10-K: XWELL Secures Capital, Addresses Going Concern Amid Losses

XWELL, Inc. reports increased net losses and significant asset impairments for 2025, but a recent $31.3 million capital raise alleviates going concern doubts and funds strategic wellness expansion.

Summary

• Net loss attributable to XWELL, Inc. increased to $16,991 thousand in 2025, compared to $16,853 thousand in 2024.
• Total revenue decreased by 14% to $29,210 thousand in 2025 from $33,897 thousand in 2024, primarily due to reduced XpresTest volumes.
• Cost of sales decreased by 13% to $21,704 thousand in 2025, mainly due to the closure of the Treat business and 3 underperforming XpresSpa locations.
• General and administrative expenses decreased by 20% to $16,000 thousand in 2025, reflecting cost optimization efforts.
• Significant impairment charges were recorded in 2025, totaling $3,149 thousand for long-lived assets, $1,736 thousand for operating lease right-of-use assets, and $1,389 thousand for goodwill (related to the Naples Wax business).
• A private placement of Series H Convertible Preferred Stock and accompanying warrants closed on February 27, 2026, raising approximately $31,300 thousand in gross proceeds.
• Approximately $9,000 thousand from the private placement proceeds was used to repurchase outstanding notes and redeem Series G Preferred Stock and warrants, which alleviated previously identified going concern doubts.
• The XpresTest bio-surveillance program with the Centers for Disease Control and Prevention (CDC) was extended through a three-year contract in February 2025, with a total base value of $22,200 thousand and a maximum ceiling value of $24,800 thousand.
• The company regained compliance with Nasdaq's minimum bid price rule on March 11, 2026.
• Material weaknesses in internal controls over financial reporting were identified as of December 31, 2025, related to lease accounting, financial close and reporting, service organizations/IT vendors, the revenue process, and foreign subsidiaries. Management is implementing remediation actions.
• As of December 31, 2025, XWELL operated 16 domestic and 9 international XpresSpa locations, and 6 Naples Wax Center locations; all Treat locations were converted to XWELL by the first quarter of 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed filing. The successful capital raise and Nasdaq compliance are crucial for immediate stability, but the increased net loss, significant asset impairments, and identified material weaknesses in internal controls reflect ongoing operational and financial challenges. The future outlook is strategic but execution risk remains high.

Positives

• Successfully completed a private placement of Series H Convertible Preferred Stock and warrants, raising approximately $31,300 thousand in gross proceeds.
• Used $9,000 thousand from the private placement to repurchase outstanding notes and redeem Series G Preferred Stock and warrants, significantly improving the capital structure and alleviating going concern doubts.
• The XpresTest bio-surveillance program with the CDC was extended for three years in February 2025, securing a total base value of $22,200 thousand and a maximum ceiling of $24,800 thousand in future revenue.
• Regained compliance with Nasdaq's minimum bid price rule on March 11, 2026, resolving a potential delisting issue.
• Achieved a 20% reduction in general and administrative expenses, decreasing by $4,082 thousand in 2025 due to cost optimization.
• Net cash used in operating activities decreased by $2,292 thousand in 2025 compared to 2024, indicating improved operational efficiency.
• Interest income, net, increased by $281 thousand, primarily driven by the recognition of an employee retention credit.

Negatives

• Net loss attributable to XWELL, Inc. increased to $16,991 thousand in 2025 from $16,853 thousand in 2024.
• Total revenue decreased by 14% ($4,687 thousand) in 2025, primarily due to a decline in XpresTest segment revenues from reduced testing volumes.
• Incurred significant impairment charges in 2025, totaling $3,149 thousand for long-lived assets, $1,736 thousand for operating lease right-of-use assets, and $1,389 thousand for goodwill (related to the Naples Wax business), indicating underperforming assets and business units.
• Identified material weaknesses in internal controls over financial reporting as of December 31, 2025, across multiple critical areas.
• Working capital was in a deficit position at December 31, 2025, with total current assets of $5,910 thousand against total current liabilities of $12,892 thousand.
• Foreign exchange loss increased by $395 thousand in 2025, primarily due to the fluctuation of the Turkish Lira.
• Recognized a loss on issuance of Series G Preferred Stock of $3,443 thousand in 2025.
• The Naples Wax Center acquisition, intended for diversification, experienced operating challenges that led to impairment charges.

Risks

• Ability to continue as a going concern and raise additional capital.
• Adverse effects of public health epidemics on business, results of operations, and financial condition.
• Material weaknesses in internal control over financial reporting, efforts to remediate them, and the timing of remediation.
• Ability to develop and offer new products and services.
• Ability to effectively deploy available cash resources and raise additional capital to fund operations and business plan.
• General economic conditions and level of consumer and corporate spending on health, wellness, and travel.
• Ability to secure new locations, maintain XpresSpa, Naples Wax, and CDC bio-surveillance testing locations, and ensure continued customer traffic.
• Ability to hire a skilled labor force and the costs associated with that labor.
• Ability to accurately forecast the costs associated with opening new retail locations and maintaining or converting existing ones, and the revenue derived from them.
• Performance by Airport Concession Disadvantaged Business Enterprise partners on obligations set forth in joint venture agreements.
• Ability to protect confidential information and customers' financial data and other personal information.
• Failure or disruption to information technology systems.
• Ability to retain key members of the management team.
• Loss of, or an adverse change with regard to, one or more significant suppliers, distributors, vendors, or other business relationships.
• Unexpected events and trends in the health, wellness, and travel industries.
• Market acceptance, quality, pricing, availability, and useful life of products and/or services, as well as the mix of products and services sold.
• Competitive conditions within industries.
• Compliance with laws and regulations in the jurisdictions of operation and any new laws or changes in existing laws.
• Further regulatory actions in the healthcare sector that could impact the ability to continue operations.
• Discontinuance of emergency use authorization (EUA) policies that could impact business.
• Ability to maintain compliance with Nasdaq Capital Markets listing standards.
• Lawsuits, claims, and investigations that may be filed against the company and other events that may adversely affect reputation.
• Ability to protect and maintain intellectual property.
• Future acquisitions or business opportunities could involve unknown risks that could harm business and adversely affect financial condition and results of operations.
• Limitations on the ability to use net operating loss carryforwards and certain other tax attributes (Section 382).
• Dependence on third parties to provide services critical to the XpresTest bio-surveillance business and their compliance with applicable laws and regulations.
• Breaches of the information technology systems of third parties.
• Business operations and reputation may be materially impaired if privacy laws or information security policies are not complied with.
• Hardware and software failures or delays in information technology systems, including failures from systems conversions.
• Capital expenditures in Naples Wax locations may not generate a positive return and will incur significant additional costs.
• Reliance on international and domestic airplane travel, and the time that airline passengers spend in United States airports post-security; a decrease would negatively impact operations.
• Negative social media regarding XWELL, XpresSpa, XpresTest, or Naples Wax Center.
• Product liability defense costs and product liability payments from sourcing, developing, and selling products.
• Litigation that could divert management's attention and harm businesses.
• Failure or inability to protect trademarks or other proprietary rights, or claims of infringement by third parties.
• Risks associated with international operations, including local laws, tax regulations, political/socio-economic conditions, and foreign currency exchange rate fluctuations.
• Stock prices can be volatile, and this volatility may depress the price of common stock.
• Restrictive covenants and terms in the Series H Certificate of Designations may make it difficult to procure additional financing.
• No current plans to pay dividends on common stock, so investors may not receive funds without selling their stock.
• Failure to meet the continued listing requirements of Nasdaq could result in a delisting of common stock.
• If securities analysts do not publish research or reports about the business, or if they publish negative evaluations, the price of common stock could decline.
• Scaled disclosure available to smaller reporting companies may make common stock less attractive to investors.
• Confidential information may be disclosed by other parties.
• Failure to meet publicly announced financial guidance or other expectations about the business, which would cause stock to decline in value.
• Ongoing conflicts in Russia, Ukraine, and the Middle East, including related sanctions and countermeasures, could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility.

Future Outlook

The company believes it is strategically positioned to capitalize on growing consumer interest in travel, health, and wellness. Its forward-looking plan focuses on expanding and integrating offerings across its brands, unifying airport and off-airport locations under the XWELL brand, and developing membership programs. The strategy includes optimizing the airport portfolio for profitability and pursuing off-airport growth through acquisitions, particularly in the expanding med spa sector. XWELL also plans to leverage its XpresTest unit's expertise to expand bio-security services internationally through government partnerships and continue growing domestic bio-security initiatives. Management anticipates that these strategic efforts, combined with cost structure optimization and refining existing operations, will drive sustainable financial and operational growth and maximize shareholder value. The recent Series H financing is expected to provide sufficient liquidity to fund operations for at least the next twelve months, alleviating prior going concern doubts.

Management Comments

• "We believe our company is strategically positioned to capitalize on the growing consumer interest in travel, health, and wellness, as well as the increasing demand for related products and services."
• "This strategic alignment will enable the development of membership programs that provide seamless access to XWELL locations, fostering deeper customer relationships and enhancing brand loyalty."
• "Our plan includes both developing new locations and acquiring established med spas, strategically expanding XWELLs presence in key metropolitan areas that align with our existing airport locations."
• "Our expertise from the XpresTest unit will allow us to expand bio-security services beyond the U.S. through partnerships with government clients."
• "By optimizing our cost structure, refining our existing operations, and pursuing strategic acquisitions, XWELL is positioning itself for sustainable financial and operational growth while maximizing shareholder value."
• "Management has concluded that the conditions that previously raised substantial doubt about our ability to continue as a going concern have been alleviated as of the date these financial statements are issued."
• "Management is committed to the remediation of the material weaknesses described above, as well as the continued improvement of the Company’s internal control over financial reporting."

Industry Context

StockSavvy.ai notes that XWELL's strategy to expand beyond airport-centric operations into the broader wellness and med spa sector aligns with a growing trend of diversification among travel-related service providers seeking to capture a wider consumer base and reduce reliance on volatile travel patterns. The focus on bio-security services also positions XWELL within an emerging public health infrastructure market, potentially offering a more stable revenue stream compared to traditional retail. The challenges faced by Naples Wax Center, however, highlight the competitive and capital-intensive nature of expanding into new retail segments, suggesting that successful execution in these new markets will be critical for long-term viability.

Comparison to Industry Standards

• The domestic market for airport retailers is highly fragmented, with the largest domestic competitor operating 9 locations in 7 airports, while XWELL operates 16 domestic XpresSpa locations, suggesting a relatively significant footprint in its niche.
• No specific financial or operational benchmarks for direct comparison to industry standards or comparable companies/projects/results are provided in the filing.

Management Changes

Corporate Governance

Legal Proceedings

• November 2025 Employment Litigation: A former employee filed claims for age and disability discrimination and retaliation. The matter was confidentially settled for a de minimis amount, with the plaintiff agreeing to dismiss the action with prejudice and provide a general release of claims.
• OTG Management PHL B v. XpresSpa Philadelphia Terminal B et al.: A lawsuit claiming XWELL improperly backed out of a sublease and owed between $864 thousand and $2,250 thousand in accelerated rent. An Order to Settle, Discontinue and End with Prejudice was filed as to all claims on June 20, 2024.
• CPC Pain & Wellness SPV, LLC: A lawsuit filed on July 19, 2024, alleging breach of fiduciary duties by the Board and unlawful application of bylaws to reject director nominations. CPC dismissed all claims on August 9, 2024.
• XpresSpa Holdings, LLC v. Cordial Endeavor Concessions of Atlanta, LLC: An arbitration proceeding mandated by the City of Atlanta regarding alleged breaches of operating agreements for XpresSpa locations in Hartsfield-Jackson Atlanta International Airport. Evidentiary proceedings have concluded, and a final judgment is pending; management does not believe an unfavorable outcome is probable.

Related Party Transactions

• Consulting agreement with XWEL INV I, LLC and Jason Aintabi (a greater than 5% beneficial owner of the company's securities). The agreement, initially entered on January 30, 2025, was extended on May 12, 2025, for a total of $530 thousand, and further amended on December 15, 2025, increasing the total value by $250 thousand to $780 thousand. For 2025, $558 thousand was recognized in general and administrative expenses, $82 thousand as a prepaid expense, and $250 thousand as an accrued liability.

Stakeholder Impact

• Shareholders: Face potential dilution from the conversion of Series H Preferred Stock and warrants, and no dividends are planned for the foreseeable future. However, the recent capital raise has alleviated immediate going concern doubts, which is positive for shareholder confidence.
• Employees: May be impacted by ongoing cost optimization and 'right-sizing' of the business. The ability to attract and retain a skilled, licensed labor force remains crucial for operations. Potential for increased labor costs if unionization efforts are successful.
• Customers: Can expect continued and expanded wellness services through XpresSpa and Naples Wax, and bio-security services through XpresTest, with plans for new membership programs and off-airport expansion.
• Suppliers/Vendors: The company's reliance on a limited number of suppliers for certain products poses risks of supply chain disruption.
• Creditors: The repurchase of outstanding notes and redemption of preferred stock reduces certain liabilities, but the new Series H Preferred Stock and warrants introduce new obligations and restrictive covenants.
• Regulatory Bodies: The company is subject to ongoing scrutiny and compliance requirements from the SEC, Nasdaq, and various federal, state, local, and foreign regulatory authorities. Remediation of identified material weaknesses in internal controls is a key focus.

Next Steps

• Expand and integrate offerings across XWELL brands, unifying airport and off-airport locations under the XWELL brand.
• Develop membership programs to foster deeper customer relationships and enhance brand loyalty.
• Optimize the airport portfolio to create a leaner, more profitable business.
• Pursue an off-airport growth strategy through acquisitions, particularly in the expanding med spa sector, including developing new locations and acquiring established med spas.
• Expand bio-security services beyond the U.S. through partnerships with government clients and continue growing domestic bio-security initiatives.
• Remediate identified material weaknesses in internal controls over financial reporting, including implementing multi-currency features in accounting systems, engaging outside service providers for key reporting areas, contracting an independent consulting firm for financial statement preparation, and reviewing complementary user entity controls.
• File a registration statement with the SEC for the resale of shares underlying the Series H Preferred Stock and warrants from the February 2026 Private Placement by the specified deadline.
• Continue to monitor pending legislation and implementation by individual countries regarding Pillar Two tax rules.
• Await a final judgment in the arbitration proceeding for XpresSpa Holdings, LLC v. Cordial Endeavor Concessions of Atlanta, LLC.

Key Dates

Recommendation

The recent capital raise of $31.3 million and the successful regaining of Nasdaq compliance are critical positive developments that alleviate immediate liquidity and listing concerns. The strategic pivot towards a broader wellness platform and the long-term CDC bio-surveillance contract offer potential for future growth and diversification. However, the company's continued net losses, significant asset impairments, and identified material weaknesses in internal controls indicate ongoing operational and financial challenges. While the immediate risk of going concern has been mitigated, the company's ability to achieve sustained profitability and successfully execute its growth strategy remains unproven. Therefore, a 'hold' recommendation is appropriate, advising investors to monitor the effectiveness of management's remediation efforts and the progress of strategic initiatives before making further investment decisions.

Keywords

Wellness services, Airport spa, Bio-surveillance, SEC filing, 10-K, XWELL, XpresSpa, XpresTest, Naples Wax Center, Financial results, Capital raise, Nasdaq compliance, Internal controls, Risk factors, Corporate governance, Travel health, Med spa, Airport concessions, XWEL