Dubber clients run away with $18.5m worth of services; shares nosedive, CFO departs

Cloud recording small cap Dubber (ASX: DUB) shares were smashed after flagging an alarming $18.5m difference between the company's audited and preliminary annual financial report.

Dubber shares are down -27.9% in early trade, at levels not seen since March 2020.

An ugly sequence of events

Dubber shares were suspended from trade last Monday, 3 October after failing to ledge its annual report by the due date.

After market close on Friday, Dubber released its annual report, which was filled with negative restatements surrounding its earnings and debt.

On Monday, the company's chief financial officer resigned and will be replaced by executive director Peter Pawlowitsch for the interim.

"In that role Mr Pawlowitsch will lead a comprehensive review of all current practices, processes and systems in the Company’s finance function," Dubber said in a statement.

More questions than answers

Dubber posted in preliminary final report on 30 August, where the company delivered a 55% increase in revenue to $35.9m and a -$64.7m loss.

The restated financials corrected revenue to $25.3m and losses to -$83.2m. Management said this reflected a "modification in the treatment of platform and foundation based income."

The $18.5m net loss differential comprised of:

• A doubtful debt expense relating to trade debtors for $8.16m after a customer failed to meet contractual payments

• A $10.33m initially recognised as revenue but reversed following management's assessment that the likelihood of the company collecting the amount owning as "not probable"

Dubber said that by 30 June, the debtor repaid $1.8m and engaged the company on a repayment plan to pay down the remainder of the debt over the next 18 months.

Not all hope is lost but boy have things gotten messy. Dubber shares are down -46% in the last month and -85% year-to-date.

Dubber share price chart