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What changed in XWELL, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of XWELL, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+284 added−226 removedSource: 10-K (2025-04-15) vs 10-K (2024-04-16)

Top changes in XWELL, Inc.'s 2024 10-K

284 paragraphs added · 226 removed · 169 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Company’s common stock, par value $0.01 per share, which had previously been listed under the trading symbol “XSPA” on the Nasdaq Capital Market, now trades under the trading symbol “XWEL”. The Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on October 24, 2022 (the “Amended and Restated Certificate”) reflecting the name change.
Biggest changeOn October 25, 2022, the Company changed its name to XWELL, Inc. (“XWELL” or the “Company”) from XpresSpa Group, Inc. The Company’s common stock, par value $0.01 per share, which had previously been listed under the trading symbol “XSPA” on Nasdaq, now trades under the trading symbol “XWEL”.
Although we have historically focused our growth in the airport space, our strategy continues to shift with further emphasis on growth outside the airport—in and out of travel focused centers. This shift includes taking our XpresSpa brand out of the airport and into other transit centers such as rail terminals.
Although we have historically focused our growth on the airport space, our strategy continues to shift with further emphasis on growth outside the airport—in and out of travel focused centers. This shift includes taking our XpresSpa brand out of the airport and into other transit centers such as rail terminals.
XpresTest The Company, in partnership with certain COVID-19 testing partners, successfully launched its XpresCheck Wellness Centers, in June of 2020, through its XpresTest, Inc. subsidiary (“XpresTest”), which offered COVID-19 and other medical diagnostic testing services to the traveling public, as well as airline, airport and concessionaire employees, and TSA and U.S. Customs and Border Protection agents during the pandemic.
XpresTest The Company, in partnership with certain COVID-19 testing partners, successfully launched its XpresCheck Wellness Centers, in June of 2020, through its XpresTest, Inc. subsidiary (“XpresTest”), which offered COVID-19 and other medical to the traveling public, as well as airline, airport and concessionaire employees, and TSA and U.S. Customs and Border Protection agents during the pandemic.
Although we recognize four segments of business, we believe there is opportunity to leverage a segment of our products and services across the Company’s platform of brands. Additionally, we are expanding our retail strategy, not only adding more products for sale but aligning those products more efficiently to our service offerings.
Although we recognize four segments of business, we believe there is opportunity to leverage a segment of our products and services across our platform of brands. Additionally, we are expanding our retail strategy, not only adding more products for sale but aligning those products more efficiently to our service offerings.
Risk Factors – Risks Related to our Business Operations – Failure to comply with minimum airport concession disadvantaged business enterprise participation goals and requirements could lead to lost business opportunities or the loss of existing business.” We are subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act, the Family and Medical Leave Act, the Affordable Care Act, the Healthcare Insurance Portability and Accountability Act and various federal and state laws governing matters such as minimum wages, overtime, unemployment tax rates, workers’ compensation rates, citizenship requirements and other working conditions.
Risk Factors – Risks Related to our Business Operations – Failure to comply with minimum airport concession disadvantaged business enterprise participation goals and requirements could lead to lost business opportunities or the loss of existing business.” We are subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act, the Family and Medical Leave Act, the Affordable Care Act and various federal and state laws governing matters such as minimum wages, overtime, unemployment tax rates, workers’ compensation rates, citizenship requirements and other working conditions.
We consider our relationships with our employees to be good. 7 Table of Contents Corporate Information Our common stock, par value $0.01 per share, which was previously listed since January 8, 2018 under the trading symbol “XSPA” on the Nasdaq Capital Market, has been listed under the trading symbol “XWELL” since October 25, 2022.
We consider our relationships with our employees to be good. Corporate Information Our common stock, par value $0.01 per share, which was previously listed since January 8, 2018 under the trading symbol “XSPA” on Nasdaq, has been listed under the trading symbol “XWELL” since October 25, 2022.
The Company also had 11 international locations operating as of December 31, 2023, including two XpresSpa locations in Dubai International Airport in the United Arab Emirates, one XpresSpa location in Zayad International Airport in Abu Dhabi, UAE, three XpresSpa locations in Schiphol Amsterdam Airport in the Netherlands and five XpresSpa locations in the Istanbul Airport in Turkey.
The Company also had 10 international locations operating as of December 31, 2024, including two XpresSpa locations in the Dubai International Airport in the United Arab Emirates, one XpresSpa location in the Zayad International Airport in Abu Dhabi, United Arab Emirates, three XpresSpa locations in the Schiphol Amsterdam Airport in the Netherlands and four XpresSpa locations in the Istanbul Airport in Turkey.
It also includes growth through acquisition such as Naples Wax Centers where we can apply our wellness pedigree to expand that business from both a location standpoint and from a diversification of products and services standpoint. Additionally, we are currently advancing another off-airport model called TreatStudios.
It also includes growth through acquisition such as Naples Wax Centers where we can apply our wellness pedigree to expand that business from both a location standpoint and from a diversification of products and services standpoint.
Our principal executive offices are located at 254 West 31 st Street, 11 th Floor, New York, New York 10001. Our telephone number is (212) 309-7549 and our website address is www.xwell.com . We also operate the websites www.xpresspa.com , www.treat.com , www.xprescheck.com , www.hyperpointe.com and www.napleswaxcenter.com .
Our principal executive offices are located at 254 West 31 st Street, 11 th Floor, New York, New York 10001. Our telephone number is (212) 309-7549 and our website address is www.xwell.com .
From the creation of marketing campaigns for the pharmaceutical industry, 4 Table of Contents to learning management systems to website and health related content creation, HyperPointe is a complementary service provider to XWELL’s health-focused brands as well as providing the majority of services to the external community.
From the creation of marketing campaigns for the pharmaceutical industry, to learning management systems to website and health related content creation, HyperPointe is a complementary service provider to XWELL’s health-focused brands as well as providing the majority of services to the external community. For reporting purposes, the former HyperPointe segment has been consolidated into the XpresTest segment.
Airport retailers also benefit from “dwell time,” the period after travelers have passed through airport security and before they board an aircraft. For over 21 years, increased security requirements have led travelers to spend more time at the airport.
Unlike traditional retailers, airport retailers benefit from a steady and predictable flow of traffic from a constantly changing customer base. Airport retailers also benefit from “dwell time,” the period after travelers have passed through airport security and before they board an aircraft. For over 21 years, increased security requirements have led travelers to spend more time at the airport.
References in this Annual Report on Form 10-K to our website address and websites we operate do not constitute incorporation by reference of the information contained on the websites.
We also operate the websites www.xpresspa.com , www.xprescheck.com , www.hyperpointe.com and www.napleswaxcenter.com . 7 Table of Contents References in this Annual Report on Form 10-K to our website address and websites we operate do not constitute incorporation by reference of the information contained on the websites.
In March 2024, the program funding and scope were expanded, a revenue increase of $4,000, to an estimated $11,044 in revenue for XpresTest with new collection locations at U.S. international airports in Miami (MIA) and Chicago (ORD) and the roll out of multi-pathogen testing across the program.
The revenue to XpresTest from such one-year extension totaled approximately $7,044. In January 2024, the program funding and scope were expanded, a revenue increase of $4,000, to an estimated $11,044 in revenue for XpresTest with new collection locations at U.S. international airports and the roll out of multi-pathogen testing across the program.
We are also subject to certain truth-in-advertising, general customs, consumer and data protection, product safety, workers’ health and safety and public health rules that govern retailers in general, as well as the merchandise sold within the various jurisdictions in which we operate.
We are also subject to certain truth-in-advertising, general customs, consumer and data protection, product safety, workers’ health and safety and public health rules that govern retailers in general, as well as the merchandise sold within the various jurisdictions in which we operate. Employees As of December 31, 2024, we had approximately 246 full-time and 66 part-time employees of XWELL.
Regulation Our operations are subject to a range of laws and regulations adopted by national, regional, and local authorities from the various jurisdictions in which we operate, including those relating to, among others, licensing (e.g., massage, nail, and cosmetology), public health and safety and fire codes.
Our goal continues to be opportunistic expansion outside the airport and we believe our family of brands will help to serve that growth strategy. 6 Table of Contents Regulation Our operations are subject to a range of laws and regulations adopted by national, regional, and local authorities from the various jurisdictions in which we operate, including those relating to, among others, licensing (e.g., massage, nail, and cosmetology), public health and safety and fire codes.
ITEM 1. BUSINESS Overview XWELL is a global wellness company operating multiple brands and focused on bringing restorative, regenerative and reinvigorating products and services to travelers. XWELL currently has four reportable operating segments: XpresSpa®, XpresTest®, Naples Wax Center and Treat™. On October 25, 2022, the Company changed its name to XWELL, Inc. (“XWELL” or the “Company”) from XpresSpa Group, Inc.
ITEM 1. BUSINESS Overview XWELL is a global wellness company operating multiple brands and focused on bringing restorative, regenerative and reinvigorating products and services to travelers. As of the date of this Annual Report on Form 10-K, XWELL currently has four reportable operating segments: XpresSpa®, XpresTest®, Naples Wax Center® and Treat®.
Naples Wax Center On September 12, 2023, XWELL acquired Naples Wax, LLC, a group of upscale hair removal boutiques in Florida, for a purchase price of $1,624. Aiming to provide a memorable customer experience, Naples Wax Center operates three high-performing locations with core products and service offerings from face and body waxing to a range of skincare and cosmetic products.
Naples Wax Center XWELL’s subsidiary Naples Wax, LLC, d/b/a Naples Wax Centers (“Naples Wax Center” or “Naples Wax”) which was acquired on September 12, 2023, for a purchase price of $1,624, operates a group of upscale hair removal locations with core products and service offerings from face and body waxing to a range of skincare and cosmetic products.
For reporting purposes, the former HyperPointe segment has been consolidated into the XpresTest segment. Treat Treat, which is operating through XWELL’s subsidiary Treat, Inc. (“Treat”) is a wellness brand that provides access to wellness services for travelers at on-site centers (currently located in JFK International Airport and in Salt Lake City International Airport).
Treat Treat, which is operating through XWELL’s subsidiary Treat, Inc. (“Treat”) is a wellness brand that provides access to wellness services for travelers at on-site centers. In April 2024, the decision was made to close the location in the Salt Lake City International Airport.
The balance of the domestic market is highly fragmented and is represented largely by small, privately-owned entities. The largest domestic competitor operated 14 locations in 9 airports in the United States. Our Market Airport retailers differ significantly from traditional retailers. Unlike traditional retailers, airport retailers benefit from a steady and predictable flow of traffic from a constantly changing customer base.
Competition Our domestic units operate within many of the largest and most heavily trafficked airports in the United States. The balance of the domestic market is highly fragmented and is represented largely by small, privately-owned entities. The largest domestic competitor operated 15 locations in 11 airports in the United States. Our Market Airport retailers differ significantly from traditional retailers.
XpresSpa XWELL’s subsidiary, XpresSpa Holdings, LLC (“XpresSpa”) has been a global airport retailer of spa services through its XpresSpa spa locations, offering travelers premium spa services, including massage, nail and skin care, as well as spa and travel products. As of December 31, 2023, there were 21 domestic XpressSpa locations in total, 19 Company-owned locations and two franchises.
All amounts are in thousands, except share, per share, or as otherwise specifically noted. XpresSpa XWELL’s subsidiary, XpresSpa Holdings, LLC (“XpresSpa”) has been a global airport retailer of spa services through its XpresSpa spa locations, offering travelers premium spa services, including massage, nail and skin care, as well as spa and travel products.
Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play wellness services company, in both the airport and off-airport marketplaces.
The Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on October 24, 2022 (as amended, the “Amended and Restated Certificate”) reflecting the name change. Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play wellness services company, in both the airport and off-airport marketplaces.
We believe operating outside of the airport complements our offering and represents the fastest way to scale the XWELL family of brands. We will be looking to further expand internationally. With international travel slowly returning to pre-pandemic levels, we continue to be opportunistic in our approach, by taking advantage of the current market to growth.
We believe operating outside of the airport complements our offering and represents the fastest way to scale the XWELL family of brands. We will be looking to further expand internationally. We believe a strategy for international expansion further advances our ability to expand our other brands including bio surveillance outside of the US.
XpresTest began conducting bio surveillance monitoring with the Centers for Disease Control and Prevention (CDC) in collaboration with Concentric by Ginkgo BioWorks in 2021 and on January 31, 2022, we announced the extension of our initial program, bringing the total contract to $5,537. As of August 2022, the program was renewed in partnership with Ginkgo BioWorks.
As of December 31, 2023, the Company closed all XpresCheck locations and XpresTest no longer provides diagnostic testing services XpresTest began conducting bio surveillance monitoring with the Centers for Disease Control and Prevention (CDC) in collaboration with Concentric by Ginkgo Bioworks Holdings, Inc. (“Ginkgo Bioworks”) in 2021. The program was renewed through August 2024.
HyperPointe XWELL’s subsidiary, gcg Connect, LLC, operating as HyperPointe, provides direct to business marketing support across a number of health and health-related channels.
In February 2025, the program was extended through a three-year contract with a total base value of $22.2 million over three years, and a maximum ceiling value of $24.8 million within the same timeframe. 4 Table of Contents HyperPointe XWELL’s subsidiary, gcg Connect, LLC, operating as HyperPointe, provides direct to business marketing support across a number of health and health-related channels.
Our Strategy and Outlook We believe that our company is well positioned to benefit from consumers’ growing interest and pent-up demand in travel health and wellness and increasing demand for health and wellness related services and products.
Our Strategy and Outlook We believe our company is strategically positioned to capitalize on the growing consumer interest in travel, health, and wellness, as well as the increasing demand for related products and services. Our forward-looking plan focuses on expanding and integrating offerings across our brands, with a key emphasis on unifying airport and off-airport locations under the XWELL brand.
Removed
During 2022 and 2023, as countries continued to relax their testing requirements resulting in rapid decline of testing volumes at the Company’s XpresCheck locations, the Company closed XpresCheck Wellness Centers. As of December 31, 2023, we have closed all XpresCheck locations.
Added
As of December 31, 2024, there were 18 domestic XpresSpa locations in total comprised of 17 Company-owned locations and one franchise.
Removed
A new two-year contract was initiated which represents approximately $7,330 in revenue (for the first year) for the XpresTest segment. The program was renewed in August 2023 through a new one-year contract. The revenue to XpresTest from such one-year extension totaled approximately $7,044.
Added
In July 2024, the contract was further amended to extend the time period for services by two weeks (extension period August 12, 2024 to August 25, 2024). An increase of $293 in revenue for the two week extension brought total revenue to $11,337. The program was again extended in August 2024 through February 25, 2025.
Removed
In 2022, Treat opened a new location in Phoenix Sky Harbor International Airport but by the fourth quarter of 2022, the decision was made to close this location. The remaining Treat locations offer a full retail product offering and a suite of wellness and spa services.
Added
The funding was expanded with a revenue increase of $3,763, to an estimated $15,100 in revenue for XpresTest.
Removed
Travelers can purchase time blocks to use our wellness rooms to engage in interactive services like self-guided yoga, meditation and low impact weight exercises or to relax and unplug from the hectic pace of the airport and renew themselves before or after their trip.
Added
In the first quarter of 2025, the decision was made to convert the final remaining Treat location at JFK International Airport in New York City to an XWELL location. Following the conversion of the JFK Treat location, in mid-2025, we will no longer have any Treat locations.
Removed
We believe a strategy for international expansion further advances our ability to expand our other brands including bio surveillance outside of the US. TreatStudios Further, in Q4 of 2023, the Company began plans to open its first TreatStudios location in Jacksonville, Florida in 2024. TreatStudios is an out-of-airport concept providing leased space to established wellness service providers.
Added
This strategic alignment will enable the development of membership programs that provide seamless access to XWELL locations, fostering deeper customer relationships and enhancing brand loyalty. Additionally, a strong customer community will support targeted marketing initiatives and cross-promotional opportunities, strengthened by advanced technology and customer relationship management capabilities from the HyperPointe unit.
Removed
Revenue will be derived from both lease payments received from the stylists, the sale of retail at the wellness center and in specific locations curated services that are XWELL branded. These strategic imperatives will be accomplished through development of an infrastructure specifically focused on enabling scalable and efficient growth.
Added
As part of our strategy, we will optimize our airport portfolio to create a leaner, more profitable business while leveraging the high foot traffic of airport locations to build brand recognition. Simultaneously, we will pursue an off-airport growth strategy through acquisitions, particularly in the expanding med spa sector, which includes health, wellness, and beauty services.
Removed
Our go-forward plan 5 Table of Contents includes the expansion and integration of products and services across our six brands; the right-sizing of our existing airport portfolio to a leaner and more profitable business; the execution of an ‘off-airport’ strategy through acquisition to deliver more products and services, which will serve as a catalyst for our future growth; the implementation of an international expansion plan; and ensuring we can scale our growth in a responsible way that drives shareholder value.
Added
Our plan includes both developing new locations and acquiring established med spas, strategically expanding XWELL’s presence in key metropolitan areas that align with our existing airport locations.
Removed
Through right-sizing our existing business, optimizing our cost structure and making acquisitions that further leverage the strength of our brand portfolio, XWELL is positioning itself for both financial and operational growth now and in the future. Competition Our domestic units operate within many of the largest and most heavily trafficked airports in the United States.
Added
This approach will enhance membership accessibility and strengthen our brand’s reach. 5 Table of Contents Additionally, our expertise from the XpresTest unit will allow us to expand bio-security services beyond the U.S. through partnerships with government clients. Domestically, we will continue growing our bio-security initiatives in collaboration with government agencies.
Removed
This concept represents a departure from our traditional “brick and mortar” spa operation business building wellness centers where established service providers can lease space from TreatStudios to deliver their services to their customers.
Added
These strategic efforts will serve as catalysts for future growth, support our international expansion goals, and ensure scalable, long-term success. By optimizing our cost structure, refining our existing operations, and pursuing strategic acquisitions, XWELL is positioning itself for sustainable financial and operational growth while maximizing shareholder value.
Removed
While similar to other coworking space concepts, TreatStudios has the unique advantage of offering space focused entirely on delivery of wellness services and the creation of a “wellness community” where practitioners can leverage others in the space to further develop their profession. 6 Table of Contents Our goal continues to be opportunistic expansion outside the airport and we believe our family of brands will help to serve that growth strategy.
Removed
We are also subject to HIPAA and the HITECH Act as they relate to patients’ Protected Health Information (PHI), patient rights, breach notification and other actions. Employees As of December 31, 2023, we had approximately 266 full-time and 71 part-time employees of XWELL.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Capital Stock ● Stock prices can be volatile, and this volatility may depress the price of our common stock. ● We have no current plans to pay dividends on our common stock, and our investors may not receive funds without selling their stock. ● Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. 10 Table of Contents ● If securities analysts do not publish research or reports about our business, or if they publish negative evaluations, the price of our Common Stock could decline. ● Having availed ourselves of scaled disclosure available to smaller reporting companies, we cannot be certain if such reduced disclosure will make our common stock less attractive to investors.
Biggest changeIf we make these payments in common stock, it may result in substantial dilution to the holders of our common stock. ● The Series G Preferred Stock and certain of our outstanding warrants contain certain anti-dilution provisions, which may dilute the interests of our stockholders, depress the price of our common stock, and make it difficult for us to raise additional capital. 10 Table of Contents ● The Series G Certificate of Designations contains restrictive covenants and terms that may make it difficult to procure additional financing and that may affect our financial condition and results of operations. ● We have no current plans to pay dividends on our common stock, and our investors may not receive funds without selling their stock. ● Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. ● If securities analysts do not publish research or reports about our business, or if they publish negative evaluations, the price of our common stock could decline. ● Having availed ourselves of scaled disclosure available to smaller reporting companies, we cannot be certain if such reduced disclosure will make our common stock less attractive to investors.
Furthermore, the exit of an airline from a market or the bankruptcy of an airline could reduce the number of airline passengers in a terminal or airport where we operate and have a material adverse impact on our business, financial condition, and results of operations.
Furthermore, the exit of an airline from a market or the bankruptcy of an airline could reduce the number of airline passengers in a terminal or airport where we operate and have a material adverse impact on our business, financial condition, and results of operations.
If we cannot hire adequate staff for our locations, we will not be able to operate. ● Our labor force could unionize, putting upward pressure on labor costs. ● We may not be able to predict accurately or fulfill customer preferences or demands. ● Our leases may be terminated, either for convenience by the landlord or because of a XpresSpa, Naples Wax or Treat of a default. ● Our ability to operate depends on the traffic patterns of the terminals in which we operate, and the cessation or disruption of air traveler traffic in these terminals would negatively impact XpresSpa’s, XpresTest’s and Treat’s addressable market. ● Failure to comply with minimum airport concession disadvantaged business enterprise participation goals and requirements could lead to lost business opportunities or the loss of existing business. ● If we are unable to protect our customers’ credit card data and other personal information, we could be exposed to data loss, litigation and liability, and our reputation could be significantly harmed. ● Negative social media regarding XWELL, XpresSpa, Treat, XpresTest, Naples Wax Center, TreatStudios or HyperPointe could result in decreased revenues and impact our ability to recruit worker. ● We source, develop, and sell products that may result in product liability defense costs and product liability payments. ● We and our subsidiaries have been, are, and may become involved in litigation that could divert management’s attention and harm our businesses. ● Our failure or inability to protect the trademarks or other proprietary rights we use or claims of infringement by us of rights of third parties, could adversely affect our competitive position or the value of our brands. ● Our future acquisitions or business opportunities could involve unknown risks that could harm our business and adversely affect our financial condition and the results of operations.
If we cannot hire adequate staff for our locations, we will not be able to operate. ● Our labor force could unionize, putting upward pressure on labor costs. ● We may not be able to predict accurately or fulfill customer preferences or demands. ● Our leases may be terminated, either for convenience by the landlord or because of a XpresSpa or Naples Wax event of default. ● Our ability to operate depends on the traffic patterns of the terminals in which we operate, and the cessation or disruption of air traveler traffic in these terminals would negatively impact XpresSpa and XpresTest’s addressable market. ● Failure to comply with minimum airport concession disadvantaged business enterprise participation goals and requirements could lead to lost business opportunities or the loss of existing business. ● If we are unable to protect our customers’ credit card data and other personal information, we could be exposed to data loss, litigation and liability, and our reputation could be significantly harmed. ● Negative social media regarding XWELL, XpresSpa, Treat, XpresTest, Naples Wax Center or HyperPointe could result in decreased revenues and impact our ability to recruit worker. ● We source, develop, and sell products that may result in product liability defense costs and product liability payments. ● We and our subsidiaries have been, are, and may become involved in litigation that could divert management’s attention and harm our businesses. ● Our failure or inability to protect the trademarks or other proprietary rights we use or claims of infringement by us of rights of third parties, could adversely affect our competitive position or the value of our brands. ● Our future acquisitions or business opportunities could involve unknown risks that could harm our business and adversely affect our financial condition and the results of operations.
The demand for these licensed technicians has been increasing as more consumers gravitate to health and wellness treatments such as spa services. We compete not only with other airport-based spa companies but with spa companies outside of the airport for this skilled labor force.
The demand for these licensed technicians has been increasing as more consumers gravitate to health and wellness treatments such as spa services. We compete not only with other airport-based spa companies but also with spa companies outside of the airport for this skilled labor force.
A decrease in the desire of customers to buy spa services and products, or decreased time spent in airports would negatively impact our operations. ● We rely on a limited number of distributors and suppliers for certain of our products, and events outside our control may disrupt our supply chain, which could result in an inability to perform our obligations under our concession agreements and cause us to lose our concessions. ● Our operating results may fluctuate significantly due to certain factors, some of which are beyond our control. 9 Table of Contents ● Our expansion into new airports or off-airport locations may present increased risks due to our unfamiliarity with those areas. ● We may not be able to execute our growth strategy to expand and integrate new concessions or future acquisitions into our business or remodel existing concessions, our recently acquired entity or future acquisitions into our business or remodel existing concessions.
A decrease in the desire of customers to buy spa services and products, or decreased time spent in airports would negatively impact our operations. ● We rely on a limited number of distributors and suppliers for certain of our products, and events outside our control may disrupt our supply chain, which could result in an inability to perform our obligations under our concession agreements and cause us to lose our concessions. ● Our operating results may fluctuate significantly due to certain factors, some of which are beyond our control. ● Our expansion into new airports or off-airport locations may present increased risks due to our unfamiliarity with those areas. ● We may not be able to execute our growth strategy to expand and integrate new concessions or future acquisitions into our business or remodel existing concessions, our recently acquired entity or future acquisitions into our business or remodel existing concessions.
If we fail to comply with the complex federal, state, local and foreign laws and regulations that apply to all our businesses, we could suffer severe consequences that could materially and adversely affect our operating results and financial condition.
If we fail to comply with the complex federal, state, local and foreign laws and regulations that apply to our businesses, we could suffer severe consequences that could materially and adversely affect our operating results and financial condition.
Based upon that evaluation, our management concluded that our disclosure controls and procedures were not effective as of December 31, 2023, due to the following material weaknesses: 1) The Company did not properly design, implement, and consistently operate effective controls over the completeness and accuracy of its accounting for leases under ASC 842. 2) The Company did not properly design or maintain effective entity level monitoring controls over the financial close and reporting process. 3) The Company did not design or maintain effective controls over its service organizations and IT vendors.
Based upon that evaluation, our management concluded that our disclosure controls and procedures were not effective as of December 31, 2024, due to the following material weaknesses: 1) The Company did not properly design, implement, and consistently operate effective controls over the completeness and accuracy of its accounting for leases under ASC 842. 2) The Company did not properly design or maintain effective entity level monitoring controls over the financial close and reporting process. 3) The Company did not design or maintain effective controls over its service organizations and IT vendors.
Some reasons for these events could include: ● terrorist activities (including cyber-attacks) impacting either domestic or international travel through airports where we operate, causing fear of flying, flight cancellations, or an economic downturn, fears of war or actual conflicts, such as the Russian invasion of Ukraine, the armed conflict between Israel and Palestine, civil unrest, terrorism or violence or any other events of a similar nature, even if not directly affecting the airline industry, may lead to a significant reduction in the number of airline passengers; ● a decrease in business spending that impacts business travel, such as a recession; 18 Table of Contents ● a decrease in consumer spending that impacts leisure travel, such as a recession or a stock market downturn or a change in consumer lending regulations impacting available credit for leisure travel; ● an increase in airfare prices that impacts the willingness of air travelers to fly, such as an increase in oil prices or heightened taxation from federal or other aviation authorities; ● severe weather, ash clouds, airport closures, natural disasters, strikes or accidents (airplane or otherwise), causing travelers to decrease the amount that they fly and any of these events, or any other event of a similar nature, even if not directly affecting the airline industry, may lead to a significant reduction in the number of airline passengers; ● as to our spa business, scientific studies that malign the use of spa services or the products used in spa services, such as the impact of certain chemicals and procedures on health and wellness; or ● streamlined security screening checkpoints, which could decrease the wait time at checkpoints and therefore the time air travelers budget for spending time at the airport. ● Customer preferences for services in general at the airport could change as dwell times in US airports continues to go down and more airports are focusing available concession space on quicker service food and beverage concepts.
Some reasons for these events could include: ● terrorist activities (including cyber-attacks) impacting either domestic or international travel through airports where we operate, causing fear of flying, flight cancellations, or an economic downturn, fears of war or actual conflicts, such as the Russian invasion of Ukraine, the armed conflict between Israel and Palestine, civil unrest, terrorism or violence or any other events of a similar nature, even if not directly affecting the airline industry, may lead to a significant reduction in the number of airline passengers; ● a decrease in business spending that impacts business travel, such as a recession; ● a decrease in consumer spending that impacts leisure travel, such as a recession or a stock market downturn or a change in consumer lending regulations impacting available credit for leisure travel; ● an increase in airfare prices that impacts the willingness of air travelers to fly, such as an increase in oil prices or heightened taxation from federal or other aviation authorities; ● severe weather, ash clouds, airport closures, natural disasters, strikes or accidents (airplane or otherwise), causing travelers to decrease the amount that they fly and any of these events, or any other event of a similar nature, even if not directly affecting the airline industry, may lead to a significant reduction in the number of airline passengers; ● as to our spa business, scientific studies that malign the use of spa services or the products used in spa services, such as the impact of certain chemicals and procedures on health and wellness; ● streamlined security screening checkpoints, which could decrease the wait time at checkpoints and therefore the time air travelers’ budget for spending time at the airport; or ● Customer preferences for services in general at the airport could change as dwell times in US airports continue to go down and more airports are focusing available concession space on quicker service food and beverage concepts.
If and to the extent we determine it is necessary or desirable, we may not be able to obtain such additional financing, through equity capital when needed, on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock.
If and to the extent we determine whether it is necessary or desirable, we may not be able to obtain such additional financing through equity capital when needed, on acceptable terms to us, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock.
Further, damage or disruption to our supply chain due to any of the following could impair our ability to sell our products: adverse weather conditions or natural disaster, government action, fire, terrorism, cyber-attacks, the outbreak or escalation of armed hostilities (such as the Russian invasion of Ukraine and the armed conflict between Israel and Palestine), pandemics, industrial accidents or other occupational health and safety issues, strikes and other labor disputes, customs or 19 Table of Contents import restrictions or other reasons beyond our control or the control of our suppliers and business partners.
Further, damage or disruption to our supply chain due to any of the following could impair our ability to sell our products: adverse weather conditions or natural disaster, government action, fire, terrorism, cyber-attacks, the outbreak or escalation of armed hostilities (such as the Russian invasion of Ukraine and the armed conflict between Israel and Palestine), pandemics, industrial accidents or other occupational health and safety issues, strikes and other labor disputes, customs or import restrictions or other reasons beyond our control or the control of our suppliers and business partners.
As a result, new airport terminal and/or off-airport operations may be less successful than existing concession locations in current airport terminals. We may find it more difficult in new markets to hire, motivate and keep qualified employees who can project its vision, passion, and culture.
As a result, new airport terminal and/or off-airport operations may be less successful than existing concession locations in current airport terminals. We may find it more difficult in new markets to hire, motivate and keep qualified employees who can project our vision, passion, and culture.
XWELL to date has not been named as a defendant in any product liability action. We and our subsidiaries have been, are, and may again become involved in litigation that could divert management’s attention and harm our businesses. Litigation is often expensive and diverts management’s attention and resources, which could adversely affect our businesses.
To date, we have not been named as a defendant in any product liability action. We and our subsidiaries have been, are, and may again become involved in litigation that could divert management’s attention and harm our businesses. Litigation is often expensive and diverts management’s attention and resources, which could adversely affect our businesses.
New concessions and acquisitions, and in some cases future expansions and remodeling of existing concessions, could pose numerous risks to our operations, including that we may: ● have difficulty integrating operations or personnel; ● incur substantial unanticipated integration costs; ● experience unexpected construction and development costs and project delays; ● face difficulties associated with securing required governmental approvals, permits and licenses (including construction permits) in a timely manner and responding effectively to any changes in federal, state or local laws and regulations that adversely affect our costs or ability to open new concessions; 21 Table of Contents ● have challenges identifying and engaging local business partners to meet ACDBE requirements in concession agreements; ● not be able to obtain construction materials or labor at acceptable costs; ● face engineering or environmental problems associated with our new and existing facilities; ● experience significant diversion of management attention and financial resources from our existing operations in order to integrate expanded, new or acquired businesses, which could disrupt our ongoing business; ● lose key employees, particularly with respect to acquired or new operations; ● have difficulty retaining or developing acquired or new business customers; ● impair our existing business relationships with suppliers or other third parties as a result of acquisitions; ● fail to realize the potential cost savings or other financial benefits and/or the strategic benefits of acquisitions, new concessions, or remodeling; and ● incur liabilities from the acquired businesses and we may not be successful in seeking indemnification for such liabilities.
A failure to grow successfully may materially adversely affect our business, financial condition, and results of operations. 20 Table of Contents New concessions and acquisitions, and in some cases future expansions and remodeling of existing concessions, could pose numerous risks to our operations, including that we may: ● have difficulty integrating operations or personnel; ● incur substantial unanticipated integration costs; ● experience unexpected construction and development costs and project delays; ● face difficulties associated with securing required governmental approvals, permits and licenses (including construction permits) in a timely manner and responding effectively to any changes in federal, state or local laws and regulations that adversely affect our costs or ability to open new concessions; ● have challenges identifying and engaging local business partners to meet ACDBE requirements in concession agreements; ● not be able to obtain construction materials or labor at acceptable costs; ● face engineering or environmental problems associated with our new and existing facilities; ● experience significant diversion of management attention and financial resources from our existing operations in order to integrate expanded, new or acquired businesses, which could disrupt our ongoing business; ● lose key employees, particularly with respect to acquired or new operations; ● have difficulty retaining or developing acquired or new business customers; ● impair our existing business relationships with suppliers or other third parties as a result of acquisitions; ● fail to realize the potential cost savings or other financial benefits and/or the strategic benefits of acquisitions, new concessions, or remodeling; and ● incur liabilities from the acquired businesses and we may not be successful in seeking indemnification for such liabilities.
Our growth strategy is dependent in part on our ability to successfully identify and open new locations. We will need to assess and mitigate the risk of any new locations, to open the location on favorable terms and to successfully integrate their operations with ours.
Our growth strategy is, among others, dependent in part on our ability to successfully identify and open new locations. We will need to assess and mitigate the risk of any new locations, to open the location on favorable terms and to successfully integrate their operations with ours.
While we have mitigated the cash crisis we faced in the first half of 2020, throughout our operating history prior to the successful launch of our XpresCheck business, we did not generate sufficient cash from operations to fund new store development.
We have mitigated the cash crisis we faced in the first half of 2020. However, throughout our operating history prior to the successful launch of our XpresCheck business, we did not generate sufficient cash from operations to fund new store development.
As of the fiscal year ended December 31, 2023, our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures, pursuant to Rule 13a-15(b) under the Exchange Act.
As of the fiscal year ended December 31, 2024, our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures, pursuant to Rule 13a-15(b) under the Exchange Act.
Accordingly, our investors may have to sell some or all their common stock in order to generate cash from their investment. You may not receive a gain on your investment when you sell our common stock and may lose the entire amount of your investment.
Accordingly, our investors may have to sell some or all of their common stock to generate cash from their investment. You may not receive a gain on your investment when you sell our common stock and may lose the entire amount of your investment.
Because we are not required to, and have not, had our auditor provide an attestation of our management’s assessment of internal control over financial reporting, a material weakness in internal controls may remain undetected for a longer period. We cannot predict if investors will find our securities less attractive because we may rely on these exemptions.
Because we are not required to, and have not, had our auditor provide an attestation of our management’s assessment of internal control over financial reporting, a material weakness in internal controls may remain undetected for a longer period. 32 Table of Contents We cannot predict if investors will find our securities less attractive because we may rely on these exemptions.
Although we use secure private networks to transmit confidential information, third parties may have the technology or know-how to breach the security of the customer information transmitted in connection with credit and debit card sales, and its security measures and those of technology vendors may not effectively prohibit others from obtaining improper access to this information.
Although we use secure private networks to transmit confidential information, third parties may have the technology or know-how to breach the security of the customer information transmitted in connection with credit and debit 24 Table of Contents card sales, and its security measures and those of technology vendors may not effectively prohibit others from obtaining improper access to this information.
If these assumptions prove inaccurate, our business, financial condition and results of operations could be adversely affected. We currently rely on a skilled, licensed labor force to provide our services, and the supply of this labor force is finite. If we cannot hire adequate staff for our locations, we will not be able to operate.
If these assumptions prove inaccurate, our business, financial condition and results of operations could be adversely affected. 21 Table of Contents We currently rely on a skilled, licensed labor force to provide our services, and the supply of this labor force is finite. If we cannot hire adequate staff for our locations, we will not be able to operate.
In addition, our operations in international markets are conducted primarily in the local currency of those countries. Given that our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period.
In addition, our operations in international markets are conducted primarily in the local currency of those countries. Given that our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for 26 Table of Contents the current period.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. We cannot assure you that any of our remedial measures will be effective in resolving our material weaknesses.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. 15 Table of Contents We cannot assure you that any of our remedial measures will be effective in resolving our material weaknesses.
As a result, economic downturns may have a material adverse impact on our business, financial condition, and results of operations. Moreover, uncertainty about global economic conditions poses 12 Table of Contents a risk as businesses and individuals may postpone spending in response to tighter credit, negative financial news and declines in income or asset values.
As a result, economic downturns may have a material adverse impact on our business, financial condition, and results of operations. Moreover, uncertainty about global economic conditions poses a risk as businesses and individuals may postpone spending in response to tighter credit, negative financial news and declines in income or asset values.
If we are unable to identify and open new locations in accordance with its operating plan, our revenue growth rate and financial performance may fall short of our expectations. 20 Table of Contents Our profitability relating to our operations depends on the number of airline passengers in the terminals in which we have concessions.
If we are unable to identify and open new locations in accordance with its operating plan, our revenue growth rate and financial performance may fall short of our expectations. Our profitability relating to our operations depends on the number of airline passengers in the terminals in which we have concessions.
While we expect to maintain broad form liability insurance coverage for these risks, and we expect our professional practice partner to maintain appropriate malpractice insurance, the level or breadth of our or their coverage may not be adequate to fully cover potential liability claims to which we might be exposed. 14 Table of Contents U.S.
While we expect to maintain broad form liability insurance coverage for these risks, and we expect our professional practice partner to maintain appropriate malpractice insurance, the level or breadth of our or their coverage may not be adequate to fully cover potential liability claims to which we might be exposed. U.S.
If the time that these travelers spend post-security decreases, and/or if travelers’ ability or willingness to pay for our products and services diminishes, this could have an adverse effect on our growth, business activities, cash flow, financial condition, and results of operations.
If the time that these travelers spend post-security clearance at airports decreases, and/or if travelers’ ability or willingness to pay for our products and services diminishes, this could have an adverse effect on our growth, business activities, cash flow, financial condition, and results of operations.
Any new concessions, future acquisitions or remodeling of existing concessions may divert management resources, result in unanticipated costs, or dilute the ownership of our stockholders. ● If the estimates and assumptions we use to determine the size of our market are inaccurate, our future growth rate may be impacted.
Any new concessions, future acquisitions or remodeling of existing 9 Table of Contents concessions may divert management resources, result in unanticipated costs, or dilute the ownership of our stockholders. ● If the estimates and assumptions we use to determine the size of our market are inaccurate, our future growth rate may be impacted.
We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially, including, among others, the following: ● additions to or departures of our key personnel, or our overall ability to retain key personnel; 27 Table of Contents ● announcements of innovations by us or our competitors; ● announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, capital commitments, or new technologies; ● new regulatory pronouncements and changes in regulatory guidelines; ● developments or disputes concerning intellectual property rights generally; ● lawsuits, claims, and investigations that may be filed against us, and other events that may adversely affect our reputation; ● changes in financial estimates or recommendations by securities analysts; ● general and industry-specific economic conditions; ● our ability to develop and introduce new products and services; ● our ability to raise additional capital to fund our operations and business plan and the effects that such financing may have on the value of the equity instruments held by our stockholders; ● our ability to hire a skilled labor force and the costs associated; ● our ability to secure new retail locations, maintain existing ones, and ensure continued customer traffic at those locations; ● the loss of one or more of our significant suppliers; ● unexpected trends in the health and wellness and travel industries and potential technology and service obsolescence; and ● market acceptance, quality, pricing, availability, and useful life of our products and/or services, as well as the mix of our products and services sold.
We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially, including, among others, the following: ● additions to or departures of our key personnel, or our overall ability to retain key personnel; ● announcements of innovations by us or our competitors; ● announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, capital commitments, or new technologies; ● new regulatory pronouncements and changes in regulatory guidelines; ● developments or disputes concerning intellectual property rights generally; ● lawsuits, claims, and investigations that may be filed against us, and other events that may adversely affect our reputation; ● changes in financial estimates or recommendations by securities analysts; ● general and industry-specific economic conditions; ● our ability to develop and introduce new products and services; ● our ability to raise additional capital to fund our operations and business plan and the effects that such financing may have on the value of the equity instruments held by our stockholders; ● our ability to hire a skilled labor force and the costs associated; ● our ability to secure new retail locations, maintain existing ones, and ensure continued customer traffic at those locations; ● the loss of one or more of our significant suppliers; ● unexpected trends in the health and wellness and travel industries and potential technology and service obsolescence; and ● market acceptance, quality, pricing, availability, and useful life of our products and/or services, as well as the mix of our products and services sold. 27 Table of Contents We have no current plans to pay dividends on our common stock, and our investors may not receive funds without selling their stock.
Our professional practice partner’s diagnostic testing activities involve the controlled use of hazardous laboratory materials and chemicals, including small quantities of acid and alcohol, and patient samples.
Our professional practice partners’ diagnostic testing activities involve the controlled use of hazardous laboratory materials and chemicals, including small quantities of acid and alcohol, and patient samples.
In the event of a data security breach, we may be subject to notification obligations, litigation and governmental investigation or sanctions, and may suffer reputational damage, which could have an adverse impact on our business.
In the event of 16 Table of Contents a data security breach, we may be subject to notification obligations, litigation and governmental investigation or sanctions, and may suffer reputational damage, which could have an adverse impact on our business.
If we do not use or adequately safeguard that information in compliance with applicable requirements under federal, state, and 16 Table of Contents international laws, or if it were disclosed to persons or entities that should not have access to it, our business could be materially impaired, our reputation could suffer, and we could be subject to fines, penalties, and litigation.
If we do not use or adequately safeguard that information in compliance with applicable requirements under federal, state, and international laws, or if it were disclosed to persons or entities that should not have access to it, our business could be materially impaired, our reputation could suffer, and we could be subject to fines, penalties, and litigation.
Our growth strategy depends upon developing our off-airport locations which will include travel health and wellness mini locations and expanding Naples Wax and TreatStudios. Those markets and locations may have demographic characteristics, consumer tastes and discretionary spending patterns that are different from those in the markets where our existing spa and testing operations are located.
Our growth strategy depends upon developing our off-airport locations which will include travel health and wellness mini locations and the expansion of Naples Wax. Those markets and locations may have demographic characteristics, consumer tastes and discretionary spending patterns that are different from those in the markets where our existing spa and testing operations are located.
Although we 25 Table of Contents carry cyber liability insurance to protect against these risks, there can be no assurance that such insurance will provide adequate levels of coverage against all potential claims. Negative social media regarding XWELL, XpresSpa, Treat, XpresTest, Naples Wax Center, TreatStudios or HyperPointe could result in decreased revenues and impact our ability to recruit workers.
Although we carry cyber liability insurance to protect against these risks, there can be no assurance that such insurance will provide adequate levels of coverage against all potential claims. Negative social media regarding XWELL, XpresSpa, XpresTest, Naples Wax Center or HyperPointe could result in decreased revenues and impact our ability to recruit workers.
Our products contain ingredients that are deemed to be safe by the United States Federal Drug Administration and the Federal Food, Drug and Cosmetics Act. However, there is no guarantee that these ingredients will not cause adverse health effects to some consumers given the wide range of ingredients and allergies amongst the general population.
Our products contain ingredients that are deemed to be safe by the FDA and the Federal Food, Drug and Cosmetics Act. However, there is no guarantee that these ingredients will not cause adverse health effects to some consumers given the wide range of ingredients and allergies amongst the general population.
Thus, our ability to utilize all such NOL and credit carryforwards may be limited. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation. Global economic and market conditions may adversely affect our business, financial condition, and operating results.
Thus, our ability to utilize all such NOL and credit carryforwards may be limited. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation. 11 Table of Contents Global economic and market conditions may adversely affect our business, financial condition, and operating results.
Our XpresTest operations are subject to extensive federal, state, local and foreign laws and regulations, all of which are subject to change.
Our XpresTest operations may be subject to extensive federal, state, local and foreign laws and regulations, all of which are subject to change.
Our capital expenditures may not generate a positive return. Significant capital expenditures will be required to construct new TreatStudios and Naples Wax centers to accommodate our proposed new business model. No assurance can be given that our future capital expenditures will generate a positive return or that we will have adequate capital available to finance such construction or renovations.
Significant capital expenditures will be required to construct Naples Wax centers to accommodate our proposed new business model. No assurance can be given that our future capital expenditures will generate a positive return or that we will have adequate capital available to finance such construction or renovations.
To the extent that our leases are terminated, and we are required to shut down one or more store locations, there could be a material adverse impact to our business and results of operations. 24 Table of Contents Continued minimum wage increases could negatively impact our cost of labor.
To the extent that our leases are terminated, and we are required to shut down one or more store locations, there could be a material adverse impact on our business and results of operations. Continued minimum wage increases could negatively impact our cost of labor.
If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all our business plans. Any such financing that we undertake will likely be dilutive to our current stockholders.
If we are unable to obtain additional funding on a timely basis, on terms acceptable to us, or at all, we may be required to curtail or terminate some or all our business plans. Any such financing that we undertake will likely be dilutive to our current stockholders.
We depend on a high volume of air travelers in its terminals. It is possible that a terminal in which we operate could become subject to a lower volume of air travelers, which would significantly impact traffic near and around our locations and therefore its total addressable market.
It is possible that a terminal in which we operate could become subject to a lower volume of air travelers, which would significantly impact traffic near and around our locations and therefore its total addressable market.
They could be liable for accidental contamination or discharge or any resultant injury from hazardous materials, and conveyance, processing, and storage of and data on patient samples.
They could be liable for accidental contamination or 13 Table of Contents discharge or any resultant injury from hazardous materials, and conveyance, processing, and storage of and data on patient samples.
Breaches of health information and/or personal data may be extremely expensive to remediate, may prompt federal or state investigation, fines, civil and/or criminal sanctions, and significant reputational damage. Our capital expenditures in the new TreatStudios and Naples Wax locations may not generate a positive return and we will incur significant additional costs.
Breaches of personal data may be extremely expensive to remediate, may prompt federal or state investigation, fines, civil and/or criminal sanctions, and significant reputational damage. Our capital expenditures in Naples Wax locations may not generate a positive return and we will incur significant additional costs. Our capital expenditures may not generate a positive return.
As of December 31, 2023, our estimated aggregate total net operating loss carryforwards (“NOLs”) were $150,926 for U.S. federal purposes, expiring 20 years from the respective tax years to which they relate, and $97,968 for U.S. federal purposes with an indefinite life due to new regulations in the Tax Cuts and Jobs Act of 2017.
As of December 31, 2024, our estimated aggregate total gross net operating loss carryforwards (“NOLs”) were $150,926 for U.S. federal purposes, expiring 20 years from the respective tax years to which they relate, and $114,321 for U.S. federal purposes with an indefinite life due to new regulations in the Tax Cuts and Jobs Act of 2017.
The U.S. federal budget remains in flux, however, which could, among other things, result in cuts to the CDC and otherwise affect federal spending on public health surveillance. Changing attitudes toward the risks associated with COVID-19 may lead to a decrease in funding available for bio surveillance monitoring activities.
The U.S. federal budget remains in flux, however, which could, among other things, result in budget cuts to the CDC and otherwise affect federal spending on public health surveillance. Changing attitudes may lead to a decrease in funding available for bio surveillance monitoring activities.
Our business plan depends significantly on worldwide economic conditions and our success is dependent on consumer spending, which is sensitive to economic downturns; inflation and any associated rise in unemployment; declines in consumer confidence; adverse changes in exchange rates; increases in interest rates; the impact of high energy, fuel, food and healthcare costs; , deflation, direct or indirect taxes, increases in consumer debt levels; fears of war or actual conflicts, such as the Russian invasion of Ukraine and the armed conflict between Israel and Palestine, civil unrest, terrorism or violence; and increased stock market volatility.
Our business plan depends significantly on worldwide economic conditions and our success is dependent on consumer spending, which is sensitive to, among others, trade disputes, the imposition of tariffs, and other protectionist policies enacted by various governments, economic downturns, inflation and any associated rise in unemployment, declines in consumer confidence, adverse changes in exchange rates, increases in interest rates, the impact of high energy, fuel, food and healthcare costs, deflation, direct or indirect taxes, increases in consumer debt levels; fears of war or actual conflicts, such as the Russian invasion of Ukraine and the armed conflict between Israel and Palestine, civil unrest, terrorism or violence, and increased stock market volatility.
In connection with all of the foregoing, we will require significant capital to fund our operations and respond to potential strategic opportunities, such as investments, acquisitions and expansions. Since mid-2020, we have been able to obtain additional capital through access to the equity markets, selling our common stock and warrants.
In connection with all the foregoing, we will require significant capital to fund our operations and respond to potential strategic opportunities, such as investments, acquisitions and expansions. Since mid-2020, we generally have been able to obtain additional capital through access to the equity markets and the sale of our securities.
Moreover, our ability to raise additional equity capital will be constrained because of our relatively low stock price, and we may need to undertake a reverse stock split soon to maintain our Nasdaq listing and flexibility in access to the equity capital markets.
Moreover, our ability to raise additional equity capital may be constrained because of our relatively low stock price, and we may need to undertake a reverse stock split in the near future to maintain compliance with the Nasdaq listing rules and to maintain flexibility in access to the equity capital markets.
A negative customer experience that is posted to social media outlets and is distributed virally could tarnish each of the XpresSpa’s, Treat’s, XpresTest’s, Naples Wax Center, TreatStudios or HyperPointe’s brand and our customers may opt to no longer engage with that particular brand, or any of our brands.
A negative customer experience that is posted to social media outlets and is distributed virally could tarnish each of the XpresSpa, XpresTest, Naples Wax Center, or HyperPointe brands and our customers may opt to no longer engage with that particular brand, or any of our brands.
Most states have adopted laws requiring notification of affected individuals and state regulators in the event of a breach of personal information, which is a broader class of information than the health information protected by HIPAA. Many state laws impose significant data security requirements, such as encryption or mandatory contractual terms to ensure ongoing protection of personal information.
Most states have adopted laws requiring notification of affected individuals and state regulators in the event of a breach of personal information Many state laws impose significant data security requirements, such as encryption or mandatory contractual terms to ensure ongoing protection of personal information.
As of December 31, 2023, we had approximately 266 full-time and 71 part-time employees in its locations. Excluding some dedicated retail staff, most of these employees are licensed to perform spa services, and hold such licenses as masseuses, nail technicians, and aestheticians.
As of December 31, 2024, we had approximately 246 full-time and 66 part-time employees. Excluding some dedicated retail staff, most of our employees in our locations are licensed to perform spa services, and hold such licenses as masseuses, nail technicians, and aestheticians.
These concessions involve risks that are different from the risks involved in operating a concession independently, and include the possibility that our local partners: ● are in a position to take action contrary to our instructions, our requests, our policies, our objectives or applicable laws; ● take actions that reduce our return on investment; ● go bankrupt or are otherwise unable to meet their capital contribution obligations; ● have economic or business interests or goals that are or become inconsistent with our business interests or goals; or ● take actions that harm our reputation or restrict our ability to run our business.
These concessions involve risks that are different from the risks involved in operating a concession independently, and include the possibility that our local partners: ● are in a position to take action contrary to our instructions, our requests, our policies, our objectives or applicable laws; ● take actions that reduce our return on investment; ● go bankrupt or are otherwise unable to meet their capital contribution obligations; ● have economic or business interests or goals that are or become inconsistent with our business interests or goals; or ● take actions that harm our reputation or restrict our ability to run our business. 23 Table of Contents Failure to comply with minimum airport concession disadvantaged business enterprise participation goals and requirements could lead to lost business opportunities or the loss of existing business.
We may also be unfamiliar with local laws, regulations, and administrative procedures, including the procurement of spa services retail licenses, in new markets which could delay the build-out of new concession locations and prevent it from achieving its target revenues on a timely basis.
We may also be unfamiliar with local laws, regulations, and administrative procedures, including the procurement of spa services retail licenses, in new markets which could delay the build-out of new concession locations and prevent it from achieving its target revenues on a timely basis. 19 Table of Contents Operations in new markets may also have lower average revenues or enplanements than in the markets where we currently operate.
Delays in the commencement of new projects and the refurbishment of concessions can also affect our business. In addition, we will expend resources to remodel our concessions and may not be able to recoup these investments. A failure to grow successfully may materially adversely affect our business, financial condition, and results of operations.
Delays in the commencement of new projects and the refurbishment of concessions can also affect our business. In addition, we will expend resources to remodel our concessions and may not be able to recoup these investments.
Our operations conducted under such federal contracts are subject to certain federal regulations regarding how we conduct our business, and we will be obligated to abide by the agreement terms relating to those contracts.
Any such reductions failure to realize expected funds could delay the development of our business. Our operations conducted under such federal contracts are subject to certain federal regulations regarding how we conduct our business, and we will be obligated to abide by the agreement terms relating to those contracts.
If in the future we seek to implement a reverse stock split to remain listed on Nasdaq, the announcement and/or implementation of a reverse stock split could significantly negatively affect the price of our common stock.
If in the future we seek to implement a reverse stock split to remain listed on Nasdaq, the announcement and/or implementation of a reverse stock split could significantly negatively affect the price of our common stock. We may be unable to regain compliance in the future if our stock price again falls below the minimum bid price.
We have received and intend to continue to seek funding for the bio surveillance monitoring activities conducted by XpresTest under contract with Gingko Bioworks Inc. However, funding by the CDC or other governmental agencies may be significantly reduced or eliminated in the future for several reasons.
We have received and intend to continue to seek funding for the bio surveillance monitoring activities conducted by XpresTest under contract with Ginkgo Bioworks. However, funding by the CDC or other governmental agencies may be significantly reduced or eliminated in the future for several reasons. For example, some programs are subject to a yearly appropriations process overseen by the U.S.
If we are unable to predict or rapidly respond to sales demand or to changing styles or trends, or if we experience inventory shortfalls on popular merchandise, our revenue may be lower, which could have a materially adverse impact on our business, financial condition, and results of operations.
If we are unable to predict or rapidly respond to sales demand or to changing styles or trends, or if we experience inventory shortfalls on popular merchandise, our revenue may be lower, which could have a materially adverse impact on our business, financial condition, and results of operations. 22 Table of Contents Our leases may be terminated, either for convenience by the landlord or because of a XpresSpa or Naples Wax default.
We are subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”), which prohibits certain “business combination” transactions (as defined in Section 203) with an “interested stockholder” (defined in Section 203 as a 15% or greater stockholder) for a period of three years after a stockholder 29 Table of Contents becomes an “interested stockholder,” unless the attaining of “interested stockholder” status or the transaction is pre-approved by our Board of Directors, the transaction results in the attainment of at least an 85% ownership level by an acquirer or the transaction is later approved by our Board of Directors and by our stockholders by at least a 66 2 / 3 percent vote of our stockholders other than the “interested stockholder,” each as specifically provided in Section 203.
We are subject to the provisions of Section 203 of the DGCL, which prohibits certain “business combination” transactions (as defined in Section 203) with an “interested stockholder” (defined in Section 203 as a 15% or greater stockholder) for a period of three years after a stockholder becomes an “interested stockholder,” unless the attaining of “interested stockholder” status or the transaction is pre-approved by our Board of Directors, the transaction results in the attainment of at least an 85% ownership level by an acquirer or the transaction is later approved by our Board of Directors and by our stockholders by at least a 66 2 / 3 percent vote of our stockholders other than the “interested stockholder,” each as specifically provided in Section 203. 31 Table of Contents Our certificate of incorporation and our bylaws, each as currently in effect, also contain certain provisions that may delay, discourage, or make it more difficult for a third-party acquisition of control of us.
These laws and regulations are complex and are subject to interpretation by the courts and by government agencies. Our failure to comply could lead to civil or criminal penalties, exclusion from participation in state and federal healthcare programs, or prohibitions or restrictions on our laboratory’s ability to provide or receive payment for our services.
Our failure to comply could lead to civil or criminal penalties, exclusion from participation in state and federal healthcare programs, or prohibitions or restrictions on our laboratory’s ability to provide or receive payment for our services.
The delisting of our common stock also would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so.
These factors could contribute to lower prices and larger spreads in the bid and ask prices for our common stock. The delisting of our common stock also would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so.
Various patent offices, governments or intergovernmental bodies may implement new legislation, regulations or rulings that impact the patent enforcement process, or the rights of patent holders and such changes could negatively affect licensing efforts and/or litigations.
Intellectual property is the subject of intense scrutiny by the courts, legislatures, and executive branches of governments around the world. Various patent offices, governments or intergovernmental bodies may implement new legislation, regulations or rulings that impact the patent enforcement process, or the rights of patent holders and such changes could negatively affect licensing efforts and/or litigations.
If a landlord elects to terminate a lease, we may have to shut down one or more affected locations. Additionally, our leases have numerous provisions governing the operation of our stores. Violation of one or more of these provisions, even unintentionally, may result in the landlord finding that we are in default of the lease.
Additionally, our leases have numerous provisions governing the operation of our stores. Violation of one or more of these provisions, even unintentionally, may result in the landlord finding that we are in default of the lease. Violation of lease provisions may result in fines and, in some cases, termination of a lease.
Even if we have the right to be indemnified against such costs, the indemnifying party may be unable to uphold its contractual obligations. New legislation, regulations or court rulings related to enforcing patents could harm our business and operating results. Intellectual property is the subject of intense scrutiny by the courts, legislatures, and executive branches of governments around the world.
Even if we have the right to be indemnified against such costs, the indemnifying party may be unable to uphold its contractual obligations. 25 Table of Contents New legislation, regulations or court rulings related to enforcing patents could harm our business and operating results.
We depend on third parties to provide services critical to our XpresTest bio surveillance business, including supplies, ground and air transport of clinical and diagnostic testing supplies and specimens, research products, and people, among other services.
Additionally, any breaches of the information technology systems of third parties could have a material adverse effect on our operations. We depend on third parties to provide services critical to our XpresTest bio surveillance business, including supplies, ground and air transport of clinical and diagnostic testing supplies and specimens, research products, and people, among other services.
Additionally, any breaches of the information technology systems of third parties could have a material adverse effect on our operations. ● Our business operations may be materially impaired if we do not comply with privacy laws or information security policies. ● Hardware and software failures or delays in our information technology systems, including failures resulting from our systems conversions or otherwise, could disrupt our operations and cause the loss of confidential information, customers and business opportunities or otherwise adversely impact our business. ● We must comply with complex and overlapping laws protecting the privacy and security of health information and personal data. ● Our capital expenditures in the new TreatStudios and Naples Wax Center locations may not generate a positive return and we will incur significant additional costs. ● We rely on international and domestic airplane travel, and the time that airline passengers spend in United States airports post-security.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results and current and potential stockholders may lose confidence in our financial reporting. ● Hardware and software failures or delays in our information technology systems, including failures resulting from our systems conversions or otherwise, could disrupt our operations and cause the loss of confidential information, customers and business opportunities or otherwise adversely impact our business. ● We must comply with complex and overlapping laws protecting the privacy and security of personal data. ● Our capital expenditures in Naples Wax Center locations may not generate a positive return and we will incur significant additional costs. ● We rely on international and domestic airplane travel, and the time that airline passengers spend in United States airports post-security.
Decreased disclosure in our SEC filings because of our having availed ourselves of scaled disclosure may make it harder for investors to analyze our results of operations and financial prospects. 30 Table of Contents Furthermore, we are a non-accelerated filer as defined by Rule 12b-2 of the Exchange Act, and, as such, are not required to provide an auditor attestation of management’s assessment of internal control over financial reporting, which is generally required for SEC reporting companies under Section 404(b) of the Sarbanes-Oxley Act.
Furthermore, we are a non-accelerated filer as defined by Rule 12b-2 of the Exchange Act, and, as such, are not required to provide an auditor attestation of management’s assessment of internal control over financial reporting, which is generally required for SEC reporting companies under Section 404(b) of the Sarbanes-Oxley Act.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results and current and potential stockholders may lose confidence in our financial reporting. ● Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. ● Global economic and market conditions may adversely affect our business, financial condition, and operating results. ● Increasing inflation could adversely affect our business, financial condition, results of operations or cash flows. ● Our business requires substantial capital expenditures, and we may not have access to the capital required to maintain and grow our operations. ● The bio surveillance monitoring activities conducted by XpresTest are funded partially by government contracts awards, which may not be available to us in the future, and such contracts awards are subject to guidelines regulating certain aspects of our operations. ● Our ability to obtain funding for our bio surveillance monitoring activities from the CDC may be impacted by possible reductions in federal spending.
Risks Related to our Financial Condition and Capital Requirements ● Our consolidated financial statements have been prepared on a going concern basis; we must raise additional capital to fund our operations in order to continue as a going concern; ● Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. ● Global economic and market conditions may adversely affect our business, financial condition, and operating results. 8 Table of Contents ● Increasing inflation could adversely affect our business, financial condition, results of operations or cash flows. ● Our business requires substantial capital expenditures, and we may not have access to the capital required to maintain and grow our operations. ● The bio surveillance monitoring activities conducted by XpresTest are funded partially by government contracts awards, which may not be available to us in the future, and such contracts awards are subject to guidelines regulating certain aspects of our operations. ● Our ability to obtain funding for our bio surveillance monitoring activities from the CDC may be impacted by possible reductions in federal spending.
We have no current plans to pay dividends on our common stock, and our investors may not receive funds without selling their stock. We have not declared or paid any cash dividends on our common stock, nor do we expect to pay any cash dividends on our common stock for the foreseeable future.
We have not declared or paid any cash dividends on our common stock, nor do we expect to pay any cash dividends on our common stock for the foreseeable future.
Even if an active trading market develops, the market price of our common stock may be significantly volatile. Historically, our common stock has experienced a lack of consistent trading liquidity.
Our common stock has historically traded in low volumes. We cannot predict whether an active trading market for our common stock will ever develop. Even if an active trading market develops, the market price of our common stock may be significantly volatile. Historically, our common stock has experienced a lack of consistent trading liquidity.
We believe that our trademarks and other proprietary rights are important to our success and our competitive position. However, any actions that we take to protect the intellectual property we use may not prevent unauthorized use or imitation by others, which could have an adverse impact on our image, brand, or competitive position.
However, any actions that we take to protect the intellectual property we use may not prevent unauthorized use or imitation by others, which could have an adverse impact on our image, brand, or competitive position. If we commence litigation to protect our interests or enforce our rights, we could incur significant legal fees.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results and current and potential stockholders may lose confidence in our financial reporting.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results and current and potential stockholders may lose confidence in our financial reporting We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq.
We are also required to collect and maintain personal information about our employees as well as receive and transfer certain payment information, to accept payments from our customers, including credit card information.
We must comply with complex and overlapping laws protecting the privacy and security of personal data. We are required to collect and maintain personal information about our employees as well as receive and transfer certain payment information, to accept payments from our customers, including credit card information.
The domestic and international tax environments continue to evolve because of tax changes in various jurisdictions in which we operate and changes in the tax laws in certain countries, including the United States, could impact our future operating results. A significant increase in the U.S. corporate tax rate could negatively impact our financial results.
We have international operations and generate substantial revenues and profits in foreign jurisdictions. The domestic and international tax environments continue to evolve because of tax changes in various jurisdictions in which we operate and changes in the tax laws in certain countries, including the United States, could impact our future operating results.
The full impact on our business of any future cuts to the CDC or other programs is uncertain. In addition, we cannot predict any impact which the actions of President Biden’s administration and the U.S. Congress may have on the federal budget. We operate globally and changes in tax laws could adversely affect our results.
The full impact on our business and financial condition of any future budget cuts to the CDC or other programs is uncertain. In addition, we cannot predict any impact which the actions of President Trump’s administration and the U.S.
Our leases may be terminated, either for convenience by the landlord or because of a XpresSpa, Naples Wax or Treat default. We have stores and kiosks in several airports and off airport locations in which the landlord, with prior written notice to us, can terminate our lease, including for convenience or as necessary for operations.
We have stores and kiosks in several airports and off airport locations in which the landlord, with prior written notice to us, can terminate our lease, including for convenience or as necessary for operations. If a landlord elects to terminate a lease, we may have to shut down one or more affected locations.
Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below following this summary, and should be carefully considered, together with other information in this Annual Report on Form 10-K, including the consolidated financial statements and related notes thereto, and our other filings with the SEC, before making an investment decision regarding our common stock. 8 Table of Contents Risks Related to our Financial Condition and Capital Requirements ● We have identified certain material weaknesses in our internal controls over financial reporting, which could impair our ability to produce accurate consolidated financial statements on a timely basis and result in material misstatements in our consolidated financial statements if not remediated.
Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below following this summary, and should be carefully considered, together with other information in this Annual Report on Form 10-K, including the consolidated financial statements and related notes thereto, and our other filings with the SEC, before making an investment decision regarding our common stock.
We are subject to various laws and regulations in the United States, Netherlands, Turkey, and United Arab Emirates that affect the operation of our concessions.
Our business is subject to various laws and regulations, and changes in such laws and regulations, or failure to comply with existing or future laws and regulations, could adversely affect us. We are subject to various laws and regulations in the United States, Netherlands, Turkey, and United Arab Emirates that affect the operation of our concessions.
Violation of lease provisions may result in fines and, in some cases, termination of a lease. 23 Table of Contents Our ability to operate depends on the traffic patterns of the terminals in which we operate, and the cessation or disruption of air traveler traffic in these terminals would negatively impact XpresSpa’s, XpresTest’s and Treat’s addressable market.
Our ability to operate depends on the traffic patterns of the terminals in which we operate, and the cessation or disruption of air traveler traffic in these terminals would negatively impact XpresSpa’s and XpresTest’s addressable market. We depend on a high volume of air travelers in its terminals.
The continued listing standards of Nasdaq provide, among other things, that a company may be delisted if the bid price of its stock drops below $1.00 for a period of 30 consecutive business days or if stockholders’ equity is less than $2,500,000. 28 Table of Contents While we are currently in compliance, we have in the past been, and may in the future be, unable to comply with certain of the listing standards that we are required to meet to maintain the listing of our common stock on Nasdaq.
The continued listing standards of Nasdaq provide, among other things, that a company may be delisted if the bid price of its stock drops below $1.00 for a period of 30 consecutive business days or if stockholders’ equity is less than $2,500,000.
We depend upon a large number of airplane travelers with the propensity for health and wellness, and in particular spa treatments and products, spending significant time post-security clearance check points. The number of airline travelers has been extremely volatile since the onset of COVID-19 in March 2020.
We depend upon a large number of airplane travelers with the propensity for health and wellness, and in particular spa treatments and products, spending significant time post-security clearance check points at airports. The number of airline 17 Table of Contents travelers at any given time is volatile and subject to change.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also have policies and procedures to oversee and identify the risks from cybersecurity threats associated with our use of third-party service providers. 32 Table of Contents A third-party risk management program was established in 2022, defining four vendor risk tiers based on data sensitivity, regulatory requirements, and service criticality.
Biggest changeWe also have policies and procedures to oversee and identify the risks from cybersecurity threats associated with our use of third-party service providers. A third-party risk management program was established in 2022, defining four vendor risk tiers based on data sensitivity, regulatory requirements, and service criticality.
Depending on the materiality of a potential incident and/or cybersecurity initiatives, the Committee will present all information directly to the Audit Committee. Our cybersecurity program implements a defense-in-depth strategy, ensuring comprehensive safeguards are in place across various security domains.
Depending on the materiality of a 33 Table of Contents potential incident and/or cybersecurity initiatives, the Committee will present all information directly to the Audit Committee. Our cybersecurity program implements a defense-in-depth strategy, ensuring comprehensive safeguards are in place across various security domains.
The Committee members include 31 Table of Contents our Director of Data Privacy & Security and Director of Technology Operations. In the event of a cybersecurity incident, the Committee would then be expanded to include our General Counsel. Data is collected and reviewed as needed and reviewed weekly by our Director of Technology Operations.
The Committee members include our Director of Data Privacy & Security and Director of Technology Operations. In the event of a cybersecurity incident, the Committee would then be expanded to include our General Counsel. Data is collected and reviewed as needed and reviewed weekly by our Director of Technology Operations.
Each vendor is scored based on service type and data and their responses to the questionnaire. This risk-based approach ensures proper oversight of vendor relationships and informs decisions on both who and how we choose to partner.
Each vendor is scored based on service type and data and their responses to the questionnaire. This risk-based 34 Table of Contents approach ensures proper oversight of vendor relationships and informs decisions on both who and how we choose to partner.
Key risks that have been deemed material include, but are not limited to, the potential for data exfiltration from unmanaged devices, insufficient staffing, and tools due to recent budgetary reductions, increased risk of managing of protected health information in-house, potentially ineffective cybersecurity governance due to singular reporting structure, and lack of visibility and protection for the remote workforce.
Key risks that have been deemed material include, but are not limited to, the potential for data exfiltration from unmanaged devices, insufficient staffing, and tools due to recent budgetary reductions, increased risk of managing of personal information, potentially ineffective cybersecurity governance due to singular reporting structure, and lack of visibility and protection for the remote workforce.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of December 31, 2023, besides our Global Support Center at 254 West 31 st Street in New York City, XWELL had 37 spas and wellness centers in 18 airport and off airport locations, in the United States, Netherlands, Turkey, and the United Arab Emirates.
Biggest changeITEM 2. PROPERTIES As of December 31, 2024, besides our Global Support Center at 254 West 31 st Street in New York City, XWELL had 33 spas and wellness centers in 18 airport and off-airport locations, in the United States, Netherlands, Turkey, and the United Arab Emirates.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. We evaluated the outstanding legal matters and assessed the probability and likelihood of the occurrence of liability.
Biggest changeHowever, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. We evaluated the outstanding legal matters and assessed the probability and likelihood of the occurrence of liability. Based on management’s estimates, we did not record a liability for all outstanding legal matters as of December 31, 2024.
XpresSpa Philadelphia Terminal B et al. On May 9, 2022, a lawsuit was filed in the Philadelphia Court of Common Pleas by OTG Management at Philadelphia International Airport, claiming that XWELL improperly backed out of its sublease for space at Terminal B and now owes between $865 and $2,250 in accelerated rent for the 12-year contract.
On May 9, 2022, a lawsuit was filed in the Philadelphia Court of Common Pleas by OTG Management at Philadelphia International Airport, claiming that XWELL improperly backed out of its sublease for space at Terminal B and now owes between $864 and $2,250 in accelerated rent for the 12-year contract.
They claim that by refusing to complete the project, failing to commence and maintain operations, refusing to pay rent and improperly purporting to terminate the lease (among other acts and omissions), XWELL breached the lease. On January 9, 2024, the court placed the matter on Civil Suspense.
They claim that by refusing to complete the project, failing to commence and maintain operations, refusing to pay rent and improperly purporting to terminate the lease (among other acts and omissions), XWELL breached the lease. On June 20, 2024, an Order to Settle, Discontinue and End with Prejudice was filed as to all claims.
Removed
Based on management’s estimates, we have recorded a liability of approximately $449 for all outstanding legal matters as of December 31, 2023, which is included in “Accrued expenses and other current liabilities” in the consolidated balance sheet. Related legal fees are recorded in the period in which they are incurred. OTG Management PHL B v.
Added
Related legal fees are recorded in the period in which they are incurred. OTG Management PHL B v. XpresSpa Philadelphia Terminal B et al.
Added
CPC Pain & Wellness SPV, LLC On July 19, 2024, CPC Pain & Wellness SPV, LLC (“CPC”), a recently formed special purpose vehicle that announced it had acquired a 9.42% stake in XWELL in June 2024, filed suit in the Court of Chancery of the State of Delaware against the Company, Chairman Bruce T.
Added
Bernstein, and directors Michael Lebowitz, Robert Weinstein, Gaëlle Wizenberg, and Scott R. Milford (the “Action”).
Added
In the Action, CPC alleged, in pertinent part, that the Board of Directors breached their fiduciary duties and that the Company and Board of Directors engaged in an unlawful, unenforceable, and inequitable application of the Company’s Third Amended and Restated Bylaws to reject CPC’s notice of intent to propose its own slate of directors for election at the 2024 annual meeting of stockholders.
Added
On August 2, 2024, the Court set the Action for trial on September 18-19, 2024. The Company has vigorously defended these claims.
Added
As a result of the Company’s efforts, on August 9, 2024, CPC dismissed all claims in the Action, agreed to irrevocably withdraw its nominations, and agreed not assert any claims related to the 2024 annual meeting. 35 Table of Contents Settlement Agreement On August 5, 2024, the Company, XpresSpa Middle East B.V., and certain parties thereto (such parties, the “Settlor Parties” entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the Company agreed to issue an aggregate of 416,000 shares of common stock (the “Settlement Shares”) which were issued on August 6, 2024,and have a fair market value of $2.26 per share to the Settlor Parties in consideration for their entry into the Settlement Agreement.
Added
The Settlement Shares were not registered under the Securities Act of 1933, as amended (the “Securities Act”),and were issued in reliance on one or more exemptions from registration under the Securities Act, including pursuant to Rule 903 of Regulation S under the Securities Act. XpresSpa Holdings, LLC (“XpresSpa”) v.
Added
Cordial Endeavor Concessions of Atlanta, LLC (“Cordial”), et al., Arbitration Case No. 2126399 .
Added
The Company’s subsidiary, XpressSpa Holdings, LLC, is party to an arbitration proceeding (the “Arbitration”) which was mandated by the City of Atlanta, Georgia related to the Operating Agreements by and between Cordial and XpresSpa for the operation of the XpresSpa locations in Hartsfield-Jackson Atlanta International Airport (“ATL”) in ATL Terminal A and ATL Terminal C.
Added
The City of Atlanta filed an application to compel arbitration in the Superior Court of Fulton County, and on November 5, 2024, the court granted that application and ordered the parties to arbitrate their disagreements. This dispute arises out of the alleged breaches of varies contracts between the parties as well as other improper conduct relating to the Operating Agreements.
Added
The Arbitration has recently commenced, and the parties are awaiting a scheduling order to be issued by the Arbitrator. No substantive proceedings have taken place and there have been no substantive rulings.
Added
In addition to those matters specifically set forth herein, the Company and its subsidiaries are involved in various other claims and legal actions that arise in the ordinary course of business.
Added
The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s financial position, results of operations, liquidity, or capital resources.
Added
However, a significant increase in the number of these claims, or one or more successful claims under which the Company incurs greater liabilities than the Company currently anticipates, could materially adversely affect the Company’s business, financial condition, results of operations and cash flows.
Added
In the event that an action is brought against the Company or one of its subsidiaries, the Company will investigate the allegation and vigorously defend itself. In addition to those matters specifically set forth herein, the Company and its subsidiaries are involved in various other claims and legal actions that arise in the ordinary course of business.
Added
The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s financial position, results of operations, liquidity, or capital resources.
Added
However, a significant increase in the number of these claims, or one or more successful claims under which the Company incurs greater liabilities than the Company currently anticipates, could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. ​ In the event that an action is brought against the Company or one of its subsidiaries, the Company will investigate the allegation and vigorously defend itself.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy We have never declared or paid any cash dividends on our capital stock, and do not anticipate paying any cash dividends on our capital stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance our operations and to expand our business.
Biggest changeThis does not reflect persons or entities that hold their stock in nominee or “street” name through various brokerage firms . ​ Dividend Policy We have never declared or paid any cash dividends on our capital stock, and do not anticipate paying any cash dividends on our capital stock in the foreseeable future.
The Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on October 24, 2022 (the “Amended and Restated Certificate”) reflecting the name change. Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play wellness services company, in both the airport and off-airport marketplaces.
The Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on October 24, 2022, reflecting the name change. Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play wellness services company, in both the airport and off-airport marketplaces.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information On October 25, 2022, the Company changed its name to XWELL, Inc. (“XWELL” or the “Company”) from XpresSpa Group, Inc.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information On October 25, 2022, the Company changed its name to XWELL, Inc. from XpresSpa Group, Inc.
Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, operating results, capital requirements and other factors that our Board of Directors considers appropriate. Unregistered Sales of Equity Securities None.
We currently intend to retain future earnings, if any, to finance our operations and to expand our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, operating results, capital requirements and other factors that our Board of Directors considers appropriate.
Removed
Stockholders As of April 15, 2024, we had 86 stockholders of record of the 4,183,435 outstanding shares of our common stock. This does not reflect persons or entities that hold their stock in nominee or “street” name through various brokerage firms.
Added
Stockholders As of April 11, 2025, we had 90 stockholders of record of the 5,261,024 outstanding shares of our common stock and 2 stockholders of record of the 4,000 outstanding shares of our Series G Preferred Stock.
Added
Additionally, so long as any shares of our Series G Preferred Stock are outstanding, as they are at this time, we are not able to, without the prior written consent of the Required Holders (as defined in the Series G Certificate of Designations), directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of our capital stock (other than as required by the Series G Certificate of Designations).
Added
Unregistered Sales of Equity Securities All sales of unregistered securities during the year ended December 31, 2024, were previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

28 edited+29 added−12 removed17 unchanged
Biggest changeIncome Taxes As of December 31, 2023, our estimated aggregate total NOLs were $150,926 for U.S. federal purposes, expiring 20 years from the respective tax years to which they relate, and $97,968 for U.S. federal purposes with an indefinite life due to new regulations in the Tax Act of 2017.
Biggest changeOther non-operating expenses, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Other non-operating expense, net ​ $ (211) ​ $ (355) ​ $ 144 40 Table of Contents The following is a summary of the transactions included in other non-operating expenses, net for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 ​ 2023 Bank fees and financing charges ​ $ (179) ​ $ (320) Other ​ ​ (32) ​ ​ (35) Total ​ $ (211) ​ $ (355) ​ Income Taxes As of December 31, 2024, our estimated aggregate total gross NOLs were $150,926 for U.S. federal purposes, expiring 20 years from the respective tax years to which they relate, and $114,321 for U.S. federal purposes with an indefinite life due to new regulations in the Tax Act of 2017.
An impairment loss is recognized if it is determined that the long-lived asset group is not recoverable and is calculated based on the excess of the carrying amount of the long-lived asset group over the long-lived asset group’s fair value. The Company estimates the fair value of long-lived assets using present value income approach.
An impairment loss is recognized if it is determined that the long-lived asset group is not recoverable and is calculated based on the excess of the carrying amount of the long-lived asset group over the long-lived asset group’s fair value. The Company estimates the fair value of long-lived assets using the present value income approach.
Our go-forward plan includes the expansion and integration of products and services across our six brands; the right-sizing of our existing airport portfolio to a leaner and more profitable business; the execution of an ‘off-airport’ strategy through acquisition to deliver more products and services, which will serve as a catalyst for our future growth; the implementation of an international expansion plan; and ensuring we can scale our growth in a responsible way that drives shareholder value.
Our go-forward plan includes the expansion and integration of products and services across our brands; the right-sizing of our existing airport portfolio to a leaner and more profitable business; the execution of an ‘off-airport’ strategy through acquisition to deliver more products and services, which will serve as a catalyst for our future growth; the implementation of an international expansion plan; and ensuring we can scale our growth in a responsible way that drives shareholder value.
The CARES Act was enacted on March 27, 2020, and provides favorable changes to tax laws for businesses impacted by COVID-19. However, we do not anticipate the income tax law changes will materially benefit us. We did not have any material unrecognized tax benefits as of December 31, 2023.
The CARES Act was enacted on March 27, 2020, and provides favorable changes to tax laws for businesses impacted by COVID-19. However, we do not anticipate the income tax law changes will materially benefit us. We did not have any material unrecognized tax benefits as of December 31, 2024.
Typically, the changes in assumptions run under different business scenarios would not result in a material change in the assessment of the potential impairment or the impairment amount of a locations long-lived asset group. But if these estimates or related assumptions were to change materially, the Company may be required to record an impairment charge.
Typically, the changes in assumptions run under different business scenarios would not result in a material change in the assessment of the potential impairment or the impairment amount of 43 Table of Contents a locations long-lived asset group. But if these estimates or related assumptions were to change materially, the Company may be required to record an impairment charge.
In assessing 39 Table of Contents the recoverability of the Company’s intangible assets, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge.
In assessing the recoverability of the Company’s intangible assets, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge.
During the quarter ended September 30, 2023, the Company identified a triggering event and as a result recognized an impairment charge of $4,024, which is recorded in goodwill impairment on the consolidated statements of operations and comprehensive loss. Impairment of Long-Lived Assets Long-lived assets are tested for impairment at the lowest level at which there are identifiable operating cash flows.
During the year ended December 31, 2023, the Company identified a triggering event and as a result recognized an impairment charge of $4,024, which is recorded in goodwill impairment on the consolidated statements of operations and comprehensive loss. Impairment of Long-Lived Assets Long-lived assets are tested for impairment at the lowest level at which there are identifiable operating cash flows.
During the year ended December 31, 2023, the Company performed its annual impairment testing procedures of long-lived assets and recognized an impairment charge of $1,159 and $926, which is recorded in Impairment of long-lived assets and Impairment of operating lease right-of-use assets on the consolidated statements of operations and comprehensive loss.
During the year ended December 31, 2023, the Company recognized an impairment charge of $1,159 and $926, which is recorded in Impairment of long-lived assets and Impairment of operating lease right-of-use assets, respectively, on the consolidated statements of operations and comprehensive loss.
The Company’s long-lived assets consist primarily of leasehold improvements and right to use lease assets for each of its locations (considered the asset group). The Company reviews its long-lived assets for recoverability yearly or sooner if events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable.
The Company’s long-lived assets consist primarily of leasehold improvements and the right to use lease assets for each of its locations (considered the asset group). The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
Goodwill represents the cost of a business acquisition in excess of the fair value of the net assets acquired. Goodwill is not amortized and is reviewed for impairment annually, or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.
Goodwill is not amortized and is reviewed for impairment annually, or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
The largest components in the cost of sales for that segment are costs of testing kits and labor costs at the location-level, rent and related occupancy costs, which primarily includes rent based on percentage of sales, and other operating costs.
The largest components in the cost of sales for that segment are labor costs at the location-level. Total cost of sales also includes rent and related occupancy costs, which primarily includes rent based on percentage of sales, as well as other product costs directly associated with the procurement of retail inventory, and other operating costs.
Through right-sizing our existing business, optimizing our cost structure, and making acquisitions that further leverage the strength of our brand portfolio, XWELL is positioning itself for both financial and operational growth now and in the future.
Through right sizing our existing business, optimizing our cost structure, and making acquisitions that further leverage the strength of our brand portfolio, XWELL is positioning itself for both financial and operational growth now and in the future. However, these plans are not finalized or fully within the Company’s control, and there is uncertainty regarding their execution and effectiveness.
We believe the following accounting estimates to be the most critical estimates we used in preparing our consolidated financial statements for the year ended December 31, 2023. 38 Table of Contents Goodwill The Company accounts for goodwill under FASB ASC 350-30, Intangibles-Goodwill and Other.
There are items within our financial statements that require estimation but are not deemed critical, as defined above. We believe the following accounting estimates to be the most critical estimates we used in preparing our consolidated financial statements for the year ended December 31, 2024. Goodwill The Company accounts for goodwill under FASB ASC 350-30, Intangibles-Goodwill and Other.
Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.
We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. 42 Table of Contents Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.
Recently adopted accounting pronouncements Please refer Note 2 to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. Recently issued accounting pronouncements Please refer Note 2 to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. ​ ITEM 7A.
During the year ended December 31, 2023, the Company recorded $2,768 of intangible impairment loss. ​ Recently adopted accounting pronouncements Please refer Note 2 to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.
Impairment The following table summarizes impairment charges the years ended December 31, 2023 and 2022, recorded on the consolidated statement of operations and comprehensive loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance Impairment of goodwill ​ $ 4,024 ​ $ — ​ $ 4,024 Impairment of intangible assets ​ ​ 2,768 ​ $ 110 ​ ​ 2,658 Impairment of long-lived assets ​ ​ 1,159 ​ $ 4,559 ​ ​ (3,400) Impairment of right-of-use assets ​ $ 926 ​ $ 1,110 ​ $ (184) ​ We completed an assessment of our property and equipment, intangible assets and right of use lease assets for impairment both as of December 31, 2023 and 2022.
Impairment /loss on disposal of assets The following table summarizes impairment charges the years ended December 31, 2024 and 2023, recorded on the consolidated statement of operations and comprehensive loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Impairment of long-lived assets ​ $ 1,711 ​ $ 3,927 ​ $ (2,216) Impairment of operating lease right-of-use assets ​ ​ 2,805 ​ ​ 926 ​ ​ 1,879 Loss on disposal of assets, net ​ ​ 90 ​ ​ 34 ​ ​ 56 Goodwill impairment ​ ​ — ​ ​ 4,024 ​ ​ (4,024) ​ The Company identified triggering events and completed an assessment of the Company’s property and equipment, intangible assets and right of use lease assets for impairment as of December 31, 2024 and 2023.
Salaries and benefits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance Salaries and benefits ​ $ 7,954 ​ $ 9,991 ​ $ (2,037) ​ During the year ended December 31, 2023, salaries and benefits expenses decreased by $2,037 or 20%, primarily due to the closing of unprofitable or poorly performing spas, optimization of systems and processes that support the business, headcount reductions and elimination of infrastructure no longer necessary to support our future growth. 36 Table of Contents Gain on securities, realized and unrealized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance Gain on securities, realized and unrealized ​ $ 912 ​ $ (0) ​ $ 912 ​ Gain on securities is affected by the adjustments to the fair value of our equity investment, which could fluctuate materially from period to period.
Salaries and benefits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Salaries and benefits ​ $ 7,540 ​ $ 7,954 ​ $ (414) ​ During the year ended December 31, 2024, salaries and benefits expenses decreased by $414 or 5%, primarily due to the closing of unprofitable or poorly performing spas, optimization of systems and processes that support the business, headcount reductions and elimination of infrastructure no longer necessary to support our future growth.
Based upon the results of the impairment test, we recorded an impairment of property and equipment, intangible assets, goodwill and right of use lease assets of approximately $1,159, $2,768, $4,024 and $926, respectively for the year ended December 31, 2023.
As of December 31, 2024, the Company recorded an impairment of property and equipment, intangible assets, and right of use lease assets of approximately $1,706, $5 and $2,805, respectively, as compared to December 31, 2023 of approximately $1,159, $2,768, and $926 impairment of property and equipment, intangible assets, and right of use lease assets, respectively. 39 Table of Contents The Company completed an assessment of goodwill for impairment as of December 31, 2024.
Fair value estimates are made at a specific point in time, based on relevant information. Based upon the results of the impairment test, we recorded an impairment of intangible assets in Impairment of long-lived assets on the consolidated statements of operations and comprehensive loss of approximately $2,768 for the year ended December 31, 2023.
Fair value estimates are made at a specific point in time, based on relevant information. During the year ended December 31, 2024, the Company recorded $5 of intangible impairment loss.
During the year ended December 31, 2023, we used net cash of $16,074 to fund our operating activities. 37 Table of Contents Cash flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2022 ​ Change Net cash used in operating activities $ (16,074) $ (24,188) $ 8,114 Net cash provided by (used in) investing activities ​ $ 5,650 ​ $ (34,843) ​ $ 40,493 Net cash (used in) provided by financing activities ​ $ 8 ​ $ (27,377) ​ $ 27,385 ​ ​ Operating activities During the year ended December 31, 2023, net cash used in operating activities was $16,074 compared to net cash used in operating activities during the year ended December 31, 2022 of $24,188.
Cash flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 ​ 2023 ​ Change Net cash used in operating activities $ (11,005) $ (16,074) $ 5,069 Net cash provided by investing activities ​ $ 5,895 ​ $ 5,650 ​ $ 245 Net cash provided by financing activities ​ $ 1,359 ​ $ 8 ​ $ 1,351 ​ ​ Operating activities During the year ended December 31, 2024, net cash used in operating activities was $11,005 compared to net cash used in operating activities during the year ended December 31, 2023 of $16,074.
The decrease in net cash used in operating activities was primarily due to the rapid decline of our XpresCheck business. Investing activities During the year ended December 31, 2023, net cash provided by investing activities was $5,650 compared to net cash used in investing activities during the year ended December 31, 2022 of $34,843.
Investing activities During the year ended December 31, 2024, net cash provided by investing activities was $5,895 compared to net cash provided by investing activities during the year ended December 31, 2023 of $5,650. Cash provided in 2024 came primarily from the sale of marketable securities of approximately $7,986.
The decrease was primarily due to fewer long-lived assets available for depreciation.
The decrease was primarily due to fewer long-lived assets available for depreciation and amortization in 2024 as compared to 2023 due the impairment of long-lived assets which occurred in the latter half of fiscal year 2023.
Our primary liquidity and capital requirements are for the maintenance of our current XpresSpa and Treat locations and brand, as well as the expansion outside the airports.
The Company is aggressively pursuing strategic partnerships that the Company expects will further strengthen the long-term profitability of the business, which puts the Company in a position of strength as the Company raises more capital. Our primary liquidity and capital requirements are for the maintenance of our current XpresSpa locations and brand, as well as the expansion outside the airports.
Our total current liabilities balance, which includes accounts payable, deferred revenue, accrued expenses, and operating lease liabilities was approximately $9,330 as of December 31, 2023. The working capital surplus was $17,236 as of December 31, 2023, compared to a working capital surplus of $36,376 as of December 31, 2022.
As of December 31, 2024, we had approximately $4,550 of cash and cash equivalents, $7,247 in marketable securities, and total current assets of approximately $15,337. Our total current liabilities balance, which includes accounts payable, deferred revenue, accrued expenses, and operating lease liabilities was approximately $9,224 as of December 31, 2024.
That resulted in additional costs of sales. 35 Table of Contents Depreciation and amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance Depreciation and amortization ​ $ 2,065 ​ $ 5,429 ​ $ (3,364) ​ During the year ended December 31, 2023, depreciation and amortization expense decreased $3,364, or 62%, compared to the depreciation and amortization expense recorded during the year ended December 31, 2022.
Depreciation and amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Depreciation and amortization ​ $ 938 ​ $ 2,065 ​ $ (1,127) ​ During the year ended December 31, 2024, depreciation and amortization expense decreased $1,127, or 55%, compared to the depreciation and amortization expense recorded during the year ended December 31, 2023.
Cash provided in 2023 came primarily from the sale of marketable securities of approximately $9,417. In addition, the Company had idle cash that they invested during the year ended December 31, 2022.
Cash provided in 2023 came primarily from the sale of marketable securities of approximately $9,417. Financing activities During the year ended December 31, 2024, net cash provided by financing activities increased by $1,351 primarily due to the net proceeds received from the August 2024 Registered Direct Offering (as defined below).
The fair value of these instruments depends on a variety of assumptions.
Gain on investments is affected by the adjustments to the fair value of our equity investment, which could fluctuate materially from period to period. The fair value of these instruments depends on a variety of assumptions.
Cost of sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance Cost of sales ​ $ 26,428 ​ $ 43,891 ​ $ (17,463) ​ The decrease in total cost of sales during the year ended December 31, 2023, was primarily driven by the corresponding decline in our XpresTest locations as countries continued to relax their testing requirements.
Cost of sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Total cost of sales ​ $ 24,978 ​ $ 26,428 ​ $ (1,450) ​ The decrease in total cost of sales during the year ended December 31, 2024, was primarily driven by the closure of XpresSpa locations that were under performing.
Removed
Year ended December 31, 2023 compared to the year ended December 31, 2022 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance Total revenue ​ $ 30,109 ​ $ 55,939 ​ $ (25,830) ​ During the year ended December 31, 2023, total revenues decreased $25,830, or 46%.
Added
As noted previously in these financial statements, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for at least one year from the date these financial statements are issued. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Removed
The decrease in revenue was primarily due to reduction in patient service revenue triggered by the rapid decline of the XpresTest segment. As countries continued to relax their testing requirements and the closure of our XpresCheck locations as we progressed through 2023.
Added
Recent Developments January 2025 Private Placement On January 14, 2025, we entered into a securities purchase agreement (the “January 2025 Purchase Agreement”) with certain accredited investors thereto, pursuant to which it agreed to sell to such investors (i) an aggregate of 4,000 shares of our newly-designated Series G Convertible Preferred Stock, par value of $0.01 per share and a stated value of $1,000 per share, initially convertible into up to 2,673,797 shares of our common stock at a conversion price of $1.496 per share, (ii) Series A Warrants to acquire up to an aggregate of 2,673,797 shares of common stock at an exercise price of $1.496 per share, and (iii) Series B Warrants to acquire up to an aggregate of 2,673,797 shares of common stock at an exercise price of $1.7952 per share (the “January 2025 Private Placement”), each for a term of five years following the date of issuance.
Removed
The Company did not reopen spas that were shut down during Covid and close spas that were open during the year that were under performing.
Added
In connection with the January 2025 Private Placement, we also entered into that certain registration rights agreement, dated as of January 14, 2025, with the investors in the January 2025 Private Placement.
Removed
We recorded an impairment of property and equipment, intangible assets and right of use lease assets of approximately $4,559, $110 and $1,110, respectively, in the year ended December 31, 2022.
Added
The January 2025 Private Placement closed on January 14, 2025. 38 Table of Contents Year ended December 31, 2024, compared to the year ended December 31, 2023 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Total revenue, net ​ $ 33,897 ​ $ 30,109 ​ $ 3,788 ​ During the year ended December 31, 2024, total revenues increased $3,788, or 13%.
Removed
During the year ended December 31, 2022, the impairment was primarily related to the impairment of leasehold improvements made to our Treat locations and its related operating lease right of use assets where management determined that the locations discounted future cash flows were not sufficient to recover the carrying value of these assets over the remaining lease term. ​ General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Variance General and administrative ​ $ 12,957 ​ $ 21,178 ​ $ (8,221) ​ During the year ended December 31, 2023, general and administrative expenses decreased by $8,221 or 39%, primarily due to the reduction of functional costs associated with the operations of XpresCheck and reduced overhead spend.
Added
The increase in revenue was primarily due to a full year service revenue generated from the acquired Naples Wax business and an increase in service revenue in the XpresSpa new touchless locations.
Removed
Other non-operating expenses, net The following is a summary of the transactions included in other non-operating income (expense), net for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Loss on equity investments ​ $ (54) ​ $ (618) Bank fees and financing charges ​ (321) ​ (462) Other ​ ​ (35) ​ ​ (51) Total ​ $ (410) ​ $ (1,131) ​ As of December 31, 2023, the equity investment in Route1 had a readily determinable fair value of $50.
Added
The year-over-year decrease is based upon the results of the 2024 impairment assessment whereby the Company identified a triggering event for goodwill but deemed that the reporting unit’s fair value is greater than its carrying value, therefore no impairment for goodwill was recognized as of December 31, 2024.
Removed
We recorded an unrealized loss of $54 in connection with the remeasurement of the shares of our common stock and warrants of Route1 obtained in the 2018 sale of Group Mobile to Route1.
Added
During the year ended December 31, 2023 the Company identified a triggering event, related to the Goodwill associated with XpresTest’s HyperPointe business, and as a result recognized an impairment charge of $4,024.
Removed
We do not expect to record any additional material provisions for unrecognized tax benefits within the next year. Liquidity and Capital Resources As of December 31, 2023, we had approximately $8,437 of cash and cash equivalents, $14,613 in marketable securities, and total current assets of approximately $26,566.
Added
General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) General and administrative ​ $ 12,542 ​ $ 12,957 ​ $ (415) ​ During the year ended December 31, 2024, general and administrative expenses decreased by $415 or 3%, which was primarily due to rightsizing our existing business and optimizing our cost structure.
Removed
Financing activities During the year ended December 31, 2023, net cash provided by financing activities increased by $27,385 primarily due to the repurchase of common stock and repayment of Paycheck Protection Program loan that occurred in 2022. Off-Balance Sheet Arrangements We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements.
Added
We have significantly reduced operating and overhead expenses while we continue to focus on returning to overall profitability. The decrease in general and administrative expenses were partially offset by an increase in one-time legal fees of approximately $2.1 million related to the defense of the CPC lawsuit .
Removed
We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
Added
Gain on investments, realized and unrealized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Inc/(Dec) Gain on investments, realized and unrealized ​ $ 356 ​ $ 857 ​ $ (501) ​ As of December 31, 2024, the decrease is primarily driven by the decrease in marketable securities balance in 2024 as compared to 2023.
Removed
There are items within our financial statements that require estimation but are not deemed critical, as defined above.
Added
We do not expect to record any additional material provisions for unrecognized tax benefits within the next year. Going Concern and Liquidity Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern as we have suffered recurring losses from operations and have insufficient liquidity to fund our future operations.
Removed
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required as we are a smaller reporting company.
Added
If we are unable to improve our liquidity position, we may not be able to continue as a going concern.
Added
The accompanying consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern and, therefore, be required to realize our assets and discharge our liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment.
Added
The working capital surplus was $6,113 as of December 31, 2024, compared to a working capital surplus of $17,236 as of December 31, 2023. The Company significantly reduced operating and overhead expenses in the 2023 and 2024, while it continues to focus on returning to overall profitability.
Added
The Company has taken actions to improve its overall cash position, right sizing its corporate structure and streamlining its operations, while at the same time the Company is aggressively trying to get the company to profitability which the Company believes will strengthen the Company’s stock price and put the Company in a stronger position to be able to raise capital in 2025 and beyond.
Added
During the year ended December 31, 2024, we used net cash of $11,005 to fund our operating activities. In order to have sufficient cash to fund our operations in the future, we will need to raise additional equity or debt capital and cannot provide any assurance that we will be successful in doing so.
Added
If we are unable to raise sufficient capital to fund our operations, we may need to delay, reduce or eliminate certain of our operations, sell some or all of our assets or merge with another entity. 41 Table of Contents We do not currently have sufficient available liquidity to fund its operations for at least the next 12 months.
Added
These conditions and events raise substantial doubt about our ability to continue as a going concern within one year after the date that these audited annual consolidated financial statements are issued.
Added
The decrease in net cash used in operating activities was primarily due the Company’s reduction of operating and overhead expenses such as lower occupancy costs in 2024 as compared to 2023. In addition, there has been higher cash flows from full year operations of the acquired Naples Wax business in 2024 as compared to 2023.
Added
Sources of Liquidity August 2024 Registered Direct Offering On August 6, 2024, we entered into a securities purchase agreement with certain institutional and accredited investors, pursuant to which we agreed to sell and issue in a registered direct offering (the “August 2024 Registered Direct Offering”), an aggregate of 652,705 shares (the “August 2024 Shares”) of our common stock.
Added
The gross proceeds to us from the August 2024 Registered Direct Offering, prior to deducting estimated fees and expenses of $0.1 million, were approximately $1.4 million. The August 2024 Registered Direct Offering closed on August 8, 2024.
Added
The August 2024 Shares were offered and sold pursuant to a shelf registration statement on Form S-3 (File No. 333-273726), previously filed with the SEC on August 4, 2023, and declared effective by the SEC on September 29, 2023, and the base prospectus included therein Off-Balance Sheet Arrangements We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements.
Added
Goodwill represents the cost of a business acquisition in excess of the fair value of the net assets acquired and liabilities assumed.
Added
During the year ended December 31, 2024, the Company identified a triggering event for goodwill but deemed that the fair value of the reporting unit is greater than its carrying value; therefore, no impairment loss was recognized.
Added
During the year ended December 31, 2024, the Company identified triggering events and completed an impairment assessment of long-lived assets for impairment and recognized an impairment charge of $1,706 and $2,805, which is recorded in Impairment of long-lived assets and Impairment of operating lease right-of-use assets, respectively, on the consolidated statements of operations and comprehensive loss.
Added
Known Trends, Events and Uncertainties ​ Ongoing conflicts in Russia and Ukraine, and Israel and Palestine, including related sanctions and countermeasures, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations.
Added
We may not be able to raise sufficient additional capital and may tailor our business and operations based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful.
Added
Additionally, our ability to operate depends upon a large number of airplane travelers with the propensity for health and wellness, and in particular spa treatments and products, spending significant time post-security clearance check points at airports.
Added
The number of airline travelers at any given time is volatile and subject to change based on various conditions, including but not limited to market and other conditions, prices of travel fare, and oil and gas prices. ​ Other than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition. ​

Other XWEL 10-K year-over-year comparisons