KUALA LUMPUR (Sept 10):Focus Dynamics Technologies Bhd has proposed to reduce the par value of its shares by cancelling five sen out of the par value of every existing ordinary share of 10 sen each to pare down its accumulated losses.

According to its filing with the stock exchange today, Focus Dynamics' issued and paid-up share capital as at Sept 9, 2015 was RM70.55 million, with 705.5 million existing shares.

The sum is not inclusive of its outstanding warrants and employees' share option scheme (ESOS).

According to the energy-efficient electrical control products manufacturer, the proposed par value reduction will give rise to a credit of between RM35.28 million under the minimum scenario and RM67.41 million under the maximum scenario, which will be utilised to set off against the accumulated losses of the company.

It plans to eliminate its audited accumulated losses as at Dec 31, 2014 of RM5.41 million and unaudited accumulated losses (as at June 30, 2015) of approximately RM6.37 million, respectively via the proposed par value reduction.

The exercise can also rationalise the statement of financial position of the company, said Focus Dynamics.

It also noted that its shares have been trading below its existing par value of 10 sen apiece, which prohibits the company from raising funds.

By lowering its shares' par value by five sen each, the company said it will provide greater flexibility to raise funds and to implement corporate proposals which entail the issuance of new shares closer to its market price in the future.

The remaining balance after offsetting its accumulated losses will be credited to the capital reserves of the company and may be utilised as and when the board deems fit.

According to its six-month period unaudited consolidated statements ended June 30, 2015, the company will then be back to a net cash position of between RM28.91 million (minimum scenario) and RM61.04 million (maximum scenario).

To facilitate the reduction in the par value of its shares, it has also proposed an amendment to its Memorandum and Articles of Association.

The proposals are subject to its shareholders' approval at an extraordinary general meeting to be convened.

Focus Dynamics closed unchanged at six sen today, giving it a market capitalisation of RM38.8 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)