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| PART I | 4 |
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| ITEM 1. BUSINESS | 4 |
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| ITEM 1A. RISK FACTORS | 8 |
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| ITEM 1B. UNRESOLVED STAFF COMMENTS | 31 |
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| ITEM 1C. CYBERSECURITY | 31 |
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| ITEM 2. PROPERTIES | 33 |
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| ITEM 3. LEGAL PROCEEDINGS | 33 |
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| ITEM 4. MINE SAFETY DISCLOSURES | 35 |
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| PART II | 36 |
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| ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 36 |
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| ITEM 6. [RESERVED] | 36 |
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| ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 37 |
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| ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 50 |
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| ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 50 |
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| ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 50 |
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| PART III | 51 |
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| ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE | 51 |
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| ITEM 11. EXECUTIVE COMPENSATION | 52 |
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| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 52 |
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| ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 52 |
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| ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 52 |
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| PART IV | 53 |
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| ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 53 |
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| SIGNATURES | 59 |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate, among other matters, to our anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters.
These risks and uncertainties, many of which are beyond our control, include, but are not limited to, the following:
| ● | our ability to continue as a going concern; |
| ● | the adverse effects of public health epidemics, similar to the coronavirus outbreak, on our business, results of operations and financial condition; |
| ● | our material weaknesses we identified in our internal control over financial reporting, our efforts to remediate such material weaknesses and the timing of remediation; |
| ● | our ability to develop and offer new products and services; |
| ● | our ability to effectively deploy our available cash resources, as well as our ability raise additional capital to fund our operations and business plan, to the extent necessary; |
| ● | general economic conditions and level of consumer and corporate spending on health, wellness and travel; |
| ● | our ability to secure new locations, maintain XpresSpa, Naples Wax and Centers for Disease Control and Prevention (“CDC”) bio surveillance testing locations, and ensure continued customer traffic at those locations; |
| ● | our ability to hire a skilled labor force and the costs associated with that labor; |
| ● | our ability to accurately forecast the costs associated with opening new retail locations and maintaining or converting existing ones, and the revenue derived from our retail locations; |
| ● | performance by our Airport Concession Disadvantaged Business Enterprise partners on obligations set forth in our joint venture agreements; |
| ● | our ability to protect our confidential information and customers’ financial data and other personal information; |
| ● | failure or disruption to our information technology systems; |
| ● | our ability to retain key members of our management team; |
| ● | the loss of, or an adverse change with regard to, one or more of our significant suppliers, distributors, vendors or other business relationships; |
| ● | unexpected events and trends in the health, wellness and travel industries; |
| ● | market acceptance, quality, pricing, availability and useful life of our products and/or services, as well as the mix of our products and services sold; |
| ● | competitive conditions within our industries; |
| ● | our compliance with laws and regulations in the jurisdictions in which we do business and any new laws and regulations or changes in existing laws and regulations; |
| ● | further regulatory actions in the healthcare sector that could impact our ability to continue operations; |
| ● | the discontinuance of emergency use authorization (“EUA”) policies that could impact our business |
| ● | our ability to maintain compliance with the Nasdaq Capital Market’s (“Nasdaq”) listing standards; |
| ● | lawsuits, claims, and investigations that may be filed against us and other events that may adversely affect our reputation; and |
| ● | our ability to protect and maintain our intellectual property. |
Forward-looking statements may appear throughout this Annual Report on Form 10-K, including, without limitation, the following sections: Item 1 “Business,” Item 1A “Risk Factors,” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 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,” “will be,” “will continue,” “will likely result,” “plans,” “predicts,” “projects,” “seeks,” “should,” “future,” “targets,” “continue,” “would,” or the negative of such terms, and similar or comparable terminology or expressions or variations intended to identify forward-looking statements. These statements are based on current expectations and assumptions based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties, assumptions (that may never materialize or may prove incorrect) 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. These forward-looking statements are not guarantees of future performance, and actual results may vary materially from the results and expectations discussed. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A of this report and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). The forward-looking statements set forth herein speak only as of the date of this report. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements to reflect events or circumstances that may arise after the date of such forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
All references in this Annual Report on Form 10-K to “we,” “us” and “our” refer to XWELL, Inc. (prior to October 25, 2022 known as “XpresSpa Group, Inc.” and prior to January 5, 2018, known as “FORM Holdings Corp.”), a Delaware corporation, and its consolidated subsidiaries unless the context requires otherwise.