Grants account for an increasingly smaller share of sales, as XTPL's sales of products and services expand. The company is currently pursuing three publicly subsidized projects, and one project was completed at the end of 2Q23 (a project with NCBiR "Innovative technology for precise deposition of conductive meshes for use in next-generation OLED displays" for PLN 11.7mn). Current ongoing projects include:
1. A grant from NCBiR for PLN 7.7mn (total project value PLN 11.6mn); duration October 1, 2020, to September 30, 2023.
2. A grant from the Polish Agency for Enterprise Development for PLN 0.4mn (total project value PLN 0.9mn); duration January 18, 2018, to December 31, 2023.
3. A grant from the European Commission for EUR 0.4mn (XTPL's budget is EUR 0.4mn, the total value of the project is EUR 4.3mn); duration from September 1, 2022, to August 31, 2024. We expect that, due to the innovative nature of the company's business, XTPL should obtain more grants for its ongoing projects. However, we do not assume an increase in the value of grants relative to historical values.
Cost analysis
Management (G&A) and research and development (R&D) costs, adjusted for the impact of the incentive program, have been rising in recent quarters as business scale increases, product commercialization begins, and marketing and sales activity increases after the pandemic period. In the coming quarters, monthly costs expressed as R&D and G&A costs adjusted by the cost of the incentive program should continue to increase - especially with the assumption of more intensive product commercialization and the entry of individual projects with customers into the production deployment phase.
Since the company operated in start-up mode in the current years and began commercializing products from 2021, the cost structure has remained relatively unchanged in recent years. Investments in fixed assets and intangible assets resulted in an increase in depreciation in 2022. The increase in the scale of operations and investments in the company's further development are driving up the cost of raw materials and materials consumption, increasing the cost of third-party services (sales commissions, hiring additional specialists), and increasing the cost of employee benefits (increasing employment and including the cost of the incentive program).
