Dubber Corp Ltd (ASX: DUB) shares have finally returned to action on Wednesday after a seven-week suspension.
Unfortunately for shareholders, the ASX stock's return to trade has not been a pleasant one.
At the time of writing, the Dubber share price is down by a massive 75% to a lowly 5.5 cents.
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Why is this ASX stock crashing?
There have been a number of reasons why investors have been rushing to the exits this morning.
This includes the call recording technology company revealing in March that it had fired its managing director and CEO, Steve McGovern after uncovering that company funds had allegedly been misused.
The company advised that between mid-2019 and August 2021, it deposited $60 million into a trust account for term deposits. However, a trust account ledger provided by Christopher William Legal (whose principal is Mark Madafferi) revealed many unauthorised transfers in and out of the account, that were unknown to the company.
A total of $26.6 million remains unaccounted for. Dubber believes it was "likely misappropriated by Mr McGovern and Mr Madafferi for unauthorised purposes, including payments to multiple third parties and entities." As we covered here, both men have since been banned from leaving Australia by ASIC.
The alleged misappropriation of funds led to an overstatement of assets and earnings from interest income. This ultimately meant that operating losses were potentially understated by over $4 million in aggregate for 2022 and prior years.
Capital raising
In light of the above, the ASX stock completed a capital raising last week.
Dubber revealed that its institutional entitlement offer raised approximately $4.52 million with a take-up rate of just 47.2%. These funds were raised through the issue of approximately 90.4 million new shares at the price of just 5 cents per new share. This represents a whopping 77% discount to where it last traded.
In addition, approximately $3.14 million was raised through the issue of 62.76 million new shares under a placement at the same price.
These funds will be used for additional working capital, bringing ordinary business creditors back into normal payment terms, costs associated with the company's financial investigation, and the repayment of loans.
Dubber's chairman, Neil Wilson, said:
This is an important step in restoring confidence in the company and I would like to thank our shareholders for their support during this challenging period. We look forward to continued positive engagement with Dubber partners and customers.
