Redcar's Applied Graphene Materials is planning to raise more than £5.5m by issuing millions of new shares.
The company, which makes the incredibly strong material graphene, said it was attempting to raise £5.3m by placing 12.9 million ordinary shares on the market, at a price of 41p per share.
The 41p placing price is a 39% discount on the shares' 67.4p closing price on January 25.
On top of this, the company has revealed that an existing shareholder plans to buy and additional 478,049 shares, allowing Applied Graphene Materials to raise a further £200,000.
Retail investors will also be given the opportunity to acquire shares in the company, with Applied Graphene Materials issuing a new ordinary shares, which will be made available to purchase through online share trading platform PrimaryBid.com. The PrimaryBid sale will be held on February 15.
The firm announced its plans for the placing yesterday, January 26, but has already revealed that it expects to raise around £6m through the scheme after the shares were oversubscribed.
In a statement to the London Stock Exchange the company said it would use the money raised to increase its working capital funding.
It said: "Applied Graphene Materials Plc announces its intention to carry out a proposed placing to issue 12,936,585 new ordinary shares at the issue price, raising £5.3m (before expenses).
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"The net proceeds of the placing, the subscription and the PrimaryBid offer will be used by the company to provide ongoing working capital funding, including costs associated with continuing the company's product and technology development roadmap; to service anticipated growth in customer and product demand; and for minor capital expenditure."
A number of the company's directors also used the placing to acquire more shares in the company.
In total five of the company's directors purchased £71,000 worth of additional shares. Of the five directors involved, Applied Graphene Materials founder and director Karl Coleman continued to own the largest proportion of shares after the second placing, with 2.83% of the company's share capital under his control.
Following the announcement Applied Graphene Materials' share price fell from 67.98p per share yesterday to a low of 44.98p at the time of writing.