XWELL (XWEL) risk factors, FY2025 10-K

Other

1. 01misstatements in our consolidated financial statements if not remediated. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results and current and potential stockholders may lose confidence in our financial reportingNew

Risks Related to our Financial Condition and Capital Requirements

1. 02Our consolidated financial statements have been prepared on a going concern basis; we must raise additional capital to fund our operations in order to continue as a going concern96% rewritten
2. 03Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited78% rewritten
3. 04Global economic and market conditions may adversely affect our business, financial condition, and operating results
4. 05Increasing inflation could adversely affect our business, financial condition, results of operations or cash flows
5. 06Our business requires substantial capital expenditures, and we may not have access to the capital required to maintain and grow our operations71% rewritten
6. 07The bio surveillance monitoring activities conducted by XpresTest are funded partially by government contract awards, which may not be available to us in the future, and such contract awards are subject to guidelines regulating certain aspects of our operations
7. 08Our ability to obtain funding for our bio surveillance monitoring activities from the CDC may be impacted by possible reductions in federal spending
8. 09We operate globally and changes in tax laws could adversely affect our results

Risks Related to our Business Operations

1. 10If we fail to comply with the complex federal, state, local and foreign laws and regulations that apply to our businesses, we could suffer severe consequences that could materially and adversely affect our operating results and financial condition
2. 11The Company did not properly design or maintain effective entity level monitoring controls over the financial close and reporting process
3. 12The Company did not design, implement, and consistently operate effective controls over its’ foreign subsidiaries68% rewritten
4. 13The Company has contracted an independent consulting firm to assist with the preparation of the Financial Statements and U.S. GAAP accounting research85% rewritten
5. 14We cannot assure you that any of our remedial measures will be effective in resolving our material weaknesses100% rewritten
6. 15We depend on third parties to provide services critical to our XpresTest bio surveillance business, and we depend on them to comply with applicable laws and regulations. Additionally, any breaches of the information technology systems of third parties could have a material adverse effect on our operations
7. 16Our business operations and reputation may be materially impaired if we do not comply with privacy laws or information security policies
8. 17Hardware and software failures or delays in our information technology systems, including failures resulting from our systems conversions or otherwise, could disrupt our operations and cause the loss of confidential information, customers and business opportunities or otherwise adversely impact our business
9. 18We must comply with complex and overlapping laws protecting the privacy and security of personal data
10. 19Our capital expenditures in Naples Wax locations may not generate a positive return and we will incur significant additional costs
11. 20We rely on international and domestic airplane travel, and the time that airline passengers spend in United States airports post-security. A decrease in the desire of customers to buy spa services and products, or decreased time spent in airports would negatively impact our operations
12. 21Furthermore, the exit of an airline from a market or the bankruptcy of an airline could reduce the number of airline passengers in a terminal or airport where we operate and have a material adverse impact on our business, financial condition, and results of operationsNew
13. 22Our operations in United Arab Emirates can be negatively impacted by recent military conflict in the Middle EastNew
14. 23We rely on a limited number of distributors and suppliers for certain of our products, and events outside our control may disrupt our supply chain, which could result in an inability to perform our obligations under our concession agreements and cause us to lose our concessions
15. 24Our operating results may fluctuate significantly due to certain factors, some of which are beyond our control
16. 25Our expansion into new airports or off-airport locations may present increased risks due to unfamiliarity with those areas
17. 26Our growth strategy is dependent in part on our ability to successfully identify and open new locations
18. 27If the estimates and assumptions we use to determine the size of our market are inaccurate, our future growth rate may be impacted
19. 28We currently rely on a skilled, licensed labor force to provide our services, and the supply of this labor force is finite. If we cannot hire adequate staff for our locations, we will not be able to operate
20. 29Our business is subject to various laws and regulations, and changes in such laws and regulations, or failure to comply with existing or future laws and regulations, could adversely affect us
21. 30Our labor force could unionize, putting upward pressure on labor costs
22. 31We compete for new locations in airports and may not be able to secure new locations
23. 32We may not be able to predict accurately or fulfill customer preferences or demands
24. 33We have stores and kiosks in several airports and off airport locations in which the landlord, with prior written notice to us, can terminate our lease, including for convenience or as necessary for operations. If a landlord elects to terminate a lease, we may have to shut down one or more affected locations
25. 34Our ability to operate depends on the traffic patterns of the terminals in which we operate, and the cessation or disruption of air traveler traffic in these terminals would negatively impact XpresSpa’s and XpresTest’s addressable market
26. 35We are dependent on our local partners
27. 36Failure to comply with minimum airport concession disadvantaged business enterprise participation goals and requirements could lead to lost business opportunities or the loss of existing business
28. 37Information technology systems failure or disruption, or changes to information technology related to payment systems, could impact our day-to-day operations
29. 38If we are unable to protect our customers’ credit card data and other personal information, we could be exposed to data loss, litigation and liability, and our reputation could be significantly harmed
30. 39Negative social media regarding XWELL, XpresSpa, XpresTest or Naples Wax Center could result in decreased revenues and impact our ability to recruit workers
31. 40We source, develop, and sell products that may result in product liability defense costs and product liability payments
32. 41We and our subsidiaries have been, are, and may again become involved in litigation that could divert management’s attention and harm our businesses
33. 42New legislation, regulations or court rulings related to enforcing patents could harm our business and operating results
34. 43Our failure or inability to protect the trademarks or other proprietary rights we use or claims of infringement by us of the rights of third parties, could adversely affect our competitive position or the value of our brands
35. 44Any future acquisitions or business opportunities could involve unknown risks that could harm our business and adversely affect our financial condition and the results of operations
36. 45Risks associated with international operations could result in additional costs and inefficiencies

Risks Related to our Capital Stock

1. 46Stock prices can be volatile, and this volatility may depress the price of our common stock
2. 47We have no current plans to pay dividends on our common stock, and our investors may not receive funds without selling their stock
3. 48Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock73% rewritten
4. 49The Series H Certificate of Designations contains restrictive covenants and terms that may make it difficult to procure additional financing and that may affect our financial condition and results of operations72% rewritten
5. 50In connection with February 2026 Private Placement, we are subject to certain restrictive covenants that may make it difficult to procure additional financingNew
6. 51Substantial future sales or other issuances of our common stock could depress the market for our common stock
7. 52You may experience future dilution as a result of future equity offerings and other issuances of our securities
8. 53Any additional capital raised through the sale of equity or equity-backed securities may dilute our stockholders’ ownership percentages and could also result in a decrease in the market value of our equity securities52% rewritten
9. 54We may be unable to raise capital by offering shares of our common stock because we do not currently have enough authorized shares available for such a transactionNew
10. 55Anti-takeover provisions of Delaware law, provisions in our charter and bylaws, and our stockholder rights plan could prevent or frustrate attempts by stockholders to change our Board of Directors or current management and could delay, discourage, or make more difficult a third-party acquisition of control of us44% rewritten
11. 56approval, that could dilute the stock ownership of a potential unsolicited acquirer and hinder an acquisition of control of us that is not approved by our Board of Directors, including through the use of preferred stock in connection with a stockholder rights planNew
12. 57If securities analysts do not publish research or reports about our business, or if they publish negative evaluations, the price of our common stock could decline
13. 58Having availed ourselves of scaled disclosure available to smaller reporting companies, we cannot be certain if such reduced disclosure will make our common stock less attractive to investors
14. 59Our confidential information may be disclosed by other parties
15. 60We may fail to meet publicly announced financial guidance or other expectations about our business, which would cause our stock to decline in value