Clearday, Inc. (CLRD)·Q3 2019 Earnings Summary

Executive Summary

• Q3 2019 revenue was $0.16M, down 69.7% year-over-year from $0.52M as DOE Phase 2 funding timing led to minimal recognized revenue; net loss was $2.38M and diluted EPS was $(0.43) .
• Management began initial deliveries of Conductus high-performance magnet wire late in Q3 but remained challenged to meet current commitments; Phase 2 of the DOE Next Generation Electrical Machines project was approved to start on December 1, 2019, and STI strengthened its IP with a new U.S. patent in October .
• Liquidity remains the central risk: cash was $0.28M at quarter-end; STI raised $3.0M gross ($2.4M net) in October, but forecasts runway only into Q1 2020 and announced a strategic alternatives review on October 29, 2019 .
• No commercial product revenue was recognized; elevated preproduction manufacturing costs drove continued gross losses, with DOE Phase 2 expected to reaccelerate program revenue starting Q4 (Dec 1) .
• Potential stock catalysts include outcomes from the strategic alternatives process and actions to address Nasdaq minimum bid compliance (reverse split proposal) .

What Went Well and What Went Wrong

What Went Well

• Initial wire shipments began: “we started delivering initial quantities of our Conductus high performance magnet wire to several customers” (CEO Jeff Quiram), a key milestone toward broader commercialization .
• Program momentum: management “reengaged our efforts on our Department of Energy (DOE) project” with Phase 2 approved to commence on December 1, 2019, aligning with NGEM goals and commercial ramp synergies .
• IP strengthening: “the U.S. Patent and Trademark Office in October granted STI a patent that further protects its unique techniques” for superconducting magnet wire performance, supporting competitive differentiation in fusion and magnet applications .

What Went Wrong

• No commercial revenue recognized and steep YoY revenue decline to $0.16M (all DOE-related), reflecting delays in DOE funding and limited customer revenue recognition; net loss widened YoY with continued operating losses .
• Manufacturing and fulfillment headwinds: management remained “challenged to meet current customer commitments,” and preproduction manufacturing efforts at sub-scale drove gross losses and higher cost-of-sales .
• Liquidity risk escalated: quarter-end cash was $0.28M; October equity raise (~$2.4M net) was insufficient for 12-month operations, with going concern language and only Q1 2020 runway forecast .

Financial Results

Segment breakdown (revenue composition):

KPIs and balance items:

Guidance Changes

Earnings Call Themes & Trends

Note: Earnings call transcript available via Seeking Alpha and other sources .

Management Commentary

• “In the third quarter, we started delivering initial quantities of our Conductus® high performance magnet wire to several customers but we remain challenged to meet current customer commitments. We remain focused on completing our current customer demand before we can begin to transition to full production.” – Jeff Quiram, CEO .
• “Late in the third quarter we reengaged our efforts on our Department of Energy (DOE) project… focused on the deployment of components for Next Generation Electrical Machines… [with] significant synergies with our commercial goal of ramping capacity” .
• “Early in the fourth quarter, we strengthened our IP portfolio… [with] a patent that further protects its unique techniques to maximize current carrying performance in superconducting magnet applications” .

Q&A Highlights

• Analysts focused on production ramp timing and capacity to meet customer commitments; management reiterated initial deliveries and the focus on process improvements before full production .
• Liquidity and financing runway were addressed, with management referencing the October raise and Q1 2020 runway, alongside exploration of strategic alternatives .
• DOE Phase 2 timing and program objectives were clarified, supporting technical progress and potential revenue recognition beginning December 2019 .

Estimates Context

• Wall Street consensus EPS and revenue estimates via S&P Global were unavailable for CLRD due to missing mapping coverage at the time of query; therefore, no estimate vs. actual comparison is provided.
• If/when S&P Global coverage is available, comparisons to “Primary EPS Consensus Mean” and “Revenue Consensus Mean” will be incorporated with S&P Global attribution.

Key Takeaways for Investors

• Commercialization milestone achieved with initial Conductus wire deliveries, but full production is contingent on process improvements and near-term capacity; near-term revenue visibility remains limited .
• Liquidity is the principal risk and likely stock driver: $0.28M cash at Q3-end, ~$2.4M net proceeds in October, runway only into Q1 2020; expect financing and/or strategic alternatives outcomes to be pivotal .
• Program tailwinds: DOE Phase 2 start on Dec 1 could reaccelerate program-related revenues and provide technical validation, supporting medium-term commercialization .
• IP moat strengthened with an October patent focused on maximizing current-carrying performance for magnet applications, relevant to fusion and NGEM customers .
• Listing compliance actions (reverse split consideration) and bid-price remediation may add technical trading volatility; monitor corporate actions post special meeting .
• Cost structure remains heavy relative to revenue at preproduction scale; until commercial revenues scale, expect operating losses to persist, a potential overhang on valuation .
• Watch for customer qualification milestones (evaluation orders of $306k) and conversion to purchase orders, which can improve AR and revenue trajectory .

Additional source documents:

• Q3 2019 press release and 8-K: revenue/EPS, liquidity, strategic review, patent .
• Q3 2019 10-Q: detailed financials, DOE timing, going concern, Nasdaq compliance, backlog .
• Prior quarter press releases (Q2/Q1): commercialization expectations and early orders (incl. IPR India) .
• Earnings call transcript (Q3 2019): thematic confirmation and Q&A .