[10-Q] XWELL, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

XWELL, Inc. reported lower Q3 2025 results and disclosed “substantial doubt” about its ability to continue as a going concern. Revenue was $7,345k (down from $8,422k), with a net loss of $724k versus a $4,750k loss a year earlier as operating expenses fell. Year to date, the company recorded a net loss of $6,851k.

Liquidity remains tight. Cash and cash equivalents were $3,987k at September 30, 2025, while net cash used in operating activities was $8,671k for the nine months. The balance sheet shows total assets of $21,742k, liabilities of $18,345k, and temporary equity of $331k from the Series G preferred.

In January 2025, XWELL raised $4,000k via Series G convertible preferred and issued Series A and B warrants for a combined 5,347,594 shares. The preferred carries an 8% dividend and is scheduled for six equal quarterly redemptions beginning July 1, 2025. As of November 11, 2025, 5,766,703 common shares were outstanding.

Positive

• None.

Negative

• Going concern uncertainty: Management disclosed substantial doubt about continuing as a going concern.
• Liquidity strain: YTD operating cash outflow of $8,671k vs. $3,987k cash at period end, plus $800k preferred redemption payable.

Insights

Credit & Capital Structure Analyst

Going concern and cash burn highlight near-term financing pressure.

XWELL flags “substantial doubt” about continuing as a going concern, anchored by weak operating cash flow. Year-to-date operating cash outflow was $8,671k against period-end cash of $3,987k. This imbalance, alongside recurring losses, frames immediate liquidity risk.

The January financing added complexity: Series G preferred with an 8% dividend, six quarterly redemptions starting July 1, 2025, and warrants totaling 5,347,594 shares. The preferred embeds a derivative (fair value $803k at Sep 30, 2025), and the company accrued an $800k redemption payable, increasing near-term cash needs.

While Q3 net loss narrowed to $724k and operating expenses declined, sustainability depends on cash generation or additional financing. Subsequent filings may clarify amended preferred terms disclosed after Sep 30, 2025.

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Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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(Mark One)

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☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the quarterly period ended September 30, 2025

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☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the transition period from ___ to ___

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Commission file number: 001-34785

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XWELL, Inc.

(Exact Name of Registrant as Specified in its Charter)

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Delaware		20-4988129
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
254 West 31st Street, 11th Floor, New York, NY		10001
(Address of principal executive offices)		(Zip Code)

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(Registrant’s Telephone Number, Including Area Code): (212) 750-9595

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(Former name, former address and former fiscal year, if changed since last report)

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Securities registered pursuant to Section 12(b) of the Act:

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Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		XWEL		The Nasdaq Stock Market LLC

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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒     No  ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒     No  ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

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Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
​	​	Emerging growth company	☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐   No  ☒

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As of November 11, 2025, 5,766,703 shares of the registrant’s common stock were outstanding.

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Table of Contents

XWELL, Inc. and Subsidiaries

Table of Contents

			Page
PART I. FINANCIAL INFORMATION			3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		41
Item 4.	Controls and Procedures		41
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PART II. OTHER INFORMATION			43
			​
Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3.	Defaults Upon Senior Securities		43
Item 4.	Mine Safety Disclosures		43
Item 5.	Other Information	​	43
Item 6.	Exhibits		44

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2

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.Condensed Consolidated Financial Statements (Unaudited)

XWELL, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

​	​	​	​	​	​	​
​		September 30,			December 31,
​	​	2025		​	2024
Current assets		​			​
Cash and cash equivalents	​	$	3,987	​	$	4,550
Marketable Securities	​	​	237	​	​	7,247
Accounts receivable	​	​	1,483	​	​	1,793
Inventory	​		516	​		501
Other current assets	​		4,591	​		1,246
Total current assets	​		10,814	​		15,337
Restricted cash	​		251	​		751
Property and equipment, net	​		3,884	​		1,809
Intangible assets, net	​		794	​		1,023
Operating lease right of use assets, net	​		2,615	​		3,409
Goodwill	​	​	1,389	​	​	1,389
Other assets	​		1,995	​		1,634
Total assets	​	$	21,742	​	$	25,352
Current liabilities	​			​
Accounts payable	​	$	3,142	​	$	1,612
Accrued expenses and other current liabilities	​	​	2,914	​	​	4,088
Accrued Series G Convertible Preferred payable	​	​	800	​	​	-
Current portion of operating lease liabilities	​	​	2,073	​	​	2,381
Deferred revenue	​	​	1,127	​	​	1,143
Total current liabilities	​		10,056	​		9,224
​	​	​	​	​	​	​
Long-term liabilities	​		​	​		​
Derivative liability	​		803	​		—
Operating lease liabilities	​		7,486	​		8,386
Total liabilities	​	​	18,345	​	​	17,610
Commitments and contingencies (see Note 12)	​			​
Temporary equity	​			​
Series G Convertible Preferred Stock, $0.01 par value per share and $1,000 stated value per share, 4,000 shares authorized; 2,666 and 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively; Liquidation preference of $2,880,000 as of September 30, 2025	​		331	​		—
Equity	​	​	​	​	​	​
Common Stock, $0.01 par value per share, 150,000,000 shares authorized; 5,766,703 and 5,261,024 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively	​	​	58	​	​	53
Additional paid-in capital	​		475,305	​		473,824
Accumulated deficit	​		(480,418)	​		(472,706)
Accumulated other comprehensive loss	​		(1,278)	​		(1,959)
Total deficit attributable to XWELL, Inc.	​		(6,333)	​		(788)
Noncontrolling interests	​		9,399	​		8,530
Total equity	​		3,066	​		7,742
Total liabilities, temporary equity and equity	​	$	21,742	​	$	25,352

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The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

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3

Table of Contents

XWELL, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)

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Three months ended September 30,

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Nine months ended September 30,

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2025

2024

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2025

2024

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Revenue, net

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Services

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$

6,482

​

$

7,486

​

​

$

19,807

​

$

23,924

Products

​

863

​

936

​

​

2,249

​

2,506

Total revenue, net

​

7,345

​

8,422

​

​

22,056

​

26,430

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of sales

​

​

​

​

​

Labor

​

3,848

​

4,426

​

​

11,727

​

13,235

Occupancy

​

1,237

​

919

​

​

3,609

​

2,564

Products and other operating costs

​

767

​

1,024

​

​

2,134

​

2,834

Total cost of sales

​

5,852

​

6,369

​

​

17,470

​

18,633

Gross Profit

​

​

1,493

​

​

2,053

​

​

​

4,586

​

​

7,797

Depreciation and amortization

​

221

​

252

​

​

574

​

705

Impairment of long-lived assets

​

​

122

​

​

—

​

​

​

122

​

​

652

Loss on disposal of assets, net

​

​

7

​

​

152

​

​

​

7

​

​

171

Impairment of operating lease right-of-use assets

​

​

359

​

​

—

​

​

​

359

​

​

—

General and administrative

​

1,554

​

6,418

​

​

10,144

​

15,309

Total operating expenses

​

2,263

​

6,822

​

​

11,206

​

16,837

Operating loss

​

(770)

​

(4,769)

​

​

(6,620)

​

(9,040)

Change in fair value of derivative liability

​

​

233

​

​

—

​

​

​

512

​

​

—

Change in fair value of warrant liability

​

​

—

​

​

—

​

​

​

3,215

​

​

—

Loss on issuance of Series G Preferred Stock

​

​

—

​

​

—

​

​

​

(3,443)

​

​

—

Interest income, net

​

490

​

100

​

​

695

​

308

Foreign exchange loss

​

​

(129)

​

​

(69)

​

​

​

(1,127)

​

​

(210)

Gain on investments, realized and unrealized

​

​

31

​

​

106

​

​

​

85

​

​

293

Other non-operating expense, net

​

(64)

​

(73)

​

​

(132)

​

(205)

Loss before income taxes

​

(209)

​

(4,705)

​

​

(6,815)

​

(8,854)

Income tax expense

​

(2)

​

—

​

​

(36)

​

—

Net loss

​

​

(211)

​

​

(4,705)

​

​

​

(6,851)

​

​

(8,854)

Net loss attributable to noncontrolling interests

​

(513)

​

(45)

​

​

(861)

​

(404)

Net loss attributable to XWELL, Inc.

​

$

(724)

​

$

(4,750)

​

​

$

(7,712)

​

$

(9,258)

Net loss

​

$

(211)

​

$

(4,705)

​

​

​

(6,851)

​

​

(8,854)

Other comprehensive income (loss) from operations

​

90

​

(223)

​

​

696

​

(407)

Comprehensive loss

​

$

(121)

​

$

(4,928)

​

​

$

(6,155)

​

$

(9,261)

Loss per share

​

​

​

​

​

​

​

​

​

​

​

​

​

Preferred stock dividends

​

​

(167)

​

​

—

​

​

​

(424)

​

​

—

Preferred stock accretion

​

​

(582)

​

​

—

​

​

​

(1,664)

​

​

—

Net loss attributable to XWELL, Inc. common stockholders

​

$

(1,473)

​

$

(4,750)

​

​

$

(9,800)

​

$

(9,258)

Basic and diluted loss per share

​

$

(0.26)

​

$

(0.99)

​

​

$

(1.79)

​

$

(2.11)

Weighted-average number of shares outstanding

​

​

​

​

​

Basic

​

5,761,486

​

4,818,681

​

​

5,482,332

​

4,394,106

Diluted

​

5,761,486

​

4,818,681

​

​

5,482,332

​

4,394,106

​

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

​

​

4

Table of Contents

XWELL, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

Series G Convertible

​

​

​

​

​

​

​

Additional

​

​

​

​

other

​

Total

​

Non-

​

​

​

​

​

​

Preferred stock

​

​

Common stock

​

paid-

​

Accumulated

​

comprehensive

​

Company

​

controlling

​

Total

​

Shares

Amount

​

Shares

Amount

​

in capital

deficit

loss

equity

interests

equity

January 1, 2025

​

​

—

​

$

—

​

​

5,261,024

​

$

53

​

$

473,824

​

$

(472,706)

​

$

(1,959)

​

$

(788)

​

$

8,530

​

$

7,742

Stock-based compensation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

80

​

​

—

​

​

—

​

​

80

​

​

3

​

​

83

Issuance of Series G Preferred Stock in private placement, net of transaction costs

​

​

4,000

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Series G Preferred Stock accretion

​

​

—

​

​

499

​

​

—

​

​

—

​

​

(499)

​

​

—

​

​

—

​

​

(499)

​

​

—

​

​

(499)

Series G Preferred Stock dividends

​

​

—

​

​

68

​

​

—

​

​

—

​

​

(68)

​

​

—

​

​

—

​

​

(68)

​

​

—

​

​

(68)

Foreign currency translation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

199

​

​

199

​

​

(10)

​

​

189

Net loss for the period

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,719)

​

​

—

​

​

(4,719)

​

​

131

​

​

(4,588)

March 31, 2025

​

​

4,000

​

$

567

​

​

5,261,024

​

$

53

​

$

473,337

​

$

(477,425)

​

$

(1,760)

​

$

(5,795)

​

$

8,654

​

$

2,859

Stock-based compensation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

599

​

​

—

​

​

—

​

​

599

​

​

—

​

​

599

Series G Preferred Stock accretion

​

​

—

​

​

583

​

​

—

​

​

—

​

​

(583)

​

​

—

​

​

—

​

​

(583)

​

​

—

​

​

(583)

Series G Preferred Stock dividends

​

​

—

​

​

81

​

​

—

​

​

—

​

​

(81)

​

​

—

​

​

—

​

​

(81)

​

​

—

​

​

(81)

Accrual of Series G Preferred Stock and dividend redemption

​

​

(667)

​

​

(816)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Deemed dividends on Preferred Stock

​

​

—

​

​

—

​

​

​

​

​

​

​

​

(108)

​

​

​

​

​

​

​

​

(108)

​

​

​

​

​

(108)

Reclass of warrant liability upon warrant modification

​

​

—

​

​

—

​

​

—

​

​

—

​

​

2,658

​

​

—

​

​

—

​

​

2,658

​

​

—

​

​

2,658

Foreign currency translation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

390

​

​

390

​

​

19

​

​

409

Other comprehensive income, net

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

8

​

​

8

​

​

—

​

​

8

Net loss for the period

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,269)

​

​

—

​

​

(2,269)

​

​

217

​

​

(2,052)

June 30, 2025

​

​

3,333

​

$

415

​

​

5,261,024

​

$

53

​

$

475,822

​

$

(479,694)

​

$

(1,362)

​

$

(5,181)

​

$

8,890

​

$

3,709

Stock-based compensation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

237

​

​

—

​

​

—

​

​

237

​

​

—

​

​

237

Issuance of restricted stock units

​

​

—

​

​

—

​

​

505,679

​

​

5

​

​

(5)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Series G Preferred Stock accretion

​

​

—

​

​

582

​

​

—

​

​

—

​

​

(582)

​

​

—

​

​

—

​

​

(582)

​

​

—

​

​

(582)

Series G Preferred Stock dividends

​

​

—

​

​

67

​

​

—

​

​

—

​

​

(67)

​

​

—

​

​

—

​

​

(67)

​

​

—

​

​

(67)

Accrual of Series G Preferred Stock and dividend redemption

​

​

(667)

​

​

(733)

​

​

—

​

​

—

​

​

​

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Deemed dividends on Preferred Stock

​

​

—

​

​

—

​

​

​

​

​

​

​

​

(100)

​

​

​

​

​

​

​

​

(100)

​

​

​

​

​

(100)

Distributions to noncontrolling interests

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(9)

​

​

(9)

Foreign currency translation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

65

​

​

65

​

​

5

​

​

70

Other comprehensive income, net

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

19

​

​

19

​

​

—

​

​

19

Net loss for the period

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(724)

​

​

—

​

​

(724)

​

​

513

​

​

(211)

September 30, 2025

​

​

2,666

​

$

331

​

​

5,766,703

​

$

58

​

$

475,305

​

$

(480,418)

​

$

(1,278)

​

$

(6,333)

​

$

9,399

​

$

3,066

​

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

5

Table of Contents

XWELL, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

(Unaudited)

(In thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

​

other

​

Total

​

Non-

​

​

​

​

​

​

Common stock

​

paid-

​

Accumulated

​

comprehensive

​

Company

​

controlling

​

Total

​

Shares

Amount

in capital

deficit

​

loss

equity

interests

equity

January 1, 2024

​

​

4,179,631

​

$

42

​

$

470,737

​

$

(455,853)

​

$

(1,924)

​

$

13,002

​

$

7,969

​

$

20,971

Issuance of restricted stock units

​

​

2,986

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation

​

​

—

​

​

—

​

​

259

​

​

—

​

​

—

​

​

259

​

​

23

​

​

282

Foreign currency translation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(175)

​

​

(175)

​

​

45

​

​

(130)

Net loss for the period

​

​

—

​

​

—

​

​

—

​

​

(2,512)

​

​

—

​

​

(2,512)

​

​

154

​

​

(2,358)

March 31, 2024

​

​

4,182,617

​

$

42

​

$

470,996

​

$

(458,365)

​

$

(2,099)

​

$

10,574

​

$

8,191

​

$

18,765

Issuance of restricted stock units

​

​

818

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Exercise of stock options

​

​

3,000

​

​

—

​

​

4

​

​

—

​

​

—

​

​

4

​

​

​

​

​

4

Stock-based compensation

​

​

—

​

​

—

​

​

281

​

​

—

​

​

—

​

​

281

​

​

23

​

​

304

Foreign currency translation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(65)

​

​

(65)

​

​

11

​

​

(54)

Net loss for the period

​

​

—

​

​

—

​

​

—

​

​

(1,996)

​

​

—

​

​

(1,996)

​

​

205

​

​

(1,791)

June 30, 2024

​

​

4,186,435

​

$

42

​

$

471,281

​

$

(460,361)

​

$

(2,164)

​

$

8,798

​

$

8,430

​

$

17,228

Issuance of restricted stock units

​

​

884

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock issued related to legal settlement

​

​

416,000

​

​

4

​

​

936

​

​

—

​

​

—

​

​

940

​

​

—

​

​

940

Stock-based compensation

​

​

—

​

​

—

​

​

208

​

​

—

​

​

—

​

​

208

​

​

24

​

​

232

Proceeds from registered offering

​

​

652,705

​

​

7

​

​

1,348

​

​

—

​

​

—

​

​

1,355

​

​

—

​

​

1,355

Net loss for the period

​

​

—

​

​

—

​

​

—

​

​

(4,750)

​

​

—

​

​

(4,750)

​

​

45

​

​

(4,705)

Foreign currency translation

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(247)

​

​

(247)

​

​

24

​

​

(223)

September 30, 2024

​

​

5,256,024

​

$

53

​

$

473,773

​

$

(465,111)

​

$

(2,411)

​

$

6,304

​

$

8,523

​

$

14,827

​

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

​

6

Table of Contents

XWELL, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

​

​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025		​	2024
Cash flows from operating activities		​		​	​
Net loss	​	$	(6,851)	​	$	(8,854)
Adjustments to reconcile net loss to net cash used in operating activities:	​		​	​		​
Depreciation and amortization	​		574	​		705
Impairment of long-lived assets	​	​	122	​	​	569
Impairment of operating lease right-of-use assets	​	​	359	​	​	254
Unrealized gain on marketable securities	​	​	(35)	​	​	(301)
Foreign currency remeasurement loss	​	​	1,127	​	​	210
Gain on lease termination	​	​	(401)	​	​	(655)
Loss on disposal of assets, net	​	​	7	​	​	—
Amortization of operating lease right of use asset	​	​	717	​	​	928
Provision for credit losses	​	​	6	​	​	—
Stock-based compensation	​		919	​		818
(Gain) loss on equity investment	​	​	(50)	​	​	8
Change in fair value of derivative liability	​		(512)	​		—
Change in fair value of warrant liability	​	​	(3,215)	​	​	—
Loss on issuance of Series G Preferred Stock	​	​	3,443	​	​	—
Changes in assets and liabilities:	​		​	​		​
(Increase) decrease in inventory	​	​	(15)	​		231
Decrease in accounts receivable	​	​	258	​	​	746
(Decrease) increase in deferred revenue	​	​	(16)	​	​	85
(Increase) in other assets, current and non-current	​	​	(3,678)	​		(1,233)
(Decrease) in other liabilities, current and non-current	​	​	(2,676)	​	​	(2,143)
Increase in accounts payable	​	​	1,246	​		1,091
Net cash used in operating activities	​		(8,671)	​		(7,541)
Cash flows from investing activities	​			​
Acquisition of property and equipment	​		(2,258)	​		(1,054)
Investment in marketable securities	​	​	(94)	​	​	(238)
Sale of marketable securities	​	​	7,158	​	​	3,492
Acquisition of intangibles	​		—	​	​	(9)
Net cash provided by investing activities	​		4,806	​		2,191
Cash flows from financing activities	​		​	​		​
Stock option exercised	​	​	—	​	​	4
Proceeds from registered offering, net of offering costs	​	​	3,745	​	​	—
Net proceeds from stock sale	​	​	—	​	​	1,355
Redemption of preferred stock	​	​	(957)	​	​	—
Distributions to noncontrolling interests	​	​	(9)	​	​	—
Net cash provided by financing activities	​		2,779	​		1,359
Effect of exchange rate changes on cash, cash equivalents and restricted cash	​		23	​		(81)
Decrease in cash, cash equivalents and restricted cash	​		(1,063)	​		(4,072)
Cash, cash equivalents, and restricted cash at beginning of the year	​	​	5,301	​	​	9,188
Cash, cash equivalents, and restricted cash at end of the period	​	$	4,238	​	$	5,116
Cash paid for	​		​	​		​
Income taxes	​	$	34	​	$	36
Non-cash investing and financing transactions	​		​	​		​
Issuance of shares of Common Stock for legal settlement	​	$	—	​	​	940
Capital expenditures included in Accounts payable, accrued expenses and other current liabilities	​	​	291	​	$	521
Accrual of Series convertible preferred stock dividends	​	​	216	​	​	—
Accretion of Series G convertible preferred stock to redemption value	​	​	1,664	​	​	—
Initial fair value of warrant liability	​	​	5,873	​	​	—
Initial fair value of derivative liability	​	​	1,315	​	​	—
Accrued Series G convertible preferred stock redemption payable	​	​	800	​	​	—
Reclass of warrant liability upon warrant modification	​	​	2,658	​	​	​
Lease liability remeasurement due to modification	​	​	79	​	​	—
Right-of-use asset and lease liability recognized for new operating lease	​	​	204	​	​	—

​

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

​

​

7

Table of Contents

XWELL, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except for share and per share data)

​

Note 1. Business Overview and Going Concern

Overview

XWELL (“XWELL” or the “Company”) is a global wellness organization dedicated to delivering restorative and health-focused services to travelers through its three reportable operating segments: XpresSpa®, XpresTest®, and Naples Wax Center®. XpresSpa operates spa service locations in major airports, offering massage, skincare, and travel products. XpresTest transitioned from providing COVID-19 testing to supporting public health efforts through bio-surveillance programs at international airports. 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. Naples Wax Center provides upscale hair removal and skincare services through its branded locations.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

​

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses and negative cash flows from operations and has insufficient liquidity to fund future operations.

As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for at least one year from the date of issuance of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has significantly reduced operating and overhead expenses, while it continues to focus on returning to overall profitability. Management is implementing various strategic initiatives to reduce operating expenses, improve working capital and enhance cash flow. These include cost reduction efforts, capital spending controls, and exploration of additional financing options. The Company has concluded that they do not have sufficient available liquidity to fund its operations for at least one year for the issuance of these unaudited condensed consolidated financial statements.

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Note 2. Accounting and Reporting Policies

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, 2024, as amended. The consolidated balance sheet as of December 31, 2024 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 and nine months ended September 30, 2025, 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.

​

Use of estimates

​

The preparation of the accompanying unaudited 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, warrant liabilities, derivative liability, deferred tax assets and liabilities, income tax uncertainties, and other contingencies.

​

Preferred Stock

The Company records shares of convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The Company concluded that the Company’s Series G Convertible Preferred Stock, par value $0.01 per share (“Series G Preferred Stock”), is more akin to a debt-type instrument than an equity-type instrument, therefore certain embedded features were deemed to not be clearly and closely related to the debt host instrument and were bifurcated as a derivative under ASC 815. The Company has applied the guidance in ASC 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities and has therefore classified the Series G convertible preferred stock as mezzanine equity as it redeemable in quarterly installments. The Company adjusts the carrying values of the convertible preferred stock by accreting the discount and accruing dividends to state the convertible preferred stock at redemption value each reporting period.

​

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as assets, liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the unaudited condensed consolidated balance sheet date.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity

9

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(“ASC 480”) and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability classified and recorded at their initial fair value on the date of issuance and remeasured at fair value and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations and comprehensive loss (see Note 11).

Modification of warrants

The Company applies the guidance in ASC 815-40 to account for warrants that are liability classified that are subsequently modified resulting in a reclassification to equity. The warrants are remeasured at fair value on the modification date, the change in fair value is recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations, and the warrants are reclassified to additional paid-in capital.

Basic and Diluted Net Loss per Common Share

The Company computes basic and diluted net loss per share under the two-class method required for participating securities. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Basic and diluted net loss for common stock equivalents is computed by dividing the dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share includes potentially dilutive securities outstanding for the period. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between the Company’s basic and diluted net loss per stock of Common Stock for the three and nine months ended September 30, 2025 and 2024. See Note 3 Potentially Dilutive Securities.

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the consolidated balance sheet. The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

​

Reclassification

​

Certain balances in the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 have been reclassified to conform to the presentation in the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025. In the prior year, the Company separately disclosed salaries and benefits and in the current year the Company has reclassified these costs on the unaudited condensed consolidated statement of operations within general and administrative expenses. These reclassifications had no effect on the Company’s previously reported results of operations, changes in temporary and stockholders’ equity, or cash flows.

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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

​

Nine months ended

​

​

September 30,

​

September 30,

​

2025

2024

2025

2024

Basic numerator:

​

​

​

​

Net loss attributable to XWELL, Inc.

​

$

(724)

​

$

(4,750)

​

$

(7,712)

​

$

(9,258)

Less: preferred stock dividends

​

(167)

​

—

​

(424)

​

—

Less: preferred stock accretion

​

​

(582)

​

​

—

​

​

(1,664)

​

​

—

Net loss attributable to common shareholders

​

$

(1,473)

​

$

(4,750)

​

$

(9,800)

​

$

(9,258)

Basic denominator:

​

​

​

​

​

​

​

Basic weighted average shares outstanding

​

5,761,486

​

4,818,681

​

5,482,332

​

4,394,106

Basic loss per share

​

$

(0.26)

​

$

(0.99)

​

$

(1.79)

​

$

(2.11)

​

​

​

​

​

​

​

​

​

​

​

​

​

Net loss per share data presented above excludes from the calculation of diluted net loss, 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

​

944,304

​

439,487

​

944,304

​

439,487

Unvested RSUs to issue an equal number of shares of Common Stock

​

72,500

​

35,208

​

72,500

​

35,208

Series A and Series B warrants to purchase shares of Common Stock

​

5,347,594

​

—

​

5,347,594

​

—

Series G Convertible Preferred Stock on an as converted basis

​

1,925,134

​

—

​

1,925,134

​

—

Total number of potentially dilutive securities excluded from the calculation of loss per share attributable to common shareholders

​

8,289,532

​

474,695

​

8,289,532

​

474,695

​

​

In accordance with ASC 260, 17,500 RSUs that were fully vested on September 30, 2025 were included in basic and dilutive earnings per share as there were no remaining contingencies for these shares to be issued as of September 30, 2025.

​

​

​

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 September 30, 2025, and December 31, 2024 is as follows:

​

​	​	​	​	​	​	​
​		September 30, 2025			December 31, 2024
Cash denominated in United States dollars	​	$	1,335	​	$	2,145
Cash denominated in currency other than United States dollars	​		2,115	​		2,160
Restricted cash	​	​	251	​	​	751
Credit and debit card receivables	​		537	​		245
Total cash, cash equivalents and restricted cash	​	$	4,238	​	$	5,301

​

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. If the Company were to distribute the amounts held overseas, the Company would need to follow an approval and

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distribution process as defined in its operating and partnership agreements, which may delay and/or reduce the availability of that cash to the Company.

​

Note 5. Other current assets

As of September 30, 2025, and December 31, 2024, other current assets consisted of the following:

​

​	​	​	​	​	​	​
​	​	​
​		​		​	​
​		September 30, 2025			December 31, 2024
Prepaid expenses	​	$	1,579	​	$	1,190
Employee Retention Credit receivable	​	​	2,811	​	​	—
Other	​		201	​		56
Total other current assets	​	$	4,591	​	$	1,246

​

​

Note 6. Intangible Assets

​

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2025

​

December 31, 2024

​

​

Gross

​

​

​

​

Net

​

Gross

​

​

​

​

Net

​

​

Carrying

​

Accumulated

​

Carrying

​

Carrying

​

Accumulated

​

Carrying

​

Amount

Amortization

Amount

Amount

Amortization

Amount

Trade names

​

$

200

​

$

(45)

​

$

155

​

$

200

​

$

(29)

​

$

171

Customer relationships

​

​

1,012

​

​

(516)

​

​

496

​

​

1,012

​

​

(441)

​

​

571

Software

​

1,461

​

(1,318)

​

143

​

2,583

​

(2,302)

​

281

Total intangible assets

​

$

2,673

​

$

(1,879)

​

$

794

​

$

3,795

​

$

(2,772)

​

$

1,023

​

The Company’s intangible assets are amortized over their expected useful lives. The Company recorded amortization expense of $76 and $78 during the three months ended September 30, 2025 and 2024, respectively, and $230 and $237 during the nine months ended September 30, 2025 and 2024, respectively.

Based on the intangible assets balance as of September 30, 2025, 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 2025	​	$	73
2026	​		223
2027	​		122
2028	​		122
2029	​	​	122
Thereafter	​	​	132
Total	​	$	794

​

​

​

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Note 7. Accrued expenses and other current liabilities

As of September 30, 2025, and December 31, 2024, accrued expenses and other current liabilities consisted of the following:

​

​	​	​	​	​	​	​
​	​	​	​	​	​	​
​		September 30, 2025			December 31, 2024
Accrued compensation	​	$	1,277	​	$	2,384
Tax-related liabilities	​		533	​		571
Common area maintenance accruals	​	​	47	​	​	31
AP Accruals	​	​	183	​	​	340
Gift certificates	​		650	​		507
Other miscellaneous accruals	​		224	​		255
Total accrued expenses and other current liabilities	​	$	2,914	​	$	4,088

​

​

Note 8. 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.

​

During the three months ended September 30, 2025, there was an increase to the lease term for the XWELL corporate headquarters, located at 254 West 31^st Street, New York, which has been accounted for as a lease renewal. A new operating lease right-of-use asset and lease liability were measured at the renewal date, resulting in an right-of-use asset and lease liability of $0.20 million.

​

During the nine months ended September 30, 2025, there was an increase to the lease term for the XpresSpa Las Vegas Airport lease, which has been accounted for as a lease modification. The operating lease right-of-use asset and liability were remeasured at the modification date, resulting in an increase to both balances of $0.08 million.

​

The following is a summary of the activity in the Company’s current and long-term operating lease liabilities for the nine months ended September 30, 2025 and 2024:

​

​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024
Cash paid for amounts included in the measurement of lease liabilities:	​	​	​	​	​	​
Operating cash flows from operating leases	​	$	(2,121)	​	$	(2,585)
Leased assets obtained in exchange for new and modified operating lease liabilities	​	$	283	​	$	3,091

​

As of September 30, 2025, operating leases contain the following future minimum commitments:

​

​	​	​	​
Calendar Years ending December 31,		Amount
Remaining 2025	​	$	811
2026	​	​	2,372
2027	​		2,213
2028	​		1,701
2029	​		1,403
Thereafter	​		2,857
Total future lease payments	​		11,357
Less: interest expense at incremental borrowing rate	​		(1,798)
Net present value of lease liabilities	​	$	9,559

​

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

​

​	​	​	​	​
Weighted average remaining lease term:	​	​	5.38	years
Weighted average discount rate used to determine present value of operating lease liability:		​	6.74	%

​

Cash paid for minimum annual rental obligations during the three and nine months ended September 30, 2025, was $505 and $1,745, respectively. Cash paid for minimum annual rental obligations during the three and nine months ended September 30, 2024, was $433 and $1,202, respectively.

​

Variable lease payments calculated monthly as a percentage of product and services revenue, were $371 and $330 for the three months ended September 30, 2025, and 2024, respectively, and $1,035 and $1,030 for the nine months ended September 30, 2025, and 2024, respectively.

​

Note 9. Other Assets

As of September 30, 2025 and December 31, 2024, assets consisted of the following:

​

​	​	​	​	​	​	​
​		September 30, 2025			December 31, 2024
Equity investments	​	$	135	​	$	85
Lease deposits	​		1,848	​		1,535
Other	​	​	12	​	​	14
Other assets	​	$	1,995	​	$	1,634

​

​

Note 10. Stock-based Compensation

​

As of September 30, 2025, and 2024, there was $0 and $27, 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:

​

​	​	​	​	​	​	​
​		2025			2024	​
Share price of the Company’s Common Stock on the grant date:	​	$	0.97 - 1.52	​	1.50 - 1.80	​
Exercise price:	​	$	0.97 - 1.52	​	1.50 - 1.80	​
Expected volatility:	​		121.04	​	121.04	%
Expected dividend yield:	​		0	​	0	%
Annual average risk-free rate:	​		4.13 - 4.47	​	4.05 - 4.14	%
Expected term:	​		6.32	​	6.32	years

​

Total stock-based compensation for the three and nine months ended September 30, 2025, was $237 and $919, respectively. Total stock-based compensation for the three and nine months ended September 30, 2024, was $232 and $818 respectively. All stock-based compensation for the three and nine months ended September 30, 2025 and 2024 is presented on the unaudited condensed consolidated Statements of Operations and Comprehensive Loss within general and administrative expense.

​

14

Table of Contents

The following tables summarize information about stock options and RSU activity for the nine months ended September 30, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

RSUs

​

Stock options

​

​

Weighted

​

Weighted

​

Weighted

​

​

​

​

average

​

​

​

average

​

average

​

​

No. of

​

grant date

​

No. of

​

exercise

​

remaining

​

​

RSUs

​

fair value

​

options

​

price

​

term

Outstanding as of December 31, 2024

​

30,000

​

$

1.80

​

539,799

​

$

12.85

​

​

7.63 years

Granted

​

565,679

​

​

0.97

​

581,038

​

​

1.00

​

​

​

Exercised/Vested

​

(523,179)

​

​

0.99

​

—

​

​

—

​

​

​

Forfeited

​

—

​

​

—

​

(357)

​

​

29.18

​

​

​

Expired

​

—

​

—

​

(176,176)

​

​

18.97

​

​

​

Outstanding as of September 30, 2025

​

72,500

​

$

1.23

​

944,304

​

$

4.36

​

​

8.99 years

Exercisable as of September 30, 2025

​

—

​

​

​

​

399,958

​

$

8.53

​

​

8.99 years

​

Unrecognized stock-based payment cost related to non-vested stock options as of September 30, 2025 was $371, vesting over the next 0.61 years.

​

Unrecognized stock-based payment cost related to non-vested RSUs as of September 30, 2025 was $88.

​

Note 11. Private Placement

​

Private Placement

​

On January 14, 2025, XWELL, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which it agreed to sell to the Investors (i) an aggregate of 4,000 shares of the Company’s newly-designated Series G Convertible Preferred Stock, with a par value of $0.01 per share and a stated value of $1,000 per share, initially convertible into up to 2,673,797 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) at a conversion price of $1.496 per share (the “Preferred Stock”), (ii) Series A warrants to acquire up to an aggregate of 2,673,797 shares of Common Stock (the “Series A Warrants”) at an exercise price of $1.496 per share, and (iii) Series B warrants to acquire up to an aggregate of 2,673,797 shares of Common Stock (the “Series B Warrants,” and collectively with the Series A Warrants, the “Warrants”) at an exercise price of $1.7952 per share (collectively, the “Private Placement”).

​

The closing of the Private Placement occurred on January 14, 2025 (the “Closing Date”). The Private Placement unit described above had a purchase price of $1,000 per unit and aggregate gross proceeds from the Private Placement were $4 million. The Company expects to use the net proceeds from the Private Placement for general corporate purposes.

​

The Company engaged GP Nurmenkari Inc. (the “Placement Agent”) to act as the placement agent in connection with the Private Placement. Pursuant to an Engagement Letter with the Placement Agent, the Company paid to the Placement Agent a cash fee equal to 2% of gross proceeds of the Private Placement.

​

Transaction costs totaling approximately $255 were incurred related to the Private Placement consisting of cash expenses for placement agent fees, legal fees, and accounting costs related to the financing. These cost were proportionately allocated to the Series G Convertible Preferred Stock and the Warrants based on the allocated gross proceeds of the instruments. Accordingly, none of the transaction costs were allocated against the carrying value of the Preferred Stock and the total of approximately $255 of transaction costs were immediately expensed related to the Warrants which are accounted for as liabilities in accordance with ASC 815,which is included as a component of loss on issuance of Series G Preferred Stock on the condensed consolidated statement of operations. Net proceeds from the Private Placement totaled $3,745.

​

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January 2025 Private Placement of Preferred Shares and Warrants

In connection with the private placement consummated on January 14, 2025, the Company and the investors entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company is required to file a resale registration statement (the “Registration Statement”) with the SEC and to have such Registration Statement declared effective by the Effectiveness Deadline (as defined in the Registration Rights Agreement). The Company is obligated to pay certain liquidated damages to the investors if the Company fails to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, or fails to maintain the effectiveness of the Registration Statement pursuant to the terms of the Registration Rights Agreement. The Registration Statement was filed on February 7, 2025. Following a series of waivers and amendments to the Registration Rights Agreement to extend the effectiveness date of the Registration Statement by and between the Company and the investors, the Registration Statement was declared effective on June 30, 2025.

Pursuant to the Registration Rights Agreement, the Company shall pay to each holder of Registrable Securities (as defined in the Registration Rights Agreement) relating to such Registration Statement an amount in cash equal to 2% of such investor’s respective purchase price (as defined in the Securities Purchase Agreement) on the closing date (1) on the date of such filing failure, effectiveness failure, maintenance failure, or current public information failure, as applicable, and (2) on every 30 day anniversary of (I) a filing failure until such filing failure is cured; (II) an effectiveness failure until such effectiveness failure is cured; (III) a maintenance failure until such maintenance failure is cured; and (IV) a current public information failure until the earlier of (i) the date such current public information failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144 (in each case, prorated for periods totaling less than 30 days) (such payments to which a holder of Registrable Securities shall be entitled pursuant to the Registration Rights Agreement, the “Registration Delay Payments”). Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such event or failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration Delay Payments is cured prior to any 30 day anniversary of such event or failure, then such Registration Delay Payment shall be made on the third business day after such cure. In the event the Company fails to make Registration Delay Payments in a timely manner in accordance with the foregoing, such Registration Delay Payments shall bear interest at the rate of one and 1.5% per month (prorated for partial months) until paid in full.

​

Series G Convertible Preferred Stock

​

The terms of the Preferred Stock are as set forth in the form of Certificate of Designations (the “Certificate of Designations”). The Preferred Stock are convertible into shares of Common Stock (the “Conversion Shares”) at the election of the holder at any time at an initial conversion price of $1.496 per share (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like (subject to certain exceptions). The Company is required to redeem the Preferred Stock in six (6) equal quarterly installments, commencing on July 1, 2025. The amortization payments due upon such redemption are payable, at the Company’s election, in cash at 107% of the applicable Installment Redemption Amount (as defined in the Certificate of Designations), or subject to certain limitations, in shares of Common Stock valued at the lower of (i) the Conversion Price then in effect and (ii) the greater of (A) 80% of the average of the three lowest closing prices of the Company’s Common Stock during the thirty consecutive trading day period ending and including the trading day immediately prior to the date the amortization payment is due or (B) the lower of (i) $0.167 and (ii) 20% of the “Minimum Price” (as defined in Rule 5635 of the Rule of the Nasdaq Stock Market) (the “Floor Price”), and in each case subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events.

​

The holders of the Preferred Stock are entitled to dividends of 8% per annum, compounded each calendar quarter, which are payable in arrears monthly in cash or shares of Common Stock at the Company’s option, in accordance with the terms of the Certificate of Designations. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Preferred Stock accrue dividends at the rate of 15% per annum. Upon conversion or redemption, the holders of the Preferred Stock are also entitled to receive a dividend make-whole payment, assuming for calculation purposes that the stated value of such Preferred Stock remained outstanding through and including the one-year anniversary of the applicable date of conversion. The Company is required to maintain unrestricted cash and cash equivalents on hand in an amount equal to at least 200% of the sum of the stated value, accrued dividends, dividend make-

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whole payments payable, and any other required amounts payable pursuant to the Certificate of Designations for all outstanding shares of Preferred Stock. The holders of the Preferred Stock are entitled to vote with holders of the Common Stock on as as-converted basis, with the number of votes to which each holder of Preferred Stock is entitled to be calculated assuming a conversion price of $1.36 per share, which was the Minimum Price (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) applicable immediately before the execution and delivery of the Purchase Agreement, subject to certain beneficial ownership limitations as set forth in the Certificate of Designations.

​

Notwithstanding the foregoing, the Company’s ability to settle conversions and make amortization and dividend make-whole payments using shares of Common Stock is subject to certain limitations set forth in the Certificate of Designations, including a limit on the number of shares that may be issued until the time, if any, that the Company has obtained the Stockholder Approval. Further, the Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Preferred Stock or as part of any amortization payment or dividend make-whole payment under the Certificate of Designations.

​

The Certificate of Designations includes certain Triggering Events, including, among other things, the Company’s failure to pay any amounts due to the holders of the Preferred Stock when due. In connection with a Triggering Event, each holder of Preferred Stock will be able to require the Company to redeem in cash any or all of the holder’s Preferred Stock at a premium set forth in the Certificate of Designations.

​

The Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the following embedded features that are not clearly and closely related to the debt host instrument: 1) certain contingent redemption options and 2) variable share-settled conversions, and 3) certain contingent penalty features. These features were bundled together, assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are recognized in the Consolidated Statement of Operations. The Company estimated the $1,315 fair value of the bifurcated embedded derivative at issuance using a Monte Carlo simulation, with the following inputs: the fair value of the Company’s common stock of $1.37 on the issuance date, estimated equity volatility of 86.0%, the time to maturity of 2.0 years, a discounted market interest rate of 6.4%, a risk-free rate of 4.28%, dividend rate of 8.0%, a penalty dividend rate of 15.0%, and probability of default of 9.9%. The fair value of the bifurcated derivative liability was estimated utilizing the with and without method which uses the probability weighted difference between the scenarios with the derivative and the plain vanilla maturity scenario without a derivative.

​

The discount to the fair value is included as a reduction to the carrying value of the Series G Preferred Shares. During nine months ended September 30, 2025, the Company recorded a total discount of $4,000 upon issuance of the Series G Preferred Shares, which was comprised of the issuance date fair value of the associated embedded derivative of $1,315 and the remaining $2,685 of gross proceeds after allocation to the derivative liability which represents the portion of the Warrant liability allocated to the discount. It was deemed probable that the Series G Preferred Shares will become redeemable, the Company recognized accretion of $582 and $1,664 related to the Series G Preferred Shares for the three and nine months ended September 30, 2025, respectively, pursuant to ASC 480-10-S99-3A utilizing the effective interest method, which is included as a deduction from net loss attributable to common stockholders in the condensed consolidated statement of operations. As the fair value of the liabilities required to be subsequently measured at fair value exceeded the net proceeds received, the Company recognized the excess of the fair value over the net proceeds received as a component of the loss upon issuance of preferred stock of $3,188 which is included in other income (expense) in the unaudited condensed consolidated statement of operations.

​

During the three and nine months ended September 30, 2025, the Company recorded a gain of $233 and $512, respectively, related to the change in fair value of the derivative liability which is recorded in other income (expense) on the unaudited condensed consolidated statements of operations. The Company estimated the $803 fair value of the bifurcated embedded derivative at September 30, 2025 using a Monte Carlo simulation model, with the following inputs: the fair value of the Company’s common stock of $0.99 on the valuation date, estimated equity volatility of 85%, the time to maturity of 1.29 years, a discounted market interest rate of 5.2%, a risk-free rate of 3.59%, dividend rate of 8.0%, a penalty dividend rate of 15.0%, and probability of default of 4.2%.

​

As of September 30, 2025, the Company had notified the investors of its intention to redeem the upcoming installment due in cash and recorded a liability of $800 representing the cash payable to investors which includes $667 of the stated

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value of the Series G Preferred Shares, $29 of accrued dividends payable of dividends, and $104 of cash premiums which was recognized as a deemed dividend.

​

During the three months ended September 30, 2025, the Company recognized a total of $167 of preferred dividends consisting of $67 of preferred dividends at the stated dividend rate, and $100 of cash premiums recognized as deemed dividends. During the nine months ended September 30, 2025, the Company recognized a total of $424 of preferred dividends consisting of $216 of preferred dividends at the stated dividend rate, and $208 of cash premium recognized as a deemed dividend.

​

Following September 30, 2025, the Company agreed to amend certain terms of the Series G Preferred Stock pursuant to the terms of a Certificate of Amendment to the Certificate of Designations (the “Certificate of Amendment”). The Certificate of Amendment amends the Certificate of Designations to (i) reduce the Conversion Price to $1.00, (ii) remove the restrictive covenant requiring the Company to maintain unencumbered, unrestricted cash and cash equivalents on hand in an amount equal to at least 200% of the shares of common stock issuable upon conversion of the outstanding shares of Series G Preferred Stock, (iii) amend the definition of “Make-Whole Amount,” such that it now means an amount equal to the amount of additional dividends that would accrue at the dividend rate then in effect assuming for calculation purposes that the Stated Value as of the Closing Date remained outstanding through and including the Maturity Date (as defined in the Certificate of Designations), (iv) add certain anti-dilution provisions such that the Conversion Price will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Conversion Price (subject to certain exceptions), (v) add certain provisions such that the Company and the holder of the shares of Series G Preferred Stock may agree to accelerate the conversion of such shares (including any Deferral Amounts (as defined in the Certificate of Designations)) at a conversion price equal to the lower of (i) the Installment Conversion Price (as defined in the Certificate of Designations) applicable to the current Installment Date and (ii) the greater of the Floor Price and (x) 80% of the dollar volume-weighted average price (“VWAP”) of the common stock immediately prior to such acceleration, and (y) the average three daily VWAP during the thirty consecutive trading day immediately prior to such acceleration. See Note 18.

​

Warrants

​

Pursuant to the Private Placement, the Company issued (i) the Series A Warrants to acquire up to an aggregate of 2,673,797 shares of Common Stock at an exercise price of $1.496 per share, and (ii) the Series B Warrants to acquire up to an aggregate of 2,673,797 shares of Common Stock at an exercise price of $1.7952 per share.

​

On January 14, 2025 The Company assessed the Warrants under ASC 815 and determined that the Warrants will be classified as liabilities as they do not meet the requirements to be considered indexed to the Company’s own stock, due to the presence of certain Stockholder Approval-related provisions in the Warrants which potentially adjust the settlement value in conjunction with the Stockholder Approval event. Additionally, the Warrants include a provision related to certain tender or exchange offers which further preclude the Warrants from being accounted for as equity. As such, the Company recorded the Warrants as a liability at fair value with subsequent changes in fair value recognized in earnings. The Company utilized the Black Scholes Model to calculate the value of the Warrants issued on issuance. The fair value of the Warrants of approximately $5.9 million was estimated at January 14, 2025 utilizing the Black Scholes Model using the following weighted average assumptions: the fair value of the Company’s common stock per share of $1.37; remaining term of 5 years; equity volatility of 114.0%; and a risk-free interest rate of 4.49%.

​

On May 16, 2025, the Company entered into an omnibus amendment (the “Warrant Amendment”) with each of the holders of the Series A Warrants and Series B Warrants. The Warrant Amendment makes certain adjustments to the definition of a “Fundamental Transaction” in each of the Warrants, as described in the Warrant Amendment, including changing the scope of the definition applicable to tender or exchange offers that the Company makes, allows one or more Subject Entities (as defined in the Warrant Agreement) to make, or allows the Company to be subject to, to require such a tender or exchange offer to represent more than 50% of the outstanding voting power of the Company. Further, the Warrant Amendment modifies certain terms of the Warrants relating to the rights of the holders in the event of a Fundamental Transaction (as defined in each of the Series A Warrants and Series B Warrants, and as each amended by the Warrant Amendment) that is not within the Company’s control, including that upon a Fundamental Transaction not being approved by the Company’s Board of Directors, the holders of the Warrants shall only be entitled to receive from the Company or

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any successor entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined in each of the Series A Warrants and Series B Warrants and as each amended by the Warrant Amendment, as described below) of the unexercised portion of such Warrants, that is being offered and paid to the holders of the Company’s Common Stock. In addition, the Amendment revises the definition of Black Scholes Value related to the volatility input which is now an expected volatility equal to the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the trading day immediately following the earliest to occur of (1) the public disclosure of the applicable Fundamental Transaction and (2) the date of a holder’s request. The Warrant Amendment resulted in the reclassification of the Warrants as equity, rather than liability, as upon reassessment, the Company concluded that the Warrants now met the requirements to be considered indexed to the Company’s own stock and eligible for equity classification under ASC 815-40. The Company utilized the Black Scholes Model to calculate the value of the Warrants on the modification date. The fair value of the Warrants of approximately $2.7 million was estimated at May 16, 2025 utilizing the Black Scholes Model using the following weighted average assumptions: the fair value of the Company’s common stock per share of $0.91; remaining term of 4.67 years; equity volatility of 82.0%; and a risk-free interest rate of 3.97%. This information is presented in further detail in Note 16. On May 16, 2025, the $2.7 million fair value of the warrants was reclassified to additional paid-in-capital (APIC) on the unaudited condensed consolidated statements of changes in temporary equity and stockholders’ equity and will not require remeasurement moving forward.

​

Following September 30, 2025, on November 3, 2025, in connection with the Exchange (as defined herein), the Company and the Investors agreed to, among others, amend and restate the Investors’ Series A Warrants (the “Amended and Restated Series A Warrants”) and (ii)  Series B Warrants (the “Amended and Restated Series B Warrants” and, collectively with the Amended and Restated Series A Warrants, the “Amended and Restated Warrants”) to (A) reduce the exercise price of the Warrants to $1.00, and (B) add certain anti-dilution provisions such that the exercise price of the Warrants will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable exercise price. See Note 18.

​

During the three and nine months ended September 30, 2025, the Company recorded a gain of approximately $0 and $3,215, respectively, related to the change in fair value of the warrant liability which is recorded in other income (expense) on the unaudited condensed consolidated statements of operations.

​

The following table represents the activity related to the Company’s warrants during the nine months ended September 30, 2025:

​

​	​	​	​	​	​	​	​	​
​		​		Weighted average			Remaining
​	​	No. of Warrants	​	exercise price*		​	contractual term (years)
December 31, 2024	​	—	​	$	—	​	$	—
Granted		5,347,594	​	$	1.65	​	$	—
September 30, 2025		5,347,594	​	$	1.65	​	$	4.30

​

All outstanding warrants were exercisable as of September 30, 2025 with an intrinsic value of $0.

Note 12. 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.

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

XpresSpa Holdings, LLC (“XpresSpa”) v. Cordial Endeavor Concessions of Atlanta, LLC (“Cordial”), et al., Arbitration Case No. 2126399.

The Company’s subsidiary, XpressSpa Holdings, LLC, is party to an arbitration proceeding (the “Arbitration”) which was requested by the City of Atlanta relating to agreements by and between Cordial and XpresSpa for the operation of the XpresSpa locations in Hartsfield - Jackson Atlanta International Airport (“ATL”) in ATL Terminal A and ATL Terminal C. The City of Atlanta filed an application to compel arbitration in the Superior Court of Fulton County, and on November 5, 2024, the court granted that application and ordered the parties to arbitrate their disagreements. 

​

This dispute arises out of the alleged breaches of contract between the parties as well as other alleged improper conduct relating to the agreements. The Arbitration has recently commenced, and a scheduling order was issued by the Arbitrator on May 12, 2025. An arbitration hearing is scheduled to take place in March 2026.  

​

No substantive proceedings have taken place and there have been no substantive rulings.

​

Other Arrangements

​

On May 16, 2025, the Company entered into a sales and marketing agreement with a vendor that obligates the Company to make payments totaling $662 over the next three years.

​

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.

​

Note 13. Segment Information

In the first quarter of 2025, the decision was made to convert the final remaining Treat location at JFK International Airport in New York City to an XWELL location. Treat has been aggregated with XpresSpa in the segment tables below and the presentation has been revised for 2024.

The CODM evaluates performance and allocates resources for all of its reportable segments based on segment revenues and operating income.

The CODM uses segment revenues and segment operating income, to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly basis using the segment revenues and segment operating income when making decisions about allocating capital and personnel to the segments. The CODM also uses the segment revenues and operating income to assess the performance for each segment by comparing the results and return on assets of each segment with one another and in the compensation of certain employees. Expenses that can be specifically identified with a segment have been included as deductions in determining operating income. The Company separately presents the costs associated with certain corporate functions as Corporate and Other, primarily consisting of unallocated operating expenses including costs that were not specific to a particular segment but are general to the group, expenses incurred for insurance, legal fees, public company administrative costs, and other similar corporate expenses.

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The table below presents information about reported segments for the three and nine months ended September 30, 2025 and 2024:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue

​

$

4,819

​

$

2,031

$

495

​

$

—

​

$

7,345

Operating (loss)/income

​

$

(318)

​

$

2,457

​

$

(387)

​

$

(2,522)

​

$

(770)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue

​

$

4,849

​

$

3,144

$

429

​

$

—

​

$

8,422

Operating (loss)/income

​

$

(2,357)

​

$

1,138

​

$

(66)

​

$

(3,484)

​

$

(4,769)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue

​

$

13,999

​

$

6,363

$

1,694

​

$

—

​

$

22,056

Operating (loss)/income

​

$

1,060

​

$

3,767

​

$

(1,051)

​

$

(10,396)

​

$

(6,620)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue

​

$

14,206

​

$

10,630

$

1,594

​

$

—

​

$

26,430

Operating (loss)/income

​

$

(6,581)

​

$

4,450

​

$

(177)

​

$

(6,732)

​

$

(9,040)

​

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A reconciliation of total segment revenues to total unaudited condensed consolidated revenue and of total segment operating (loss) income to total consolidated (loss) income, for the three and nine months ended September 30, 2025 and 2024, is as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue from external customers

​

$

4,819

​

$

2,031

​

$

495

​

$

—

​

$

7,345

Less: Significant Expenses (1):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of Goods Sold - Labor

​

​

2,331

​

​

1,135

​

​

382

​

​

—

​

​

3,848

Cost of Goods Sold - Products & Services

​

​

404

​

​

—

​

​

6

​

​

—

​

​

410

Occupancy Cost

​

​

1,072

​

​

10

​

​

155

​

​

—

​

​

1,237

Other Cost of Revenue

​

​

228

​

​

60

​

​

69

​

​

—

​

​

357

Depreciation and amortization

​

​

114

​

​

3

​

​

86

​

​

18

​

​

221

Impairment of long lived assets

​

​

122

​

​

—

​

​

—

​

​

—

​

​

122

Impairment of operating lease right-of-use assets

​

​

359

​

​

—

​

​

—

​

​

—

​

​

359

Loss on disposal of assets, net

​

​

7

​

​

—

​

​

—

​

​

—

​

​

7

Less: Other Segment Expenses (2):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other segment operating expenses

​

​

500

​

​

(1,634)

​

​

184

​

​

2,504

​

​

1,554

Segment operating (loss) income

​

$

(318)

​

$

2,457

​

$

(387)

​

$

(2,522)

​

$

(770)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue from external customers

​

$

4,849

​

$

3,144

​

$

429

​

$

—

​

$

8,422

Less: Significant Expenses (1):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of Goods Sold - Labor

​

​

2,549

​

​

1,607

​

​

270

​

​

—

​

​

4,426

Cost of Goods Sold - Products & Services

​

​

463

​

​

6

​

​

7

​

​

—

​

​

476

Occupancy Cost

​

​

846

​

​

10

​

​

63

​

​

—

​

​

919

Other Cost of Revenue

​

​

375

​

​

131

​

​

42

​

​

—

​

​

548

Depreciation and amortization

​

​

188

​

​

16

​

​

34

​

​

14

​

​

252

Loss on disposal of assets, net

​

​

152

​

​

—

​

​

—

​

​

—

​

​

152

Less: Other Segment Expenses (2):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other segment operating expenses

​

​

2,633

​

​

236

​

​

79

​

​

3,470

​

​

6,418

Segment operating (loss) income

​

$

(2,357)

​

$

1,138

​

$

(66)

​

$

(3,484)

​

$

(4,769)

​

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Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue from external customers

​

$

13,999

​

$

6,363

​

$

1,694

​

$

—

​

$

22,056

Less: Significant Expenses (1):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of Goods Sold - Labor

​

​

7,075

​

​

3,604

​

​

1,048

​

​

—

​

​

11,727

Cost of Goods Sold - Products & Services

​

​

1,004

​

​

—

​

​

26

​

​

—

​

​

1,030

Occupancy Cost

​

​

3,105

​

​

37

​

​

467

​

​

—

​

​

3,609

Other Cost of Revenue

​

​

668

​

​

164

​

​

272

​

​

—

​

​

1,104

Depreciation and amortization

​

​

319

​

​

7

​

​

200

​

​

48

​

​

574

Impairment of long-lived assets

​

​

122

​

​

—

​

​

—

​

​

—

​

​

122

Impairment of operating lease right-of-use assets

​

​

359

​

​

—

​

​

—

​

​

—

​

​

359

Loss on disposal of assets, net

​

​

7

​

​

—

​

​

—

​

​

—

​

​

7

Less: Other Segment Expenses (2):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other segment operating expenses

​

​

280

​

​

(1,216)

​

​

732

​

​

10,348

​

​

10,144

Segment operating (loss) income

​

$

1,060

​

$

3,767

​

$

(1,051)

​

$

(10,396)

​

$

(6,620)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Revenue from external customers

​

$

14,206

​

$

10,630

​

$

1,594

​

$

—

​

$

26,430

Less: Significant Expenses (1):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of Goods Sold - Labor

​

​

7,499

​

​

4,796

​

​

940

​

​

—

​

​

13,235

Cost of Goods Sold - Products & Services

​

​

1,165

​

​

46

​

​

33

​

​

—

​

​

1,244

Occupancy Cost

​

​

2,386

​

​

29

​

​

149

​

​

—

​

​

2,564

Other Cost of Revenue

​

​

882

​

​

492

​

​

216

​

​

—

​

​

1,590

Depreciation and amortization

​

​

493

​

​

72

​

​

97

​

​

43

​

​

705

Impairment of long-lived assets

​

​

652

​

​

—

​

​

—

​

​

—

​

​

652

Loss on disposal of assets, net

​

​

171

​

​

—

​

​

—

​

​

—

​

​

171

Less: Other Segment Expenses (2):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other segment operating expenses

​

​

7,539

​

​

745

​

​

336

​

​

6,689

​

​

15,309

Segment operating (loss) income

​

$

(6,581)

​

$

4,450

​

$

(177)

​

$

(6,732)

​

$

(9,040)

(1) The significant expense amounts align with the expenses that the CODM is regularly provided with to assess performance and allocate resources.

(2) For all segments, SGA consists of the following:

​

Salaries & Benefits, Rent & Utilities, Office Supplies & Shipping, Travel & Entertainment, IT & Telecom, Repairs & Maintenance, Accounting, Legal, Franchise/Property Tax, Management/DBE Fees, Advertising & Marketing, Insurance

23

Table of Contents

Other Significant Items

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Stock based compensation

​

$

66

​

$

—

​

$

—

​

$

171

​

$

237

Impairment

​

$

481

​

$

—

​

$

—

​

$

—

​

$

481

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Stock based compensation

​

$

207

​

$

24

​

$

1

​

$

—

​

$

232

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Stock based compensation

​

$

141

​

$

3

​

$

—

​

$

775

​

$

919

Impairment

​

$

481

​

$

—

​

$

—

​

$

—

​

$

481

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Stock based compensation

​

$

748

​

$

70

​

$

—

​

$

—

​

$

818

Impairment

​

$

652

​

$

—

​

$

—

​

$

—

​

$

652

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2025

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Capital expenditures

​

$

1,458

​

$

—

$

941

​

$

124

​

$

2,523

Assets

​

$

9,138

​

$

4,382

​

$

5,834

​

$

2,388

​

$

21,742

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2024

​

XpresSpa

XpresTest

Naples Wax

Corporate and other

Total

Capital expenditures

​

$

755

​

$

49

$

959

​

$

18

​

$

1,781

Assets

​

$

8,545

​

$

2,133

​

$

6,216

​

$

8,458

​

$

25,352

​

The Company currently operates in two geographical regions: United States and all other countries, which include Netherlands, Turkey and United Arab Emirates. The following table represents the geographical revenue, and total long-lived asset information. There were no concentrations of geographical revenue and long-lived assets related to any single foreign country that were material to the Company’s unaudited condensed consolidated financial statements. Long-lived assets include property and equipment and right of use lease assets.

​

​	​	​	​	​	​	​
​	​	Nine months ended
​	​	September 30,
​		2025			2024
Revenue		​			​
United States	​	$	18,349	​	$	22,530
All other countries	​		3,707	​		3,900
Total revenue	​	$	22,056	​	$	26,430

24

Table of Contents

​

​	​	​	​	​	​	​
​	​	Three months ended
​	​	September 30,
​		2025			2024
Revenue		​			​
United States	​	$	6,448	​	$	7,417
All other countries	​		897	​		1,005
Total revenue	​	$	7,345	​	$	8,422

​

​	​	​	​	​	​	​
Long-lived assets		September 30, 2025			December 31, 2024
United States	​	$	5,581	​	$	3,289
All other countries	​		918	​		1,929
Total long-lived assets	​	$	6,499	​	$	5,218

​

​

Note 14. Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue from contracts with customers by the nature of products and services provided (in thousands): 

​	​	​	​	​	​	​
​	​	Nine months ended
​	​	September 30,
​		2025			2024
Revenue, point in time	​	$	15,693	​	$	15,800
Revenue, over time	​	​	6,363	​	​	10,630
Total Revenue	​	$	22,056	​	$	26,430

​

​	​	​	​	​	​	​
​	​	Three months ended
​	​	September 30,
​		2025			2024
Revenue, point in time	​	$	5,314	​	$	5,278
Revenue, over time	​	​	2,031	​	​	3,144
Total Revenue	​	$	7,345	​	$	8,422

​

As of September 30, 2025, the unrecognized committed amount of the Ginkgo/Bioworks contract is $3,366.

​

Contract Costs

The Company has no contract costs related to the periods presented.

25

Table of Contents

Contract Liabilities

Contract liabilities are classified as deferred revenue in the unaudited condensed consolidated balance sheets. The activity in deferred revenue for the nine months ended September 30, 2025, and for the year ended December 31, 2024, was as follows:

​

​	​	​	​	​	​	​
​		September 30, 2025			December 31, 2024
Beginning of the period contract liability	​	$	1,143	​	$	861
Revenue recognized from the contract liabilities included in the beginning balance	​	​	(605)	​	​	(461)
Increases due cash received net of amounts recognized revenue during the period	​	​	589	​	​	743
End of period contract liability	​	$	1,127	​	$	1,143

​

Of the $1,143 outstanding as of December 31, 2024, $117 and $605 have been recognized as revenue for the three and nine months ended September 30, 2025, respectively.

​

The Company has elected not to include in unfulfilled performance obligations for contracts in which the amount of revenue it recognizes is equal to the amount which the Company has a right to invoice. No revenue was recognized in the reporting period from performance obligations satisfied in previous periods. The Company applies the right-to-invoice practical expedient for its Priority Pass and HyperPointe revenue streams and recognizes revenue in the amount it is entitled to invoice when that amount corresponds directly with the value of the performance to date. For the Company’s XpresTest business unit, there are no portions of unfulfilled performance obligations, because the Company’s efforts towards satisfying each of the performance obligations are expended evenly throughout the period of performance. For the Company’s HyperPointe business unit, 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 $44 and $181 as of September 30, 2025, and December 31, 2024, respectively. 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, which was $882 and $956 as of September 30, 2025 and December 31, 2024, respectively. As services related to prepaid packages are used, revenue is recognized as income.

Note 15. Property and Equipment, net

Property and equipment are comprised of the following (in thousands):

​	​	​	​	​	​	​	​	​
​	​	September 30,		​	December 31,		​
​		2025			2024			Useful Life
Leasehold improvements	​	$	6,693	​	$	4,566		Average 5-8 years
Furniture and fixtures	​	​	454	​	​	359		3-4 years
Other operating equipment	​		900	​		722		Maximum 5 years
​	​		8,047	​		5,647	​	​
Accumulated depreciation	​		(4,163)	​		(3,838)
Total property and equipment, net	​	$	3,884	​	$	1,809

​

Depreciation expense was $144 and $344 for the three and nine months ended September 30, 2025, respectively. Depreciation expense was $173 and $468 for the three and nine months ended September 30, 2024, respectively.

​

26

Table of Contents

Note 16. Fair Value Measurements

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

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

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

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

The following table presents the placement in the fair value hierarchy of the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of September 30, 2025 and December 31, 2024. Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to tangible property and equipment, right-of-use assets, and other intangible assets, which are remeasured when the derived fair value is below carrying value in the consolidated balance sheets. Recoverability is based on estimated undiscounted cash flows or other relevant observable/unobservable measures. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. If it is determined that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is included in Impairment of long-lived assets and Impairment of operating lease right-of-use assets on the condensed consolidated statements of operations and comprehensive loss.

27

Table of Contents

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the nine months ended September 30, 2025. The carrying amounts of cash equivalents, accounts receivable, and accounts payable approximated their fair values as of September 30, 2025 due to their short-term nature. The fair value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility of our common stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to maturity, dividend rate, a penalty dividend rate, and our probability of default. The fair value of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years; equity volatility; and risk-free interest rate.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair value measurement at reporting date using

​

​

​

Quoted prices in

​

​

​

​

​

​

​

​

​

active markets

​

Significant other

​

Significant

​

​

​

​

​

for identical

​

observable

​

unobservable

​

​

Balance

​

assets (Level 1)

​

inputs (Level 2)

​

inputs (Level 3)

As of September 30, 2025:

​

​

​

​

Recurring fair value measurements

​

​

​

​

​

​

​

​

​

​

​

​

Equity and debt securities:

​

​

​

​

​

​

​

​

​

​

​

​

Route1, Inc.

​

$

50

​

$

—

​

$

50

​

$

—

Marketable securities

​

​

237

​

​

237

​

​

—

​

​

—

Total equity and debt securities

​

​

287

​

​

237

​

​

50

​

​

—

Derivatives:

​

​

​

​

​

​

​

​

​

​

​

​

Derivative liability

​

​

803

​

​

—

​

​

—

​

​

803

Total derivatives

​

​

803

​

​

—

​

​

—

​

​

803

Total recurring fair value measurements

​

$

1,090

​

$

237

​

$

50

​

$

803

Nonrecurring fair value measurements

​

​

​

​

​

​

​

​

​

​

​

​

Property, plant and equipment

​

$

3,884

​

$

—

​

$

—

​

$

3,884

Operating lease right-of-use asset

​

​

2,615

​

​

—

​

​

—

​

​

2,615

Total nonrecurring fair value measurements

​

$

6,499

​

$

—

​

$

—

​

$

6,499

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2024

​

​

​

​

Recurring fair value measurements

​

​

​

​

​

​

​

​

​

​

​

​

Equity and debt securities:

​

​

​

​

​

​

​

​

​

​

​

​

Route1

​

$

85

​

$

—

​

$

85

​

$

—

Marketable securities

​

​

7,247

​

​

7,247

​

​

—

​

​

—

Total equity and debt securities

​

​

7,332

​

​

7,247

​

​

85

​

​

—

Derivatives:

​

​

​

​

​

​

​

​

​

​

​

​

Derivative liability

​

​

—

​

​

—

​

​

—

​

​

—

Total derivatives

​

​

—

​

​

—

​

​

—

​

​

—

Total recurring fair value measurements

​

$

7,332

​

$

7,247

​

$

85

​

$

—

Nonrecurring fair value measurements

​

​

​

​

​

​

​

​

​

​

​

​

Property, plant and equipment

​

$

1,809

​

$

—

​

$

—

​

$

1,809

Operating lease right-of-use asset

​

​

3,409

​

​

—

​

​

—

​

​

3,409

Total nonrecurring fair value measurements

​

$

5,218

​

$

—

​

$

—

​

$

5,218

​

28

Table of Contents

The following table sets forth a summary of the change in the fair value of the warrant liability that is measured at fair value on a recurring basis:

​	​	​	​
Balance on January 1, 2025	​		—
Issuance of warrants reported as fair value	​		5,873
Change in fair value of warrant liability	​		(3,215)
Reclassification to APIC due to warrant modification (Note 11)	​	​	(2,658)
Balance on September 30, 2025	​	$	—

​

The following table sets forth a summary of the change in the fair value of the bifurcated embedded derivative liability that is measured at fair value on a recurring basis:

​	​	​	​
Balance on January 1, 2025	​		—
Issuance of convertible preferred stock with bifurcated embedded derivative	​		1,315
Change in fair value of bifurcated embedded derivative	​		(512)
Balance on September 30, 2025	​	$	803

​

​

Note 17. Related Party

On January 30, 2025, the Company entered into a consulting agreement (“Consulting Agreement”) with XWEL INV I, LLC (“XWEL INV I”) and Jason Aintabi (the “Consultant”) for the Consultant to provide advisory services to the Company. Mr. Aintabi serves as the Manager of XWEL INV I. The Consulting Agreement is deemed to be related party transaction as Mr. Aintabi is a greater than 5% beneficial owner of the Company’s securities. The Consulting Agreement was further extended on May 12, 2025 for a total period of twelve (12) months from the effective date of the agreement in exchange for a total amount for both the original and amended agreements of $530. For the three and nine months ended September 30, 2025, $39 and $245, respectively, of this contract was recognized in general and administrative expenses on the unaudited condensed consolidated statement of operations and comprehensive loss and $145 was recognized as a prepaid expense in other current assets on the unaudited condensed consolidated balance sheets as of September 30, 2025.

​

29

Table of Contents

Note 18. Subsequent Events

​

On November 3, 2025, the Company entered into a Securities Exchange and Amendment Agreement (the “Exchange Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to exchange a portion of its outstanding Series G Preferred Stock, including accrued and unpaid dividends thereon, with an aggregate stated value of approximately $1.6 million, for senior secured convertible notes (the “Notes”) in an aggregate principal amount of approximately $3.4 million. The Notes are secured by first-priority liens on substantially all of the Company’s and its subsidiaries’ assets, bear interest at 8.0% per annum, compounded quarterly, mature approximately three years and four months after issuance, and are convertible into shares of the Company’s common stock (the “Exchange”).

​

In connection with the Exchange, the Company also filed a Certificate of Amendment to the Certificate of Designations to (i) reduce the Conversion Price to $1.00, (ii) remove the restrictive covenant requiring the Company to maintain unencumbered, unrestricted cash and cash equivalents on hand in an amount equal to at least 200% of the shares of common stock issuable upon conversion of the outstanding shares of Series G Preferred Stock, (iii) amend the definition of “Make-Whole Amount,” such that it now means an amount equal to the amount of additional dividends that would accrue at the dividend rate then in effect assuming for calculation purposes that the Stated Value as of the Closing Date remained outstanding through and including the Maturity Date (as defined in the Certificate of Designations), (iv) add certain anti-dilution provisions such that the Conversion Price will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Conversion Price (subject to certain exceptions), (v) add certain provisions such that the Company and the holder of the shares of Series G Preferred Stock may agree to accelerate the conversion of such shares (including any Deferral Amounts (as defined in the Certificate of Designations)) at a conversion price equal to the lower of (i) the Installment Conversion Price (as defined in the Certificate of Designations) applicable to the current Installment Date and (ii) the greater of the Floor Price and (x) 80% of the dollar volume-weighted average price (“VWAP”) of the common stock immediately prior to such acceleration, and (y) the average three daily VWAP during the thirty consecutive trading day immediately prior to such acceleration. Additionally, in connection with the Exchange, the Company and the Investors agreed to amend and restate the Warrants  to (i) reduce the exercise price of the Warrants to $1.00, and (ii) add certain anti-dilution provisions such that the exercise price of the Warrants will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable exercise price.

​

The Notes will mature on the date that is three years and four months from the date of issuance (the “Notes Maturity Date”), which may be extended as set forth in the Notes. The Notes bear an interest rate of 8.0% per annum compounded each quarter, which are payable in arrears (i) on the first trading day of each quarter beginning February 2, 2026 (each such date, an “Interest Date”), in cash, (ii) on each Interest Date occurring on an Installment Date (as defined in the Notes), payable by way of inclusion of the interest in the applicable Installment Amount (as defined in the Notes), (iii) prior to the First Installment Date (as defined herein), payable by way of inclusion of interest in the Conversion Amount (as defined in the Notes) on each conversion date occurring prior to the First Installment Date, or (iv) upon any redemption or any required payment upon any Event of Default (as defined in the Notes). Upon the occurrence and during the continuance of an Event of Default, the Notes accrue interest at the rate of 15% per annum.

​

The Notes are convertible into shares of common stock at the election of the holder at any time at an initial conversion price of $1.00 per share (the “Note Conversion Price”). The Note Conversion Price will be subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like (subject to certain exceptions). Additionally, the Note Conversion Price will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Note Conversion Price (subject to certain exceptions).

​

The closing of the Exchange occurred on November 5, 2025. The Company intends to submit the required proposal to its stockholders for approval by December 31, 2025 of (i) the issuance of shares of common stock in connection with conversion of the Notes and the amended securities, and (ii) the certificate of amendment to the Series G Convertible Preferred Stock and the amended Warrants, in order to comply with the listing rules of the Nasdaq Stock Market.

​

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained herein that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipates,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “will be,” “plans,” “projects,” “seeks,” “should,” “targets,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2025, as subsequently amended on April 28, 2025 (the “Annual Report”) and this Quarterly Report on Form 10-Q and any future reports we file with the SEC. The forward-looking statements set forth herein speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

All references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” refer to XWELL, Inc., a Delaware corporation, and its consolidated subsidiaries.

Overview

XWELL is a global wellness company operating multiple brands and focused on bringing restorative, regenerative and reinvigorating products and services to travelers. As of the date of this Quarterly Report on Form 10-Q, XWELL currently has three reportable operating segments: XpresSpa®, XpresTest®, and Naples Wax Center®

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 Nasdaq, 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 (as amended, the “Amended and Restated Certificate”) reflecting the name change. Rebranding to XWELL aligned the Company’s corporate strategy to build a pure-play wellness services company, in both the airport and off-airport marketplaces.

All amounts are in thousands, except share, per share, or as otherwise specifically noted.

XpresSpa

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

As of September 30, 2025, there were 17 domestic XpresSpa locations in total comprised of 16 Company-owned locations and one franchise. The Company also had 11 international locations operating as of September 30, 2025, including two XpresSpa locations in the Dubai International Airport in the United Arab Emirates, one XpresSpa location in the Zayad International Airport in Abu Dhabi, United Arab Emirates, four XpresSpa locations in the Schiphol Amsterdam Airport in the Netherlands and four XpresSpa locations in the Istanbul Airport in Turkey.

Treat, which is operating through XWELL’s subsidiary Treat, Inc. (“Treat”) is a wellness brand that provides access to wellness services for travelers at on-site centers. In April 2024, the decision was made to close the location in the Salt Lake City International Airport. In the first quarter of 2025, the decision was made to convert the final remaining Treat

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location at JFK International Airport in New York City to an XWELL location. As of Q2 2025, all Treat locations have been converted to XWELL.

XpresTest

The Company, in partnership with certain COVID-19 testing partners, successfully launched its XpresCheck Wellness Centers, in June of 2020, through its XpresTest, Inc. subsidiary (“XpresTest”), which offered COVID-19 and other medical to the traveling public, as well as airline, airport and concessionaire employees, and TSA and U.S. Customs and Border Protection agents during the pandemic. As of December 31, 2023, the Company closed all XpresCheck locations and XpresTest no longer provides diagnostic testing services XpresTest began conducting bio surveillance monitoring with the Centers for Disease Control and Prevention (CDC) in collaboration with Concentric by Ginkgo Bioworks Holdings, Inc. (“Ginkgo Bioworks”) in 2021.

The program was renewed through August 2024. The revenue to XpresTest from such one-year extension totaled approximately $7,044. In January 2024, the program funding and scope were expanded, a revenue increase of $4,000, to an estimated $11,044 in revenue for XpresTest with new collection locations at U.S. international airports and the roll out of multi-pathogen testing across the program. In July 2024, the contract was further amended to extend the time period for services by two weeks (extension period August 12, 2024 to August 25, 2024). An increase of $293 in revenue for the two week extension brought total revenue to $11,337. The program was again extended in August 2024 through February 25, 2025. The funding was expanded with a revenue increase of $3,763, to an estimated $15,100 in revenue for XpresTest. In February 2025, the program was extended through a three-year contract with a total base value of $22.2 million over three years, and a maximum ceiling value of $24.8 million within the same timeframe.

Naples Wax Center

XWELL’s subsidiary Naples Wax, LLC, d/b/a Naples Wax Centers (“Naples Wax Center” or “Naples Wax”) which was acquired on September 12, 2023, for a purchase price of $1,624, operates a group of upscale hair removal locations with core products and service offerings from face and body waxing to a range of skincare and cosmetic products. The acquisition of Naples Wax Center is intended to enable us to move beyond our airport client base with a business that can be adapted to a larger wellness platform while also growing our retail footprint to serve our long-term financial goals.

Although we recognize four segments of business, we believe there is opportunity to leverage a segment of our products and services across our platform of brands. Additionally, we are expanding our retail strategy, not only adding more products for sale but aligning those products more efficiently to our service offerings. This product strategy includes, for example, adding muscle relaxation patches to a neck or back massage to continue treatment after the delivery of the service.

We also plan to build our capability for delivering health and wellness services outside of the airport. We believe operating outside of the airport complements our offering and represents the fastest way to scale the XWELL family of brands.

We will be looking to further expand internationally. We believe a strategy for international expansion further advances our ability to expand our other brands including bio surveillance outside of the US.

Recent Developments

Exchange Agreement

​

On November 3, 2025, we entered into a Securities Exchange and Amendment Agreement (the “Exchange Agreement”) with certain accredited investors (the “Investors”), pursuant to which we agreed to exchange a portion of our outstanding Series G Convertible Preferred Stock (the “Series G Preferred Stock”), including accrued and unpaid dividends thereon, with an aggregate stated value of approximately $1.6 million, for senior secured convertible notes (the “Notes”) in an aggregate principal amount of approximately $3.4 million. The Notes are secured by first-priority liens on substantially all of our and our subsidiaries’ assets, bear interest at 8.0% per annum, compounded quarterly, mature approximately three years and four months after issuance, and are convertible into shares of common stock (the “Exchange”). See “Going Concern and Liquidity – Senior Secured Convertible Notes.”

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​

In connection with the Exchange, we also filed a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Designations for the Series G Convertible Preferred Stock (the “Certificate of Designations”). The Certificate of Amendment amends the Certificate of Designations to (i) reduce the conversion price of the Series G Preferred Stock (the “Series G Conversion Price”) to $1.00, (ii) remove the restrictive covenant requiring us to maintain unencumbered, unrestricted cash and cash equivalents on hand in an amount equal to at least 200% of the shares of common stock issuable upon conversion of the outstanding shares of Series G Preferred Stock, (iii) amend the definition of “Make-Whole Amount,” such that it now means an amount equal to the amount of additional dividends that would accrue at the dividend rate then in effect assuming for calculation purposes that the Stated Value as of the Closing Date remained outstanding through and including the Maturity Date (as defined in the Certificate of Designations), (iv) add certain anti-dilution provisions such that the Series G Conversion Price will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Series G Conversion Price (subject to certain exceptions), (v) add certain provisions such that the Company and the holder of the shares of Series G Preferred Stock may agree to accelerate the conversion of such shares (including any Deferral Amounts (as defined in the Certificate of Designations)) at a conversion price equal to the lower of (i) the Installment Conversion Price (as defined in the Certificate of Designations) applicable to the current Installment Date and (ii) the greater of the Floor Price and (x) 80% of the dollar volume-weighted average price (“VWAP”) of the Common Stock immediately prior to such acceleration, and (y) the average three daily VWAP during the thirty consecutive trading day immediately prior to such acceleration. The closing of the Exchange occurred on November 5, 2025. Additionally, in connection with the Exchange, the Company and the Investors agreed to amend and restate the Warrants  to (i) reduce the exercise price of the Warrants to $1.00, and (ii) add certain anti-dilution provisions such that the exercise price of the Warrants will be subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable exercise price.

Results of Operations

Revenue

We recognize revenue from the sale of XpresSpa, Treat and Naples Wax services when they are rendered at our stores and from the sale of products at the time goods are purchased at our stores or online (usually by credit card), net of discounts and applicable sales taxes.

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. We recognize revenue over time for both sample collection performance obligations, using the input method based on time elapsed to measure progress towards satisfying each of the performance obligations. The Company recognizes revenue ratably (straight line basis) over the term of the contract.

Cost of sales

Cost of sales for our XpresSpa, XpresTest, and Naples Wax segments consist of location and segment level costs. Location and segment level costs include all costs that are directly attributable to operations, primarily payroll and related benefit costs for personnel, occupancy costs and cost of products sold.

General and administrative expenses

General and administrative expenses include management and administrative personnel, overhead and occupancy costs, insurance, salaries, and various professional fees, as well as stock-based compensation for directors, management and administrative personnel.

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Three months ended September 30, 2025, compared to the three months ended September 30, 2024

Revenue

​	​	​	​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024			Inc/(Dec)
Total revenue, net	​	$	7,345	​	$	8,422	​	$	(1,077)

​

The decrease in revenue of $1,077 or 13%, was primarily due to the three months ended September 30, 2024 having additional CDC revenue for XpresTest for the three months ended September 30, 2024 as compared to three months ended September 30, 2025, which did not have such additional CDC revenues for XpresTest. For XpresSpa, specifically, the additional revenue generated in 2024 was from providing more services to airports above the base contract amounts, which resulted in increased surge billing prices.

Cost of sales

​	​	​	​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024			Inc/(Dec)
Total cost of sales	​	$	5,852	​	$	6,369	​	$	(517)

​

The decrease in cost of sales of $517 or 8%, for the three months ended September 30, 2025, was primarily driven by decrease in product costs, as the agreement for clockwork manicure machines was no longer active, and decrease in labor due to store closures in XpresSpa and less surge billing for CDC testing, for the three months ended September 30, 2025 as compared to three months ended September 30, 2024. The increase in total cost of sales as a percentage of revenue for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was driven by higher cost of supplies purchased for current and anticipated store openings in 2025.

Depreciation and amortization

​	​	​	​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024			Inc/(Dec)
Depreciation and amortization	​	$	221	​	$	252	​	$	(31)

​

The decrease in depreciation and amortization of approximately $31 or 12% for the three months ended September 30, 2025 was primarily due to fewer long-lived assets available for depreciation and amortization in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 due the impairment of long-lived assets which occurred at the end of fiscal year 2024.

Impairment/loss on disposal of assets

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Impairment of long-lived assets	​	$	122	​	$	—	​	$	122
Impairment of operating lease right-of-use assets	​	​	359	​	​	—	​	​	359
Loss on disposal of assets, net	​	​	7	​	​	152	​	​	(145)

​

The increase in impairment of long-lived assets of approximately $122 for the three months ended September 30, 2025, was primarily due to the impairment of long-lived assets that occurred in the three months ended September 30, 2025. The increase in impairment of operating lease right-of-use assets of approximately $359 for the three months ended September 30, 2025 was primarily due to the impairment of a remaining lease for XWELL Studios that occurred in the three months ended September 30, 2025. The decrease in loss on disposal of assets of approximately $145 was primarily due to abandoned projects that occurred in the three months ended September 30, 2024.

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​

General and administrative expenses

​	​	​	​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024			Inc/(Dec)
General and administrative	​	$	1,554	​	$	6,418	​	$	(4,864)

​

The decrease of approximately 76% was primarily due to the decrease in accounting, legal and public company costs and the Company’s recognition of a $2,338 employee retention credit reduced in general and administrative expenses, for the three months ended September 30, 2025 as compared to three months ended September 30, 2024.

Other non-operating expense, net

​	​	​	​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024			Inc/(Dec)
Foreign exchange loss	​	$	(129)	​	$	(69)	​	$	(60)
Other non-operating expense, net	​	​	(64)	​	​	(73)	​	​	9

​

The increase in foreign exchange loss of $60 was primarily due to the fluctuation of the foreign exchange rate in Turkey, creating a remeasurement loss on our lease liability. The decrease in other non-operating expense of $9, net was primarily driven by a decrease in finance expenses related to bank fees and charges.

The following is a summary of the transactions included in other non-operating expense, net for the three months ended September 30, 2025 and 2024:

​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024
Bank fees and financing charges	​	$	(32)	​	$	(50)
Other	​		(32)	​		(23)
Total	​	$	(64)	​	$	(73)

​

Change in fair value of warrants and derivatives

​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024
Change in fair value of derivative liability	​	$	233	​	$	—

​

The change in fair value of derivatives is due to a decrease in the Company’s stock price after entering into the Securities Purchase Agreement, dated as of January 14, 2025, by and between the Company and the investors named therein (the “January 2025 Purchase Agreement”).

Interest income, net

​	​	​	​	​	​	​	​	​	​
​	​	Three months ended September 30,
​		2025			2024			Inc/(Dec)
Interest income, net	​	$	490	​	$	100	​	$	390

​

The increase of $390 was primarily driven by the recognition of $473 in interest income associated with the employee retention credit. This was partially offset by lower interest earned on cash balances during the period.

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Nine months ended September 30, 2025, compared to the nine months ended September 30, 2024

Revenue

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Total revenue, net	​	$	22,056	​	$	26,430	​	$	(4,374)

​

The decrease in revenue of $4,374 or 17%, for the nine months ended September 30, 2025, was primarily due to the nine months ended September 30, 2024 having additional CDC revenue for XpresTest and additional XpresSpa revenue driven by Priority Pass revenue, which was a new revenue stream, for the nine months ended September 30, 2024 as compared to nine months ended September 30, 2025. For XpresSpa, specifically, the additional revenue generated in 2024 was from providing more services to airports above the base contract amounts, which resulted in increased surge billing prices.

Cost of sales

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Total cost of sales	​	$	17,470	​	$	18,633	​	$	(1,163)

​

The decrease in cost of sales of $1,163 or 6%, for the nine months ended September 30, 2025, was primarily driven by decrease in product costs, as the agreement for clockwork manicure machines was no longer active, and decrease in labor due to store closures in XpresSpa and less surge billing for CDC testing, for the nine months ended September 30, 2025 as compared to nine months ended September 30, 2024. The increase in total cost of sales as a percentage of revenue for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was driven by higher cost of supplies purchased for current and anticipated store openings in 2025.

Depreciation and amortization

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Depreciation and amortization	​	$	574	​	$	705	​	$	(131)

​

The decrease in depreciation and amortization of approximately $131 or 19% for the nine months ended September 30, 2025, was primarily due to fewer long-lived assets available for depreciation and amortization in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 due the impairment of long-lived assets which occurred at the end of fiscal year 2024.

Impairment/loss on disposal of assets

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Impairment of long-lived assets	​	$	122	​	$	652	​	$	(530)
Impairment of operating lease right-of-use assets	​	​	359	​	​	—	​	​	359
Loss on disposal of assets, net	​	​	7	​	​	171	​	​	(164)

​

The decrease in impairment of long-lived assets of approximately $530 for the nine months ended September 30, 2025, was primarily due to the impairment of long-lived assets that occurred in the nine months ended September 30, 2024. The increase in impairment of operating lease right-of-use assets of approximately $359 for the nine months ended September 30, 2025 was primarily due to the impairment of a remaining lease for XWELL Studios that occurred in the nine months ended September 30, 2025. The decrease in loss on disposal of assets of approximately $164 was primarily due to abandoned projects that occurred in the nine months ended September 30, 2024.

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General and administrative expenses

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
General and administrative	​	$	10,144	​	$	15,309	​	$	(5,165)

​

The decrease of approximately $5,165 or 34% for the nine months ended September 30, 2025, was primarily due to the decrease in accounting, legal and public company costs and the Company’s recognition of an employee retention credit (ERC) reduced in general and administrative expenses, for  for the nine months ended September 30, 2025 as compared to nine months ended September 30, 2024.

Other non-operating expense, net

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Foreign exchange loss	​	$	(1,127)	​	$	(210)	​	$	(917)
Other non-operating expense, net	​	​	(132)	​	​	(205)	​	​	73

​

The increase in foreign exchange loss of $917 was primarily due to the fluctuation of the foreign exchange rate in Turkey, creating a remeasurement loss on our lease liability. The decrease in other non-operating expense of $73, net was primarily driven by a decrease in finance expenses related to bank fees and charges.

The following is a summary of the transactions included in other non-operating expense, net for the nine months ended September 30, 2025 and 2024:

​

​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024
Bank fees and financing charges	​	$	(93)	​	$	(140)
Other	​	​	(39)	​	​	(65)
Total	​	$	(132)	​	$	(205)

​

Change in fair value of warrants, derivatives, and loss on issuance of preferred stock

​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024
Change in fair value of derivative liability	​	$	512	​	$	—
Change in fair value of warrant liability	​	​	3,215	​	​	—
Loss on issuance of Series G Preferred Stock	​		(3,443)	​		—

​

The change in fair value of warrants and derivatives is due to an decrease in the Company’s stock price after entering into the January 2025 Purchase Agreement. The loss on issuance is due to the initial fair value of the Series G Preferred Stock exceeding the fair value of the proceeds received.

Interest income, net

​	​	​	​	​	​	​	​	​	​
​	​	Nine months ended September 30,
​		2025			2024			Inc/(Dec)
Interest income, net	​	$	695	​	$	308	​	$	387

​

The increase of $387 for the nine months ended September 30, 2025, was primarily due to having less cash in interest bearing accounts and interest paid towards employee retention credits.

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Going Concern and Liquidity

Substantial doubt has been expressed about our ability to continue as a going concern as we have suffered recurring losses from operations and have insufficient liquidity to fund our future operations. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern and, therefore, be required to realize our assets and discharge our liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment. As of September 30, 2025, we had cash and cash equivalents of $3,987 (excluding restricted cash), $237 in marketable securities, and total current assets of $10,814. Our total current liabilities balance, which includes accounts payable, deferred revenue, accrued expenses, accrued preferred payments payable, and operating lease liabilities was $10,056 as of September 30, 2025, and $9,224 as of December 31, 2024. The working capital surplus was $758 as of September 30, 2025, compared to a working capital surplus of $6,113 as of December 31, 2024.

​

The Company has taken actions to improve its overall cash position, right sizing its corporate structure and streamlining its operations, while at the same time the Company is aggressively trying to get the company to profitability which the Company believes will strengthen the Company’s stock price and put the Company in a stronger position to be able to raise capital in 2025 and beyond. The Company is aggressively pursuing strategic partnerships that the Company expects will further strengthen the long-term profitability of the business, which puts the Company in a position of strength as the Company raises more capital.

Our primary liquidity and capital requirements are for the maintenance of our current XpresSpa locations and brand, as well as the expansion outside the airports. During the nine months ended September 30, 2025, we used net cash of $8,671 to fund our operating activities.

In order to have sufficient cash to fund our operations in the future, we will need to raise additional equity or debt capital and cannot provide any assurance that we will be successful in doing so. If we are unable to raise sufficient capital to fund our operations, we may need to delay, reduce or eliminate certain of our operations, sell some or all of our assets or merge with another entity.

As of the date of this Quarterly Report on Form 10-Q, we do not currently have sufficient available liquidity to fund its operations for at least the next 12 months. These conditions and events raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.

Nasdaq Minimum Bid Price Rule

On May 13, 2025, we received a letter from the Listing Qualifications Department of Nasdaq indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days between March 31, 2025, to May 12, 2025, we did not meet the minimum bid price of $1.00 per share required for continued listing on Nasdaq pursuant to the Minimum Bid Price Rule.

On August 7, 2025, we received the Letter from the Listing Qualifications Department of Nasdaq stating that for the last 16 consecutive business days, from July 16, 2025, to August 6, 2025, the closing bid price of our common stock had been at or greater than $1.00 per share. Accordingly, we have regained compliance with the Minimum Bid Price Rule and per the Letter, the matter is now closed.

Senior Secured Convertible Notes

In connection with the Exchange, on November 5, 2025, we issued the Notes to the Invesotrs.. The Notes will mature on the date that is three years and four months from the date of issuance, which may be extended as set forth in the Notes. The Notes bear an interest rate of 8.0% per annum compounded each quarter, which are payable in arrears (i) on the first trading day of each quarter beginning February 2, 2026, in cash, (ii) on each Interest Date occurring on an Installment Date (as defined in the Notes), payable by way of inclusion of the interest in the applicable Installment Amount (as defined

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in the Notes), (iii) prior to the First Installment Date (as defined herein), payable by way of inclusion of interest in the Conversion Amount (as defined in the Notes) on each conversion date occurring prior to the First Installment Date, or (iv) upon any redemption or any required payment upon any Event of Default (as defined in the Notes). Upon the occurrence and during the continuance of an Event of Default, the Notes accrue interest at the rate of 15% per annum.

The Notes are convertible into shares of Common Stock at the election of the holder at any time at an initial conversion price of $1.00 per share (the “Note Conversion Price”). The Note Conversion Price will be subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like (subject to certain exceptions). Additionally, the Note Conversion Price will be subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Note Conversion Price (subject to certain exceptions).

​

The Company is required to redeem the outstanding principal amount of the Notes in quarterly installments beginning on April 1, 2026 (the “First Installment Date”) in accordance with the schedule set forth in the Note. The Installment Amounts (as defined in the Notes) are redeemable, at the Company’s election, in cash at 107% of the applicable Installment Redemption Amount, or subject to certain limitations, in shares of Common Stock valued at the lower of (i) the Note Conversion Price then in effect and (ii) the greater of (A) 80% of the average of the three lowest closing prices of the Company’s Common Stock during the thirty consecutive trading day period ending and including the trading day immediately prior to the date the amortization payment is due or (B) the Floor Price (as defined in the Notes), and in each case subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events.

​

Upon any conversion or redemption of the Notes, the holders of the Notes are also entitled to receive interest make-whole payments, equal to an amount of additional interest that would accrue under Notes at the interest rate then in effect assuming that for calculation purposes, the outstanding principal balance remained outstanding through and including the Notes Maturity Date.

The Notes include certain events of defaults, including, among other things, the suspension from trading or the failure of the Company’s common stock to be trading or listed (as applicable) on an eligible market for a period of five (5) consecutive trading days and the Company’s failure to pay any amounts due to the holders of the Notes when due. The Notes contain certain restrictive covenants, including, among other things, requiring the Company to (A) maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least $1,000,000, and (B) deposit an amount equal to $1,350,000 into a newly established segregated deposit account, which may be reduced proportionally on a dollar-for-dollar basis as (i) the outstanding principal of the applicable Note is redeemed, converted or otherwise repaid in accordance with such Note, or (ii) the outstanding shares of Series G Preferred Stock are redeemed, converted or otherwise repaid in accordance with the Certificate of Designations.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of our unaudited condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

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There have been no material changes to our critical accounting estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2024 Annual Report except as covered below:

Derivative Financial Instruments

The Company measures the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain financial instruments and contracts, such as debt financing arrangements and the issuance of preferred stock with detachable common stock warrants features that are either i) not afforded equity classification, ii) embody risks not clearly and closely related to host contracts, or iii) may be net-cash settled by the counterparty. These instruments are required to be recognized as derivative liabilities, at fair value.

The fair value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model, which uses as inputs the fair value of the Company’s common stock and estimates for the equity volatility of the Company’s common stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to maturity, dividend rate, a penalty dividend rate, and our probability of default.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability classified and recorded at their initial fair value on the date of issuance and remeasured at fair value and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations and comprehensive loss. The warrants are classified as liabilities in accordance with ASC 815 as they do not meet the requirements to be considered indexed to the Company’s own stock. The fair value of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years; equity volatility; and risk-free interest rate. (see Note 11).

Known Trends, Events and Uncertainties

Ongoing conflicts in Russia and Ukraine, and Israel and Palestine, including related sanctions and countermeasures, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. We may not be able to raise sufficient additional capital and may tailor our business and operations based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful. Our ability to operate depends upon a large number of airplane travelers with the propensity for health and wellness, and in particular spa treatments and products, spending significant time post-security clearance check points at airports. The number of airline travelers at any given time is volatile and subject to change based on various conditions, including but not limited to market and other conditions, prices of travel fare, and oil and gas prices. Additionally, the US government shutdown, recent changes to U.S. policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, tariffs, international trade

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relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business.

Other than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Item 3.         Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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Item 4.         Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Exchange Act) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (Principal Financial and Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Based upon that evaluation, our management concluded that our disclosure controls and procedures were not effective as of September 30, 2025, due to the following material weaknesses:

1) The Company did not properly design, implement, and consistently operate effective controls over the completeness and accuracy of its accounting for leases under ASC 842.

2) The Company did not properly design or maintain effective entity level monitoring controls over the financial close and reporting process.

3) The Company did not design or maintain effective controls over its service organizations and IT vendors. More specifically, the Company did not have controls in place to review the applicable complementary user entity controls described in the service organizations’ reports for their potential impact on the Company’s financial reporting.

4) The Company did not design, implement, and consistently operate effective controls over the revenue process. The Company’s controls surrounding the revenue reports and reconciliations were not designed and did not operate at a level of precision that would prevent or detect a material misstatement.

5)The Company did not design, implement, and consistently operate effective controls over its’ foreign subsidiaries.

This type of evaluation is performed on a quarterly basis so that conclusions of management, including our Chief Executive Officer and the Chief Financial Officer, concerning the effectiveness of the disclosure controls can be reported in our periodic reports on Form 10-Q and Form 10-K. The overall goals of these evaluation activities are to monitor our disclosure controls and to modify them as necessary. We intend to maintain the disclosure controls as dynamic systems that we adjust as circumstances merit. Based on the foregoing, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2025.

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Remediation Plan for Material Weakness in Internal Control over Financial Reporting

Management is committed to the remediation of the Company’s material weaknesses, as well as the continued improvement of the Company’s internal control over financial reporting. Management has implemented, and continues to implement, the actions described below to remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses. Until the remediation efforts described below, including any additional measures management identifies as necessary, are completed, the material weaknesses described above will continue to exist. We cannot provide any assurance that the below remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. Management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:

1) The Company has turned on the multi-currency features related to its cloud-based accounting systems.

2) The Company has engaged outside service providers to assist with the valuation, accounting, and recording of key reporting areas such as leases, revenue recognition and stock compensation expense.

3) The Company has contracted an independent consulting firm to assist with the preparation of the Financial Statements and U.S. GAAP accounting research.

4) The Company has engaged outside service providers to review the applicable complementary user entity controls described in the service organizations’ reports for their potential impact on the Company’s financial reporting.

Changes in Internal Control over Financial Reporting

Other than as set forth in the foregoing paragraph, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.         Legal Proceedings.

From time to time, we may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

The information set forth in Note 12 Commitments and Contingencies of the Notes to unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q is incorporated by reference herein.

There are no other material proceedings in which any of our directors, officers, affiliates, any registered or beneficial stockholder of more than 5% of our common stock, or any associate of any of the foregoing is an adverse party or has a material interest adverse to our interest.

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Item 1A.      Risk Factors.

The following description of risk factors includes any material changes to risk factors associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our Annual Report. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results, and stock price.

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Quarterly Report on Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

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Item 2.          Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter ended September 30, 2025, other than as reported in our Current Reports on Form 8-K filed with the SEC.

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Item 3.         Defaults Upon Senior Securities.

None.

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Item 4.         Mine Safety Disclosures.

Not applicable.

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Item 5.         Other Information

None.

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Item 6.         Exhibits.

Exhibit  No.		Description
​	​	​
3.1	​	First Amendment to Third Amended and Restated Bylaws of XWELL, Inc. (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 25, 2025).
​	​	​
3.2	​	Certificate of Amendment of Certificate of Designations of Series G Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2025).
​	​	​
4.1	​	Form of Senior Secured Convertible Note (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2025).
​	​	​
4.2	​	Form of Amended and Restated Series A Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2025).
​	​	​
4.3	​	Form of Amended and Restated Series B Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2025).
​	​	​
10.1	​	Form of Securities Exchange and Amendment Agreement, dated as of November 3, 2025, by and among the Company and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2025).
​	​	​
31.1*		Certification of Principal Executive Officer pursuant to Exchange Act, Rules 13a – 14(a) and 15d – 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	​	Certification of Principal Financial Officer pursuant to Exchange Act, Rules 13a – 14(a) and 15d – 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**		Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	​	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*		Filed herewith.
**		Furnished herein.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			XWELL, Inc.
​	​	​	​	​
​	​	​	​	​
Date:	November 14, 2025		By:	/s/ Ezra T. Ernst
				Ezra T. Ernst
				Chief Executive Officer
				(Principal Executive Officer)
​	​	​	​	​
​	​	​	​	​
Date:	November 14, 2025	​	By:	/s/ Ian Brown
​	​	​	​	Ian Brown
​	​	​	​	Chief Financial Officer
​	​	​	​	(Principal Financial and Accounting Officer)

​

​

​

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45

FAQ

What was XWEL’s Q3 2025 revenue and net loss?

Revenue was $7,345k and net loss was $724k for Q3 2025.

Did XWEL disclose a going concern issue in Q3 2025?

Yes. Management stated there is substantial doubt about the Company’s ability to continue as a going concern.

What is XWEL’s cash position and operating cash flow for 2025 year to date?

Cash and cash equivalents were $3,987k at Sep 30, 2025; net cash used in operating activities was $8,671k for the nine months.

How many XWEL shares were outstanding?

As of November 11, 2025, there were 5,766,703 common shares outstanding.

What financing did XWEL complete in January 2025?

It raised $4,000k via Series G convertible preferred (8% dividend, six quarterly redemptions starting July 1, 2025) and issued warrants for 5,347,594 shares.

What were total assets and liabilities at quarter end?

At Sep 30, 2025, total assets were $21,742k and total liabilities were $18,345k.

What was XWEL’s basic and diluted loss per share in Q3 2025?

Basic and diluted loss per share was $0.26 for Q3 2025.