ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless otherwise stated, dollar amounts are provided in thousands, except share and per share data.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, our consolidated financial statements (including notes to the consolidated financial statements) and the other consolidated financial information appearing elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Actual results and timing of events could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
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 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. 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. 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.
Recent Developments
January 2025 Private Placement
On January 14, 2025, the Company entered into a securities purchase agreement with the investors named therein (the “January 2025 Investors”), pursuant to which the Company issued and sold on January 14, 2025, in a private placement (the “January 2025 Private Placement”), (i) an aggregate of 4,000 shares of the Company’s newly-designated Series G Convertible Preferred Stock, par value $0.01 per share and stated value of $1,000 per share (the “Stated Value”) (the “Series G Preferred Stock”), initially convertible into up to 2,673,797 shares of common stock at a conversion price of $1.496 per share (the “Series G Preferred Stock”), (ii) Series A warrants (the “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 (the “Series B Warrants” and collectively, with the Series A Warrants, the “Warrants”) to acquire up to an aggregate of 2,673,797 shares of common stock at an exercise price of $1.7952 per share. Each share of Series G Preferred Stock and accompanying Warrants were sold together at a combined offering price of $1,000. The January 2025 Private Placement closed on January 14, 2025.
37
Table of Contents
May 2025 Warrant Amendment
On May 16, 2025, the Company entered into an omnibus amendment (the “Warrant Amendment”) with each of the holders of the Series A Warrants and Series B Warrants. The Warrant Amendment makes certain adjustments to the definition of a “Fundamental Transaction” in each of the Warrants, as described in the Warrant Amendment, including changing the scope of the definition applicable to tender or exchange offers that the Company makes, allows one or more Subject Entities (as defined in the Warrant Agreement) to make, or allows the Company to be subject to, to require such a tender or exchange offer to represent more than 50% of the outstanding voting power of the Company. Further, the Warrant Amendment modifies certain terms of the Warrants relating to the rights of the holders in the event of a Fundamental Transaction (as defined in each of the Series A Warrants and Series B Warrants, and as each amended by the Warrant Amendment) that is not within the Company’s control, including that upon a Fundamental Transaction not being approved by the Company’s Board of Directors, the holders of the Warrants shall only be entitled to receive from the Company or any successor entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined in each of the Series A Warrants and Series B Warrants and as each amended by the Warrant Amendment, as described below) of the unexercised portion of such Warrants, that is being offered and paid to the holders of the Company’s Common Stock. In addition, the Amendment revises the definition of Black Scholes Value related to the volatility input which is now an expected volatility equal to the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the trading day immediately following the earliest to occur of (1) the public disclosure of the applicable Fundamental Transaction and (2) the date of a holder’s request.
November 2025 Exchange Agreement
On November 3, 2025, the Company entered into a Securities Exchange and Amendment Agreement (the “Exchange Agreement”) with the January 2025 Investors, pursuant to which, the Company exchanged a portion of the Company’s outstanding shares of Series G Preferred Stock, including all accrued and unpaid dividends thereon equal to $1,800 in aggregate Stated Value, held by the January 2025 Investors, for senior secured convertible notes (collectively, the “Notes”) in the aggregate principal amount of $3,387 (collectively, the “Exchange”). The Notes were convertible into shares of the Company’s Common Stock in accordance with their terms and were secured by a first priority security interest in the assets of the Company and its subsidiaries. The Exchange closed on November 10, 2025 (the “Closing Date”).
In connection with the Exchange, the Company and the January 2025 Investors agreed to (A) amend certain terms of the Company’s Series G Preferred Stock as set forth in a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Designations of the Series G Convertible Preferred Stock (the “Certificate of Designations”) as described below, and (B) amend and restate the January 2025 Investors’ (i) Series A warrants (the “Amended and Restated Series A Warrants”) and (ii) Series B Warrants (the “Amended and Restated Series B Warrants” and, collectively with the Amended and Restated Series A Warrants, the “Amended and Restated Warrants”) to (A) reduce the exercise price of the Warrants to $1.00, and (B) add certain anti-dilution provisions such that the exercise price of the Warrants will be subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price.
February 2026 Private Placement
On February 24, 2026, the Company entered into the February 2026 Purchase Agreement with the a certain accredited investor (the “February 2026 Purchaser”) for the issuance and sale in a private placement of an aggregate of (i) 31,333 shares of the Company’s newly-designated Series H Convertible Preferred Stock, par value of $0.01 per share and a stated value of $1,000 per share (the “Series H Preferred Stock”), initially convertible into up to 66,665,957 shares of common stock, at an initial conversion price of $0.47 per share, subject to adjustment for certain customary adjustments, and (ii) the warrants (the “February 2026 Warrants”) to purchase up to 66,665,957 shares of common stock, at an initial exercise price of $0.345 per share, subject to adjustment for certain customary adjustments, for aggregate gross proceeds of approximately $31,300. The February 2026 Warrants expire three years from the date of issuance. The February 2026 Private Placement closed on February 27, 2026.
38
Table of Contents
In connection with the February 2026 Private Placement, pursuant to a placement agency agreement (the “Placement Agency Agreement”), dated as of February 24, 2026, by and between the Company and Dominari Securities LLC (the “Placement Agent”), the Company engaged the Placement Agent to act as an exclusive placement agent in connection with the February 2026 Private Placement and agreed to (i) pay to the Placement Agent (a) a cash fee equal to 8% of the gross proceeds of the February 2026 Private Placement and (b) reimbursements and payments of certain expenses, including non-accountable expense allowance equal to 1% of the gross proceeds raised in the February 2026 Private Placement and reasonable out-of-pocket expenses, not to exceed $250, and (ii) issue to the Placement Agent warrants (the “Placement Agent Warrants”) to purchase up to an aggregate number of shares of Common Stock equal to 8% of the aggregate number of shares of common stock underlying the securities issued in the February 2026 Private Placement, with terms identical to the February 2026 Warrants, except that the Placement Agent Warrants have a term of five (5) years from the date of issuance. The Placement Agency Agreement contains customary representations, warranties and agreements of the parties, and customary indemnification obligations of the Company.
In connection with the February 2026 Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the February 2026 Purchaser and the Placement Agent, pursuant to which the Company has agreed to prepare and file a registration statement with the SEC registering the resale of the shares of common stock underlying the Series H Preferred Stock and shares of common stock underlying the February 2026 Warrants and the Placement Agent Warrants no later than the earlier of (a) 50 days after the later of (1) the closing date of the February 2026 Private Placement or (2) the Escrow Release Date (as defined in the Registration Rights Agreement) and (b) the second trading day following the date on which the Company files its Annual Report on Form 10-K for the year ended December 31, 2025 (the “Filing Deadline”), and to use best efforts to have the registration statement declared effective as promptly as practical thereafter, and in any event no later than 60 days following the Filing Deadline (or 90 days following the Filing Deadline in the event of a “full review” by the SEC).
The Company used the net proceeds from the February 2026 Private Placement, in part, to repurchase certain outstanding indebtedness, redeem previously issued preferred equity and warrants in the Repurchase (see below February 2026 Omnibus Agreement).
February 2026 Omnibus Agreement
On February 24, 2026, the Company entered into the Omnibus Agreement, by and between the Company and January 2025 Investors, pursuant to which, the Company agreed to (i) repurchase from the January 2025 Investors $5,673 of aggregate principal amount of the Notes, representing the entire outstanding principal amounts of the Notes and any accrued and unpaid interest thereon, (ii) redeem 196 shares of Series G Preferred Stock held by the January 2025 Investors, including $283 of accrued and unpaid dividends thereon, representing all outstanding shares of Series G Preferred Stock, and (iii) redeem all Amended and Restated Warrants held by the January 2025 Investors, representing all outstanding Series A Warrants and Series B Warrants, for an aggregate cash purchase price of $9,000 (collectively, the “Repurchase”). The Repurchase closed on March 2, 2026.
On March 4, 2026, the Company filed a Certificate of Elimination (the “Certificate of Elimination”) with respect to its Series G Preferred Stock, with the Delaware Secretary of State. The Certificate of Elimination (i) eliminates the previous designation of 4,000 shares of Series G Preferred Stock, none of which were outstanding at the time of filing, (ii) causes such shares of Series G Preferred Stock to resume the status of authorized but unissued shares of preferred stock of the Company and (iii) eliminates all reference to the Series G Preferred Stock from the Company’s Amended and Restated Certificate of Incorporation, as amended.
Preferred Stock
The terms of the Preferred Stock are set forth in the respective Certificate of Designations. The shares of Series H Preferred Stock are convertible into the Conversion Shares at the election of the holders of the Series H Preferred Stock (the “Holders”) at any time at an initial conversion price of $0.47 per share (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like.
39
Table of Contents
A Holder of the Series H Preferred Stock may not convert any portion of the Preferred Stock to the extent that the Holder, together with its affiliates, would beneficially own more than 4.99% of the Company’s outstanding shares of Common Stock immediately after conversion, except that upon at least 61 days’ prior notice from the Holder to the Company, the Holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the conversion.
Pursuant to the Certificate of Designations, so long as any shares of the Series H Preferred Stock are outstanding, the Company may not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent of the Required Holders (as defined in the Certificate of Designations). In the event that dividends are consented to by the Required Holders, the Holders of the Series H Preferred Stock shall be entitled to receive dividends on shares of the Series H Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends may be paid on shares of the Series H Preferred Stock.
Except as otherwise provided in the Certificate of Designations or as otherwise required by law, the Series H Preferred Stock will have no voting rights except as provided by law. However, as long as any shares of Preferred Stock are outstanding, the Company may not, without the affirmative vote at a meeting duly called for such purpose, or the written consent without a meeting, of the Required Holders, voting together as a single class, (a) amend or repeal any provision of, or add any provision to, its charter documents, including, without limitation, its Certificate of Incorporation or bylaws, the Certificate of Designation, or file any certificate of designations or articles of amendment of any series of shares of preferred stock, in each case, only if such action would adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series H Preferred Stock, regardless of whether any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise; (b) increase or decrease (other than by conversion) the authorized number of shares of the Preferred Stock; (c) create or authorize (by reclassification or otherwise) any new class or series of shares that has a preference over the Preferred Stock with respect to dividends or the distribution of assets on the liquidation, dissolution or winding up of the Company; (d) pay dividends or make any other distribution on any shares of any capital stock of the Company junior in rank to the Preferred Stock; or (e) whether or not prohibited by the terms of the Preferred Stock, circumvent a right of the Preferred Stock.
There is no established public trading market for the Preferred Stock and the Company does not intend to list the Series H Preferred Stock on any national securities exchange or nationally recognized trading system.
Warrants
The exercise price of the Warrants is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. A holder of the Warrants may not exercise any portion of such holder’s Warrants to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% of the Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.
There is no established public trading market for the Warrants and the Company does not intend to list the Warrants on any national securities exchange or nationally recognized trading system.
Pro Forma Financial Statements
The Private Placement and Repurchase (collectively, the “Restructuring”) represent a significant restructuring of the Company’s capital including a significant repayment of debt. The accompanying unaudited pro forma consolidated balance sheet as of December 31, 2025 is presented as if the Restructuring had occurred on December 31, 2025. The Restructuring is not expected to have an impact on the Company’s consolidated statements of operations and thus no pro forma consolidated statement of operations is presented.
40
Table of Contents
These unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States.
The unaudited pro forma condensed consolidated financial information is subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. Actual adjustments may differ materially from the information presented. The unaudited pro forma consolidated financial statements are based on the historical financial statements of the Company for each period presented and in the opinion of the Company’s management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made. These unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had events reflected been completed as of the dates indicated and may not be useful in predicting the impact of the reflected transactions on the future financial condition and results of operations of the Company due to a variety of factors.
The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable. The unaudited pro forma consolidated financial statements are for illustrative and informational purposes only and do not purport to represent what our financial position or results of operations would have been if the proposed transactions had actually occurred as of the dates indicated, nor does it project our financial position at any future date or our results of operations or cash flows for any future period.
The adjustments in the unaudited pro forma consolidated financial information have been identified and presented to provide relevant information necessary for an illustrative understanding of XWELL, Inc. upon consummation of the Restructuring. The unaudited pro forma transaction accounting adjustments presented in the accompanying notes represent management’s estimates based on information available as of the date of these unaudited pro forma consolidated financial statements and are subject to change as additional information becomes available and analyses are performed.
41
Table of Contents
XWELL, Inc. and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2025
(In thousands, except share and per share data)
Adjustments
- Private Adjustments -
Historical Placement Repurchase Pro Forma
Assets
Current assets:
Marketable Securities 7 — — 7
Accounts receivable 1,560 — — 1,560
Inventory 509 — — 509
Other current assets 1,217 — — 1,217
Restricted cash 251 — — 251
Property and equipment, net 1,665 — — 1,665
Intangible assets, net 101 — — 101
Operating lease right of use assets, net 1,039 — — 1,039
Goodwill — — — —
Security deposits 2,127 — — 2,127
Other assets 124 — — 124
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,836 $ — $ — $ 2,836
Accrued Series G Convertible Preferred payable 538 — (538) (b) —
Current portion of operating lease liabilities 1,862 — — 1,862
Deferred revenue 1,126 — — 1,126
Convertible senior secured note, net 3,590 — (3,590) (b) —
Long-term liabilities:
Derivative liability 3,870 — (3,870) (b) —
Operating lease liabilities 7,035 — — 7,035
Temporary Equity
Stockholders' Equity:
Accumulated other comprehensive loss (1,541) — — (1,541)
Noncontrolling interests 9,458 9,458
See accompanying notes to the consolidated financial statements.
42
Table of Contents
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Nasdaq Minimum Bid Price Requirement
On December 1, 2025, we received a letter (the “Letter”) from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days between October 17, 2025, to November 28, 2025, we did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). The letter also indicated that we will be provided with a compliance period of 180 days (until June 1, 2026) (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On March 11, 2026, we received a letter from the Listing Qualifications Department of Nasdaq stating that for the last 10 consecutive business days, from February 25, 2026, to March 10, 2026, the closing bid price of our common stock had been at or greater than $1.00 per share. Accordingly, we have regained compliance with the Minimum Bid Price Rule and per the Letter, the matter is now closed.
Year ended December 31, 2025, compared to the year ended December 31, 2024
Revenue
Year ended December 31,
During the year ended December 31, 2025, total revenues decreased $4,687, or 14%. The decrease was driven primarily by a decline in revenues within the XpresTest segment, reflecting reduced testing volumes. This decrease was partially offset by modest growth in service revenues from newly opened Naples Wax locations.
Cost of sales
Year ended December 31,
During the year ended December 31, 2025, total cost of sales decreased $3,274, or 13%. The decrease in total cost of sales was primarily driven by the closure of the Treat business and 3 XpresSpa locations that were under performing. 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.
43
Table of Contents
Depreciation and amortization
Year ended December 31,
Depreciation and amortization $ 862 $ 938 $ (76)
During the year ended December 31, 2025, depreciation and amortization expense decreased $76, or 8%, compared to the depreciation and amortization expense recorded during the year ended December 31, 2024. The decrease was primarily due to fewer long-lived assets available for depreciation and amortization in 2025 as compared to 2024 due the impairment of long-lived assets which occurred in the latter half of fiscal year 2024.
Impairment/loss on disposal of assets
The following table summarizes impairment charges for the years ended December 31, 2025 and 2024, recorded on the consolidated statement of operations and comprehensive loss:
Year ended December 31,
Impairment of long-lived assets $ 3,149 $ 1,711 $ 1,438
Loss on disposal of assets, net 40 90 (50)
Goodwill impairment 1,389 — 1,389
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, 2025 and 2024. As of December 31, 2025, the Company recorded an impairment of property and equipment, intangible assets, and right of use lease assets of approximately $2,529, $620 and $1,736, respectively, as compared to December 31, 2024 of approximately $1,706, $5, and $2,805 impairment of property and equipment, intangible assets, and right of use lease assets, respectively.
As of December 31, 2025, after recording ASC 360 long-lived asset impairments, the Company evaluated goodwill for impairment under ASC 350 using a qualitative assessment. In the absence of a contemporaneous quantitative valuation, and considering persistent losses, negative projected cash flows, and other adverse indicators, management concluded it was more-likely-than-not that the reporting unit’s fair value did not exceed it’s carrying amount. The Company therefore recorded a full impairment as of December 31, 2025, related to the Goodwill associated with the Naples Wax business, and as a result recognized an impairment charge of $1,389.
No impairment for goodwill was recognized as of December 31, 2024.
General and administrative
Year ended December 31,
During the year ended December 31, 2025, general and administrative expenses decreased by $4,082 or 20%, which was primarily due to rightsizing our existing business and optimizing our cost structure. We have significantly reduced operating and overhead expenses while we continue to focus on returning to overall profitability.
44
Table of Contents
Gain on investments, realized and unrealized
Year ended December 31,
Gain on investments, realized and unrealized $ 61 $ 356 $ (295)
As of December 31, 2025, the decrease is primarily driven by the decrease in marketable securities balance in 2025 as compared to 2024. Gain on investments is affected by the adjustments to the fair value of our equity investments, which could fluctuate materially from period to period. The fair value of these instruments depends on a variety of assumptions.
Other non-operating expenses, net
Year ended December 31,
Foreign exchange loss $ (654) $ (259) $ (395)
Other non-operating expense, net (167) (211) 44
The increase in foreign exchange loss of $395 was primarily due to the fluctuation of the foreign exchange rate in Turkey, creating a remeasurement loss on our lease liability. The decrease in other non-operating expense of $44, net was primarily driven by a decrease in finance expenses related to bank fees and charges.
The following is a summary of the transactions included in other non-operating expenses, net for the years ended December 31, 2025 and 2024:
Year ended December 31,
Bank fees and financing charges $ (134) $ (179)
Other (33) (32)
Change in fair value of warrants and derivatives
Year ended December 31,
Change in fair value of derivative liability $ (80) $ —
Change in fair value of warrant liability 3,215 —
Loss on issuance of Series G Preferred Stock (3,443) —
The change in fair value of derivatives and warrant liabilities during the year ended December 31, 2025 primarily reflects changes in the Company’s stock price and the impact of amendments to certain outstanding warrant agreements entered into in November 2025 in connection with the Securities Exchange and Amendment Agreement with holders of the Company’s Series G Convertible Preferred Stock. As part of this transaction, certain warrants were amended and restated and a portion of the outstanding Series G Convertible Preferred Stock was exchanged for senior secured convertible notes. These modifications affected the valuation assumptions used in measuring the related derivative and warrant liabilities at fair value. The loss on issuance is due to the initial fair value of the Series G Preferred Stock exceeding the fair value of the proceeds received.
Interest income, net
Year ended December 31,
45
Table of Contents
The increase of $281 was primarily driven by the recognition of $473 in interest income associated with the employee retention credit, partially offset by lower interest earned on cash balances during the period.
Income Taxes
As of December 31, 2025, the Company’s 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 $127,912 for U.S. federal purposes with an indefinite life due to new regulations in the TCJA. of 2017. The NOL amounts are presented before Internal Revenue Code, Section 382 limitations ("Section 382"). The Tax Reform Act of 1986 imposed substantial restrictions on the utilization of NOL and tax credits in the event of an ownership change of a corporation. Thus, the Company’s ability to utilize all such NOL and credit carryforwards may be limited. An IRC Section 382 Study has not yet been completed.
We did not have any material unrecognized tax benefits as of December 31, 2025. We do not expect to record any additional material provisions for unrecognized tax benefits within the next year.
Going Concern and Liquidity
As of December 31, 2025, the Company had cash and cash equivalents of approximately $2,617, marketable securities of $7, total current assets of $5,910, total current liabilities of $12,892, and long term operating lease liabilities of $7,035. The Company’s working capital was in a deficit position at December 31, 2025, compared with a working capital surplus of $6,113 at December 31, 2024. These conditions, together with historical operating losses and negative cash flows from operations, previously raised substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of these financial statements.
On February 24, 2026, the Company announced it had entered into a securities purchase agreement for a private placement of Series H Convertible Preferred Stock and accompanying warrants, which is expected to result in gross proceeds of approximately $31,300 before fees and expenses. The private placement was priced at-the-market under Nasdaq rules and closed on February 26, 2026. As described in the announcement, the Company intends to use a portion of the proceeds to repurchase certain outstanding notes, redeem the Company’s Series G Preferred Stock and certain warrants, with the remainder used for general corporate purposes and working capital needs.
Management evaluated the impact of this financing, together with the Company’s current operating plan, on the Company’s liquidity and capital resources for the twelve months following the issuance of these financial statements. The expected net proceeds from the Series H transaction are anticipated to eliminate the Company’s working capital deficit and provide sufficient liquidity to fund operations for at least the next twelve months. On this basis, management has concluded that the conditions that previously raised substantial doubt about the Company’s ability to continue as a going concern have been alleviated as of the date these financial statements are issued.
The consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result if the Company were unable to continue as a going concern.
Cash flows
Year ended December 31,
Net cash provided by investing activities $ 4,332 $ 5,895 $ (1,563)
Net cash provided by financing activities $ 1,942 $ 1,359 $ 583
Operating activities
During the year ended December 31, 2025, net cash used in operating activities was $8,713 compared to net cash used in operating activities during the year ended December 31, 2024 of $11,005. The decrease in net cash used in operating
46
Table of Contents
activities was primarily due the Company’s reduction of operating and overhead expenses such as lower occupancy costs in 2025 as compared to 2024.
Investing activities
During the year ended December 31, 2025, net cash provided by investing activities was $4,332, compared to net cash provided by investing activities during the year ended December 31, 2024 of $5,895. Cash provided in 2025 came primarily from the sale of marketable securities of approximately $7,391, partially offset by the purchase of $2,964 of property and equipment. Cash provided in 2024 came primarily from the sale of marketable securities of approximately $7,986, partially offset by the purchase of 1,783 of property and equipment.
Financing activities
During the year ended December 31, 2025, net cash provided by financing activities increased by $583, primarily reflecting $4,000 of net proceeds from the January 2025 Private Placement, partially offset by financing cash outflows. During the year ended December 31, 2024, net cash provided by financing activities increased by $1,359 primarily due to the net proceeds received from the August 2024 Registered Direct Offering (as defined below).
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. The gross proceeds to us from the August 2024 Registered Direct Offering, prior to deducting estimated fees and expenses of $100, were approximately $1,400. The August 2024 Registered Direct Offering closed on August 8, 2024.
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.
January 2025 Private Placement
On January 14, 2025, we entered into a January 2025 Purchase Agreement with the January 2025 Investors, pursuant to which we sold to the January 2025 Investors: (i) an aggregate of 4,000 shares of Series G Preferred Stock, initially convertible into up to 2,673,797 shares of the Company’s 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 closing of the Private Placement occurred on January 14, 2025 (the “Closing Date”). The aggregate gross proceeds from the Private Placement were $4,000.
February 2026 Private Placement of Preferred Shares and Warrants
On February 24, 2026, the Company entered into the February 2026 Purchase Agreement with the February 2026 Purchaser for the issuance and sale in a private placement of an aggregate of (i) 31,333 shares of the Company’s newly-designated Series H Convertible Preferred Stock, with a par value of $0.01 per share and a stated value of $1,000 per share, initially convertible into up to 66,665,957 shares of Common Stock, at an initial conversion price of $0.47 per share, subject to adjustment for certain customary adjustments, and (ii) the February 2026 Warrants to purchase up to 66,665,957 shares of Common Stock, at an initial exercise price of $0.345 per share, subject to adjustment for certain customary adjustments. The February 2026 Warrants expire three years from the date of issuance. The February 2026 Private
47
Table of Contents
Placement closed on February 27, 2026. Gross proceeds from the issuance are expected to be approximately $31,300 before fees and expenses.
Nasdaq Minimum Bid Price Requirement
On December 1, 2025, we received the Letter from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days between October 17, 2025, to November 28, 2025, we did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq pursuant to the Minimum Bid Price Rule. The letter also indicated that we will be provided with a compliance period of 180 days (until June 1, 2026), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On March 11, 2026, we received a letter from the Listing Qualifications Department of Nasdaq stating that for the last 10 consecutive business days, from February 25, 2026, to March 10, 2026, the closing bid price of our common stock had been at or greater than $1.00 per share. Accordingly, we have regained compliance with the Minimum Bid Price Rule and per the Letter, the matter is now closed.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements. 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.
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. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. 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, 2025.
Derivative Financial Instruments
The Company measures the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain financial instruments and contracts, such as debt financing arrangements and the issuance of preferred stock with detachable common stock warrants features that are either i) not afforded equity classification, ii) embody risks not clearly and closely related to host contracts, or iii) may be net-cash settled by the counterparty. These instruments are required to be recognized as derivative liabilities, at fair value. The fair value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model, which uses as inputs the fair value of the Company’s common stock and estimates for the equity volatility of the Company’s common stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to maturity, dividend rate, a penalty dividend rate, and our probability of default. The fair value of the bifurcated embedded derivative related to the convertible notes was also estimated using a Monte Carlo simulation model, which uses as inputs the fair value of the Company’s common stock and estimates for the equity volatility of the
48
Table of Contents
Company’s common stock, the time to maturity of the convertible notes, the risk-free interest rate for a period that approximates the time to maturity, the stated interest rate, and our probability of default.
Intangible assets
Intangible assets include customer relationships, trade names, and technology, which were primarily acquired as part of the acquisition of XpresSpa in December 2016 and Naples Wax Center in 2023 and were recorded based on the estimated fair value in purchase price allocation. The intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness.
The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value is then compared to the carrying value and an impairment charge is recognized by the amount in which the carrying value exceeds the fair value of the asset. 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. Fair value estimates are made at a specific point in time, based on relevant information. During the year ended December 31, 2025, the Company recorded $620 of intangible impairment loss. During the year ended December 31, 2024, the Company recorded $5 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.
Known Trends, Events and Uncertainties
Ongoing conflicts in Russia, Ukraine, and the Middle East, including related sanctions and countermeasures and involvement of the United States and other countries, 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. 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. 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. 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.
49
Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required as we are a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements required by this Item are set forth in Item 15 beginning on page F-1 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report to provide reasonable assurance that material information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms due to the material weaknesses described below.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, management, including our Chief Executive Officer and Chief Financial Officer, our Certifying Officers concluded that, as of December 31, 2025, the evaluation date, our disclosure controls and procedures were not effective due to the following material weaknesses:
50
Table of Contents
Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting
Management is committed to the remediation of the material weaknesses described above, as well as the continued improvement of the Company’s internal control over financial reporting. Management has implemented, and continues to implement, the actions described below to remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses. Until the remediation efforts described below, including any additional measures management identifies as necessary, are completed, the material weaknesses described above will continue to exist. We cannot provide any assurance that the remediation efforts below will be successful or that our internal control over financial reporting will be effective because of these efforts. Management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:
Changes in Internal Control over Financial Reporting
Other than as set forth in the foregoing paragraph, there have been no changes in our internal control over financial reporting that occurred during the year ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Notwithstanding the material weaknesses in our internal control over financial reporting, our management has determined that the consolidated financial statements for the periods covered by and included in this Annual Report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
ITEM 9B. OTHER INFORMATION
Not Applicable
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information called for by this Item will be included in an amendment to this Annual Report on Form 10-K to be filed with the SEC and is incorporated by reference in this Item 10.
Information called for by this Item will be included in an amendment to this Annual Report on Form 10-K to be filed with the SEC and is incorporated by reference in this Item 11.
51
Table of Contents
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information called for by this Item will be included in an amendment to this Annual Report on Form 10-K to be filed with the SEC and is incorporated by reference in this Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Information called for by this Item will be included in an amendment to this Annual Report on Form 10-K to be filed with the SEC and is incorporated by reference in this Item 13.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information called for by this Item will be included in an amendment to this Annual Report on Form 10-K to be filed with the SEC and is incorporated by reference in this Item 14.
52
Table of Contents
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Consolidated Financial Statements. For the financial statements included in this Annual Report on Form 10-K, see “Index to the Financial Statements” on page F-1.
(a)(2) Consolidated Financial Statement Schedules. All schedules are omitted because they are not applicable or because the required information is included in the financial statements or notes thereto.
(a)(3) Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
Exhibits Index
Exhibit No. Description
53
Table of Contents
Exhibit No. Description
54
Table of Contents
Exhibit No. Description
55
Table of Contents
Exhibit No. Description
56
Table of Contents
Exhibit No. Description
23.1* Consent of CBIZ CPAs P.C., independent registered public accounting firm
23.2* Consent of Marcum LLP, independent registered public accounting firm
24.1* Power of Attorney (attached to the signature page hereto).
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL documents)
* Filed herewith.
** Furnished herewith.
57
Table of Contents
† Management contract or compensatory plan or arrangement.
†† Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.
+ Certain of the schedules (and similar attachments) to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K under the Securities Act because they do not contain information material to an investment or voting decision and that information is not otherwise disclosed in the exhibit or the disclosure document. The registrant hereby agrees to furnish a copy of all omitted schedules (or similar attachments) to the SEC upon its request.
ITEM 16. FORM 10-K SUMMARY
None.
58
Table of Contents
XWELL, Inc. and Subsidiaries
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets F-5
Consolidated Statements of Operations and Comprehensive Loss F-6
Consolidated Statements of Changes in Equity F-7
Consolidated Statements of Cash Flows F-9
Notes to the Consolidated Financial Statements F-10
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
XWELL, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of XWELL, Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of operations and comprehensive loss, changes in temporary equity and stockholders’ deficit and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.
F-2
Table of Contents
Fair Value of Financial Instruments
/s/ CBIZ CPAs P.C.
CBIZ CPAs P.C.
We have served as the Company’s auditor since 2020 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024).
Morristown, New Jersey
April 1, 2026
F-3
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
XWELL, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidatedbalance sheet of XWELL, Inc. (the “Company”) as of December 31, 2024 the related consolidated statements of operations and comprehensive loss, changes in equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum LLP
We have served as the Company’s auditor from 2020 to 2025.
Morristown, New Jersey
April 15, 2025
F-4
Table of Contents
XWELL, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31, December 31,
Current assets
Cash and cash equivalents $ 2,617 $ 4,550
Marketable Securities 7 7,247
Accounts receivable, net of allowance for credit losses 1,560 1,793
Property and equipment, net 1,665 1,809
Intangible assets, net 101 1,023
Operating lease right of use assets, net 1,039 3,409
Goodwill - 1,389
Current liabilities
Accrued expenses and other current liabilities 2,940 4,088
Accrued Series G Convertible Preferred payable 538 —
Current portion of operating lease liabilities 1,862 2,381
Convertible senior secured note, net 3,590 -
Long-term liabilities
Derivative liabilities 3,870 —
Operating lease liabilities 7,035 8,386
Commitments and contingencies (see Note 17)
Temporary equity
Equity (Deficit)
Accumulated other comprehensive loss (1,541) (1,959)
Total deficit attributable to XWELL, Inc. (22,262) (788)
Total liabilities and equity (deficit) $ 11,217 $ 25,352
The accompanying notes form an integral part of these consolidated financial statements.
F-5
Table of Contents
XWELL, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
Year ended December 31,
Revenue, net
Cost of sales
Products and other operating costs 2,742 3,789
Depreciation and amortization 862 938
Impairment of long-lived assets 3,149 1,711
Goodwill impairment 1,389 —
Loss on disposal of assets, net 40 90
Impairment of operating lease right-of-use assets 1,736 2,805
Change in fair value of derivative liabilities (80) —
Change in fair value of warrant liability 3,215 —
Loss on issuance of Series G Preferred Stock (3,443) —
Interest income, net 661 380
Foreign exchange loss (654) (259)
Gain on investments, realized and unrealized 61 356
Other non-operating expense, net (167) (211)
Income tax expense (29) (49)
Net loss attributable to noncontrolling interests (885) (363)
Net loss attributable to XWELL, Inc. $ (16,991) $ (16,853)
Other comprehensive income (loss) from operations 467 69
Loss per share
Preferred stock dividends (509) —
Preferred stock accretion (4,000) —
Deemed dividend on warrant exchange (2,334) —
Deemed dividend on Exchange of Series G Preferred Stock (4,399) —
Basic and diluted loss per share $ (5.08) $ (3.66)
Weighted-average number of shares outstanding
The accompanying notes form an integral part of these consolidated financial statements.
F-6
Table of Contents
XWELL, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
Accumulated
Additional other Total Non-
Stock-based compensation — — 799 — — 799 94 893
Exercise of stock options 8,000 — 4 — — 4 — 4
The accompanying notes form an integral part of these consolidated financial statements.
F-7
Table of Contents
XWELL, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
The accompanying notes form an integral part of these consolidated financial statements.
F-8
Table of Contents
XWELL, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31,
Cash flows from operating activities
Depreciation and amortization 862 938
Impairment of long-lived assets 2,529 1,706
Impairment of goodwill 1,389 —
Impairment of intangible assets 620 5
Impairment of operating lease right-of-use assets 1,736 2,805
Unrealized gain on marketable securities (33) (321)
Foreign currency remeasurement loss 654 259
Gain on lease termination (410) (655)
Loss on disposal of assets, net 29 90
Amortization of operating lease right of use asset 916 1,335
Provision for credit losses - 50
Stock-based compensation 1,082 893
(Gain) on equity investment (27) (35)
Change in fair value of derivative liability 80 —
Change in fair value of warrant liability (3,215) —
Loss on issuance of Series G Preferred Stock 3,443 —
Changes in assets and liabilities: