XWELL, Inc. Leases Disclosure
Note 8. Leases
The Company leases spa and clinic locations at various domestic and international airports. Additionally, the Company leases its corporate office in New York City and other off airport locations in various US cities. Leases entered into by the Company are accounted for in accordance with ASC 842. The Company determines if an arrangement is a lease at inception and if it qualifies under ASC 842. The Company’s lease arrangements generally contain fixed payments throughout the term of the lease and most also contain a variable component to determine the lease obligation where a certain percentage of sales is used to calculate the lease payments. The Company enters into leases that expire, are amended and extended, or are extended on a month-to-month basis. Leases are not included in the calculation of the total lease liability and the right of use asset when they are month-to-month.
All qualifying leases held by the Company are classified as operating leases. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company records its operating lease assets and liabilities based on required guaranteed payments under each lease agreement. The Company uses its incremental borrowing rate, which approximates the rate at which the Company can borrow funds on a secured basis, using the information available at commencement date of the lease in determining the present value of guaranteed lease payments. The interest rate implicit in the lease is generally not determinable in transactions where a company is the lessee.
The Company reviews all of its existing lease agreements to determine whether there were any modifications to lease agreements and to assess if any agreements should be accounted for pursuant to the guidance in ASC 842. If a lease is deemed to be modified, the operating lease ROU asset and lease liability is re-measured using the current incremental borrowing rate. There were various lease modifications that occurred for the years ended December 31, 2025 and 2024.
During the year ended December 31, 2024, the Company’s Treat Salt Lake City International Airport (“SLC”) location was terminated. When a termination occurs, the Company remeasures the related operating lease right of use asset and lease liability and recognizes those adjustments in the consolidated statements of operations and comprehensive loss. Since the related operating right of use asset was fully impaired for the Treat SLC location at the time of the termination, the Company recognized a gain from lease termination of approximately $655 as a result of this termination.
During the year ended December 31, 2025, the Company’s Treat Studios location was terminated. Since the related operating right of use asset was fully impaired for the Treat Studios location at the time of termination, the Company recognized a gain from lease termination of approximately $410 as a result of this termination.
During the year ended December 31, 2025, there was an increase to the lease term for the XWELL corporate headquarters, located at 254 West 31st 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 $200.
During the year ended December 31, 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 $80.
The following is a summary of the activity in the Company’s current and long-term operating lease liabilities for the year ended December 31, 2025 and 2024:
Year ended December 31, | ||||||
| 2025 | | 2024 | |||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||
Operating cash flows from operating leases | $ | (2,930) | $ | (3,480) | ||
Leased assets obtained in exchange for new and modified operating lease liabilities | $ | 283 | $ | 3,257 | ||
As of December 31, 2025, future minimum operating leases commitments are as follows:
Calendar Years ending December 31, | | Amount | |
2026 | $ | 2,371 | |
2027 | 2,211 | ||
2028 |
| 1,700 | |
2029 |
| 1,402 | |
2030 |
| 1,243 | |
Thereafter |
| 1,610 | |
Total future lease payments |
| 10,537 | |
Less: interest expense at incremental borrowing rate |
| (1,640) | |
Net present value of lease liabilities | $ | 8,897 | |
Other assumptions and pertinent information related to the Company’s accounting for operating leases are:
Weighted average remaining lease term: | 5.30 | years | ||
Weighted average discount rate used to determine present value of operating lease liability: |
| 6.67 | % |
Cash paid for minimum annual rental obligations for the years ended December 31, 2025 and 2024, were $2,272 and $1,668, respectively.
Variable lease payments calculated monthly as a percentage of a product and services revenue were $1,396 and $1,330 for the years ended December 31, 2025 and 2024, respectively.
Rent expense for operating leases for the years ended December 31, 2025 and 2024 were $2,995 and $3,110 respectively.
The Company performed assessments of its right of use lease assets for impairment for the years ended December 31, 2025 and 2024. Based upon the results of the impairment tests, the Company recorded impairment expenses of approximately $1,736 and $2,805 which is included in Impairment of operating lease right-of-use assets on the consolidated statement of operations and comprehensive loss for the years ended December 31, 2025 and 2024 respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 1, 2026 | Showing above |
| 2024 | Apr 15, 2025 | |
| 2023 | Apr 16, 2024 | |
| 2022 | Apr 17, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 31, 2021 | |
| 2019 | Apr 20, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.