0001544784-24-000083 | 10-Q | XBRL Viewer

Three months ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

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Other current assets - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Other current assets
Prepaid expenses	$ 1,602	$ 894
Other	19	55
Total other current assets	$ 1,621	$ 949

Stockholders' Equity - Stock Options and RSU Activity (Details)	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Stockholders Equity [Line Items]
No. of options, Outstanding, Beginning balance \| shares	341,205
No. of options, Granted \| shares	150,000
No. of options, Forfeited \| shares	(29,278)
No. of options, Expired \| shares	(9,453)
No. of options, Outstanding, Ending balance \| shares	452,474
No. of options, Exercisable \| shares	272,683
Weighted average grant date fair value, Beginning balance	$ 26.85
Weighted average grant date fair value, Granted	1.50
Weighted average grant date fair value, Forfeited	17.40
Weighted average grant date fair value, Expired	67.89
Weighted average grant date fair value, Ending balance	18.20
Weighted average grant date fair value, Exercisable	25.07
Exercise price range, Granted	$ 1.50
RSUs
Stockholders Equity [Line Items]
RSUs and RSAs Outstanding, Beginning \| shares	11,944
No. of RSUs and RSAs, Exercised/Vested \| shares	(2,986)
No. of RSUs and RSAs, Forfeited \| shares	(2,500)
RSUs and RSAs Outstanding, Ending \| shares	6,458
Weighted average grant date fair value, RSUs and RSAs, Beginning	$ 6.08
Weighted average grant date fair value, RSUs and RSAs exercised/vested	6.13
Weighted average grant date fair value, RSUs and RSAs forfeited	5.09
Weighted average grant date fair value, RSUs and RSAs, Ending	$ 6.74
XpresTest RSAs
Stockholders Equity [Line Items]
RSUs and RSAs Outstanding, Beginning \| shares	5.00
RSUs and RSAs Outstanding, Ending \| shares	5.00
Weighted average grant date fair value, RSUs and RSAs, Beginning	$ 47,570
Weighted average grant date fair value, RSUs and RSAs, Ending	47,570
Minimum
Stockholders Equity [Line Items]
Exercise price range, Outstanding, Beginning balance	4.60
Exercise price range, Forfeited	1.50
Exercise price range, Expired	8.00
Exercise price range, Outstanding, Ending balance	1.50
Exercise price range, Exercisable	4.60
Maximum
Stockholders Equity [Line Items]
Exercise price range, Outstanding, Beginning balance	49,200
Exercise price range, Forfeited	34.40
Exercise price range, Expired	49,200
Exercise price range, Outstanding, Ending balance	7,080
Exercise price range, Exercisable	$ 7,080

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2024

Stockholders' Equity

Schedule of variables used as inputs in calculation of fair value of stock options


Share price of the Company’s Common Stock on the grant date:	$	1.50
Exercise price:	$	1.50
Expected volatility:		121.04	%
Expected dividend yield:		0	%
Annual average risk-free rate:		4.14	%
Expected term:		6.32	years

Schedule of stock options and restricted stock units activity


	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, 2023	11,944	$	6.08	5.00	$	47,570	341,205	$	26.85	$	4.60 - 49,200
Granted	—		-	—		—	150,000	$	1.50		1.50
Exercised/Vested	(2,986)		6.13	—		—	—		—
Forfeited	(2,500)		5.09	—		—	(29,278)	$	17.40	$	1.50 - 34.40
Expired	—		—	—		—	(9,453)	$	67.89	$	8.00 - 49,200
Outstanding as of March 31, 2024	6,458	$	6.74	5.00	$	47,570	452,474	$	18.20	$	1.50 - 7,080
Exercisable as of March 31, 2024							272,683	$	25.07	$	4.60- 7,080

Stockholders' Equity - Stockholders' Equity - Stock-based Compensation (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended
	Oct. 04, 2022	Sep. 30, 2020	Mar. 31, 2024	Mar. 31, 2023
Stockholders Equity [Line Items]
Total stock-based compensation			$ 282	$ 612
Equity incentive plan 2020
Stockholders Equity [Line Items]
Number of shares authorized (in shares)	625,000	250,000
Number of additional shares authorized (in shares)	375,000
Equity incentive plan 2020 \| Employee Stock Option [Member]
Stockholders Equity [Line Items]
Award vesting period (in years)			1 year
Options expiration period (in years)			10 years
Equity incentive plan 2020 \| RSUs
Stockholders Equity [Line Items]
Award vesting period (in years)			1 year
XpresTest 2020 Plan
Stockholders Equity [Line Items]
Number of shares authorized (in shares)		200
Percentage of shares authorized for issuance (in %)		20.00%
Unrecognized stock-based compensation			$ 74	$ 167
Maximum \| Equity incentive plan 2020
Stockholders Equity [Line Items]
Number of shares available for issuance (in shares)			141,120

Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases

Schedule of supplemental cash flow information related to leases

Schedule of future minimum commitments


Calendar Years ending December 31,	Amount
Remaining 2024	$	2,577
2025		3,054
2026		1,979
2027		1,866
2028		1,497
2029		1,273
Thereafter		2,609
Total future lease payments		14,855
Less: interest expense at incremental borrowing rate		(2,745)
Net present value of lease liabilities	$	12,110

Schedule of other assumptions and pertinent information


Weighted average remaining lease term:	5.95	years
Weighted average discount rate used to determine present value of operating lease liability:	7.33	%

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities
Net loss	$ (2,358)	$ (5,829)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	225	587
Impairment of fixed assets	398
Impairment of operating lease right-of-use assets	254
Unrealized Gain on marketable securities	(92)	(206)
Foreign currency remeasurement loss	166	85
Amortization of operating lease right of use asset	286	416
Stock-based compensation	282	612
(Gain) loss on equity investment	(43)	(25)
Changes in assets and liabilities:
Decrease in inventory	66	166
Increase (decrease) in accounts receivable	(1,223)	843
Increase in other assets, current and non-current	(594)	(469)
Increase in deferred revenue	29	6
Decrease in other liabilities, current and non-current	(1,987)	(2,567)
Increase in accounts payable	909	516
Net cash used in operating activities	(3,682)	(5,865)
Cash flows from investing activities
Acquisition of property and equipment	(291)	(1,404)
Investment in marketable securities	(80)	(1,882)
Acquisition of intangibles		(4)
Net cash used in investing activities	(371)	(3,290)
Cash flows from financing activities
Payments for shares withheld on vesting		(22)
Net cash used in financing activities		(22)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(67)	8
Decrease in cash, cash equivalents and restricted cash	(4,120)	(9,169)
Cash, cash equivalents, and restricted cash at beginning of the period	9,188	19,789
Cash, cash equivalents, and restricted cash at end of the period	5,068	10,620
Non-cash investing and financing transactions
Capital expenditures included in Accounts payable, accrued expenses and other current liabilities	$ 17	$ 38

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Intangible Assets
Amortization expense - intangibles	$ 84	$ 382

Business, Basis of Presentation and Liquidity

3 Months Ended

Mar. 31, 2024

Business, Basis of Presentation and Liquidity

Business, Basis of Presentation and Liquidity

Note 1. Business, Basis of Presentation and Liquidity

Overview

XWELL is a global wellness company operating multiple brands and focused on bringing restorative, regenerative and reinvigorating products and services to travelers. XWELL currently has four reportable operating segments: XpresSpa®, XpresTest®, Naples Wax Center and Treat™.

On October 25, 2022, the Company changed its name to XWELL, Inc. (“XWELL” or the “Company”) from XpresSpa Group, Inc. 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”. The Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on October 24, 2022 (the “Amended and Restated Certificate”) reflecting the name change. Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play wellness services company, in both the airport and off-airport marketplaces.

XpresSpa

XWELL’s subsidiary, XpresSpa Holdings, LLC (“XpresSpa”) has been a global airport retailer of spa services through its XpresSpa spa locations, offering travelers premium spa services, including massage, nail and skin care, as well as spa and travel products.

As of March 31, 2024, there were 21 domestic XpresSpa locations in total, 19 Company-owned locations and two franchises. The Company also had 11 international locations operating as of March 31, 2024, including two XpresSpa locations in Dubai International Airport in the United Arab Emirates, one XpresSpa location in Zayad International Airport in Abu Dhabi, UAE, three XpresSpa locations in Schiphol Amsterdam Airport in the Netherlands and five XpresSpa locations in the Istanbul Airport in Turkey.

XpresTest

The Company, in partnership with certain COVID-19 testing partners, successfully launched its XpresCheck Wellness Centers, in June of 2020, through its XpresTest, Inc. subsidiary (“XpresTest”), which offered COVID-19 and other medical diagnostic testing services to the traveling public, as well as airline, airport and concessionaire employees, and TSA and U.S. Customs and Border Protection agents during the pandemic. During 2022 and 2023, as countries continued to relax their testing requirements resulting in rapid decline of testing volumes at the Company’s XpresCheck locations, the Company closed XpresCheck Wellness Centers. As of December 31, 2023, we have closed all XpresCheck locations.

XWELL’s subsidiary, XpresTest, Inc (“XpresTest”) began conducting bio surveillance monitoring with the Centers for Disease Control and Prevention (CDC) in collaboration with Concentric by Ginkgo BioWorks in 2021. The program was extended in January 2022 and renewed in August of 2022 and 2023. In March 2024, the program funding and scope were expanded.

HyperPointe

XWELL’s subsidiary, gcg Connect, LLC, operating as HyperPointe, provides direct to business marketing support across a number of health and health-related channels. From the creation of marketing campaigns for the pharmaceutical industry, to learning management systems to website and health related content creation, HyperPointe is a complementary service provider to XWELL’s health-focused brands as well as providing the majority of services to the external community.

For reporting purposes, the former HyperPointe segment has been consolidated into the XpresTest segment.

Treat

Treat, which is operating through XWELL’s subsidiary Treat, Inc. (“Treat”) is a wellness brand that provides access to wellness services for travelers at on-site centers (currently located in JFK International Airport). In April 2024, the decision was made to close the location in the Salt Lake City International Airport.

Treat offers a full retail product offering and a suite of wellness and spa services. Travelers can purchase time blocks to use our wellness rooms to engage in interactive services like self-guided yoga, meditation and low impact weight exercises or to relax and unplug from the hectic pace of the airport and renew themselves before or after their trip.

Naples Wax Center

XWELL’s subsidiary Naples Wax Center, LLC, which was acquired on September 12, 2023, for a purchase price of $1,624 operates three high-performing locations with core products and service offerings from face and body waxing to a range of skincare and cosmetic products. The acquisition of Naples Wax Center is intended to enable the Company to move beyond its airport client base with a business that can be adapted to a larger wellness platform while also growing its retail footprint to serve long-term financial goals.

TreatStudios

In Q4 of 2023, the Company began plans to open its first TreatStudios location in Jacksonville, Florida in 2024. TreatStudios is an out-of-airport concept providing leased space to established wellness service providers. Revenue will be derived from both lease payments received from the wellness practitioners and the sale of retail at the wellness center.

The Company believes that these strategic imperatives will be accomplished through development of an infrastructure specifically focused on enabling scalable and efficient growth.

Basis of Presentation and Principles of Consolidation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Article 8-03 of Regulation S-X, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as amended. The consolidated balance sheet as of December 31, 2023 was derived from the audited annual financial statements but does not include all information required by GAAP for annual financial statements. The 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 adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected by the Company. Such adjustments are of a normal, recurring nature. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period. All significant intercompany balances and transactions have been eliminated in consolidation.

Reverse Stock Split

On September 28, 2023, the Company effected a 1-for-20 reverse stock split, (the “Reverse Stock Split”) whereby every twenty shares of its Common Stock were reduced to one share of its Common Stock and the price per share of its Common Stock was multiplied by 20. All references to shares and per share amounts have been adjusted to reflect the reverse stock split.

Liquidity and Financial Condition

As of March 31, 2024, the Company had cash and cash equivalents of $4,317 (excluding restricted cash), $14,784 in marketable securities, and total current assets of $24,456. The Company’s total current liabilities balance, which includes accounts payable, deferred revenue, accrued expenses, and operating lease liabilities was $9,187 as of March 31, 2024 and $9,330 as of December 31, 2023. The working capital surplus was $15,269 as of March 31, 2024, compared to a working capital surplus of $17,236 as of December 31, 2023.

The Company significantly reduced operating and overhead expenses in the second half of 2023, while it continues to focus on returning to overall profitability.

The Company has taken actions to improve its overall cash position, right sizing its corporate structure and streamlining its operations. The Company is pursuing strategic partnerships that the Company expects will further strengthen the long-term profitability of the business.

Other current assets (Tables)

3 Months Ended

Mar. 31, 2024

Other current assets

Schedule of other current assets


	March 31, 2024		December 31, 2023
Prepaid expenses	$	1,602	$	894
Other		19		55
Total other current assets	$	1,621	$	949

Stockholders' Equity - 2023 Reverse Stock Split (Details)	Sep. 28, 2023
Stockholders' Equity
Reverse stock split, conversion ratio	0.05
Reverse stock split, multiplying factor for price per share	20

Other Assets - Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Other Assets
Equity investments	$ 92	$ 50
Lease deposits	1,523	1,556
Other	170	236
Other assets	$ 1,785	$ 1,842

Other current assets

3 Months Ended

Mar. 31, 2024

Other current assets

Other current assets

Note 5. Other current assets

As of March 31, 2024 and December 31, 2023, other current assets consisted of the following:


	March 31, 2024		December 31, 2023
Prepaid expenses	$	1,602	$	894
Other		19		55
Total other current assets	$	1,621	$	949

Accrued expenses and other current liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Accrued expenses and other current liabilities
Litigation accrual	$ 424	$ 449
Accrued compensation	1,184	2,098
Tax-related liabilities	485	501
Common area maintenance accruals	495	8
Accounts payable accruals	235	913
Gift certificates	508	509
Credit card processing fees	5	8
Other miscellaneous accruals	359	482
Total accrued expenses and other current liabilities	$ 3,695	$ 4,968

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (2,512)	$ (5,509)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Leases
Operating cash flows from operating leases	$ (835)	$ (973)

Segment Information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Information

Schedule of segment reporting information, by segment


	For the three months ended
	March 31,
	2024		2023
Revenue
XpresSpa	$	4,345	$	4,499
XpresTest		3,643		2,360
Naples Wax		648		—
Treat		90		204
Total revenue	$	8,726	$	7,063

	2024		2023
Operating loss
XpresSpa	$	(2,107)	$	(3,132)
XpresTest		1,670		(281)
Naples Wax		(78)		—
Treat		(673)		(444)
Corporate and other		(1,191)		(2,431)
Total operating loss	$	(2,379)	$	(6,288)

	2024		2023
Depreciation & amortization
XpresSpa	$	132	$	423
XpresTest		26		86
Naples Wax		31		—
Treat		19		65
Corporate and other		17		13
Total depreciation & amortization	$	225	$	587

	For the three months ended
	March 31,
	2024		2023
Capital expenditures
XpresSpa	$	261	$	834
XpresTest		28		28
Naples Wax		22		—
Treat		—		33
Corporate and other		—		7
Total capital expenditures	$	311	$	902

	March 31, 2024		December 31, 2023
Long-lived Assets
XpresSpa	$	8,383	$	8,268
XpresTest		58		92
Naples Wax		2,711		1,371
Treat		28		669
Corporate and other		406		438
Total long-lived Assets	$	11,586	$	10,838

	March 31, 2024		December 31, 2023
Assets
XpresSpa	$	19,098	$	18,453
XpresTest		3,197		2,408
Naples Wax		3,784		2,951
Treat		524		848
Corporate and other		10,874		14,333
Total assets	$	37,477	$	38,993

Intangible Assets

3 Months Ended

Mar. 31, 2024

Intangible Assets

Intangible Assets

Note 6. Intangible Assets

The following tables provides information regarding the Company’s intangible assets subject to amortization, which consist of the following:


	March 31, 2024						December 31, 2023
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trade names	$	200	$	(12)	$	188	$	200	$	(6)	$	194
Customer relationships		1,012		(366)		646		1,012		(341)		671
Software		2,593		(2,174)		419		2,593		(2,120)		473
Licenses		35		(24)		11		35		(20)		15
Total intangible assets	$	3,840	$	(2,576)	$	1,264	$	3,840	$	(2,487)	$	1,353

The Company’s intangible assets are amortized over their expected useful lives. The Company recorded amortization expense of $84 and $382 during the three months ended March 31, 2024 and 2023, respectively.

Based on the intangible assets balance as of March 31, 2024, the estimated amortization expense for the remainder of the calendar year and each of the succeeding calendar years is as follows:


Calendar Years ending December 31,	Amount
Remaining 2024	$	229
2025		307
2026		228
2027		122
2028		122
Thereafter		256
Total	$	1,264

CONDENSED 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 Beginning at Dec. 31, 2022	$ 42	$ 468,530	$ (428,112)	$ (534)	$ 39,926	$ 8,023	$ 47,949
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2022	4,161,613
Issuance of restricted stock units (in shares)	6,015
Value of Shares Withheld to fund payroll taxes		(22)			(22)		(22)
Stock-based compensation		589			589	23	612
Net loss for the period			(5,509)		(5,509)	(320)	(5,829)
Foreign currency translation				(130)	(130)	11	(119)
Balance Ending at Mar. 31, 2023	$ 42	469,097	(433,621)	(664)	34,854	7,737	42,591
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2023	4,167,628
Balance Beginning at Dec. 31, 2023	$ 42	470,737	(455,853)	(1,924)	13,002	7,969	$ 20,971
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2023	4,179,631						4,179,631
Issuance of restricted stock units (in shares)	2,986
Stock-based compensation		259			259	23	$ 282
Net loss for the period			(2,512)		(2,512)	154	(2,358)
Foreign currency translation				(175)	(175)	45	(130)
Balance Ending at Mar. 31, 2024	$ 42	$ 470,996	$ (458,365)	$ (2,099)	$ 10,574	$ 8,191	$ 18,765
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2024	4,182,617						4,182,617

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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- Definition

Amount of equity (deficit) attributable to parent and noncontrolling interest. Excludes temporary equity.

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+ Details

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Accrued expenses and other current liabilities

3 Months Ended

Mar. 31, 2024

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities

Note 7. Accrued expenses and other current liabilities

As of March 31, 2024 and December 31, 2023, accrued expenses and other current liabilities consisted of the following:



	March 31, 2024		December 31, 2023
Litigation accrual	$	424	$	449
Accrued compensation		1,184		2,098
Tax-related liabilities		485		501
Common area maintenance accruals		495		8
Accounts payable accruals		235		913
Gift certificates		508		509
Credit card processing fees		5		8
Other miscellaneous accruals		359		482
Total accrued expenses and other current liabilities	$	3,695	$	4,968

Potentially Dilutive Securities (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share Disclosure.
Net loss attributable to XWELL, Inc	$ (2,512)	$ (5,509)
Basic weighted average shares outstanding	4,182,617	4,167,295
Basic loss per share (in dollars per share)	$ (0.60)	$ (1.32)
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	458,932	401,238
Both vested and unvested options to purchase an equal number of shares of Common Stock
Earnings Per Share Disclosure.
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	452,474	384,719
Unvested RSUs to issue an equal number of shares of Common Stock
Earnings Per Share Disclosure.
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders	6,458	16,319
Warrants to purchase an equal number of shares of Common Stock
Earnings Per Share Disclosure.
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders		200

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

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+ Details

Accounting and Reporting Policies

3 Months Ended

Mar. 31, 2024

Accounting and Reporting Policies

Accounting and Reporting Policies

Note 2. Accounting and Reporting Policies

Use of estimates

The preparation of the accompanying condensed 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 condensed 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.

Revenue Recognition Policy

XpresSpa, Treat and Naples Wax Center

The Company recognizes revenue from the sale of products and services when the services are rendered at XpresSpa, Treat, and Naples Wax Centers locations 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.

XpresTest

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 was 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 the Company is entitled to $10,674 for the sample collection (passenger and aircraft wastewater) and $370 for the traveler enrollment initiatives, which represents the amount of consideration that we are entitled. The Company recognizes 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 recognized the revenue for the traveler enrollment initiative performance obligation in the second quarter of 2023. The Company recognizes revenue ratably (straight line basis) over the term of the contract (one year). The Company recorded $3,306 and $1,670, in revenue for the three months ended March 31, 2024 and 2023, respectively, 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

The Company’s HyperPointe business provides a broad range of service and support options for HyperPointe’s 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. Revenues billed in advance are treated as deferred revenue, which was $87 and $72 as of March 31, 2024 and December 31, 2023, respectively.

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 condensed consolidated balance sheets until remitted to state agencies.

Gift cards, customer rewards and prepaid packages

XWELL offers no-fee, non-expiring gift cards to its customers. No revenue is recognized upon the 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 the reduction in the value of unused card balances.

In addition, XWELL 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. In 2023 the Company adopted a formal expiration policy whereby any loyalty members with inactivity for an 18-month period will forfeit any unused loyalty rewards.

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 condensed consolidated balance sheets until used.

Naples Wax Center offers prepaid wax packages that are either unlimited for one year or a set number of services. When the packages are purchased, the sales are recorded as deferred revenue. As services related to prepaid packages are used, revenue is recognized as income. The deferred revenue as of March 31, 2024 was $794 and for the year ended December 31, 2023 deferred revenue was $778.

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 condensed consolidated statements of operations and comprehensive loss. During the three months ended March 2024, the Company recorded $166 in exchange losses occurring from the remeasurement of monetary balance sheet items denominated in non-dollar currencies. During the three months ended March 2023, the Company recorded $85 in exchange gain.

Accounts of the foreign subsidiaries of XpresSpa are translated into United States dollars. Assets and liabilities have been translated primarily at period end exchange rates and revenues and expenses have been translated at average monthly rates for the three months ended March 31, 2024. The translation adjustments arising from the use of different exchange rates are included as foreign currency translation within the condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of changes in stockholders’ equity.

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 condensed 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. Estimates in valuing certain of the intangible assets the Company has acquired include future expected cash flows, and discount rates.

Intangible assets

Intangible assets include customer relationships, trade names, and technology, which were primarily acquired as part of the acquisition of XpresSpa in December 2016, HyperPointe in 2022 and Naples Wax Center in 2023 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.

The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value is then compared to the carrying value and an impairment charge is recognized by the amount in which the carrying value exceeds the fair value of the asset. In assessing the recoverability of the Company’s intangible assets, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information.

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. During the quarter ended March 31, 2024, the Company did not record any goodwill impairment loss.

Reclassification

Certain balances in the unaudited condensed consolidated financial statements for the three months ended March 31, 2023 have been reclassified to conform to the presentation in the unaudited condensed consolidated financial statements for the three months ended March 31, 2024, primarily the presentation of revenue, general and administrative expense, foreign currency exchange gain, and the realized and unrealized gain on investments and other operating expenses. The above separation affected revenue classifications, general and administrative expenses, foreign currency exchange gain, and the realized and unrealized gain on investments and other operating expenses in the comparative 2023 financial statements. Such reclassifications did not have a material impact on the unaudited condensed consolidated financial statements.

Impairment of Long-Lived Assets

Long-lived assets are tested for impairment at the lowest level at which there are identifiable operating cash flows. The Company’s long-lived assets consist primarily of leasehold improvements and right to use lease assets for each of its locations (considered the asset group). The Company reviews its long-lived assets for recoverability yearly or sooner if events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable. 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 group’s fair value. The Company estimates the fair value of long-lived assets using present value income approach. Future cash flows are calculated based on forecasts over the estimated remaining useful life of the asset group, which for each of the Company’s locations, is the remaining term of the operating lease.

The estimates used to calculate future cash flows are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated fair value of each asset group. The Company will calculate the future cash flow using what it believes to be the most predictable of several scenarios. Typically, the changes in assumptions run under different business scenarios would not result in a material change in the assessment of the potential impairment or the impairment amount of a locations long-lived asset group. But if these estimates or related assumptions were to change materially, the Company may be required to record an impairment charge.

During the three months ended March 31, 2024 the Company recorded impairment of long-lived assets of $652 compared with $0 impairment of long-lived assets in March 2023.

Recently Issued Accounting Standards

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.

ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,840	$ 3,840
Accumulated Amortization	(2,576)	(2,487)
Net Carrying Amount	1,264	1,353
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	200	200
Accumulated Amortization	(12)	(6)
Net Carrying Amount	188	194
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,012	1,012
Accumulated Amortization	(366)	(341)
Net Carrying Amount	646	671
Software
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,593	2,593
Accumulated Amortization	(2,174)	(2,120)
Net Carrying Amount	419	473
Licenses
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	35	35
Accumulated Amortization	(24)	(20)
Net Carrying Amount	$ 11	$ 15

Leases - Future Minimum Commitments (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Leases
Remaining 2024	$ 2,577
2025	3,054
2026	1,979
2027	1,866
2028	1,497
2029	1,273
Thereafter	2,609
Total future lease payments	14,855
Less: interest expense at incremental borrowing rate	(2,745)
Net present value of lease liabilities	$ 12,110

Cash, Cash Equivalents, and Restricted Cash (Tables)

3 Months Ended

Mar. 31, 2024

Cash, Cash Equivalents, and Restricted Cash

Schedule of cash, cash equivalents, and restricted cash


	March 31, 2024		December 31, 2023
Cash denominated in United States dollars	$	1,875	$	5,726
Cash denominated in currency other than United States dollars		2,155		2,395
Restricted cash		751		751
Credit and debit card receivables		287		316
Total cash, cash equivalents and restricted cash	$	5,068	$	9,188

Segment Information

3 Months Ended

Mar. 31, 2024

Segment Information

Segment Information

Note 14. Segment Information

As a result of the Company’s transition to a pure-play wellness services company, the Company currently has four reportable operating segments: XpresSpa, XpresTest, Naples Wax Center, and Treat. The Company analyzes the results of the Company’s business through the four reportable segments. The XpresSpa segment provides travelers premium spa services, including massage, nail and skin care, as well as spa and travel products. The XpresTest segment provided diagnostic COVID-19 tests at XpresCheck Wellness Centers in airports, to airport employees and to the traveling public but has transitioned to the CDC’s bio-surveillance program. XpresTest’s HyperPointe business provides a broad range of service and support options for its customers, including technical support services and advanced services. The Treat segment is a wellness brand that provides access to wellness services for travelers at on-site centers. The Naples Wax Center segment operates three high-performing locations with core products and service offerings from face and body waxing to a range of skincare and cosmetic products. The Treat segment is a wellness brand that provides access to wellness services for travelers at on-site centers.

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.


	For the three months ended
	March 31,
	2024		2023
Revenue
XpresSpa	$	4,345	$	4,499
XpresTest		3,643		2,360
Naples Wax		648		—
Treat		90		204
Total revenue	$	8,726	$	7,063

	2024		2023
Operating loss
XpresSpa	$	(2,107)	$	(3,132)
XpresTest		1,670		(281)
Naples Wax		(78)		—
Treat		(673)		(444)
Corporate and other		(1,191)		(2,431)
Total operating loss	$	(2,379)	$	(6,288)

	2024		2023
Depreciation & amortization
XpresSpa	$	132	$	423
XpresTest		26		86
Naples Wax		31		—
Treat		19		65
Corporate and other		17		13
Total depreciation & amortization	$	225	$	587

	For the three months ended
	March 31,
	2024		2023
Capital expenditures
XpresSpa	$	261	$	834
XpresTest		28		28
Naples Wax		22		—
Treat		—		33
Corporate and other		—		7
Total capital expenditures	$	311	$	902

	March 31, 2024		December 31, 2023
Long-lived Assets
XpresSpa	$	8,383	$	8,268
XpresTest		58		92
Naples Wax		2,711		1,371
Treat		28		669
Corporate and other		406		438
Total long-lived Assets	$	11,586	$	10,838

	March 31, 2024		December 31, 2023
Assets
XpresSpa	$	19,098	$	18,453
XpresTest		3,197		2,408
Naples Wax		3,784		2,951
Treat		524		848
Corporate and other		10,874		14,333
Total assets	$	37,477	$	38,993

- 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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-15

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//280/tableOfContent

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-26

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-34

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

+ Details

Accounting and Reporting Policies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Sep. 30, 2022	Dec. 31, 2023
Foreign currency remeasurement gain/(loss)	$ (166)	$ 85
Impairment of operating lease right-of-use assets	254
Deferred revenue	890			$ 861
Impairment of long-lived assets	$ 652	0
Naples Wax LLC
Deferred revenue, period earned	1 year
Deferred revenue, inactivity period	18 months
Deferred revenue	$ 794			778
Impairment loss on goodwill	$ 0
XpresTest
Revenue Contract, Term	1 year
XpresTest \| CDC Program Options and Public Health Services
Unrecognized revenue contract amount			$ 16,000
XpresTest \| Traveler Enrollment Initiatives \| CDC Program Options and Public Health Services
Revenue recognized			370
XpresTest \| Passenger and Aircraft Wastewater Sample Collection \| CDC Program Options and Public Health Services
Revenue recognized	$ 3,306	$ 1,670
Unrecognized revenue contract amount			10,674
HyperPointe
Deferred revenue	$ 87			$ 72
Minimum \| XpresTest \| CDC Program Options and Public Health Services
Unrecognized revenue contract amount			$ 61,000

Cash, Cash Equivalents, and Restricted Cash

3 Months Ended

Mar. 31, 2024

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

Note 4. Cash, Cash Equivalents, and Restricted Cash

A reconciliation of the Company’s cash and cash equivalents in the Unaudited Condensed Consolidated Balance Sheets to cash, cash equivalents and restricted cash in the Unaudited Condensed Consolidated Statements of Cash Flows as of March 31, 2024 and December 31, 2023 is as follows:


	March 31, 2024		December 31, 2023
Cash denominated in United States dollars	$	1,875	$	5,726
Cash denominated in currency other than United States dollars		2,155		2,395
Restricted cash		751		751
Credit and debit card receivables		287		316
Total cash, cash equivalents and restricted cash	$	5,068	$	9,188

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. As of March 31, 2024, and December 31, 2023, deposits in excess of FDIC limits were $932 and $4,195, respectively. As of March 31, 2024, and December 31, 2023, the Company held cash balances in overseas accounts, totaling $2,155 and $2,395 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.

Acquisition of Naples Wax, LLC (Details) - Naples Wax LLC - USD ($) $ in Thousands		3 Months Ended
	Sep. 12, 2023	Mar. 31, 2024
Acquisition of Naples Wax, LLC
Consideration paid	$ 1,624
Aggregate purchase price paid in cash	1,574	$ 14
Consideration held back to cover potential indemnification claims	$ 50
Consideration held back term	6 months
Percentage of acquired ownership interests	100.00%
Impairment of goodwill		0
Deductible goodwill acquired	$ 1,371
Operating expenses		$ 36

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue, net
Total revenue, net	$ 8,726	$ 7,063
Cost of sales
Labor	4,149	4,378
Occupancy	942	1,213
Products and other operating costs	964	950
Total cost of sales	6,055	6,541
Gross Profit	2,671	522
Depreciation and amortization	225	587
Impairment of long-lived assets	652	0
Loss on disposal of assets		132
General and administrative	2,092	3,966
Salaries and Benefits	2,081	2,125
Total operating expenses	5,050	6,810
Operating loss	(2,379)	(6,288)
Interest income, net	110	393
Gain on Investments, realized and unrealized	135	24
Foreign exchange gain (loss)	(166)	85
Other non-operating expense, net	(58)	(43)
Loss before income taxes	(2,358)	(5,829)
Net loss	(2,358)	(5,829)
Net loss (income) attributable to noncontrolling interests	(154)	320
Net loss attributable to XWELL, Inc.	(2,512)	(5,509)
Net loss	(2,358)	(5,829)
Other comprehensive loss from operations	(175)	(130)
Comprehensive loss income	$ (2,533)	$ (5,959)
Loss per share
Basic loss per share (in dollars per share)	$ (0.60)	$ (1.32)
Diluted loss per share (in dollars per share)	$ (0.60)	$ (1.32)
Weighted-average number of shares outstanding during the period
Basic (in shares)	4,182,617	4,167,295
Diluted (in shares)	4,182,617	4,167,295
Services
Revenue, net
Total revenue, net	$ 8,035	$ 6,467
Products
Revenue, net
Total revenue, net	$ 691	$ 596

Potentially Dilutive Securities (Tables)

3 Months Ended

Mar. 31, 2024

Potentially Dilutive Securities

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


	Three months ended
	March 31,
	2024		2023
Basic numerator:
Net loss attributable to XWELL, Inc.	$	(2,512)	$	(5,509)
Basic denominator:
Basic weighted average shares outstanding		4,182,617		4,167,295
Basic loss per share	$	(0.60)	$	(1.32)

Net loss 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		452,474		384,719
Unvested RSUs to issue an equal number of shares of Common Stock		6,458		16,319
Warrants to purchase an equal number of shares of Common Stock		—		200
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders		458,932		401,238

Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies

Commitments and Contingencies

Note 13. 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 adjusts as appropriate. A 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 $424 and $449 as of March 31, 2024 and December 31, 2023, respectively, which is included in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.

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

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. On January 9, 2024, the court placed the matter on Civil Suspense.

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.

Leases

XWELL is contingently liable to a surety company under certain general indemnity agreements required by various airports relating to its lease agreements. XWELL 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.

Intangible Assets - Amortization Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
Remaining 2024	$ 229
2025	307
2026	228
2027	122
2028	122
Thereafter	256
Total	$ 1,264	$ 1,353

Cash, Cash Equivalents, and Restricted Cash - Summary of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Cash, Cash Equivalents, and Restricted Cash
Cash denominated in United States dollars	$ 1,875	$ 5,726
Cash denominated in currency other than United States dollars	2,155	2,395
Restricted cash	751	751
Credit and debit card receivables	287	316
Total cash, cash equivalents and restricted cash	$ 5,068	$ 9,188	$ 10,620	$ 19,789

- Definition

Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Excludes cash and cash equivalents within disposal group and discontinued operation.

+ References + Details

Potentially Dilutive Securities

3 Months Ended

Mar. 31, 2024

Potentially Dilutive Securities

Potentially Dilutive Securities

Note 3. Potentially Dilutive Securities

The table below presents the computation of basic and diluted net loss per share of Common Stock:


	Three months ended
	March 31,
	2024		2023
Basic numerator:
Net loss attributable to XWELL, Inc.	$	(2,512)	$	(5,509)
Basic denominator:
Basic weighted average shares outstanding		4,182,617		4,167,295
Basic loss per share	$	(0.60)	$	(1.32)

Net loss 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		452,474		384,719
Unvested RSUs to issue an equal number of shares of Common Stock		6,458		16,319
Warrants to purchase an equal number of shares of Common Stock		—		200
Total number of potentially dilutive securities excluded from the calculation of earnings/(loss) per share attributable to common shareholders		458,932		401,238

Reverse Stock Split

Other Assets (Tables)

3 Months Ended

Mar. 31, 2024

Other Assets

Schedule of other assets


	March 31, 2024		December 31, 2023
Equity investments	$	92	$	50
Lease deposits		1,523		1,556
Other		170		236
Other assets	$	1,785	$	1,842

Stockholders' Equity

3 Months Ended

Mar. 31, 2024

Stockholders' Equity

Stockholders' Equity

Note 11. Stockholders’ Equity

2023 Reverse Stock Split

On September 28, 2023, we effected the “Reverse Stock Split”, whereby every twenty shares of our common stock were reduced to one share of our common stock and the price per share of our common stock was multiplied by 20. All references to shares and per share amounts, including shares of common stock underlying stock options, warrants, and applicable exercise prices, have been retroactively adjusted for all periods presented herein to give effect to the Reverse Stock Split as required in accordance with United States of America generally accepted accounting principles.

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 250,000 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 375,000 shares of Common Stock to an aggregate of 625,000 shares. Under the 2020 Equity Incentive Plan (the “2020 Plan”), a maximum of 141,120 shares of Common Stock remained available for issuance as of March 31, 2024.

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 March 31, 2024. 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.

As of March 31, 2024 and 2023, there was $74 and $167 respectively of unrecognized stock-based compensation related to the XpresTest Plan.

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:	$	1.50
Exercise price:	$	1.50
Expected volatility:		121.04	%
Expected dividend yield:		0	%
Annual average risk-free rate:		4.14	%
Expected term:		6.32	years

Total stock-based compensation for the three months ended March 31, 2024 and 2023 is $282 and $612, respectively.

The following tables summarize information about stock options and RSU activity for the three months ended March 31, 2024:


	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, 2023	11,944	$	6.08	5.00	$	47,570	341,205	$	26.85	$	4.60 - 49,200
Granted	—		-	—		—	150,000	$	1.50		1.50
Exercised/Vested	(2,986)		6.13	—		—	—		—
Forfeited	(2,500)		5.09	—		—	(29,278)	$	17.40	$	1.50 - 34.40
Expired	—		—	—		—	(9,453)	$	67.89	$	8.00 - 49,200
Outstanding as of March 31, 2024	6,458	$	6.74	5.00	$	47,570	452,474	$	18.20	$	1.50 - 7,080
Exercisable as of March 31, 2024							272,683	$	25.07	$	4.60- 7,080

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//505/tableOfContent

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+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 4,317	$ 8,437
Marketable securities	14,784	14,613
Accounts receivable	2,900	1,667
Inventory	834	900
Other current assets	1,621	949
Total current assets	24,456	26,566
Restricted cash	751	751
Property and equipment, net	2,139	2,454
Intangible assets, net	1,264	1,353
Operating lease right of use assets, net	5,651	4,656
Goodwill	1,431	1,371
Other assets	1,785	1,842
Total assets	37,477	38,993
Current liabilities
Accounts payable	2,017	1,099
Accrued expenses and other current liabilities	3,695	4,968
Current portion of operating lease liabilities	2,585	2,402
Deferred revenue	890	861
Total current liabilities	9,187	9,330
Long-term liabilities
Operating lease liabilities	9,525	8,692
Total liabilities	18,712	18,022
Commitments and contingencies (see Note 13)
Equity
Common Stock, $0.01 par value per share, 150,000,000 shares authorized; 4,182,617 and 4,179,631 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	42	42
Additional paid-in capital	470,996	470,737
Accumulated deficit	(458,365)	(455,853)
Accumulated other comprehensive loss	(2,099)	(1,924)
Total equity attributable to XWELL, Inc.	10,574	13,002
Noncontrolling interests	8,191	7,969
Total equity	18,765	20,971
Total liabilities and equity	$ 37,477	$ 38,993

Income Taxes

3 Months Ended

Mar. 31, 2024

Income Taxes

Income Taxes

Note 12. Income Taxes

The Company’s provision for income taxes consists of federal, state, local, and foreign taxes in amounts necessary to align the Company’s year-to-date provision for income taxes with the effective tax rate that the Company expects to achieve for the full year. Each quarter, the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as deemed necessary. The income tax provision for the three months ended March 31, 2024, reflects an estimated global annual effective tax rate of approximately 0% from continuing operations.

As of March 31, 2024, deferred tax assets generated from the Company’s U.S. activities were offset by a valuation allowance because realization depends on generating future taxable income, which, in the Company’s estimation, is not more likely than not to be generated before such net operating loss carryforwards expire. Net operating loss carryforwards generated after December 31, 2017 do not expire. The Company expects its effective tax rate for its current fiscal year to be significantly lower than the statutory rate as a result of a full valuation allowance; therefore, any loss before income taxes does not generate a corresponding income tax benefit. Income tax expense/(benefit) for the three months ended March 31, 2024 was $0 which was attributed to state taxing jurisdictions in which a measure of income is utilized to determine a tax liability. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates.

- 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
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical)	Sep. 28, 2023
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Reverse stock split, conversion ratio	0.05

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2024	May 14, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-34785
Entity Registrant Name	XWELL, Inc.
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 Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,183,435
Entity Central Index Key	0001410428
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

Segment Information (Details) $ in Thousands	3 Months Ended
Segment Information (Details) $ in Thousands	Mar. 31, 2024 USD ($) segment location	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)
Revenue
Total revenue	$ 8,726	$ 7,063
Operating loss
Total operating loss	(2,379)	(6,288)
Total depreciation & amortization	225	587
Total capital expenditures	311	902
Assets
Total long-lived Assets	11,586		$ 10,838
Total assets	$ 37,477		38,993
Number of operating segments \| segment	4
Number of reportable segments \| segment	4
XpresSpa
Revenue
Total revenue	$ 4,345	4,499
Operating loss
Total operating loss	(2,107)	(3,132)
Total depreciation & amortization	132	423
Total capital expenditures	261	834
Assets
Total long-lived Assets	8,383		8,268
Total assets	19,098		18,453
XpresTest
Revenue
Total revenue	3,643	2,360
Operating loss
Total operating loss	1,670	(281)
Total depreciation & amortization	26	86
Total capital expenditures	28	28
Assets
Total long-lived Assets	58		92
Total assets	3,197		2,408
Naples Wax
Revenue
Total revenue	648
Operating loss
Total operating loss	(78)
Total depreciation & amortization	31
Total capital expenditures	22
Assets
Total long-lived Assets	2,711		1,371
Total assets	$ 3,784		2,951
Number of High- Performing Locations \| location	3
Treat
Revenue
Total revenue	$ 90	204
Operating loss
Total operating loss	(673)	(444)
Total depreciation & amortization	19	65
Total capital expenditures		33
Assets
Total long-lived Assets	28		669
Total assets	524		848
Corporate and Other
Operating loss
Total operating loss	(1,191)	(2,431)
Total depreciation & amortization	17	13
Total capital expenditures		$ 7
Assets
Total long-lived Assets	406		438
Total assets	$ 10,874		$ 14,333

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Leases
Cash paid for minimum annual rental	$ 450	$ 662
Variable lease payments	360	$ 345
Impairment of operating lease right-of-use assets	$ 254

Accrued expenses and other current liabilities (Tables)

3 Months Ended

Mar. 31, 2024

Accrued expenses and other current liabilities

Schedule of accrued expenses and other current liabilities



	March 31, 2024		December 31, 2023
Litigation accrual	$	424	$	449
Accrued compensation		1,184		2,098
Tax-related liabilities		485		501
Common area maintenance accruals		495		8
Accounts payable accruals		235		913
Gift certificates		508		509
Credit card processing fees		5		8
Other miscellaneous accruals		359		482
Total accrued expenses and other current liabilities	$	3,695	$	4,968

Stockholders' Equity - Variables Used in Estimating Fair Value of Stock Options (Details) - Employee Stock Option [Member]	3 Months Ended
	Mar. 31, 2024 $ / shares
Stockholders Equity [Line Items]
Share price of the Company's Common Stock on the grant date:	$ 1.50
Exercise price:	$ 1.50
Expected volatility:	121.04%
Expected dividend yield:	0.00%
Annual average risk-free rate:	4.14%
Expected term:	6 years 3 months 25 days

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Leases - Other Assumptions and Pertinent Information (Details)	Mar. 31, 2024
Leases
Weighted average remaining lease term (years):	5 years 11 months 12 days
Weighted average discount rate used to determine present value of operating lease liability:	7.33%

Other Assets

3 Months Ended

Mar. 31, 2024

Other Assets

Other Assets

Note 10. Other Assets

As of March 31, 2024 and December 31, 2023, assets consisted of the following:


	March 31, 2024		December 31, 2023
Equity investments	$	92	$	50
Lease deposits		1,523		1,556
Other		170		236
Other assets	$	1,785	$	1,842

Accounting and Reporting Policies (Policies)	3 Months Ended
Accounting and Reporting Policies (Policies)	Mar. 31, 2024
Accounting and Reporting Policies
Use of estimates	Use of estimates The preparation of the accompanying condensed 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 condensed 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.
Revenue Recognition Policy	Revenue Recognition Policy XpresSpa, Treat and Naples Wax Center The Company recognizes revenue from the sale of products and services when the services are rendered at XpresSpa, Treat, and Naples Wax Centers locations 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. XpresTest 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 was 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 the Company is entitled to $10,674 for the sample collection (passenger and aircraft wastewater) and $370 for the traveler enrollment initiatives, which represents the amount of consideration that we are entitled. The Company recognizes 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 recognized the revenue for the traveler enrollment initiative performance obligation in the second quarter of 2023. The Company recognizes revenue ratably (straight line basis) over the term of the contract (one year). The Company recorded $3,306 and $1,670, in revenue for the three months ended March 31, 2024 and 2023, respectively, 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 The Company’s HyperPointe business provides a broad range of service and support options for HyperPointe’s 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. Revenues billed in advance are treated as deferred revenue, which was $87 and $72 as of March 31, 2024 and December 31, 2023, respectively. 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 condensed consolidated balance sheets until remitted to state agencies.
Gift cards, customer rewards and prepaid packages	Gift cards, customer rewards and prepaid packages XWELL offers no-fee, non-expiring gift cards to its customers. No revenue is recognized upon the 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 the reduction in the value of unused card balances. In addition, XWELL 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. In 2023 the Company adopted a formal expiration policy whereby any loyalty members with inactivity for an 18-month period will forfeit any unused loyalty rewards. 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 condensed consolidated balance sheets until used. Naples Wax Center offers prepaid wax packages that are either unlimited for one year or a set number of services. When the packages are purchased, the sales are recorded as deferred revenue. As services related to prepaid packages are used, revenue is recognized as income. The deferred revenue as of March 31, 2024 was $794 and for the year ended December 31, 2023 deferred revenue was $778.
Translation into United States dollars	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 condensed consolidated statements of operations and comprehensive loss. During the three months ended March 2024, the Company recorded $166 in exchange losses occurring from the remeasurement of monetary balance sheet items denominated in non-dollar currencies. During the three months ended March 2023, the Company recorded $85 in exchange gain. Accounts of the foreign subsidiaries of XpresSpa are translated into United States dollars. Assets and liabilities have been translated primarily at period end exchange rates and revenues and expenses have been translated at average monthly rates for the three months ended March 31, 2024. The translation adjustments arising from the use of different exchange rates are included as foreign currency translation within the condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of changes in stockholders’ equity.
Business Combinations	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 condensed 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. Estimates in valuing certain of the intangible assets the Company has acquired include future expected cash flows, and discount rates.
Intangible assets	Intangible assets Intangible assets include customer relationships, trade names, and technology, which were primarily acquired as part of the acquisition of XpresSpa in December 2016, HyperPointe in 2022 and Naples Wax Center in 2023 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. The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value is then compared to the carrying value and an impairment charge is recognized by the amount in which the carrying value exceeds the fair value of the asset. In assessing the recoverability of the Company’s intangible assets, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information.
Goodwill	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. During the quarter ended March 31, 2024, the Company did not record any goodwill impairment loss.
Reclassification	Reclassification Certain balances in the unaudited condensed consolidated financial statements for the three months ended March 31, 2023 have been reclassified to conform to the presentation in the unaudited condensed consolidated financial statements for the three months ended March 31, 2024, primarily the presentation of revenue, general and administrative expense, foreign currency exchange gain, and the realized and unrealized gain on investments and other operating expenses. The above separation affected revenue classifications, general and administrative expenses, foreign currency exchange gain, and the realized and unrealized gain on investments and other operating expenses in the comparative 2023 financial statements. Such reclassifications did not have a material impact on the unaudited condensed consolidated financial statements.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets Long-lived assets are tested for impairment at the lowest level at which there are identifiable operating cash flows. The Company’s long-lived assets consist primarily of leasehold improvements and right to use lease assets for each of its locations (considered the asset group). The Company reviews its long-lived assets for recoverability yearly or sooner if events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable. 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 group’s fair value. The Company estimates the fair value of long-lived assets using present value income approach. Future cash flows are calculated based on forecasts over the estimated remaining useful life of the asset group, which for each of the Company’s locations, is the remaining term of the operating lease. The estimates used to calculate future cash flows are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated fair value of each asset group. The Company will calculate the future cash flow using what it believes to be the most predictable of several scenarios. Typically, the changes in assumptions run under different business scenarios would not result in a material change in the assessment of the potential impairment or the impairment amount of a locations long-lived asset group. But if these estimates or related assumptions were to change materially, the Company may be required to record an impairment charge. During the three months ended March 31, 2024 the Company recorded impairment of long-lived assets of $652 compared with $0 impairment of long-lived assets in March 2023.
Recently Issued Accounting Standards	Recently Issued Accounting Standards ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024. ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

Business, Basis of Presentation and Liquidity (Details) $ / shares in Units, $ in Thousands			3 Months Ended
	Sep. 28, 2023	Sep. 12, 2023 USD ($) location	Mar. 31, 2024 USD ($) segment location $ / shares	Dec. 31, 2023 USD ($) $ / shares	Oct. 25, 2022 $ / shares
Common stock, par value \| $ / shares			$ 0.01	$ 0.01	$ 0.01
Number of operating segments \| segment			4
Reverse stock split, conversion ratio	0.05
Reverse stock split, multiplying factor for price per share	20
Cash and cash equivalents \| $			$ 4,317	$ 8,437
Marketable securities \| $			14,784	14,613
Total current assets \| $			24,456	26,566
Total current liabilities \| $			9,187	9,330
Working capital \| $			$ 15,269	$ 17,236
XpresSpa \| United States
Number of operating locations			21
Number of operating locations, company-owned			19
Number of operating locations, franchises			2
XpresSpa \| Non-US
Number of operating locations			11
Naples Wax LLC
Consideration paid \| $		$ 1,624
Number of operating locations		3
Dubai International Airport \| XpresSpa \| Non-US
Number of operating locations			2
Zayad International Airport \| XpresSpa \| Non-US
Number of operating locations			1
Schiphol Amsterdam Airport \| XpresSpa \| Non-US
Number of operating locations			3
Istanbul Airport \| XpresSpa \| Non-US
Number of operating locations			5

Income Taxes (Details) $ in Thousands	3 Months Ended
Income Taxes (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Income Taxes
Annual effective tax rate for continuing operations (in %)	0.00%
Income tax expense (benefit) attributable to state taxing jurisdictions	$ 0

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2024

Intangible Assets

Schedule of carrying amounts for intangible assets subject to amortization


	March 31, 2024						December 31, 2023
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trade names	$	200	$	(12)	$	188	$	200	$	(6)	$	194
Customer relationships		1,012		(366)		646		1,012		(341)		671
Software		2,593		(2,174)		419		2,593		(2,120)		473
Licenses		35		(24)		11		35		(20)		15
Total intangible assets	$	3,840	$	(2,576)	$	1,264	$	3,840	$	(2,487)	$	1,353

Schedule of future estimated amortization expense for intangible assets subject to amortization


Calendar Years ending December 31,	Amount
Remaining 2024	$	229
2025		307
2026		228
2027		122
2028		122
Thereafter		256
Total	$	1,264

Commitments and Contingencies (Details) - USD ($) $ in Thousands	May 09, 2022	Mar. 31, 2024	Dec. 31, 2023
OTG Management PHL B
Loss Contingencies [Line Items]
Sublease contractual term (in years)	12 years
Accrued expenses and other current liabilities
Loss Contingencies [Line Items]
Estimated litigation liability - current		$ 424	$ 449
Minimum \| OTG Management PHL B
Loss Contingencies [Line Items]
Loss contingency damages sought	$ 864
Maximum \| OTG Management PHL B
Loss Contingencies [Line Items]
Loss contingency damages sought	$ 2,250

Leases

3 Months Ended

Mar. 31, 2024

Leases

Leases

Note 9. 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 and other off airport locations in various US cities. 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 three months ended March 31, 2024 and 2023:

As of March 31, 2024, operating leases contain the following future minimum commitments:


Calendar Years ending December 31,	Amount
Remaining 2024	$	2,577
2025		3,054
2026		1,979
2027		1,866
2028		1,497
2029		1,273
Thereafter		2,609
Total future lease payments		14,855
Less: interest expense at incremental borrowing rate		(2,745)
Net present value of lease liabilities	$	12,110

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


Weighted average remaining lease term:	5.95	years
Weighted average discount rate used to determine present value of operating lease liability:	7.33	%

Cash paid for minimum annual rental obligations for the three months ended March 31, 2024 and 2023, were $450 and $662 respectively.

Variable lease payments calculated monthly as a percentage of a product and services revenue were $360 and $345 for the three months ended March 31, 2024 and 2023 respectively.

Potentially Dilutive Securities - Reverse Stock Split (Details)	Sep. 28, 2023
Stockholders' Equity
Reverse stock split, conversion ratio	0.05
Reverse stock split, multiplying factor for price per share	20

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical)	Mar. 31, 2024 $ / shares shares	Dec. 31, 2023 $ / shares shares
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value \| $ / shares	$ 0.01	$ 0.01
Common stock, authorized	150,000,000	150,000,000
Common stock, issued	4,182,617	4,179,631
Common stock, outstanding	4,182,617	4,179,631

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical)	Sep. 28, 2023
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Reverse stock split, conversion ratio	0.05

Acquisition of Naples Wax, LLC

3 Months Ended

Mar. 31, 2024

Acquisition of Naples Wax, LLC

Acquisition of Naples Wax, LLC

Note 8. Acquisition of Naples Wax, LLC

On September 12, 2023, the Company acquired all of the equity interests in Naples Wax, LLC, d/b/a Naples Wax Centers, a Florida limited liability company (“Naples Wax”), for an aggregate purchase price of $1,624, of which $1,574 was paid in cash at closing. The remaining $50 was held for six months as a holdback to cover any potential indemnification claims. $14 was paid in the quarter ended March 31, 2024. The remaining $36 was offset by operating expenses.

The Company applies the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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. As of March 31, 2024, no impairment of the Company’s goodwill was required. The purchase accounting for the acquisition remains incomplete as management continues to gather and evaluate information about circumstances that existed as of the acquisition date. 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 condensed consolidated statements of operations.

Accounting for business combinations requires management to make 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. Estimates in valuing certain of the intangible assets the Company has acquired include future expected cash flows, and discount rates.

For income tax purposes, this acquisition of 100% of the units is treated as an asset acquisition. As a result of the acquisition of Naples Wax, the company generated tax deductible goodwill of $1,371.

Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Cash, Cash Equivalents, and Restricted Cash
Deposits in excess of FDIC limits	$ 932	$ 4,195
Amount of cash in overseas accounts	$ 2,155	$ 2,395