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Photo: Ina Fassbender/picture alliance via Getty Images

When fuel cell maker Bloom Energy went public back in July, its IPO prospectus included at least 35 mentions of a utility-scale deployment of Bloom "boxes" in Delaware, the company's largest single project.

Yes, but: None of them noted that those boxes need to be replaced, at a cost to the company that Axios has learned will be between $100 million and $150 million.

  • On November 6, Bloom announced its third quarter earnings, including around a $79 million net loss on $190 million in revenue. It didn't mention the Delaware replacement needs either in its release nor in the earnings call.
  • On November 11, Bloom quietly filed a construction permit request in Delaware for the replacements.
  • On November 13, Bloom filed its 10-Q with the SEC. Again, no word of the upcoming expenditure.

It is hard to argue that this isn't material information that Bloom should have shared with investors, particularly given how it could impact shareholder liquidity and the company's path to profitability.

  • Bloom would consider this $100-$150 million to eventually fall within its "cost of service" line item, which totaled just $79 million for the first nine months of 2018, and just $84 million for all of 2017.
  • Even if Bloom keeps it to $100 million and spreads the cost out over six to eight quarters, it would still come out to a minimum of $12 million in costs per quarter, or over half of its Q3 2018 cost of service expenses. If it's $150 million for six quarters, the quarterly hit more than doubles to $25 million a pop.

There continue to be no official rules governing what is or isn't material, when it comes to corporate disclosure, neither quantitative nor qualitative. But three experts I contacted believe Bloom's upcoming expenses are material, at least from an accounting perspective, and add that the "soft" test for public disclosure is about if it's a known expense that a "reasonable investor would want to know."

Bloom thinks I'm way off base. Per a spokesman:

"There will be incremental cost for replacing these systems. However, there will also be a savings in future service cost for these newer generation systems will cover the incremental cost. We’re very confident that there will be no material adverse cost to the company from the upgrade. It’s part of the normal process of our business.”

The bottom line: Bloom is a high-powered company, with a board of directors that includes Colin Powell, John Doerr and John Chambers. It defied some skeptics by raising $270 million in its July IPO at $15 per share, having its stock pop 67% on its first day of trading and then peak at $35.80 in late September.

  • But now the shares are almost back down to the IPO price — sinking 10% yesterday, apparently on California wildfire concerns — and investors have a right to be nervous. They also have a right to know about the company's future financial challenges.

Go deeper

Massachusetts Gov. Charlie Baker will not seek re-election in 2022

Mass. Gov. Charlie Baker (R) speaking during a press conference in November 2021. Photo: Jonathan Wiggs/The Boston Globe via Getty Images

Massachusetts Gov. Charlie Baker (R), a moderate who typically ranks as one of the nation's most popular governors, said Wednesday that he and Lt. Gov. Karyn Polito (R) will not seek third terms in 2022.

Why it matters: The decision leaves the gubernatorial race wide open and will likely affect multiple down-ballot races next year. Baker was expected to be the front-runner had he joined the race.

3 hours ago - Health

CDC prepares tougher testing rules for international travelers

Travelers with their luggage arrive at a COVID-19 testing location at the airport in Los Angeles, Calif., on Nov. 23, 2021. Photo: Frederic J. Brown/AFP via Getty Images

The Centers for Disease Control and Prevention said Tuesday night that it is working to impose stricter testing requirements for international travelers due to the spread of the new Omicron variant.

The big picture: The new rules would require all international travelers, regardless of vaccination status, to show a negative test taken a day before their flight to the U.S. Currently, the CDC says fully vaccinated travelers are allowed to show a test taken no more than three days before their departure, AP reports.

Republicans threaten to shut down government over vaccine mandates

Sen. Mike Lee (R-Utah) in the Capitol in November 2020. Photo: Joshua Roberts/Getty Images

Conservative Republicans in the House and Senate are planning to force a government shutdown Friday to deny funding needed to enforce the Biden administration's vaccine mandates on the private sector, according to Politico.

Why it matters: Congress has until the end of the week to pass a stopgap measure to extend funding into 2022, though objection from a small group of Republicans could shut down the government.