where I need to be. We are in the process of opening a subsidiary in R&D and a commercial center in Munich soon. We just purchased, as you know, a company in Central Europe, Switzerland, which is very close to Germany and Austria. We are negotiating with an Austrian company. We have visitors from Germany and Austria they’re supposed to be here next. Yes, all this can be affected and hold things back. But as I said to one of the questions earlier, it’s not a strategic holdback; it’s a local holdback. I think in the long term, when I speak about long term, I’m not talking five years. I’m talking about half a year to a year. Things are on a better trajectory. I just read the news the way you do regarding what’s happening in the countries. We just came back a day ago healthy. Thank you. Yes, it has an effect, but we are looking at it as the environment, and we are looking to find solutions for every effect like that. I believe it’s not going to have, call it, major effects on our business. It will have certain effects.

Thank you.

The next question is from Bob Sagrino. Please go ahead.

Yes. My question is about developing technology competition. How are you faring right now with all the competition? I heard you mention a company called IO Tech that can handle different types of materials. I haven’t really found much information on that company, but I was wondering what companies are nipping at your heels? Are you still at least a year ahead of everybody?

IO Tech is a company with a revenue of less than $200,000 a year, maybe even less than $100 million. We know them very well. They were trying to sell themselves to us, wanted above $100 million; we said no. They have an interesting laser deposition technology, which we may license from them. They don’t have a machine or any competition that is materially affecting us. As you may remember, we have over 65 machines fully sold with customers around the world. So that’s not the—they have an interesting technology, but we’re actually working with them. Other than them, we do not see mature competition as mature as we have, which was verified in the Productronica show, which was two weeks ago, 10 days ago. We see a lot of small startups trying to get there, but not in a material way.

Okay. Thank you.

Thank you.

There are no further questions at this time. Mr. Stern, would you like to make your concluding statement?

Yeah. Thank you very, very much for participating. The market is by now, I think, open. So I’m sure all of you will go to work, and I will follow up as much as one requests. I’ll do more conference calls as much as I’m concerned—the more, the better. I just don’t want to take too much of your time. So we’ll find opportunities to have as many conference calls as necessary, so we’ll be in touch. Thank you very much.

Thank you. This concludes the Nano Dimension third quarter 2021 results call. Thank you for your participation. You may go ahead and disconnect.