0001558370-23-006084 | 10-K | XBRL Viewer

Accounting and Reporting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Basis of presentation and principles of consolidation

(a) Basis of presentation and principles of consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company, all entities that are wholly owned by the Company, and all entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates

(b) Use of estimates

The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from such estimates. Significant items subject to such estimates and assumptions include the Company’s long-lived assets, intangibles assets, the useful lives of the Company’s intangible assets, the valuation of stock-based compensation, deferred tax assets and liabilities, income tax uncertainties, and other contingencies.

Translation into United States dollars

The Company conducts certain transactions in foreign currencies, which are recorded at the exchange rate as of the transaction date. All exchange gains and losses occurring from the remeasurement of monetary balance sheet items denominated in non-dollar currencies are deemed non-operating income in the consolidated statements of operations and comprehensive loss. During 2022 and 2021, the Company recorded $664 and $18, respectively, in exchange gains and losses occurring from the remeasurement of monetary balance sheet items denominated in non-dollar currencies.

Accounts of the foreign subsidiaries of XpresSpa are translated into United States dollars. Assets and liabilities have been translated primarily at year end exchange rates and revenues and expenses have been translated at average monthly rates for the year. The translation adjustments arising from the use of different exchange rates are included as foreign currency translation within the consolidated statements of operations and comprehensive income (loss) and consolidated statements of changes in stockholders’ equity.

Cash and cash equivalents

(d) Cash and cash equivalents

The Company maintains cash in checking and money market accounts with financial institutions. The Company has established guidelines relating to diversification and maturities of its investments in order to minimize credit risk and maintain high liquidity of funds. The Company considers all highly liquid investments purchased with an original maturity of three months or less from the time they are acquired to be cash equivalents. The Company had $1,885 of such investments as of December 31, 2022 and $0 as of December 31, 2021.

Accounts Receivables

(e) Accounts Receivables

Accounts Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and primarily emanate from our contracts with customers.

Inventory

(f) Inventory

All inventory is valued at the lower of cost or net realizable value. Cost is determined using a weighted-average cost method.

Intangible assets

(g) Intangible assets

Intangible assets include trade names, customer relationships, and technology, which were primarily acquired as part of the acquisition of XpresSpa in December 2016 and Hyperpointe in 2022, and were recorded based on the estimated fair value in purchase price allocation. In addition, intangible assets include software and website development costs that were capitalized as part of the Company’s development of a mobile application and website for the treat brand. The Company accounts for these costs in accordance with ASC 350-40, Internal-Use Software. The intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness. Newly acquired or developed software has an estimated life of approximately 3 years whereas the intangibles obtained as a result of the Hyperpointe acquisition have an estimated life of 5 to 12 years.

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 also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. During the years ended December 31, 2022 and 2021, the Company recognized impairment of $110 and $0, respectively.

Property and Equipment

(h) Property and Equipment

Property and equipment are recorded at historical cost and primarily consists of leasehold improvements, furniture and fixtures, and other operating equipment. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are depreciated over the lesser of the lease term or economic useful life. Maintenance and repairs are charged to expense, and renovations or improvements that extend the service lives of the Company’s assets are capitalized over the lesser of the extension period or life of the improvement.

Impairment of long-lived assets

(i) Impairment of long-lived assets

Long-lived assets are tested for impairment at the lowest level at which there are identifiable operating cash flows, which is at the individual airport location for the XpresSpa and XpresCheck businesses. The Company’s long-lived assets consist primarily of leasehold improvements and right to use lease assets for each of its airport 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. If indicators are present, the Company performs a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the asset group in question to its carrying amount. 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 groups fair value. The Company estimates the fair value of long-lived assets using present value income approach. Future cash flow was calculated based on forecasts over the estimated remaining useful life of the asset group, which for each of the Company’s airport locations, is the remaining term of the operating lease.

The Company completed an assessment of our property and equipment, operating lease right of use assets and intangible assets for impairment as of December 31, 2022. Based upon the results of the impairment test, the Company recorded an impairment expense related to property and equipment, intangible assets, and operating lease right of use assets of $4,559, $110 and $1,110, respectively, during the year ended December 31, 2022, which is included in Impairment of long-lived assets and Impairment of operating lease right-of-use assets in the Company’s consolidated statements of operations and comprehensive income (loss). The expense was primarily related to the impairment of leasehold improvements made to the Company’s Treat, XpresCheck and Spa locations and its 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. The Company also impaired intangible assets pertaining to its Treat and XpresTest segments.

In 2021 the Company recorded an impairment expense of approximately $68 and $747 related to property and equipment, and operating lease right of use assets, respectively, which is included in Impairment of long-lived assets and Impairment of operating lease right-of-use assets in the Company’s consolidated statements of operations and comprehensive loss as of December 31, 2021. This expense was related to the impairment of the XpresSpa trademarks, where management determined that in light of the effect of the COVID-19 pandemic, the XpresSpa brand’s discounted future cash flows were not sufficient to recover the carrying value of these assets.

Leases

(j) Leases

The right of use asset (“ROU”) on the Company’s consolidated balance sheet represents a lessee's right to use an asset over the life of a lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received. The amortization period for the right of use asset is from the lease commencement date to the earlier of the end of the lease term or the end of the useful life of the asset. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected to exclude all short-term leases (i.e, leases with term of 12 months or less) from recognition on the balance sheet.

The Company’s lease liabilities are determined by calculating the present value of all future lease payments using the rate implicit in the lease if it can be readily determined, or the lessee’s incremental borrowing rate. The Company uses its incremental borrowing rate at the inception of the lease to determine the present value of future lease payments as the rate implicit in its leases could not be readily determined.

Certain leases provide for contingent rents that are not measurable at inception. These contingent rents are primarily based on a percentage of sales that are in excess of a predetermined level, an increase based on a change in the consumer price index or fair market value. These amounts are excluded from the calculation of the right of use asset and lease liability under ASC 842. Minimum rent under these leases is included in the determination of rent expense when it is probable that the expense has been incurred and the amount can be reasonably estimated.

The Financial Accounting Standards Board (“FASB”) issued a Q&A in March 2020 that focused on the application of lease guidance in ASC 842 for lease concessions related to the effects of COVID-19. The FASB staff has said that entities can elect to not evaluate whether concessions granted by lessors related to COVID-19 are lease modifications. Entities that make this election can then apply the lease modification guidance in ASC 842 or account for the concession as if it were contemplated as part of the existing contract. The Company has elected to not treat the concessions as lease modifications and will instead account for the lease concessions as if they were contemplated as part of the existing leases. The Company has recorded negative variable lease expense and adjusted lease liabilities at the point in which the rent concession has become accruable.

Restricted cash

(k) Restricted cash

Restricted cash, which is listed as a separate line item in the consolidated balance sheets, represents balances at financial institutions to secure bonds and letters of credit as required by the Company’s various lease agreements.

Equity investments

(l) Equity investments

Equity investments are carried at fair value with the changes in fair value recorded in the consolidated statement of operations and other comprehensive income (loss) in accordance with ASU 2016-01. The Company will perform a qualitative assessment on an annual basis and recognize impairment if there are sufficient indicators that the fair value of the investment is less than the carrying value.

Revenue recognition

(m) Revenue recognition

XpresSpa

The Company recognizes revenue from the sale of XpresSpa products and services when the services are rendered at XpresSpa stores and from the sale of products at the time products are purchased at the Company’s stores or online usually by credit card, net of discounts and applicable sales taxes. Accordingly, the Company recognizes revenue for the Company’s single performance obligation related to both in-store and online sales at the point at which the service has been performed or the control of the merchandise has passed to the customer. Revenues from the XpresSpa retail and e-commerce businesses are recorded at the time goods are shipped.

The Company has also entered into collaborative agreements with marketing partners whereby it sells certain of its partners’ products in the Company’s XpresSpa spas. The Company acts as an agent for revenue recognition purposes and therefore records revenue net of the revenue share payable to the partners. Upon receipt of the non-recurring, non-refundable initial collaboration fee, management records a deferred revenue liability and recognizes revenue on a straight-line basis over the life of the collaboration agreement.

XpresCheck

Through its XpresCheck Wellness Centers and under the terms of the Managed Services Agreement (“MSA”) with PLLCs that in turn contract with physicians and Nurse Practitioners, the Company offers testing services to airline employees, contractors, concessionaire employees, TSA officers and U.S. Customs and Border Protection agents, as well as the

traveling public. The Company has entered into MSAs with PLLCs that provide healthcare services to patients. Under the terms of the MSAs which may be modified for commercial reasonableness and fair market value, XpresTest provides office space, equipment, supplies, non-licensed staff, and management services to be used for the purpose of COVID-19 and other medical diagnostic testing in return for a management fee which was deemed a performance obligation for recognizing revenue prior to July 1, 2021. However, as a result of uncertainties around the cash flows of the XpresCheck Wellness Centers, the Company concluded in 2020 that the collectability criteria to qualify as a contract under ASC 606 was not met, and therefore, revenue associated with the monthly management fee would not be recognized until a subsequent reassessment resulted in the MSAs meeting the collectability criteria. XpresTest recognized revenue of $16,843 (including a cumulative catch-up adjustment of $3,186) during the six months ended June 30, 2021, under the MSAs, pursuant to reassessments in 2021, of the MSAs executed in 2020 and amended in 2021, and assessments and reassessments of MSAs executed and amended in 2021 until June 30, 2021, resulting in management’s conclusion that they met the collectability criteria. Any revenue collected not meeting the collectability criteria was recorded as deferred revenue.

Effective, July 1, 2021 (see Note 4), the Company determined that the PLLCs are variable interest entities due to its equity holder having insufficient capital at risk, and the Company having a variable interest in the PLLCs. In pursuance, the total revenue of $50,689 for the PLLCs for the six months period ended December 31, 2021 were designated as revenue for the company. The performance obligation for this revenue was the PLLCs administering COVID-19 tests to airline employees, contractors, concessionaire employees, TSA officers and U.S. Customs and Border Protection agents, as well as the traveling public, with revenue being recognized at the point in time at which the service is performed.

During 2021, XpresCheck initiated a $2,001, eight-week pilot program with the Centers for Disease Control and Prevention (CDC) in collaboration with Concentric by Ginkgo. Under this program, XpresCheck is conducting biosurveillance monitoring at four major U.S. airports (JFK International Airport, Newark Liberty International Airport, San Francisco International Airport, and Hartsfield-Jackson Atlanta International Airport) aimed at identifying existing and new SARS-CoV-2 variants. On January 31, 2022, the Company announced the extension of the program, bringing the total contract to $5,534. Approximately $4,166 and $1,368 of the full $5,534 amount was recognized during 2022 and 2021, respectively.

During the third quarter of 2022, XpresTest, in partnership with Ginkgo Bioworks in continuation of their support to the CDC’s traveler-based SARS-CoV-2 genomic surveillance program were awarded a new contract. The partnership is expected to support public health and biosecurity services totaling approximately $16,000, with an overall potential to exceed $61,000 based on CDC program options and public health priorities. As COVID-19 sub-variants and other biological threats continue to emerge, the partners plan to expand the program footprint and incorporate innovative modalities and offerings, such as monitoring of wastewater from aircraft lavatories. The current contract with Ginkgo Bioworks related to the above partnership contains fixed pricing for which we are entitled to $6,761 for the sample collection (passenger and aircraft wastewater) and $570 for the traveler enrollment initiatives, which represents the amount of consideration that we are entitled. We recognize revenue over time for both sample collection performance obligations, using the input method based on time elapsed to measure progress towards satisfying each of the performance obligations. We recognize revenue ratably (straight line basis) over the term of the contract (one year). We will recognize revenue over time for the traveler enrollment initiative performance obligation based on the amount for which we have the right to invoice. We recorded $2,617 in revenue during 2022 related to sample collection performance obligations because the Company’s efforts towards satisfying each of the performance obligations are expended evenly throughout the period of performance.

HyperPointe

Our HyperPointe segment which we acquired in January 2022 (see Note 10 Acquisition of HyperPointe) provides broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are

satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered. Revenue billed in advance are treated as deferred revenue which was $322 as of December 31, 2022.

The Company excludes all sales taxes assessed to our customers from revenue. Sales taxes assessed on revenues are included in Accrued expenses and other current liabilities on the Company’s consolidated balance sheets until remitted to state agencies.

Gift cards and customer rewards program

(n) Gift cards and customer rewards program

XpresSpa offers no-fee, non-expiring gift cards to its customers. No revenue is recognized upon issuance of a gift card and a liability is established for the gift card’s cash value. The liability is relieved, and revenue is recognized upon redemption by the customer. As the gift cards have no expiration date, there is no provision for reduction in the value of unused card balances.

In addition, XpresSpa maintains a rewards program in which customers earn loyalty points, which can be redeemed for future services. Loyalty points are rewarded upon joining the loyalty program, for customer birthdays, and based upon customer spending. When a customer redeems loyalty points, the Company recognizes revenue for the redeemed cash value and reduces the related loyalty program liability. On June 1, 2018, the Company adopted a formal expiration policy whereby any loyalty members with inactivity for an 18-month period will forfeit any unused loyalty rewards. Upon closure of the spa locations in March 2020, the Company temporarily suspended the expiration policy.

The costs associated with gift cards and reward points are accrued as the rewards are earned by the cardholder and are included in Accrued expenses and other current liabilities in the consolidated balance sheets until used.

Segment reporting

(o) Segment reporting

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company. The Company currently has four reportable operating segments: XpresSpa. XpresTest, Treat, and Hyperpointe. See Note 16. Segment Information.

There are currently no intersegment revenues. Asset information by operating segment is presented below since the chief operating decision maker reviews this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s audited consolidated financial statements.

Pre-opening costs

(p) Pre-opening costs

Pre-opening and start-up activity costs, which include rent and occupancy, supplies, advertising, and other direct expenses incurred prior to the opening of a new store, are expensed in the period in which they are incurred.

Cost of sales

(q) Cost of sales

Cost of sales consists of spa and clinic operating costs. These costs include all costs that are directly attributable to the location’s operations and include:

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payroll and related benefits for the location’s operations and management;

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rent, percentage rent and occupancy costs;

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the cost of merchandise and testing supplies;

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freight, shipping and handling costs;

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production costs;

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inventory shortage and valuation adjustments; and

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costs associated with sourcing operations.

Stock-based compensation

(r) Stock-based compensation

Stock-based compensation is recognized as an expense in the consolidated statements of operations and comprehensive loss and such cost is measured at the grant-date fair value of the equity-settled award. The fair value of stock options is estimated as of the date of grant using the Black-Scholes-Merton (“Black-Scholes”) option-pricing model. The fair value of Restricted Stock Units (“RSUs”) is calculated as of the date of grant using the grant date closing share price multiplied by the number of RSUs granted. The expense is recognized on a straight-line basis, over the requisite service period. The Company uses the simplified method to estimate the expected term of options due to insufficient history and high turnover in the past. Expected volatility is estimated based on a weighted average historical volatility of the Company. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve as of the date of grant. The Company recognizes forfeitures as they occur. The Company issues new stock to deliver shares under its Equity Plan.

Income taxes

(s) Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not more likely than not to be realized. Tax benefits related to excess deductions on stock-based compensation arrangements are recognized when they reduce taxes payable.

In assessing the need for a valuation allowance, the Company looks at cumulative losses in recent years, estimates of future taxable earnings, feasibility of tax planning strategies, the ability to realize tax benefit carryforwards, and other relevant information. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable earnings. Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict. In the event that actual results differ from these estimates in future periods, the Company will be required to adjust the valuation allowance.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had no uncertain tax positions as of December 31, 2022 and 2021.

Noncontrolling interests

(t) Noncontrolling interests

Noncontrolling interests represent the noncontrolling holders’ percentage share of earnings or losses from; i) the subsidiaries, in which the Company holds a majority, but less than 100%, ownership interest, ii) Variable Interest Entities, where the Company is a primary beneficiary (See sub note (w) below, and the results of which are included in the Company’s consolidated statements of operations and comprehensive income (loss). Net loss attributable to noncontrolling interests represents the proportionate share of the noncontrolling holders’ ownership in certain subsidiaries of XpresSpa and of XpresTest.

Net income/(loss) per common share

(u) Net income/(loss) per common share

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders for the period by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share is computed by dividing the net loss attributable to the Company for the period by the weighted-average number of shares of Common Stock plus dilutive potential Common Stock considered outstanding during the period.

Commitments and contingencies

(v) Commitments and contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Legal costs expected to be incurred in connection with a loss contingency are expensed as incurred.

Variable Interest Entities

(w) Variable Interest Entities

The Company evaluates its ownership, contractual, pecuniary, and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex and involve judgment. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

Business Combinations

(x) Business Combinations

The Company uses the provisions of ASC Topic 805, Business Combinations (“ASC 805”) in the accounting for acquisitions of businesses. ASC 805 requires the Company to use the acquisition method of accounting by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest in the acquired business, measured at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the aforementioned amounts.

While the Company uses its best estimates and assumptions to accurately apply preliminary values to assets acquired and liabilities assumed at the acquisition date, these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations.

Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets. Although the Company believes the assumptions and estimates that have been made are reasonable and appropriate, they are based in part on historical experience and information obtained from the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets the Company has acquired include future expected cash flows, and discount rates.

Goodwill

(y) Goodwill

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. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the company performs a quantitative test to identify and measure the amount of goodwill impairment loss. The Company compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds fair value, goodwill of the reporting unit is considered impaired, and that excess is recognized as a goodwill impairment loss.

Advertising Costs

(z) Advertising Costs

Advertising costs are expensed as incurred. Advertising expenses amounted to approximately $4,645 and $2,817 for the years ended December 31, 2022 and 2021, respectively.

Fair value measurements

(aa) Fair value measurements

The Company measures fair value in accordance with ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received by selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Reclassification

(bb) Reclassification

Certain balances in the 2021 consolidated financial statements have been reclassified to conform to the presentation in the 2022 consolidated financial statements, primarily the separate classification and presentation of accounts payable, gross profits, impairments and loss on disposal of assets. Such reclassifications did not have a material impact on the consolidated financial statements.

Recently adopted accounting pronouncements

(cc) ) Recently adopted accounting pronouncements

Accounting Standards Update No. 2020-06—Debt--Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)

Issued in August 2020, this update is intended to reduce the unnecessary complexity of the current guidance thus resulting in more accurate accounting for convertible instruments and consistent treatment from one entity to the next. Under current GAAP, there are five accounting models for convertible debt instruments. Except for the traditional convertible debt model that recognizes a convertible debt instrument as a single debt instrument, the other four models, with their different measurement guidance, require that a convertible debt instrument be separated (using different separation approaches) into a debt component and an equity or a derivative component. Convertible preferred stock also is required to be assessed under similar models. The Financial Accounting Standard Board (“FASB”) decided to simplify the accounting for convertible instruments by removing certain separation models currently included in other accounting guidance that were being applied to current accounting for convertible instruments. Under the amendments in this update, an embedded conversion feature no longer needs to be separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. The FASB also decided to add additional disclosure requirements in an attempt to improve the usefulness and relevance of the information being provided. The new standard is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company adopted ASU 2020-06 as of the reporting period beginning January 1, 2022. The adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.

ASU 2021-04: Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options

In May 2021, the FASB issued ASU 2021-04, "Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options'" ("ASU 2021-04"), which introduces a new way for companies to account for warrants either as stock compensation or derivatives. Under the new guidance, if the modification does not change the instrument's classification as equity, the company accounts for the modification as an exchange of the original instrument for a new instrument. In general, if the fair value of the "new" instrument is greater than the fair value of the "original" instrument, the excess is recognized based on the substance of the transaction, as if the issuer has paid cash. The effective date of the standard is for interim and annual reporting periods beginning after December 15,

2021 for all entities. The Company adopted ASU 2021-04 as of the reporting period beginning January 1, 2022. The adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Standards

(dd) Recently Issued Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13's main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. The guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The ASU is not expected to have material impact on the Company’s financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires contract assets and contract liabilities acquired in a business acquisition to be recognized and measured in accordance with ASC Topic 606, Revenues from Contracts with Customers, which the Company generally expects will result in the recognition and measurement of contract assets and contract liabilities in a manner that is consistent with the acquiree. For the Company, the amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The materiality of the application of ASU 2021-08 depends on the recognition and measurement of acquired assets and liabilities associated with future acquisitions.

Leases (Details) - USD ($) $ in Thousands	12 Months Ended
Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases
Variable lease payments	$ 1,392	$ 576
Operating leases, rent expense	3,917	2,069
Impairment expense	$ 1,110	$ 747

Stock-based Compensation

12 Months Ended

Dec. 31, 2022

Stock-based Compensation

Stock-based Compensation

Note 15. Stock-based Compensation

The Company has a stock-based compensation plan available to grant stock options and RSUs to the Company’s directors, employees and consultants.

In September 2020, the Board of Directors approved a new stock-based compensation plan available to grant stock options, restricted stock and Restricted Stock Units (“RSU’s”) aggregating to 5,000,000 shares of Common Stock, to the

Company’s directors, employees and consultants. Shareholder approval of the plan was subsequently obtained on October 28, 2020. On October 4, 2022, shareholders approved the amendment to the Company’s 2020 Equity Incentive Plan to increase the number of shares authorized for issuance under the Plan by 7,500,000 shares of Common Stock to an aggregate of 12,500,000 shares. Under the 2020 Equity Incentive Plan (the “2020 Plan”), a maximum of 7,396,691 shares of Common Stock remained available for issuance as of December 31, 2022.

The Company’s previous Employee, Director and Consultant Equity Incentive Plan (the “2012 Plan”) was terminated upon receipt of shareholder approval of the 2020 Plan. Awards granted under the 2012 Plan remain in effect pursuant to their terms. Generally, stock options are granted with exercise prices equal to the fair market value on the date of grant, vest in four equal quarterly installments, and expire 10 years from the date of grant. RSU’s granted generally vest over a period of one year.

In September 2020, XpresTest created a stock-based compensation plan available to grant stock options, restricted stock and RSU’s to the XpresTest’s directors, employees and consultants. Under the XpresTest 2020 Equity Incentive Plan (the “XpresTest Plan”), a maximum of 200 shares of XpresTest common stock may be awarded, which would represent 20% of the total number of shares of common stock of XpresTest as of December 31, 2022. Certain named executive officers, consultants, and directors of the Company are eligible to participate in the XpresTest Plan. The XpresTest Plan RSAs vest upon satisfaction of certain service and performance-based conditions. The fair value of the XpresTest Plan RSAs is determined based on the weighted average of (i) Fair Value of XpresTest under the Indirect Valuation Method developing assumptions for XpresSpa Net Market Cap and XpresSpa standalone Fair Value, and (ii) Direct Valuation Method developing assumptions for XpresTest Representative Forecasted Revenue for 2021 and Peer companies Revenue’s Multiples.

The fair value of stock options is estimated as of the date of grant using the Black-Scholes-Merton (“Black-Scholes”) option-pricing model. The Company uses the simplified method to estimate the expected term of options due to insufficient history and high turnover in the past.

The following variables were used as inputs in the model:


Share price of the Company’s Common Stock on the grant date:	$	0.65 - 1.64
Exercise price:	$	0.65 - 1.64
Expected volatility:		119.41 - 123.45	%
Expected dividend yield:		0	%
Annual average risk-free rate:		1.62 - 4.14	%
Expected term:		6.41 - 6.43	years

Total stock-based compensation expense for the years ended December 31, 2022 and 2021 was $3,770 and $2,856, respectively.

The following tables summarize information about stock options and RSU activity during the year ended December 31, 2022:


	RSUs			XpresTest RSAs			Stock options
		Weighted			Weighted			Weighted
		average			average			average		Exercise
	No. of	grant date		No. of	grant date		No. of	exercise		price
	RSUs	fair value		RSAs	fair value		options	price		range
Outstanding as of December 31, 2021	600,000	$	1.63	—	$	—	2,826,871	$	2.57	$	1.19 - 2,460
Granted	531,250		0.84	15.0		56,890	2,350,338		1.46		0.65 - 1.64
Exercised/Vested	(850,000)		1.46	(10.0)		61,550	—		—
Forfeited	—		—	—		—	(245,027)		1.55		1.43-3.82
Expired	—		—	—		—	(102,153)		6.05		1.44-2,232
Outstanding as of December 31, 2022	281,250	$	0.65	5.0	$	47,570	4,830,029	$	2.00	$	0.65 - 2,460
Exercisable as of December 31, 2022							2,061,259	$	2.56	$	1.19 - 2,460

The following tables summarize information about stock options and RSU activity during the year ended December 31, 2021:


	RSUs			XpresTest RSAs			Stock options
		Weighted			Weighted			Weighted
		average			average			average		Exercise
	No. of	grant date		No. of	grant date		No. of	exercise		price
	RSUs	fair value		RSAs	fair value		options	price		range
Outstanding as of December 31, 2020	—	$	—	28.75	$	11,390.35	1,353,888	$	3.82	$	1.53 - 2,460.0
Granted	1,349,167		1.58	120.00		5,227.20	1,668,297		1.56		1.19 - 1.61
Exercised/Vested	(749,167)		1.54	(148.75)		6,418.40	(8,334)		1.53
Forfeited	—		—	—		—	(183,230)		1.61
Expired	—		—	—		—	(3,750)		50.8		NA
Outstanding as of December 31, 2021	600,000	$	1.63	—	$	—	2,826,871	$	2.57	$	1.19 - 2,460.0
Exercisable as of December 31, 2021							1,024,694	$	3.81	$	1.19 - 2,460.0

The weighted average remaining contractual term for options outstanding as of December 31, 2022 and 2021 was 7.83 years and 8.71 years, respectively.

As of December 31, 2022, Aggregate Intrinsic Value of Options Outstanding and Vested was $0. As of December 31, 2021, Aggregate Intrinsic Value of Options Outstanding and Vested was $545.

Unrecognized stock-based payment cost related to non-vested stock options as of December 31, 2022 and 2021 were $2,506 and $2,088, respectively.

Unrecognized stock-based payment cost related to non-vested RSUs as of December 31, 2022 and 2021 were $183 and $978 respectively.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies

Commitments and Contingencies

Note 19. Commitments and Contingencies

Certain of the Company’s outstanding legal matters include speculative claims for substantial or indeterminate amounts of damages. The Company regularly evaluates developments in its legal matters that could affect the amount of any potential liability and makes adjustments as appropriate. Significant judgment is required to determine both the likelihood of there being any potential liability and the estimated amount of a loss related to the Company’s legal matters.

With respect to the Company’s outstanding legal matters, based on its current knowledge, the Company’s management believes that the amount or range of a potential loss will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Company evaluated the outstanding legal matters and assessed the probability and likelihood of the occurrence of liability. Based on management’s estimates, the Company has recorded accruals of $963 and $845 as of December 31, 2022 and December 31, 2021, respectively, which is included in Accrued expenses and other current liabilities in the consolidated balance sheets.

The Company expenses legal fees in the period in which they are incurred.

Kyle Collins v. Spa Products Import & Distribution Co., LLC et al

This is a combined class action and California Private Attorney’s General Act (“PAGA”) action. Plaintiff seeks to recover wages, penalties and PAGA penalties for claims for (1) failure to provide meal periods, (2) failure to provide rest breaks, (3) failure to pay overtime, (4) inaccurate wage statements, (5) waiting time penalties, and (6) PAGA penalties of $0.1 per employee per pay period per violation. There are approximately 240 current and former employees in the litigation class. The parties agreed to mediation on May 26, 2020, however, due to COVID-19, the parties subsequently stayed all proceedings. The mediation session occurred on March 18, 2021, and the parties reached a settlement which

was approved on September 20, 2022 for the amount of $513 and additional payroll taxes of $4. Funding of the settlement amount occurred on January 26, 2023. The Company recorded an accrual of $517 as of December 31,2022 which is included in Accrued expenses and other current liabilities in the consolidated balance sheets.

OTG Management PHL B v. 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 $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. OTG Management has agreed to extend XWELL’s time to respond to the Complaint to May 6, 2023.

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. 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. 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.

Concentrations of Supplier Risk

For the XpresTest segment, substantially all supplies for testing were purchased from one vendor. For the XpresSpa segment, substantially all inventory was also purchased from one vendor.

Leases

XpresSpa is contingently liable to a surety company under certain general indemnity agreements required by various airports relating to its lease agreements. XpresSpa agrees to indemnify the surety for any payments made on contracts of suretyship, guaranty, or indemnity. The Company believes that all contingent liabilities will be satisfied by its performance under the specified lease agreements.

Stockholders' Equity and Warrants

12 Months Ended

Dec. 31, 2022

Stockholders' Equity and Warrants

Stockholders' Equity and Warrants

Note 13. Stockholders’ Equity and Warrants

Share Repurchase Program

During 2021, the Company executed on its share repurchase program, repurchasing and retiring 4,702,072 shares at an average cost of $1.66 per share, for a total of $7,825.

During 2022, the Company continued to execute on its share repurchase program, repurchasing and retiring 19,526,706 shares at an average cost of $1.22 per share, for a total of $23,789

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. Exceptions may apply, for example, if the repurchases are less than $1,000 or issued to employees. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

Warrants

The following table represents the activity related to the Company’s warrants during the year ended December 31, 2022:


		Weighted average		Exercise
	No. of warrant	exercise price		price range
December 31, 2021	37,817,694	$	2.99	$	0.525 - 6.566
Granted	—	$	—	$
Exercised	—	$	—	$
Expired	(36,645,606)	$	3.02	$	1.7 - 6.566
December 31, 2022	1,172,088	$	2.00	$	1.7 - 2.125

The Company’s outstanding equity warrants as of December 31, 2022 consist of the following:


				Remaining
				contractual
	No. outstanding	Exercise price		life		Expiration Date
January 2021 Placement Agent Warrants	510,588	$	2.125	0.08	years	January 28, 2023
January 2021 Placement Agent Tail Fee	35,000	$	1.7	0.08	years	January 28, 2023
February 2021 Placement Agent Warrants	284,000	$	2.125	0.12	years	February 11, 2023
February 2021 Placement Agent Warrants	48,000	$	2.125	0.13	years	February 16, 2023
February 2021 Placement Agent Tail Fee	248,500	$	1.7	0.12	years	February 11, 2023
February 2021 Placement Agent Tail Fee	42,000	$	1.7	0.13	years	February 16, 2023
December 2021 Placement Agent Tail Fee	4,000	$	2.125	0.99	years	December 27, 2023
	1,172,088

During 2021, holders of the Company’s December 2020 Investor Warrants, December 2020 Placement Agent Warrants and December 2020 Placement Agent Tail Fee Warrants exercised a total of 11,273,529 warrants for common shares. The Company received gross proceeds of approximately $19,245. In accordance with the placement agent agreements with H.C. Wainwright & Co., LLC and Palladium, the Company paid cash fees of $2,162 and issued 846,588 warrants to H.C. Wainwright & Co., LLC at an exercise price of $2.125 per share and 325,500 warrants to Palladium at an exercise price of $1.70 per share.

Long-term Notes and Convertible Notes - Paycheck Protection Program (Details) - Paycheck Protection Program - USD ($) $ in Thousands	May 02, 2020	May 01, 2020	Dec. 31, 2021
Debt Instrument [Line Items]
Debt instrument, face amount		$ 5,653
Interest rate (as a percent)		1.00%
Deferral period		6 months
Payments on PPP Loan	$ 0
Debt outstanding			$ 3,584

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Accrued Expenses and Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Accrued Expenses and Other Current Liabilities

Schedule of accrued expenses and other current liabilities



	December 31, 2022		December 31, 2021
Litigation accrual	$	963	$	845
Accrued compensation		2,008		2,862
Tax-related liabilities		573		603
Common area maintenance accruals		160		—
AP Accruals		754		431
Gift certificates		496		494
Construction accrual		—		930
Credit card processing fees		33		501
Other miscellaneous accruals		732		757
Total accrued expenses and other current liabilities	$	5,719	$	7,423

Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Leases
Operating cash flows from operating leases	$ (4,092)	$ (4,230)
Leased assets obtained in exchange for new and modified operating lease liabilities	$ 6,891	3,646
Leased assets surrendered in exchange for termination of operating lease liabilities		$ 9

Net earnings/(loss) per Share of Common Stock

12 Months Ended

Dec. 31, 2022

Net earnings/(loss) per Share of Common Stock

Net earnings/(loss) per Share of Common Stock

Note 3. Net earnings/(loss) per Share of Common Stock

The table below presents the computation of basic and diluted (losses)/net earnings per common share:


	Year ended
	December 31,
	2022		2021
Basic numerator:
Net (loss) income attributable to XWELL, Inc.	$	(32,837)	$	3,349
Net (loss) income attributable to common shareholders	$	(32,837)	$	3,349
Basic denominator:
Basic weighted average shares outstanding		93,655,331		104,306,173
Basic (loss) earnings per share	$	(0.35)	$	0.03
Diluted numerator:
(Loss) earnings attributable to common shareholders	$	(32,837)	$	3,349
Diluted denominator:
Diluted weighted average shares outstanding		93,655,331		105,076,758
Diluted (loss) earnings per share	$	(0.35)	$	0.03


Net (loss) income per share data presented above excludes from the calculation of diluted net (loss) income, the following potentially dilutive securities, having an anti-dilutive impact, in case of net loss
Both vested and unvested options to purchase an equal number of shares of Common Stock		4,830,029		2,614,766
Unvested RSUs to issue an equal number of shares of Common Stock		281,250		521,049
Warrants to purchase an equal number of shares of Common Stock		1,172,088		37,338,164
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders		6,283,367		40,473,979

Other Assets (Tables)

12 Months Ended

Dec. 31, 2022

Other Assets

Schedule of other assets


	December 31, 2022		December 31, 2021
Equity investments	$	104	$	722
Lease deposits		1,973		2,030
Other		292		58
Other assets	$	2,369	$	2,810

Income Taxes (Details) $ in Thousands	12 Months Ended
Income Taxes (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Income Taxes.
Operating loss carryforwards	$ 150,926
Expiring period	20 years
Operating loss carry forwards without limitation	$ 75,045

Income Taxes - Income Tax Benefit (Expense) Attributable to the Operating Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Current:
Federal	$ 0	$ 0
State	41	56
Foreign	14	0
Deferred:
Federal	0	0
Total	$ 55	$ 56

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Total Company equity	Non-controlling interests	Total
Balance at Dec. 31, 2020	$ 941	$ 475,709	$ (398,624)	$ (220)	$ 77,806	$ 2,565	$ 80,371
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2020	94,058,853
Warrant exercises, net of costs	$ 113	16,972			17,085		17,085
Warrant exercises, net of costs (in shares)	11,273,529
Issuance of Common Stock for services	$ 2	377			379		379
Issuance of Common Stock for services (in shares)	232,637
Issuance of restricted stock	$ 4	(4)
Issuance of restricted stock (in shares)	398,068
Stock-based compensation		2,017			2,017	839	2,856
Net (loss) income			3,349		3,349	(456)	2,893
Foreign currency translation				(92)	(92)		(92)
Redemption of certain noncontrolling interests						(502)	(502)
Consolidation of Variable Interest Entities						5,109	5,109
Repurchase and retirement of common stock	$ (47)	(7,778)			(7,825)		(7,825)
Repurchase and retirement of common stock (in shares)	(4,702,072)
Distributions to noncontrolling interests						(1,170)	(1,170)
Contributions from noncontrolling interests						818	818
Stock option exercises		13			13		$ 13
Stock option exercises (in shares)	8,334						8,334
Balance at Dec. 31, 2021	$ 1,013	487,306	(395,275)	(312)	92,732	7,203	$ 99,935
Common Stock, Shares, Outstanding, Ending Balance at Dec. 31, 2021	101,269,349						101,269,349
Issuance of Common Stock for acquisition	$ 5	901			906		$ 906
Issuance of Common Stock for acquisition (in shares)	552,487
Vesting of restricted stock units (shares)	937,132
Vesting of restricted stock units (Value)	$ 9	(9)
Grant of stock options for services		103			103		103
Value of Shares Withheld to fund payroll taxes		(73)			(73)		(73)
Stock-based compensation		3,106			3,106	664	3,770
Net (loss) income			(32,837)		(32,837)	208	(32,629)
Foreign currency translation				(222)	(222)	(121)	(343)
Repurchase and retirement of common stock	$ (195)	(23,594)			(23,789)		(23,789)
Repurchase and retirement of common stock (in shares)	(19,526,706)
Distributions to noncontrolling interests						(956)	(956)
Contributions from noncontrolling interests						1,025	$ 1,025
Stock option exercises (in shares)							0
Balance at Dec. 31, 2022	$ 832	$ 467,740	$ (428,112)	$ (534)	$ 39,926	$ 8,023	$ 47,949
Common Stock, Shares, Outstanding, Ending Balance at Dec. 31, 2022	83,232,262						83,232,262

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Fair Value Measurements

Note 14. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy exists, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are:

Level 1: Inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date.

Level 3: Unobservable inputs, that are supported by little or no market activity and are developed based on the best information available in the circumstances. For example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable market data.

The following table presents the placement in the fair value hierarchy of the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2022 and 2021. Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to tangible property and equipment, right-of-use assets, and other intangible assets, which are remeasured when the derived fair value is below carrying value in the consolidated balance sheets. Recoverability is based on estimated undiscounted cash flows or other relevant observable/unobservable measures. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. If it is determined that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is included in Impairment of long-lived assets and Impairment of operating lease right-of-use assets in the consolidated statements of operations and comprehensive loss.


			Fair value measurement at reporting date using
			Quoted prices in
			active markets		Significant other		Significant
			for identical		observable		unobservable
	Balance		assets (Level 1)		inputs (Level 2)		inputs (Level 3)
As of December 31, 2022:
Recurring fair value measurements
Equity securities:
Route1, Inc.	$	104	$	—	$	104	$	—
Total equity securities		104		—		104		—
Total recurring fair value measurements	$	104	$	—	$	104	$	—
Nonrecurring fair value measurements
Intangible assets		4,008		—		—		4,008
Total nonrecurring fair value measurements	$	4,008	$	—	$	—	$	4,008

As of December 31, 2021
Recurring fair value measurements
Equity securities:
Route1	$	722	$	—	$	722	$	—
Total equity securities		722		—		722		—
Total recurring fair value measurements	$	722	$	—	$	722	$	—

In addition to the above, the Company’s financial instruments as of December 31, 2022 and 2021 consisted of cash and cash equivalents, receivables, accounts payable and debt. The carrying amounts of all the aforementioned financial instruments approximate fair value because of the short-term maturities of these instruments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Accounting and Reporting Policies (Details) $ in Thousands	1 Months Ended	6 Months Ended		12 Months Ended
Accounting and Reporting Policies (Details) $ in Thousands	Jan. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) item	Jun. 30, 2021 USD ($)	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($) item	Sep. 30, 2022 USD ($)	Dec. 31, 2020 USD ($)
Foreign exchange loss				$ (664)	$ (18)
Cash equivalents		$ 0		1,885	0
Credit and debit card receivables		813		132	813
Cash and cash equivalents		106,257		19,789	106,257		$ 90,502
Uncertain tax positions		0		0	0
Advertising expenses				4,645	2,817
Deferred revenue		$ 549		339	549
Total revenue				55,939	73,729
Impairment on property and equipment				4,559	68
Impairment of operating lease right-of-use assets				$ 1,110	747
Number of reportable segments \| segment				4
Impairment of intangible assets				$ 110	0
XpresTest
Recognized revenue				4,166	1,368
Unrecognized revenue contract amount	$ 5,534				2,001
Impairment of operating lease right-of-use assets					38
XpresTest \| MSAs
Recognized revenue			$ 16,843
XpresTest \| MSAs \| Cumulative catch-up adjustment
Recognized revenue			$ 3,186
XpresTest \| CDC Program Options and Public Health Services [Member]
Total revenue				2,617
Unrecognized revenue						$ 16,000
XpresTest \| Traveler Enrollment Initiatives \| CDC Program Options and Public Health Services [Member]
Contract with customer, liability, current						570
XpresTest \| Passenger and Aircraft Wastewater Sample Collection \| CDC Program Options and Public Health Services [Member]
Contract with customer, liability, current						6,761
XpresSpa
Impairment of operating lease right-of-use assets					$ 936
HyperPointe \| HyperPointe
Deferred revenue				$ 322
United States \| XpresTest \| Bio-surveillance Monitoring
Number of airport locations \| item		4			4
Minimum [Member] \| HyperPointe
Expected useful lives (in years)				5 years
Minimum [Member] \| XpresTest \| CDC Program Options and Public Health Services [Member]
Unrecognized revenue						$ 61,000
Maximum [Member] \| HyperPointe
Expected useful lives (in years)				12 years
Variable Interest Entity, Primary Beneficiary
Total revenue		$ 50,689		$ 32,960	$ 50,689
Software Development [Member]
Expected useful lives (in years)				3 years

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases

Schedule of supplemental cash flow information related to leases


	Year ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(4,092)	$	(4,230)
Leased assets obtained in exchange for new and modified operating lease liabilities	$	6,891	$	3,646
Leased assets surrendered in exchange for termination of operating lease liabilities	$	—	$	9

Schedule of future minimum commitments


Calendar Years ending December 31,	Amount
2023	$	3,479
2024		3,153
2025		2,676
2026		1,618
2027		1,495
Thereafter		4,389
Total future lease payments		16,810
Less: interest expense at incremental borrowing rate		(2,703)
Net present value of lease liabilities	$	14,107

Schedule of other assumptions and pertinent information


Weighted average remaining lease term:	5.98	years
Weighted average discount rate used to determine present value of operating lease liability:	7.69	%

Acquisition of HyperPointe

12 Months Ended

Dec. 31, 2022

Acquisition of HyperPointe

Acquisition of HyperPointe

Note 10. Acquisition of HyperPointe

On January 14, 2022, the Company acquired all of the equity interests in gcg Connect, LLC, d/b/a HyperPointe, a New Jersey limited liability company (“HyperPointe”), for an aggregate initial purchase price of approximately $7,257, which consisted of (i) $7,121 in cash offset by settlement of intercompany accounts payable of $770, and (ii) the issuance of 552,487 shares of common stock of the Company to the equity owners of HyperPointe, plus additional consideration in the form of a potential earnout of up to $7,500 (the “Acquisition”). The portion of the initial consideration for the Acquisition comprising the 552,487 shares of Company common stock was valued at $906 based upon a closing reference price of $1.64 as contemplated by the acquisition agreement.

XWELL also agreed pursuant to an earnout provision to issue up to an additional $7,500 in cash or stock if certain earnout performance targets are met during an earnout period ending on the third anniversary of the date of the acquisition agreement. For purposes of the earnout, the Common Stock will also be valued on a per share basis. The earnout payments may be satisfied in (i) cash, (ii) shares of Common Stock (priced at $1.81), or (iii) any combination thereof, at the election of the equity owners of HyperPointe, provided that in the event (and to the extent) XWELL does not have sufficient authorized shares of Common Stock that are unissued and not duly reserved for issuance upon options, warrants or other convertible securities, then XWELL shall be permitted to settle any earnout payments in cash. As a result, XWELL may issue up to an additional 4,143,647 shares of Common Stock; however, the actual number of shares that will be issued under the earnout, if any, will depend on (i) the extent of fulfillment of the earnout performance targets at the time of calculation of the earnout and (ii) the elections and conditions described in the previous sentence.

XWELL granted an equity award to the previous Chief Executive Officer of HyperPointe and who was offered employment with the Company in connection with XWELL’s acquisition of the equity interests of HyperPointe, as an inducement material to such new employee entering into employment with the Company.

The employee received stock options to purchase 1,000,000 shares of XWELL common stock. The stock options were issued upon the closing of the acquisition of HyperPointe and employee’s hire date in connection therewith (the "Grant Date"), and all stock options included within the equity inducement award have an exercise price of $1.64 per share, resulting in the fair value of $1,457 which would be recognized in expense on a straight-line basis, over the requisite service period. One-third of the options will vest on each of the first three anniversaries of the Grant Date, subject to the employee's continued employment with XWELL or its subsidiaries on such vesting dates. The stock options have a ten-year term.

The Company has recognized the assets and liabilities based on the acquisition date fair values. Based on an assessment of probability, the Company concluded that the acquisition did not result in the creation of any contingent consideration as of the Acquisition date and as of December 31, 2022.

Determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment.

The fair value of intangible assets other than Goodwill was determined primarily using income approaches. This included estimated multi-period excess earnings valuation method for Customer relationships and the relief-from-royalty valuation for the tradename.

The following table sets forth the significant assumptions utilized when valuing the Customer Relationships:


Customer relationships Attrition Rate	15.00	%

Existing Customer Growth	3.00	%

Business Development Expense for New Customers	0.50	%

Customer relationships Discount Rate	26.00	%

Estimated Remaining Economic Life (Years) (approx.)	5	yrs

The following table sets forth the significant assumptions utilized when valuing the Tradename:


% of Revenue Attributable to Trade Name	100	%

Royalty Rate	1.00	%

Trade Name Discount Rate	24.50	%

Remaining Economic Life (Years)	12	yrs

The adjustments set forth in the following consolidated Balance Sheet reflect the effect of the consummation of the acquisition:


Consideration paid	$	7,257

Fair value of assets acquired and liabilities assumed

Cash and cash equivalents	$	2,269
Accounts receivable		346
Unbilled Receivables		56
Prepaid expenses and other current assets		19
Other long-term assets		16
Property and equipment		68
Customer relationships		1,198
Trade name		302
Software		335

Accounts payable		(653)
Deferred revenue		(723)
		3,233
Goodwill	$	4,024

Stockholders' Equity and Warrants - Schedule of Changes In Warrants Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Warrants [Line Items]
Repurchase and retirement of common stock	$ 23,789	$ 7,825
Minimum [Member]
Warrants [Line Items]
Exercise price range, Expired	$ 1.7
Maximum [Member]
Warrants [Line Items]
Exercise price range, Expired	$ 6.566
Share Repurchase Program
Warrants [Line Items]
Repurchase and retirement of common stock (in shares)	19,526,706	4,702,072
Repurchase price	$ 1.22	$ 1.66
Repurchase and retirement of common stock	$ 23,789	$ 7,825
Warrants
Warrants [Line Items]
Outstanding, Opening Balance	37,817,694
Expired	(36,645,606)
Outstanding, Ending Balance	1,172,088	37,817,694
Weighted average exercise price, Beginning Balance	$ 2.99
Weighted average exercise price, Expired	3.02
Weighted average exercise price, Ending Balance	2.00	$ 2.99
Warrants \| Minimum [Member]
Warrants [Line Items]
Exercise price range, Beginning Balance	0.525
Exercise price range, Ending Balance	1.7	0.525
Warrants \| Maximum [Member]
Warrants [Line Items]
Exercise price range, Beginning Balance	6.566
Exercise price range, Ending Balance	$ 2.125	$ 6.566

Variable Interest Entities

12 Months Ended

Dec. 31, 2022

Variable Interest Entities

Variable Interest Entities

Note 4. Variable Interest Entities

Through its XpresCheck Wellness Centers, the Company provides services pursuant to contracts with PLLCs which in turn contracts with physicians and other medical professional providers to render COVID-19 and other medical diagnostic testing services to airline employees, contractors, concessionaire employees, TSA officers and U.S. Customs and Border Protection agents, and the traveling public. The PLLCs collectively represent the Company’s affiliated medical group. The PLLCs were designed and structured to comply with the relevant laws and regulations governing professional medical practice, which generally prohibits the practice of medicine by lay persons or entities. All of the issued and outstanding equity interests of the PLLCs are owned by a licensed medical professional nominated by the Company (the “Nominee Shareholder”). Upon formation of the PLLCs, and initial issuance of equity interests, the Nominee Shareholder contributes a nominal amount of capital in exchange for their interest in the PLLC. The Company then executes with each PLLC a MSA, which provide for various administrative services, management services and day-to-day activities of the practice to be rendered by the Company through its XpresCheck Wellness Centers.

The Company also has exclusive responsibility for the provision of all nonmedical services including contracting with customers who access the PLLCs for a medical visit, handling all financial transactions and day-to-day operations of each

PLLC, overseeing the establishment of COVID-19 and other medical diagnostic testing services policies, and making recommendations to the PLLC in establishing the guidelines for the employment and compensation of the physicians and other employees of the PLLCs. Until June 30, 2021, MSA Fees were commensurate with the expected level of activity required to be billed by XpresCheck Wellness Centers. Therefore, these PLLCs were assessed not to be variable interest entities prior to July 1, 2021.

Effective July 1, 2021, contractual arrangements between the company, the company’s affiliated medical group and nominated shareholder were modified in a manner that changes the characteristics or adequacy of the nominee shareholders equity investment at risk and residual returns. Therefore, due to reassessment triggered by the development on July 1, 2021, the Company determined that the PLLCs are now variable interest entities. Notwithstanding their legal form of ownership of equity interests in the PLLC, the primary beneficiary of the affiliated medical group is the Company as it meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the affiliated medical group; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the affiliated medical group. The Company consolidated the PLLCs under the VIE model since the Company has the power to direct activities that most significantly impact the PLLCs economic performance and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the PLLCs.

The aggregate carrying value of total assets and total liabilities included on the consolidated balance sheets for the PLLCs after elimination of intercompany transactions were $275, included in Cash and Cash Equivalents, and $146, included in Accrued expenses and other current liabilities, respectively, as of December 31, 2022. The aggregate carrying value of total assets and total liabilities included on the consolidated balance sheets for the PLLCs after elimination of intercompany transactions were $3,033, included in Cash and Cash Equivalents, and $683, included in Accrued expenses and other current liabilities, respectively, as of December 31, 2021. The total revenue included on the consolidated statements of operations and comprehensive income (loss) for the PLLCs after elimination of intercompany transactions was $32,960 and $50,689 for the twelve months ended December 31, 2022 and December 31, 2021, respectively.

General

12 Months Ended

Dec. 31, 2022

General

General

Note 1. General

Overview

On 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 the Nasdaq Capital Market, now trades under the trading symbol “XWEL” since the opening of the trading market on October 25, 2022. In pursuance, the Company amended and restated its certificate of incorporation filed with the Delaware Secretary of State on October 24, 2022 (the “Amended and Restated Certificate”). Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play health and wellness services company, both in the airport and off airport marketplaces.

In addition, prior to filing the Amended and Restated Certificate, the Company filed a Certificate of Elimination (the “Certificate of Elimination”) with respect to its Series A Convertible Preferred Stock, par value $0.01 per share, Series D Convertible Preferred Stock, par value $0.01 per share, Series E Convertible Preferred Stock, par value $0.01 per share, and Series F Convertible Preferred Stock, par value $0.01 per share (collectively, the “Eliminated Preferred Stock”) with the Delaware Secretary of State, becoming effective as of at 11:59 p.m., Eastern Time on October 24, 2022.

The Certificate of Elimination (i) eliminated the previous designation of 6,968 shares of Series A Convertible Preferred Stock, none of which were outstanding at the time of filing, (ii) eliminated the previous designation of 500,000 shares of Series D Convertible Preferred Stock, none of which were outstanding at the time of filing, (iii) eliminated the previous designation of 2,397,060 shares of Series E Convertible Preferred Stock, none of which were outstanding at the time of filing, (iv) eliminated the previous designation of 9,000 shares of Series F Convertible Preferred Stock, none of which were outstanding at the time of filing, (v) caused such shares of Eliminated Preferred Stock to resume the status of authorized but unissued shares of preferred stock of the Company and (vi) eliminated all reference to the Eliminated Preferred Stock from the Company’s Certificate of Incorporation filed with the Secretary of State of the State of Delaware and effective prior to the effective time of the Amended and Restated Certificate.

XWELL is a global travel health and wellness services holding company. XWELL currently has four reportable operating segments: XpresSpa^®, XpresTest, Treat^™, and HyperPointe which was acquired in January 2022.

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. Most of XpresSpa spa locations were closed between March 2020 and September 2021, largely due to the airport traffic remaining at insufficient levels to support operations at a unit level.

During the period between March 2020 and September 2021, when the Company was unable to reopen its spa locations for normal operations, the Company in partnership with certain COVID-19 testing partners, successfully launched its XpresCheck Wellness Centers through its XpresTest, Inc. subsidiary (“XpresTest”), offering testing services, also in airports. XpresTest offers 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. XpresTest has entered into managed services agreements (“MSAs”) with professional medical services companies that provide health care services to patients. The medical services companies pay XpresTest a monthly fee to operate in the XpresCheck Wellness Centers. Under the terms of the MSAs, XpresTest provides office space, equipment, supplies, non-licensed staff, and management services in return for a management fee. Effective July 1, 2021, the Company determined that the medical service companies are variable interest entities (“VIEs”) due to their equity holders having sufficient capital at risk; and the Company having a variable interest in and being a primary beneficiary of the medical service companies. During 2022, as countries continued to relax their testing requirements resulting in rapid decline of testing volumes at Company’s

XpresCheck locations, the Company closed all but one XpresCheck Wellness Centers. Therefore, as of the date of this report, there is only one operating XpresCheck location operating in one airport.

The Treat segment, which is operating through XWELL’s subsidiary Treat, Inc. (“Treat”) is a travel health and wellness brand that provides access to health and wellness services for travelers at on-site centers (currently located in JFK International Airport and in Salt Lake City International Airport).

By the third quarter of 2022, it became clear that the Treat business was underperforming and as a result, we began to retool the offerings within the Treat locations by providing additional retail as part of our retail strategy expansion as well as lay the foundation to bring more spa-like services into the Treat location in an attempt to unify our core offering.

By the fourth quarter of 2022, the decision was made to close the pre-security Treat location at Phoenix Sky Harbor Airport. As of March 31, 2023, the Treat brand operates 2 locations (JFK International Airport and Salt Lake City International Airport). These remaining Treat locations offer a full retail product offering and a suite of wellness and spa services.

The Company’s HyperPointe segment, which the Company acquired in January 2022 (see Note 10. Acquisition of HyperPointe), provides a broad range of service and support options for our customers, including technical support services and advanced services.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company, all entities that are wholly owned by the Company, and all entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

HyperPointe Acquisition

In January 2022, the Company announced and closed on the acquisition of gcg Connect, LLC d/b/a HyperPointe.

The purchase price in the transaction consisted of $7,121 in cash and $906 in common stock, offset by the settlement of intercompany accounts payable of $770 as well as potential additional earn-out payments of up to $7,500 over a three-year timeframe based upon future performance; these earn-out payments may be satisfied in cash or common stock or a combination thereof subject to various terms and conditions. As of the acquisition date, and as of December 31, 2022, the Company believes that the fair value of the potential earnout payment is $0.

HyperPointe currently operates as a new operating segment within XWELL. The chief executive officer of HyperPointe before the Company’s acquisition, continues to serve as the chief executive officer of HyperPointe, as well as serving as the chief executive officer of XpresCheck. See Note 10. Acquisition of HyperPointe for related discussion.

Liquidity and Financial Condition

As of December 31, 2022, the Company had approximately $19,038 of cash and cash equivalents, $23,153 in marketable securities, and total current assets of approximately $47,332. The Company's total current liabilities balance, which includes accounts payable, deferred revenue, accrued expenses, and operating lease liabilities was approximately $10,956 as of December 31, 2022. The working capital surplus was $36,376 as of December 31, 2022, compared to a working capital surplus of $89,152 as of December 31, 2021.

The Company has significantly reduced operating and overhead expenses in the second half of 2022, while it continues to focus on returning to overall profitability.

The Company has taken actions to improve its overall cash position and access to liquidity through equity offerings and debt retirements, by exploring valuable strategic partnerships, right sizing its corporate structure and streamlining its operations.

General (Details) $ / shares in Units, $ in Thousands		1 Months Ended	6 Months Ended	12 Months Ended
General (Details) $ / shares in Units, $ in Thousands	Jan. 14, 2022 USD ($)	Jan. 31, 2022 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2022 USD ($) segment item location $ / shares	Dec. 31, 2021 USD ($) item $ / shares shares	Mar. 31, 2023 location	Oct. 24, 2022 $ / shares shares	Sep. 30, 2022 USD ($)
Common stock, par value \| $ / shares				$ 0.01	$ 0.01		$ 0.01
Number of operating segments \| segment				4
Total revenue, net				$ 55,939	$ 73,729
Cash and cash equivalents				19,038	105,506
Total current assets				47,332	108,979
Total current liabilities				10,956	19,827
Working capital				36,376	89,152
Investment in marketable securities				23,153
Issuance of Common Stock on acquisition of gcg Connect, LLC, d/b/a HyperPointe				906
Other
Total revenue, net				$ 6	14
XpresTest
Number of operating locations \| location				1
Unrecognized revenue contract amount		$ 5,534			2,001
Number of airports \| item				1
Recognized revenue				$ 4,166	$ 1,368
XpresTest \| Bio-surveillance Monitoring \| United States
Number of airport locations \| item					4
Treat
Number of operating locations \| location						2
HyperPointe
Payments to acquire business	$ 7,121
Issuance of Common Stock on acquisition of gcg Connect, LLC, d/b/a HyperPointe	906
Settlement of intercompany accounts payable	$ 770
Fair value of potential earnout				0
Timeframe within which potential additional earnout payments to be made for Business acquisition	3 years
HyperPointe \| Maximum [Member]
Business acquisition, potential additional earnout payments	$ 7,500
MSAs \| XpresTest
Recognized revenue			$ 16,843
Placement Agent Agreement
Cash fees paid					$ 2,162
CDC Program Options and Public Health Services [Member] \| XpresTest
Unrecognized revenue								$ 16,000
Total revenue, net				$ 2,617
CDC Program Options and Public Health Services [Member] \| XpresTest \| Passenger and Aircraft Wastewater Sample Collection
Contract with customer, liability, current								6,761
CDC Program Options and Public Health Services [Member] \| XpresTest \| Traveler Enrollment Initiatives
Contract with customer, liability, current								570
CDC Program Options and Public Health Services [Member] \| XpresTest \| Minimum [Member]
Unrecognized revenue								$ 61,000
December 2020 Warrants
Total of warrants exercised \| shares					11,273,529
Gross proceeds					$ 19,245
H.C.W. Warrants \| Placement Agent Agreement
Warrants issued \| shares					846,588
Warrant exercise price \| $ / shares					$ 2.125
Palladium Warrants \| Placement Agent Agreement
Warrants issued \| shares					325,500
Warrant exercise price \| $ / shares					$ 1.70
Series A Convertible Preferred stock
Preferred stock, par value \| $ / shares							$ 0.01
Preferred stock, authorized \| shares							6,968
Preferred stock, outstanding \| shares							0
Series D Convertible Preferred Stock
Preferred stock, par value \| $ / shares							$ 0.01
Preferred stock, authorized \| shares							500,000
Preferred stock, outstanding \| shares							0
Series E Convertible Preferred Stock.
Preferred stock, par value \| $ / shares							$ 0.01
Preferred stock, authorized \| shares							2,397,060
Preferred stock, outstanding \| shares							0
Series F Convertible Preferred Stock.
Preferred stock, par value \| $ / shares							$ 0.01
Preferred stock, authorized \| shares							9,000
Preferred stock, outstanding \| shares							0

Accrued Expenses and Other Current Liabilities (Schedule of Accrued Expenses and Other Current Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accrued Expenses and Other Current Liabilities
Litigation accrual	$ 963	$ 845
Accrued compensation	2,008	2,862
Tax-related liabilities	573	603
Common area maintenance accruals	160
AP Accruals	754	431
Gift certificates	496	494
Construction accrual		930
Credit card processing fees	33	501
Other miscellaneous accruals	732	757
Total accounts payable, accrued expenses and other current liabilities	$ 5,719	$ 7,423

Stockholders' Equity and Warrants (Tables)

12 Months Ended

Dec. 31, 2022

Stockholders' Equity and Warrants

Schedule of information about all warrant activity


		Weighted average		Exercise
	No. of warrant	exercise price		price range
December 31, 2021	37,817,694	$	2.99	$	0.525 - 6.566
Granted	—	$	—	$
Exercised	—	$	—	$
Expired	(36,645,606)	$	3.02	$	1.7 - 6.566
December 31, 2022	1,172,088	$	2.00	$	1.7 - 2.125

Schedule of outstanding equity warrants


				Remaining
				contractual
	No. outstanding	Exercise price		life		Expiration Date
January 2021 Placement Agent Warrants	510,588	$	2.125	0.08	years	January 28, 2023
January 2021 Placement Agent Tail Fee	35,000	$	1.7	0.08	years	January 28, 2023
February 2021 Placement Agent Warrants	284,000	$	2.125	0.12	years	February 11, 2023
February 2021 Placement Agent Warrants	48,000	$	2.125	0.13	years	February 16, 2023
February 2021 Placement Agent Tail Fee	248,500	$	1.7	0.12	years	February 11, 2023
February 2021 Placement Agent Tail Fee	42,000	$	1.7	0.13	years	February 16, 2023
December 2021 Placement Agent Tail Fee	4,000	$	2.125	0.99	years	December 27, 2023
	1,172,088

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities
Net (loss) income	$ (32,629)	$ 2,893
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,429	3,201
Impairment of fixed assets	4,559	68
Impairment of intangible assets	110	0
Impairment of operating lease right-of-use assets	1,110	747
Loss on disposal of assets, net	834	22
Amortization of operating lease right of use asset	1,844	1,719
Issuance of shares of Common Stock for services	103	379
Stock-based compensation	3,770	2,856
Loss on equity investment	618	1,046
Changes in assets and liabilities:
Decrease (increase) in inventory	592	(1,106)
Increase in accounts receivable	(1,835)	(1,124)
Decrease in deferred revenue	(933)	(365)
Other assets, current and non-current	(457)	(1,251)
Other liabilities, current and non-current	(4,056)	(1,211)
(Decrease) increase in accounts payable	(3,247)	6,687
Net cash (used in) provided by operating activities	(24,188)	14,561
Cash flows from investing activities
Acquisition of property and equipment	(6,464)	(4,282)
Investment in marketable securities	(23,153)
Cash acquired on consolidation of certain Variable Interest Entities		2,434
Acquisition of HyperPointe net of cash assumed	(4,853)
Acquisition of software	(373)	(3,308)
Net cash used in investing activities	(34,843)	(5,156)
Cash flows from financing activities
Proceeds from direct offerings of Common Stock and warrants exercises, net of costs		17,085
Redemption of non-controlling interests		(502)
Repurchase of Common Stock	(23,789)	(7,825)
Contributions from noncontrolling interests	1,025	818
Proceeds from stock option exercises		13
Payments for shares withheld on vesting	(73)
Repayment of Paycheck Protection Program	(3,584)	(2,069)
Distributions to noncontrolling interests	(956)	(1,170)
Net cash (used in) provided by financing activities	(27,377)	6,350
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(60)	0
(Decrease)/ Increase in cash, cash equivalents and restricted cash	(86,468)	15,755
Cash, cash equivalents, and restricted cash at beginning of the period	106,257	90,502
Cash, cash equivalents, and restricted cash at end of the period	19,789	106,257
Cash paid for
Interest	10	11
Income taxes	55
Non-cash investing and financing transactions
Capital expenditures included in Accounts payable, accrued expenses and other current liabilities	544	$ 1,081
Issuance of Common Stock on acquisition of gcg Connect, LLC, d/b/a HyperPointe	$ 906

Stock-based Compensation - Stock-based Compensation (Details) $ in Thousands		1 Months Ended		12 Months Ended
	Oct. 04, 2022 shares	Sep. 30, 2022 item	Sep. 30, 2020 shares	Dec. 31, 2022 USD ($) shares	Dec. 31, 2021 USD ($) shares
Stockholders Equity [Line Items]
Number of equal quarterly vesting installments \| item		4
Stock-based compensation expense \| $				$ 3,770	$ 2,856
Number of options, granted				2,350,338	1,668,297
Weighted average remaining contractual term				7 years 9 months 29 days	8 years 8 months 15 days
Aggregate Intrinsic Value of Options Outstanding and Vested \| $				$ 0	$ 545
Stock Compensation Plan
Stockholders Equity [Line Items]
Options, expiry period		10 years
Options, vesting period		1 year
RSUs
Stockholders Equity [Line Items]
Number of options, granted				531,250	1,349,167
Non-vested Stock Options
Stockholders Equity [Line Items]
Unrecognized stock-based payment cost \| $				$ 2,506	$ 2,088
Non-Vested RSUs
Stockholders Equity [Line Items]
Unrecognized stock-based payment cost \| $				$ 183	$ 978
2020 Plan [Member]
Stockholders Equity [Line Items]
Number of shares authorized	7,500,000			12,500,000
Maximum [Member] \| 2020 Plan [Member]
Stockholders Equity [Line Items]
Number of shares authorized			5,000,000
Number of stock shares issued	7,396,691
Directors, Employees And Consultants \| XpresTest 2020 Plan [Member]
Stockholders Equity [Line Items]
Number of shares authorized			200
Percentage of shares authorized for issuance			20.00%

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property and equipment, Gross	$ 10,666	$ 13,398
Accumulated depreciation	(7,000)	(6,740)
Total property and equipment, net	3,666	6,658
Impairment on property and equipment	4,559	68
Depreciation expense	3,663	2,754
Leasehold improvements [Member]
Property and equipment, Gross	$ 8,692	11,225
Leasehold improvements [Member] \| Minimum [Member]
Property and equipment, useful life	5 years
Leasehold improvements [Member] \| Maximum [Member]
Property and equipment, useful life	8 years
Furniture and fixtures [Member]
Property and equipment, Gross	$ 1,214	1,146
Furniture and fixtures [Member] \| Minimum [Member]
Property and equipment, useful life	3 years
Furniture and fixtures [Member] \| Maximum [Member]
Property and equipment, useful life	4 years
Other operating equipment [Member]
Property and equipment, Gross	$ 760	$ 1,027
Other operating equipment [Member] \| Maximum [Member]
Property and equipment, useful life	5 years

Other Current Assets (Tables)

12 Months Ended

Dec. 31, 2022

Other Current Assets

Schedule of other current assets


	December 31, 2022		December 31, 2021
Prepaid expenses	$	1,074	$	1,047
Other		48		48
Total other current assets	$	1,122	$	1,095

Stockholders' Equity and Warrants - Schedule of Warrants Outstanding (Details) - Outstanding Equity Warrants	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Warrants [Line Items]
No. outstanding	1,172,088
January 2021 Placement Agent Warrants [Member]
Warrants [Line Items]
No. outstanding	510,588
Remaining contractual life	29 days
Expiration Date	January 28, 2023
Exercise price \| $ / shares	$ 2.125
January 2021 Placement Agent Tail Fee [Member]
Warrants [Line Items]
No. outstanding	35,000
Remaining contractual life	29 days
Expiration Date	January 28, 2023
Exercise price \| $ / shares	$ 1.7
February 2021 Placement Agent Warrants One[Member]
Warrants [Line Items]
No. outstanding	284,000
Remaining contractual life	1 month 13 days
Expiration Date	February 11, 2023
Exercise price \| $ / shares	$ 2.125
February 2021 Placement Agent Warrants Two[Member]
Warrants [Line Items]
No. outstanding	48,000
Remaining contractual life	1 month 17 days
Expiration Date	February 16, 2023
Exercise price \| $ / shares	$ 2.125
February 2021 Placement Agent Tail Fee [Member]
Warrants [Line Items]
No. outstanding	248,500
Remaining contractual life	1 month 13 days
Expiration Date	February 11, 2023
Exercise price \| $ / shares	$ 1.7
February 2021 Placement Agent Tail Fee One [Member]
Warrants [Line Items]
No. outstanding	42,000
Remaining contractual life	1 month 17 days
Expiration Date	February 16, 2023
Exercise price \| $ / shares	$ 1.7
December 2021 Placement Agent Tail Fee [Member]
Warrants [Line Items]
No. outstanding	4,000
Remaining contractual life	11 months 26 days
Expiration Date	December 27, 2023
Exercise price \| $ / shares	$ 2.125

Income Taxes - Changes to Valuation Allowance (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Taxes [Line Items]
Beginning Balance	$ 53,298	$ 64,245
Return to provision true-up and other	97	(2,403)
Ending Balance	60,259	53,298
Continuing Operations [Member]
Income Taxes [Line Items]
Charged to cost and expenses	$ 6,864	$ (8,544)

Net earnings (loss) per Share of Common Stock - Potentially Dilutive Securities (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share Disclosure
Net (loss) income attributable to XWELL, Inc.	$ (32,837)	$ 3,349
Net (loss) income attributable to common shareholders	$ (32,837)	$ 3,349
Basic weighted average shares outstanding	93,655,331	104,306,173
Basic (loss) earnings per share (in dollars per share)	$ (0.35)	$ 0.03
Diluted weighted average shares outstanding	93,655,331	105,076,758
Diluted (loss) income per share (in dollars per share)	$ (0.35)	$ 0.03
Net (loss) income per share data presented above excludes from the calculation of diluted net (loss) income, the following potentially dilutive securities, having an anti-dilutive impact, in case of net loss
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	6,283,367	40,473,979
Both vested and unvested options to purchase an equal number of shares of Common Stock
Net (loss) income per share data presented above excludes from the calculation of diluted net (loss) income, the following potentially dilutive securities, having an anti-dilutive impact, in case of net loss
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	4,830,029	2,614,766
Unvested Restricted Stock Units ("RSU")
Net (loss) income per share data presented above excludes from the calculation of diluted net (loss) income, the following potentially dilutive securities, having an anti-dilutive impact, in case of net loss
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	281,250	521,049
Warrants
Net (loss) income per share data presented above excludes from the calculation of diluted net (loss) income, the following potentially dilutive securities, having an anti-dilutive impact, in case of net loss
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	1,172,088	37,338,164

Cash, Cash Equivalents, and Restricted Cash (Tables)

12 Months Ended

Dec. 31, 2022

Cash, Cash Equivalents, and Restricted Cash

Schedule of cash, cash equivalents, and restricted cash


	December 31, 2022		December 31, 2021
Cash denominated in United States dollars	$	16,344	$	102,560
Cash denominated in currency other than United States dollars		2,562		2,133
Restricted cash		751		751
Credit and debit card receivables		132		813
Total cash, cash equivalents and restricted cash	$	19,789	$	106,257

Other Current Assets

12 Months Ended

Dec. 31, 2022

Other Current Assets

Other Current Assets

Note 6. Other Current Assets

As of December 31, 2022, and 2021, the Company’s other current assets were comprised of the following:


	December 31, 2022		December 31, 2021
Prepaid expenses	$	1,074	$	1,047
Other		48		48
Total other current assets	$	1,122	$	1,095

Prepaid expenses are predominantly comprised of financed and prepaid insurance policies which have terms of one year or less.

Other Assets (Details) - USD ($) $ in Thousands	12 Months Ended
Other Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Security deposits	$ 1,973	$ 2,030
Other nonoperating income expense
Unrealized loss on remeasurement of common stock and/or warrants	618	1,046
Route1 Inc
Fair value of the investment	$ 104	$ 722

Segment Information - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accrued Expenses And Other Current Liabilities [Line Items]
Impairment of long-lived assets	$ 4,669	$ 68
Impairment of operating lease right-of-use assets	1,110	747
XpresSpa
Accrued Expenses And Other Current Liabilities [Line Items]
Impairment of long-lived assets	619
Impairment of operating lease right-of-use assets		936
Treat Segment
Accrued Expenses And Other Current Liabilities [Line Items]
Impairment of long-lived assets	3,373
Impairment of operating lease right-of-use assets		136
XpresTest
Accrued Expenses And Other Current Liabilities [Line Items]
Impairment of long-lived assets	$ 677
Impairment of operating lease right-of-use assets		$ 38
Customer Concentration Risk [Member] \| Net Sales \| Customers A [Member] \| HyperPointe
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	55.00%
Customer Concentration Risk [Member] \| Net Sales \| Customers B [Member] \| HyperPointe
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	33.00%
Customer Concentration Risk [Member] \| Net Sales \| Customers C [Member] \| HyperPointe
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	10.00%
Customer Concentration Risk [Member] \| Net Sales \| Customers E [Member] \| XpresTest
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	10.00%
Customer Concentration Risk [Member] \| Accounts Receivable \| Customers A [Member] \| HyperPointe
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	55.00%
Customer Concentration Risk [Member] \| Accounts Receivable \| Customers D [Member] \| HyperPointe
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	27.00%
Customer Concentration Risk [Member] \| Accounts Receivable \| Customers F [Member]
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	92.00%
Customer Concentration Risk [Member] \| Accounts Receivable \| Customers F [Member] \| XpresTest
Accrued Expenses And Other Current Liabilities [Line Items]
Concentration risk, percentage	99.00%

Income Taxes - Components of Loss Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Taxes.
Domestic	$ (32,445)	$ 3,137
Foreign	(129)	(188)
Total	$ (32,574)	$ 2,949

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-Section S99
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+ Details

Other Assets

12 Months Ended

Dec. 31, 2022

Other Assets

Other Assets

Note 8. Other Assets

Other assets in the consolidated balance sheets are comprised of the following as of December 31, 2022 and 2021:


	December 31, 2022		December 31, 2021
Equity investments	$	104	$	722
Lease deposits		1,973		2,030
Other		292		58
Other assets	$	2,369	$	2,810

As of December 31, 2022 and 2021, the equity investment in Route1 had a readily determinable fair value of $104 and $722, respectively. The Company recorded an unrealized loss of $618 in 2022 and an unrealized loss of $1,046 in 2021, in connection with the remeasurement of the shares of our common stock of Route 1 it obtained in the 2018 sale of Group Mobile to Route 1. The loss/gain is included in Other non-operating income (expense), net on the consolidated statement of operations and comprehensive income (loss) for the years ended December 31, 2022 and 2021.

Also included in “Other assets” as of December 31, 2022 and 2021 were $1,973 and $2,030, respectively, of security deposits made pursuant to various lease agreements, which will be returned to the Company at the end of the leases.

Cash, Cash Equivalents, and Restricted Cash

12 Months Ended

Dec. 31, 2022

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

Note 5. Cash, Cash Equivalents, and Restricted Cash


	December 31, 2022		December 31, 2021
Cash denominated in United States dollars	$	16,344	$	102,560
Cash denominated in currency other than United States dollars		2,562		2,133
Restricted cash		751		751
Credit and debit card receivables		132		813
Total cash, cash equivalents and restricted cash	$	19,789	$	106,257

The Company places its cash and temporary cash investments with credit quality institutions. At times, such cash denominated in United States dollars may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. At December 31, 2022 and 2021, deposits in excess of FDIC limits were $16,069 and $103,339. As of December 31, 2022 and 2021, the Company held cash balances in overseas accounts, totaling $2,562 and $2,113, respectively, which are not insured by the FDIC. If the Company were to distribute the amounts held overseas, the Company would need to follow an approval and distribution process as defined in its operating and partnership agreements, which may delay and/or reduce the availability of that cash to the Company.

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2022	Dec. 31, 2021	Apr. 14, 2023	Jun. 30, 2022
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-34785
Entity Registrant Name	XWELL, Inc.
Entity Central Index Key	0001410428
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-4988129
Entity Address, Address Line One	254 West 31st Street
Entity Address, Address Line Two	11th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	212
Local Phone Number	750-9595
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	XWEL
Security Exchange Name	NASDAQ
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding			83,418,535
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Auditor Name	Marcum llp	Friedman LLP
Auditor Firm ID	688	711
Auditor Location	East Hanover, New Jersey	East Hanover, New Jersey
Entity Public Float				$ 65,798,587

Income Taxes - Income Tax Benefit (Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Taxes.
Income (loss) from operations before income taxes	$ (32,574)	$ 2,949
Tax rate	21.00%	21.00%
Computed "expected" tax benefit	$ (6,841)	$ 619
State taxes, net of federal income tax benefit	706	1,516
Change in valuation allowance	7,014	(10,946)
Adjustment JV Basis	339	4,445
Nondeductible expenses	341	1,104
Return to Provision Adjustment	(94)	2,403
State Deferred Rate Change	(570)
Asset Impairment Adjustment	(810)
Other items	(31)	915
Income tax expense	$ 55	$ 56

Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 6,352	$ 5,341
Accumulated Amortization	(2,344)	(1,609)
Net Carrying Amount	4,008	3,732
Trade names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	302	1,339
Accumulated Amortization	(24)	(1,118)
Net Carrying Amount	278	221
Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,510
Accumulated Amortization	(542)
Net Carrying Amount	968
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,485	3,886
Accumulated Amortization	(1,761)	(484)
Net Carrying Amount	2,724	3,402
License [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	55	116
Accumulated Amortization	(17)	(7)
Net Carrying Amount	$ 38	$ 109

Acquisition of HyperPointe (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Jan. 14, 2022	Dec. 31, 2022
Acquisition of Hyperpointe
Issuance of Common Stock on acquisition of gcg Connect, LLC, d/b/a HyperPointe		$ 906
Fair value of assets acquired and liabilities assumed
Goodwill		$ 4,024
HyperPointe
Acquisition of Hyperpointe
Payments to acquire business	$ 7,121
Settlement of intercompany accounts payable	$ 770
Shares issuance	552,487
Issuance of Common Stock on acquisition of gcg Connect, LLC, d/b/a HyperPointe	$ 906
Business acquisition, share price	$ 1.64
Share price	$ 1.81
Additional consideration in cash or shares	$ 7,500
Additional contingent shares issued or issuable	4,143,647
Consideration paid	$ 7,257
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents	2,269
Accounts receivable	346
Unbilled Receivables	56
Prepaid expenses and other current assets	19
Other long-term assets	16
Property and equipment	68
Accounts payable	(653)
Deferred revenue	(723)
Total net assets	3,233
Goodwill	4,024
HyperPointe \| Customer relationships [Member]
Fair value of assets acquired and liabilities assumed
Other intangible assets, net	1,198
HyperPointe \| Trade names [Member]
Fair value of assets acquired and liabilities assumed
Other intangible assets, net	302
HyperPointe \| Software [Member]
Fair value of assets acquired and liabilities assumed
Other intangible assets, net	335
HyperPointe \| Maximum [Member]
Acquisition of Hyperpointe
Potential earnout	$ 7,500

Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Deferred income tax assets
Net operating loss carryforwards	$ 51,932	$ 48,556
Stock-based compensation	1,029	507
Intangible assets and other	7,298	4,235
Net deferred income tax assets	60,259	53,298
Less:
Valuation allowance	$ (60,259)	$ (53,298)	$ (64,245)

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	150,000,000	150,000,000
Common stock, issued	83,232,262	101,269,349
Common stock, outstanding	83,232,262	101,269,349

Segment Information - Geographical Revenue, Segment Operating Loss and Total Asset Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) segment location	Dec. 31, 2021 USD ($)
Revenue
Total revenue	$ 55,939	$ 73,729
Operating (loss) income
Total operating income (loss)	(31,163)	4,107
Depreciation & Amortization	5,429	3,201
Capital Expenditures	6,293	8,671
Assets
Total long-lived assets	18,794	14,497
Total assets	$ 70,426	127,266
Number of reportable segments \| segment	4
Number of locations operated \| location	2
XpresSpa
Revenue
Total revenue	$ 13,680	4,614
Operating (loss) income
Total operating income (loss)	(12,910)	(9,617)
Depreciation & Amortization	1,479	1,281
Capital Expenditures	2,134	908
Assets
Total long-lived assets	11,851	8,419
Total assets	21,135	12,351
XpresTest
Revenue
Total revenue	38,523	69,078
Operating (loss) income
Total operating income (loss)	2,403	25,452
Depreciation & Amortization	1,711	1,858
Capital Expenditures	775	1,723
Assets
Total long-lived assets	112	2,246
Total assets	4,285	19,349
Treat
Revenue
Total revenue	1,392	37
Operating (loss) income
Total operating income (loss)	(10,577)	(5,735)
Depreciation & Amortization	1,876	50
Capital Expenditures	3,274	5,904
Assets
Total long-lived assets	2,314	2,700
Total assets	3,186	5,918
HyperPointe
Revenue
Total revenue	2,344
Operating (loss) income
Total operating income (loss)	(1,165)
Depreciation & Amortization	332
Assets
Total long-lived assets	4,108
Total assets	6,913
Corporate and Other
Operating (loss) income
Total operating income (loss)	(8,914)	(5,993)
Depreciation & Amortization	31	12
Capital Expenditures	110	136
Assets
Total long-lived assets	409	1,132
Total assets	34,907	89,648
United States
Revenue
Total revenue	52,250	71,114
Assets
Total long-lived assets	15,084	9,698
All other countries
Revenue
Total revenue	3,689	2,615
Assets
Total long-lived assets	$ 3,710	$ 4,799

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property and Equipment

Schedule of property and equipment


	December 31,
	2022		2021		Useful Life
Leasehold improvements	$	8,692	$	11,225	Average 5-8 years
Furniture and fixtures		1,214		1,146	3-4 years
Other operating equipment		760		1,027	Maximum 5 years
		10,666		13,398
Accumulated depreciation		(7,000)		(6,740)
Total property and equipment, net	$	3,666	$	6,658

Commitments and Contingencies (Details)		12 Months Ended
Commitments and Contingencies (Details)	May 26, 2020 USD ($) employee	Dec. 31, 2022 USD ($)	Sep. 20, 2022 USD ($)	Dec. 31, 2021 USD ($)
Kyle Collins
Loss Contingencies [Line Items]
Penalties per employee per pay period	$ 0.1
Number of current and former employees \| employee	240
Kyle Collins \| Settled litigation
Loss Contingencies [Line Items]
Settlement amount			$ 513,000
Additional payroll tax			$ 4,000
Accrued settlement amount		$ 517,000
OTG Management PHL B [Member]
Loss Contingencies [Line Items]
Lease term		12 years
Accounts payable, accrued expenses and other.
Loss Contingencies [Line Items]
Estimated litigation liability, current		$ 963,000		$ 845,000
Maximum [Member] \| OTG Management PHL B [Member]
Loss Contingencies [Line Items]
Loss contingency damages sought		2,250,000
Minimum [Member] \| OTG Management PHL B [Member]
Loss Contingencies [Line Items]
Loss contingency damages sought		$ 864,000

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes.

Income Taxes

Note 18. Income Taxes

For the years ended December 31, 2022 and 2021, the income (loss) before income taxes consisted of the following:


	2022		2021
Domestic	$	(32,445)	$	3,137
Foreign		(129)		(188)
	$	(32,574)	$	2,949

Income tax expense for the years ended December 31, 2022 and 2021 consisted of the following:


	For the years ended December 31,
	2022		2021
Current:
Federal	$	—	$	—
State		41		56
Foreign		14		—
Deferred:
Federal		—		—
	$	55	$	56

Income tax expense differed from the amounts computed by applying the applicable United States federal income tax rate to loss from continuing operations before taxes on income as a result of the following:


	For the years ended December 31,
	2022			2021
Income (loss) from operations before income taxes	$	(32,574)		$	2,949
Tax rate		21	%		21	%

Computed “expected” tax benefit		(6,841)			619
State taxes, net of federal income tax benefit		706			1,516
Change in valuation allowance		7,014			(10,946)
Adjustment JV Basis		339			4,445
Nondeductible expenses		341			1,104
Return to Provision Adjustment		(94)			2,403
State Deferred Rate Change		(570)			—
Asset Impairment Adjustment		(810)			—
Other items		(31)			915
Income tax expense	$	55		$	56

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows:


	December 31,
	2022		2021
Deferred income tax assets
Net operating loss carryforwards	$	51,932	$	48,556
Stock-based compensation		1,029		507
Intangible assets and other		7,298		4,235
Net deferred income tax assets		60,259		53,298
Less:
Valuation allowance		(60,259)		(53,298)
Net deferred income tax assets	$	—	$	—

The Company assesses the need for a valuation allowance related to its deferred income tax assets by considering whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. A valuation allowance has been recorded against the Company’s deferred income tax assets, as it is in the opinion of management that it is more likely than not that the net operating loss carryforwards ("NOL") will not be utilized in the foreseeable future.

The cumulative valuation allowance as of December 31, 2022 is $60,259 which will be reduced if and when the Company determines that the deferred income tax assets are more likely than not to be realized.


As of January 1, 2021	$	64,245
Charged to cost and expenses		(8,544)
Return to provision true-up and other		(2,403)
As of December 31, 2021		53,298
Charged to cost and expenses		6,864
Return to provision true-up and other		97
As of December 31, 2022	$	60,259

As of December 31, 2022, 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 $75,045 for U.S. federal purposes with an indefinite life due to new regulations in the Tax Cuts and Jobs Act 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. The Coronavirus Aid, Relief, and Economic Security Act or "CARES Act" was enacted subsequent to the December 31, 2019 period, on March 27, 2020. The CARES act provided for favorable business provisions. However, the Company does not anticipate the income tax provision changes to materially benefit the Company.

The Company files its tax returns in the U.S. federal jurisdiction, as well as in various state and local jurisdictions. The company is not currently under audit in any taxing jurisdictions. The federal statute of limitations for audit consideration is 3 years from the filing date, and generally states implement a statute of limitations between 3 and 5 years.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-Paragraph 2
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+ Details

Segment Information (Tables)

12 Months Ended

Dec. 31, 2022

Segment Information

Schedule of revenue from external customers and long-lived assets, by geographical areas


	For the years ended
	December 31,
	2022		2021
Revenue
United States	$	52,250	$	71,114
All other countries		3,689		2,615
Total revenue	$	55,939	$	73,729
Long-lived assets
United States	$	15,084	$	9,698
All other countries		3,710		4,799
Total long-lived assets	$	18,794	$	14,497

Schedule of segment reporting information, by segment


	For the twelve months ended
	December 31,
	2022		2021
Revenue
XpresSpa	$	13,680	$	4,614
XpresTest		38,523		69,078
Treat		1,392		37
HyperPointe		2,344		—
Corporate and other		—		—
Total revenue	$	55,939	$	73,729





	For the twelve months ended
	December 31,
	2022		2021
Operating loss
XpresSpa	$	(12,910)	$	(9,617)
XpresTest		2,403		25,452
Treat		(10,577)		(5,735)
HyperPointe		(1,165)		—
Corporate and other		(8,914)		(5,993)
Total operating (loss) income	$	(31,163)	$	4,107

		2022		2021
Depreciation & Amortization
XpresSpa	$	1,479	$	1,281
XpresTest		1,711		1,858
Treat		1,876		50
HyperPointe		332		—
Corporate and other		31		12
Total depreciation & amortization	$	5,429	$	3,201


		2022		2021
Capital Expenditures
XpresSpa	$	2,134	$	908
XpresTest		775		1,723
Treat		3,274		5,904
HyperPointe		—		—
Corporate and other		110		136
Total capital expenditures	$	6,293	$	8,671



		As of December 31,
	2022		2021
Long-lived Assets
XpresSpa	$	11,851		8,419
XpresTest		112		2,246
Treat		2,314		2,700
HyperPointe		4,108		—
Corporate and other		409		1,132
Total long-lived Assets	$	18,794	$	14,497

	2022		2021
Assets
XpresSpa	$	21,135	$	12,351
XpresTest		4,285		19,349
Treat		3,186		5,918
HyperPointe		6,913		—
Corporate and other		34,907		89,648
Total assets	$	70,426	$	127,266

Acquisition of HyperPointe - Fair value assumptions of intangible assets (Details) - Income approach - HyperPointe	Dec. 31, 2022 Y
Trade name [Member] \| Discount rate
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	0.2450
Trade name [Member] \| Estimated remaining economic life (Years)
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	12
Trade name [Member] \| Percent of revenue attributable to intangible assets
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	1
Trade name [Member] \| Royalty rate
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	0.0100
Customer relationships [Member] \| Attrition rate
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	0.1500
Customer relationships [Member] \| Existing customer growth
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	0.0300
Customer relationships [Member] \| Business development expense for new customers
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	0.0050
Customer relationships [Member] \| Discount rate
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	0.2600
Customer relationships [Member] \| Estimated remaining economic life (Years)
Acquisition of Hyperpointe
Acquired finite lived intangible asset, measurement input	5

Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets	$ 110	$ 0
Amortization expense	$ 1,766	447
Minimum [Member] \| HyperPointe
Finite-Lived Intangible Assets [Line Items]
Expected useful lives (in years)	5 years
Maximum [Member] \| HyperPointe
Finite-Lived Intangible Assets [Line Items]
Expected useful lives (in years)	12 years
Trade names [Member]
Finite-Lived Intangible Assets [Line Items]
Expected useful lives (in years)	6 years
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets		$ 0
Software [Member] \| Impairment of long-lived assets
Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets	$ 110
Software [Member] \| Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Expected useful lives (in years)	3 years
Software [Member] \| Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Expected useful lives (in years)	5 years

Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Cash, Cash Equivalents, and Restricted Cash
Deposits in excess of FDIC limits	$ 16,069	$ 103,339
Amount of cash in overseas accounts	$ 2,562	$ 2,113

Net earnings (loss) per Share of Common Stock (Tables)

12 Months Ended

Dec. 31, 2022

Net earnings/(loss) per Share of Common Stock

Schedule of computation of basic and diluted net earnings/(losses) per common share


	Year ended
	December 31,
	2022		2021
Basic numerator:
Net (loss) income attributable to XWELL, Inc.	$	(32,837)	$	3,349
Net (loss) income attributable to common shareholders	$	(32,837)	$	3,349
Basic denominator:
Basic weighted average shares outstanding		93,655,331		104,306,173
Basic (loss) earnings per share	$	(0.35)	$	0.03
Diluted numerator:
(Loss) earnings attributable to common shareholders	$	(32,837)	$	3,349
Diluted denominator:
Diluted weighted average shares outstanding		93,655,331		105,076,758
Diluted (loss) earnings per share	$	(0.35)	$	0.03


Net (loss) income per share data presented above excludes from the calculation of diluted net (loss) income, the following potentially dilutive securities, having an anti-dilutive impact, in case of net loss
Both vested and unvested options to purchase an equal number of shares of Common Stock		4,830,029		2,614,766
Unvested RSUs to issue an equal number of shares of Common Stock		281,250		521,049
Warrants to purchase an equal number of shares of Common Stock		1,172,088		37,338,164
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders		6,283,367		40,473,979

Property and Equipment

12 Months Ended

Dec. 31, 2022

Property and Equipment

Property and Equipment

Note 7. Property and Equipment

Property and equipment are comprised of three categories: leasehold improvements, furniture and fixtures, and other operating equipment as of December 31, 2022 and 2021 as follows:


	December 31,
	2022		2021		Useful Life
Leasehold improvements	$	8,692	$	11,225	Average 5-8 years
Furniture and fixtures		1,214		1,146	3-4 years
Other operating equipment		760		1,027	Maximum 5 years
		10,666		13,398
Accumulated depreciation		(7,000)		(6,740)
Total property and equipment, net	$	3,666	$	6,658

Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are depreciated over the shorter of remaining lease term or economic useful life (which is on average 5-8 years).

The Company performed assessments of its property and equipment for impairment for the years ended December 31, 2022 and 2021 and based upon the results of the impairment tests, the Company recorded impairment expenses of approximately $4,559 and $68, respectively, which is included in “Impairment of long-lived assets” in the consolidated statements of operations and comprehensive loss. The increase in impairment expense is related to the closure of the XpresCheck locations throughout 2022, the underperformance of our Treat locations at JFK International airport and Phoenix Sky Harbor airport, and the impairment of certain XpresSpa stores.

During the years ended December 31, 2022 and 2021, the Company recorded $3,663 and $2,754, respectively, of depreciation expense.

Cash, Cash Equivalents, and Restricted Cash - Summary of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash, Cash Equivalents, and Restricted Cash
Cash denominated in United States dollars	$ 16,344	$ 102,560
Cash denominated in currency other than United States dollars	2,562	2,133
Restricted cash	751	751
Credit and debit card receivables	132	813
Total cash, cash equivalents and restricted cash	$ 19,789	$ 106,257	$ 90,502

Intangible Assets

12 Months Ended

Dec. 31, 2022

Intangible Assets

Intangible Assets

Note 9. Intangible Assets

The following table provides information regarding the Company’s intangible assets, which consist of the following:


	December 31, 2022						December 31, 2021
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trade names	$	302	$	(24)	$	278	$	1,339	$	(1,118)	$	221
Customer relationships		1,510		(542)		968		—		—		—
Software		4,485		(1,761)		2,724		3,886		(484)		3,402
Licenses		55		(17)		38		116		(7)		109
Total intangible assets	$	6,352	$	(2,344)	$	4,008	$	5,341	$	(1,609)	$	3,732

The Company’s trade name relates to the value of the Hyperpointe trade name, software relates to certain capitalized third-party costs related to a new website and a point-of-sale system; and licenses relates to certain capitalized costs of foreign acquisition.

In the year ended December 31, 2022, the Company recorded an impairment of $110 related to Software which is included in “Impairment of long-lived assets” on the Company’s consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2022. The Company did not record any impairment of intangible assets in 2021. The increase in impairment expense of intangible assets is primarily related to the closure of our XpresCheck locations throughout 2022.

The Company’s intangible assets are amortized over their expected useful lives, which is six years for trade names and five and three years for software, whereas the intangibles obtained as a result of the Hyperpointe acquisition have an estimated life of 5 to 12 years. During the years ended December 31, 2022 and 2021, the Company recorded amortization expense of $1,766, and $447, respectively, related to its intangible assets.

Estimated amortization expense for the Company’s intangible assets at December 31, 2022 is as follows:


Calendar Years ending December 31,	Amount
2023	$	1,503
2024		1,462
2025		411
2026		317
2027		77
Thereafter		238
Total	$	4,008

Intangible Assets - Schedule of Finite-Lived Intangible Assets, Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
2023	$ 1,503
2024	1,462
2025	411
2026	317
2027	77
Thereafter	238
Total	$ 4,008	$ 3,732

Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Stock-based Compensation

Schedule of fair value of stock options estimated


Share price of the Company’s Common Stock on the grant date:	$	0.65 - 1.64
Exercise price:	$	0.65 - 1.64
Expected volatility:		119.41 - 123.45	%
Expected dividend yield:		0	%
Annual average risk-free rate:		1.62 - 4.14	%
Expected term:		6.41 - 6.43	years

Stock options and restricted stock units activity

The following tables summarize information about stock options and RSU activity during the year ended December 31, 2022:


	RSUs			XpresTest RSAs			Stock options
		Weighted			Weighted			Weighted
		average			average			average		Exercise
	No. of	grant date		No. of	grant date		No. of	exercise		price
	RSUs	fair value		RSAs	fair value		options	price		range
Outstanding as of December 31, 2021	600,000	$	1.63	—	$	—	2,826,871	$	2.57	$	1.19 - 2,460
Granted	531,250		0.84	15.0		56,890	2,350,338		1.46		0.65 - 1.64
Exercised/Vested	(850,000)		1.46	(10.0)		61,550	—		—
Forfeited	—		—	—		—	(245,027)		1.55		1.43-3.82
Expired	—		—	—		—	(102,153)		6.05		1.44-2,232
Outstanding as of December 31, 2022	281,250	$	0.65	5.0	$	47,570	4,830,029	$	2.00	$	0.65 - 2,460
Exercisable as of December 31, 2022							2,061,259	$	2.56	$	1.19 - 2,460

The following tables summarize information about stock options and RSU activity during the year ended December 31, 2021:


	RSUs			XpresTest RSAs			Stock options
		Weighted			Weighted			Weighted
		average			average			average		Exercise
	No. of	grant date		No. of	grant date		No. of	exercise		price
	RSUs	fair value		RSAs	fair value		options	price		range
Outstanding as of December 31, 2020	—	$	—	28.75	$	11,390.35	1,353,888	$	3.82	$	1.53 - 2,460.0
Granted	1,349,167		1.58	120.00		5,227.20	1,668,297		1.56		1.19 - 1.61
Exercised/Vested	(749,167)		1.54	(148.75)		6,418.40	(8,334)		1.53
Forfeited	—		—	—		—	(183,230)		1.61
Expired	—		—	—		—	(3,750)		50.8		NA
Outstanding as of December 31, 2021	600,000	$	1.63	—	$	—	2,826,871	$	2.57	$	1.19 - 2,460.0
Exercisable as of December 31, 2021							1,024,694	$	3.81	$	1.19 - 2,460.0

Stock-based Compensation - Stock Options and RSU Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Stockholders Equity [Line Items]
No. of options, Outstanding, Beginning balance	2,826,871	1,353,888
No. of options, Granted	2,350,338	1,668,297
No. of options, Exercised/Vested	0	(8,334)
No. of options, Forfeited	(245,027)	(183,230)
No. of options, Expired	(102,153)	(3,750)
No. of options, Outstanding, Ending balance	4,830,029	2,826,871
No. of options, Exercisable	2,061,259	1,024,694
Weighted average grant date fair value, Beginning balance	$ 2.57	$ 3.82
Weighted average grant date fair value, Granted	1.46	1.56
Weighted average grant date fair value, Exercised/Vested	0	1.53
Weighted average grant date fair value, Forfeited	1.55	1.61
Weighted average grant date fair value, Expired	6.05	50.8
Weighted average grant date fair value, Ending balance	2.00	2.57
Weighted average grant date fair value, Exercisable	$ 2.56	$ 3.81
RSUs
Stockholders Equity [Line Items]
No. of options, Outstanding, Beginning balance	600,000
No. of options, Granted	531,250	1,349,167
No. of options, Exercised/Vested	(850,000)	(749,167)
No. of options, Forfeited	0
No. of options, Expired	0
No. of options, Outstanding, Ending balance	281,250	600,000
Weighted average grant date fair value, Beginning balance	$ 1.63
Weighted average grant date fair value, Granted	0.84	$ 1.58
Weighted average grant date fair value, Exercised/Vested	1.46	1.54
Weighted average grant date fair value, Forfeited	0
Weighted average grant date fair value, Expired	0
Weighted average grant date fair value, Ending balance	$ 0.65	$ 1.63
XpresTest RSAs
Stockholders Equity [Line Items]
No. of options, Outstanding, Beginning balance		28.75
No. of options, Granted	15.0	120.00
No. of options, Exercised/Vested	(10.0)	(148.75)
No. of options, Outstanding, Ending balance	5.0
Weighted average grant date fair value, Beginning balance		$ 11,390.35
Weighted average grant date fair value, Granted	$ 56,890	5,227.20
Weighted average grant date fair value, Exercised/Vested	61,550	6,418.40
Weighted average grant date fair value, Ending balance	47,570
Minimum [Member]
Stockholders Equity [Line Items]
Exercise price range, Outstanding, Beginning balance	1.19	1.53
Exercise price range, Granted	0.65	1.19
Exercise price range, Forfeited	1.43
Exercise price range, Expired	1.44
Exercise price range, Outstanding, Ending balance	0.65	1.19
Exercise price range, Exercisable	1.19	1.19
Maximum [Member]
Stockholders Equity [Line Items]
Exercise price range, Outstanding, Beginning balance	2,460
Exercise price range, Granted	1.64	1.61
Exercise price range, Forfeited	3.82
Exercise price range, Expired	2,232
Exercise price range, Outstanding, Ending balance	2,460	2,460
Exercise price range, Exercisable	$ 2,460	$ 2,460.0

Stockholders' Equity and Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Aug. 16, 2022	Dec. 31, 2021
Warrants [Line Items]
Threshold value of shares repurchases	$ 1,000
Placement Agent Agreement
Warrants [Line Items]
Cash fees paid		$ 2,162
Palladium Warrants \| Placement Agent Agreement
Warrants [Line Items]
Warrants to purchase shares of common stock		325,500
Warrant exercise price		$ 1.70
H.C.W. Warrants \| Placement Agent Agreement
Warrants [Line Items]
Warrants to purchase shares of common stock		846,588
Warrant exercise price		$ 2.125
December 2020 Warrants
Warrants [Line Items]
Total of warrants exercised		11,273,529
Gross proceeds		$ 19,245

Variable Interest Entities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Assets	$ 127,266	$ 70,426	$ 127,266
Liabilities	27,331	22,477	27,331
Total revenue		55,939	73,729
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Assets	3,033	275	3,033
Liabilities	683	146	683
Total revenue	$ 50,689	$ 32,960	$ 50,689

- Definition

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03(11))
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Reference 2: http://www.xbrl.org/2003/role/exampleRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 470
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-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.

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Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 19,038	$ 105,506
Marketable Securities	23,153
Accounts receivable	2,858	615
Inventory	1,161	1,763
Other current assets	1,122	1,095
Total current assets	47,332	108,979
Restricted cash	751	751
Property and equipment, net	3,666	6,658
Intangible assets, net	4,008	3,732
Operating lease right of use assets, net	8,276	4,336
Goodwill	4,024
Other assets	2,369	2,810
Total assets	70,426	127,266
Current liabilities
Accounts payable	2,312	5,535
Accrued expenses and other current liabilities	5,719	7,423
Current portion of operating lease liabilities	2,586	2,736
Deferred revenue	339	549
Current portion of promissory note, unsecured		3,584
Total current liabilities	10,956	19,827
Long-term liabilities
Operating lease liabilities	11,521	7,504
Total liabilities	22,477	27,331
Commitments and contingencies (see Note 19)
Equity
Common Stock, $0.01 par value per share, 150,000,000 shares authorized; 83,232,262 and 101,269,349 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively	832	1,013
Additional paid-in capital	467,740	487,306
Accumulated deficit	(428,112)	(395,275)
Accumulated other comprehensive loss	(534)	(312)
Total equity attributable to XWELL, Inc.	39,926	92,732
Noncontrolling interests	8,023	7,203
Total equity	47,949	99,935
Total liabilities and equity	$ 70,426	$ 127,266

Acquisition of HyperPointe (Tables) - HyperPointe

12 Months Ended

Dec. 31, 2022

Business Acquisition [Line Items]

Schedule of recognized identified assets acquired and liabilities assumed


Consideration paid	$	7,257

Fair value of assets acquired and liabilities assumed

Cash and cash equivalents	$	2,269
Accounts receivable		346
Unbilled Receivables		56
Prepaid expenses and other current assets		19
Other long-term assets		16
Property and equipment		68
Customer relationships		1,198
Trade name		302
Software		335

Accounts payable		(653)
Deferred revenue		(723)
		3,233
Goodwill	$	4,024

Customer relationships [Member]

Business Acquisition [Line Items]

Schedule of significant assumptions utilized in valuation of intangible assets


Customer relationships Attrition Rate	15.00	%

Existing Customer Growth	3.00	%

Business Development Expense for New Customers	0.50	%

Customer relationships Discount Rate	26.00	%

Estimated Remaining Economic Life (Years) (approx.)	5	yrs

Trade names [Member]

Business Acquisition [Line Items]

Schedule of significant assumptions utilized in valuation of intangible assets


% of Revenue Attributable to Trade Name	100	%

Royalty Rate	1.00	%

Trade Name Discount Rate	24.50	%

Remaining Economic Life (Years)	12	yrs

Leases - Other Assumptions and Pertinent Information (Details)	Dec. 31, 2022
Leases
Weighted average remaining lease term (years):	5 years 11 months 23 days
Weighted average discount rate used to determine present value of operating lease liability:	7.69%

Segment Information

12 Months Ended

Dec. 31, 2022

Segment Information

Segment Information

Note 16. Segment Information

The Company analyzes the results of the Company’s business through the Company’s four reportable segments: XpresSpa, XpresTest, Treat and HyperPointe. The XpresSpa segment provides travelers premium spa services, including massage, nail and skin care, as well as spa and travel products. The XpresTest segment provides diagnostic COVID-19 tests at XpresCheck™ Wellness Centers in airports, to airport employees and to the traveling public. The Treat segment provides access to integrated care which can seamlessly fit into a post-pandemic world and is designed to deliver on-demand access to integrated healthcare through technology and personalized services, positioned for a traveler to access health care, records and real-time information all in one place, as well as book appointments in the Company’s on-site wellness centers as they reopen. HyperPointe, which we acquired in January 2022, provides a broad range of service and support options for our customers, including technical support services and advanced services. The chief operating decision maker evaluates the operating results and performance of the Company’s segments through operating income. Expenses that can be specifically identified with a segment have been included as deductions in determining operating income. Any remaining expenses and other charges are included in Corporate and Other.

The Company currently operates in two geographical regions: United States and all other countries, which include Netherlands, Turkiye and United Arab Emirates. The following table represents the geographical revenue, and total long-lived asset information as of and for the years ended December 31, 2022 and 2021. There were no concentrations of geographical revenue and long-lived assets related to any single foreign country that were material to the Company’s consolidated financial statements. Long-lived assets include property and equipment, restricted cash, equity investments, security deposits and right of use lease assets.


	For the years ended
	December 31,
	2022		2021
Revenue
United States	$	52,250	$	71,114
All other countries		3,689		2,615
Total revenue	$	55,939	$	73,729
Long-lived assets
United States	$	15,084	$	9,698
All other countries		3,710		4,799
Total long-lived assets	$	18,794	$	14,497

The Company’s continuing operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the enterprise’s CODM in deciding how to allocate resources and in assessing performance.

As a result of the Company’s transition to a pure-play health and wellness services company, the Company currently has four reportable operating segments: XpresSpa, XpresTest Treat and HyperPointe.

For 2022, customers A, B, and C comprised approximately 55%, 33%, and 10%, respectively of the Companys’ net sales from its Hyperpointe segment.

As of December 31, 2022, Customers A and D comprised approximately 55% and 27%, respectively of the Company’s accounts receivable at its Hyperpointe segment.

Customer E comprised approximately 10% of the Company’s net sales from its XpresTest segment. Customer F comprised approximately 99% of the Company’s accounts receivable at its XpresTest segment and 92% of the Company’s accounts receivable.


	For the twelve months ended
	December 31,
	2022		2021
Revenue
XpresSpa	$	13,680	$	4,614
XpresTest		38,523		69,078
Treat		1,392		37
HyperPointe		2,344		—
Corporate and other		—		—
Total revenue	$	55,939	$	73,729





	For the twelve months ended
	December 31,
	2022		2021
Operating loss
XpresSpa	$	(12,910)	$	(9,617)
XpresTest		2,403		25,452
Treat		(10,577)		(5,735)
HyperPointe		(1,165)		—
Corporate and other		(8,914)		(5,993)
Total operating (loss) income	$	(31,163)	$	4,107

		2022		2021
Depreciation & Amortization
XpresSpa	$	1,479	$	1,281
XpresTest		1,711		1,858
Treat		1,876		50
HyperPointe		332		—
Corporate and other		31		12
Total depreciation & amortization	$	5,429	$	3,201


		2022		2021
Capital Expenditures
XpresSpa	$	2,134	$	908
XpresTest		775		1,723
Treat		3,274		5,904
HyperPointe		—		—
Corporate and other		110		136
Total capital expenditures	$	6,293	$	8,671



		As of December 31,
	2022		2021
Long-lived Assets
XpresSpa	$	11,851		8,419
XpresTest		112		2,246
Treat		2,314		2,700
HyperPointe		4,108		—
Corporate and other		409		1,132
Total long-lived Assets	$	18,794	$	14,497

	2022		2021
Assets
XpresSpa	$	21,135	$	12,351
XpresTest		4,285		19,349
Treat		3,186		5,918
HyperPointe		6,913		—
Corporate and other		34,907		89,648
Total assets	$	70,426	$	127,266

Long-lived assets includes property and equipment, right of use lease assets, security deposits, equity investments and restricted cash.

The Company performed impairment assessments of long-lived assets and operating lease right-of-use asset for the years ended December 31, 2022 and 2021. Based upon the results of the impairment tests, the Company recorded impairment expenses of long-lived assets for approximately $619, $677 and $3,373 for its XpresSpa, XpresTest and Treat segments respectively for the year ended December 31, 2022. Additionally, the Company recorded impairment expenses of lease right-of-use asset for approximately $936, $38 and $136 for its XpresSpa, XpresTest and Treat segments respectively for the year ended December 31, 2022. For the year ended December 31,2021 the Company recorded impairment expenses of long-lived assets for approximately $68 and impairment expenses of operating lease right-of-use asset for approximately $747 only in its XpresSpa segment; the XpresTest and Treat segments were not impaired in 2021.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 22
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Leases - Future Minimum Commitments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Leases
2023	$ 3,479
2024	3,153
2025	2,676
2026	1,618
2027	1,495
Thereafter	4,389
Total future lease payments	16,810
Less: interest expense at incremental borrowing rate	(2,703)
Net present value of lease liabilities	$ 14,107

Accrued Expenses and Other Current Liabilities

12 Months Ended

Dec. 31, 2022

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

Note 17. Accrued Expenses and Other Current Liabilities

As of December 31, 2022, and 2021, the Company’s accrued expenses and other current liabilities were comprised of the following:



	December 31, 2022		December 31, 2021
Litigation accrual	$	963	$	845
Accrued compensation		2,008		2,862
Tax-related liabilities		573		603
Common area maintenance accruals		160		—
AP Accruals		754		431
Gift certificates		496		494
Construction accrual		—		930
Credit card processing fees		33		501
Other miscellaneous accruals		732		757
Total accrued expenses and other current liabilities	$	5,719	$	7,423

Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other Current Assets
Prepaid expenses	$ 1,074	$ 1,047
Other	48	48
Total other current assets	$ 1,122	$ 1,095

Fair Value Measurements - (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Cost method investments	$ 104	$ 722
Fair Value, Recurring
Fair value of the investment	104	722
Assets, fair value	104	722
Fair Value, Recurring \| Fair Value, Inputs, Level 2
Fair value of the investment	104	722
Assets, fair value	104	722
Fair Value, Nonrecurring
Intangible assets	4,008
Fair Value, Nonrecurring \| Fair Value, Inputs, Level 3
Intangible assets	4,008
Route1 Inc
Fair value of the investment	104	722
Route1 Inc \| Fair Value, Recurring
Fair value of the investment	104	722
Route1 Inc \| Fair Value, Recurring \| Fair Value, Inputs, Level 2
Fair value of the investment	$ 104	$ 722

Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

Note 11. Leases

The Company leases spa and clinic locations at various domestic and international airports. Additionally, the Company leases its corporate office in New York City. Certain leases entered into by the Company are accounted for in accordance with ASC 842. The Company determines if an arrangement is a lease at inception and if it qualifies under ASC 842. The Company’s lease arrangements generally contain fixed payments throughout the term of the lease and most also contain a variable component to determine the lease obligation where a certain percentage of sales is used to calculate the lease payments. The Company enters into leases that expire, are amended and extended, or are extended on a month-to-month basis. Leases are not included in the calculation of the total lease liability and the right of use asset when they are month-to-month.

All qualifying leases held by the Company are classified as operating leases. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company records its operating lease assets and liabilities based on required guaranteed payments under each lease agreement. The Company uses its incremental borrowing rate, which approximates the rate at which the Company can borrow funds on a secured basis, using the information available at commencement date of the lease in determining the present value of guaranteed lease payments. The interest rate implicit in the lease is generally not determinable in transactions where a company is the lessee.

The Company reviews all of its existing lease agreements to determine whether there were any modifications to lease agreements and to assess if any agreements should be accounted for pursuant to the guidance in ASC 842.

The following is a summary of the activity in the Company’s current and long-term operating lease liabilities for the year ended December 31, 2022 and 2021:


	Year ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(4,092)	$	(4,230)
Leased assets obtained in exchange for new and modified operating lease liabilities	$	6,891	$	3,646
Leased assets surrendered in exchange for termination of operating lease liabilities	$	—	$	9

As of December 31, 2022, future minimum operating leases commitments are as follows:


Calendar Years ending December 31,	Amount
2023	$	3,479
2024		3,153
2025		2,676
2026		1,618
2027		1,495
Thereafter		4,389
Total future lease payments		16,810
Less: interest expense at incremental borrowing rate		(2,703)
Net present value of lease liabilities	$	14,107

Other assumptions and pertinent information related to the Company’s accounting for operating leases are:


Weighted average remaining lease term:	5.98	years
Weighted average discount rate used to determine present value of operating lease liability:	7.69	%

Variable lease payments calculated monthly as a percentage of a product and services revenue were $1,392 and $576 for the years ended December 31, 2022 and 2021, respectively.

Rent expense for operating leases for the years ended December 31, 2022 and 2021 were $3,917 and $2,069, respectively.

The Company performed assessments of its right of use lease assets for impairment for the years ended December 31, 2022 and 2021. Based upon the results of the impairment tests, the Company recorded impairment expenses of approximately $1,110 and $747 which is included in Impairment of operating lease right-of-use assets on the consolidated statement of operations and comprehensive income (loss) for the years ended December 31, 2022 and 2021, respectively.

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Schedule of asset and liabilities measured at fair value on recurring and nonrecurring basis


			Fair value measurement at reporting date using
			Quoted prices in
			active markets		Significant other		Significant
			for identical		observable		unobservable
	Balance		assets (Level 1)		inputs (Level 2)		inputs (Level 3)
As of December 31, 2022:
Recurring fair value measurements
Equity securities:
Route1, Inc.	$	104	$	—	$	104	$	—
Total equity securities		104		—		104		—
Total recurring fair value measurements	$	104	$	—	$	104	$	—
Nonrecurring fair value measurements
Intangible assets		4,008		—		—		4,008
Total nonrecurring fair value measurements	$	4,008	$	—	$	—	$	4,008

As of December 31, 2021
Recurring fair value measurements
Equity securities:
Route1	$	722	$	—	$	722	$	—
Total equity securities		722		—		722		—
Total recurring fair value measurements	$	722	$	—	$	722	$	—

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Stock-based Compensation - Variables Used in Estimating Fair Value of Stock Options (Details)	12 Months Ended
	Dec. 31, 2022 $ / shares
Stock Options
Stockholders Equity [Line Items]
Expected volatility Minimum:	119.41%
Expected volatility Maximum:	123.45%
Expected dividend yield:	0.00%
Annual average risk-free rate Minimum:	1.62%
Annual average risk-free rate Maximum:	4.14%
Minimum [Member]
Stockholders Equity [Line Items]
Expected term:	6 years 4 months 28 days
Minimum [Member] \| Stock Options
Stockholders Equity [Line Items]
Share price of the Company's Common Stock on the grant date:	$ 0.65
Exercise price:	$ 0.65
Maximum [Member]
Stockholders Equity [Line Items]
Expected term:	6 years 5 months 4 days
Maximum [Member] \| Stock Options
Stockholders Equity [Line Items]
Share price of the Company's Common Stock on the grant date:	$ 1.64
Exercise price:	$ 1.64

Long-term Notes and Convertible Notes

12 Months Ended

Dec. 31, 2022

Long-term Notes and Convertible Notes

Long-term Notes and Convertible Notes

Note 12. Long-term Notes and Convertible Notes

Paycheck Protection Program

On May 1, 2020, the Company entered into a U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“the PPP”) promissory note in the principal amount of $5,653 payable to Bank of America, NA (“Bank of America”) evidencing a PPP loan (the “PPP Loan”). The PPP Loan bore interest at a rate of 1% per annum. No payments were due on the PPP Loan during a six-month deferral period commencing on May 2, 2020. Commencing one month after the

expiration of the deferral period and continuing on the same day of each month thereafter until the maturity date of the PPP Loan, the Company was obligated to make monthly payments of principal and interest, each in such equal amount required to fully amortize the principal amount outstanding on the PPP Loan by the maturity date, which was May 2, 2022. The PPP loan balance was $3,584 as of December 31, 2021. The PPP loan was paid off in full on the maturity date of May 2, 2022.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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-Section 50
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-Subparagraph (c)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 1I
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
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-Paragraph 1I
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-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Intangible Assets

Schedule of company's intangible assets


	December 31, 2022						December 31, 2021
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trade names	$	302	$	(24)	$	278	$	1,339	$	(1,118)	$	221
Customer relationships		1,510		(542)		968		—		—		—
Software		4,485		(1,761)		2,724		3,886		(484)		3,402
Licenses		55		(17)		38		116		(7)		109
Total intangible assets	$	6,352	$	(2,344)	$	4,008	$	5,341	$	(1,609)	$	3,732

Schedule of estimated amortization expense


Calendar Years ending December 31,	Amount
2023	$	1,503
2024		1,462
2025		411
2026		317
2027		77
Thereafter		238
Total	$	4,008

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Revenue, net
Total revenue, net	$ 55,939	$ 73,729
Cost of sales
Labor	21,437	13,421
Occupancy	4,138	2,505
Products and other operating costs	18,316	25,459
Total cost of sales	43,891	41,385
Gross Profit	12,048	32,344
Depreciation and amortization	5,429	3,201
Impairment of long-lived assets	4,669	68
Loss on disposal of assets, net	834	22
Impairment of operating lease right-of-use assets	1,110	747
General and administrative	31,169	24,199
Total operating expenses	43,211	28,237
Operating (loss) income	(31,163)	4,107
Interest income, net	384	43
Foreign exchange loss	(664)	(18)
Other non-operating expense, net	(1,131)	(1,183)
(Loss) income before income taxes	(32,574)	2,949
Income tax expense	(55)	(56)
Net (loss) income	(32,629)	2,893
Net (loss) income attributable to noncontrolling interests	(208)	456
Net (loss) income attributable to XWELL, Inc.	(32,837)	3,349
Net (loss) income	(32,629)	2,893
Other comprehensive loss from operations	(222)	(92)
Comprehensive (loss) income	$ (32,851)	$ 2,801
(Loss) income per share
Basic (loss) income per share (in dollars per share)	$ (0.35)	$ 0.03
Diluted (loss) income per share (in dollars per share)	$ (0.35)	$ 0.03
Weighted-average number of shares outstanding during the period
Basic (in shares)	93,655,331	104,306,173
Diluted (in shares)	93,655,331	105,076,758
Managed services fees
Revenue, net
Total revenue, net		$ 16,843
Patient services revenue
Revenue, net
Total revenue, net	$ 32,776	50,689
Services
Revenue, net
Total revenue, net	18,883	5,420
Products
Revenue, net
Total revenue, net	1,930	763
Hyperpointe Services
Revenue, net
Total revenue, net	2,344
Other
Revenue, net
Total revenue, net	$ 6	$ 14

Acquisition of HyperPointe - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Jan. 14, 2022	Dec. 31, 2022	Dec. 31, 2021
Acquisition of Hyperpointe
Number of options, granted		2,350,338	1,668,297
HyperPointe \| Ezra T. Ernst \| Stock Options
Acquisition of Hyperpointe
Number of options, granted	1,000,000
Exercise price range, Granted	$ 1.64
Fair value of options granted	$ 1,457
Vesting percentage	33.33%
Options, vesting period	3 years
Options, expiry period	10 years

Other Assets - Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Equity investments	$ 104	$ 722
Lease deposits	1,973	2,030
Other	292	58
Other assets	$ 2,369	$ 2,810

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes.

Schedule of income before income tax, domestic and foreign


	2022		2021
Domestic	$	(32,445)	$	3,137
Foreign		(129)		(188)
	$	(32,574)	$	2,949

Schedule of components of income tax expense (benefit)


	For the years ended December 31,
	2022		2021
Current:
Federal	$	—	$	—
State		41		56
Foreign		14		—
Deferred:
Federal		—		—
	$	55	$	56

Schedule of effective income tax rate reconciliation


	For the years ended December 31,
	2022			2021
Income (loss) from operations before income taxes	$	(32,574)		$	2,949
Tax rate		21	%		21	%

Computed “expected” tax benefit		(6,841)			619
State taxes, net of federal income tax benefit		706			1,516
Change in valuation allowance		7,014			(10,946)
Adjustment JV Basis		339			4,445
Nondeductible expenses		341			1,104
Return to Provision Adjustment		(94)			2,403
State Deferred Rate Change		(570)			—
Asset Impairment Adjustment		(810)			—
Other items		(31)			915
Income tax expense	$	55		$	56

Schedule of deferred tax assets and liabilities


	December 31,
	2022		2021
Deferred income tax assets
Net operating loss carryforwards	$	51,932	$	48,556
Stock-based compensation		1,029		507
Intangible assets and other		7,298		4,235
Net deferred income tax assets		60,259		53,298
Less:
Valuation allowance		(60,259)		(53,298)
Net deferred income tax assets	$	—	$	—

Summary of valuation allowance


As of January 1, 2021	$	64,245
Charged to cost and expenses		(8,544)
Return to provision true-up and other		(2,403)
As of December 31, 2021		53,298
Charged to cost and expenses		6,864
Return to provision true-up and other		97
As of December 31, 2022	$	60,259

Accounting and Reporting Policies

12 Months Ended

Dec. 31, 2022

Accounting and Reporting Policies

Accounting and Reporting Policies

Note 2. Accounting and Reporting Policies

(a) Basis of presentation and principles of consolidation

(b) Use of estimates

(d) Cash and cash equivalents

(e) Accounts Receivables

Accounts Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and primarily emanate from our contracts with customers.

(f) Inventory

All inventory is valued at the lower of cost or net realizable value. Cost is determined using a weighted-average cost method.

(g) Intangible assets

(h) Property and Equipment

(i) Impairment of long-lived assets

(j) Leases

(k) Restricted cash

(l) Equity investments

(m) Revenue recognition

XpresSpa

XpresCheck

HyperPointe

(n) Gift cards and customer rewards program

(o) Segment reporting

(p) Pre-opening costs

(q) Cost of sales

Cost of sales consists of spa and clinic operating costs. These costs include all costs that are directly attributable to the location’s operations and include:

●

payroll and related benefits for the location’s operations and management;

●

rent, percentage rent and occupancy costs;

●

the cost of merchandise and testing supplies;

●

freight, shipping and handling costs;

●

production costs;

●

inventory shortage and valuation adjustments; and

●

costs associated with sourcing operations.

(r) Stock-based compensation

(s) Income taxes

(t) Noncontrolling interests

(u) Net income/(loss) per common share

(v) Commitments and contingencies

(w) Variable Interest Entities

(x) Business Combinations

(y) Goodwill

(z) Advertising Costs

Advertising costs are expensed as incurred. Advertising expenses amounted to approximately $4,645 and $2,817 for the years ended December 31, 2022 and 2021, respectively.

(aa) Fair value measurements

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

(bb) Reclassification

(cc) ) Recently adopted accounting pronouncements

Accounting Standards Update No. 2020-06—Debt--Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)

ASU 2021-04: Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options

(dd) Recently Issued Accounting Standards