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General | 9 Months Ended
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Sep. 30, 2021
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General | Note 1. General Overview XpresSpa Group, Inc. (“XpresSpa Group or the “Company”) is a leading global travel health and wellness services holding company. XpresSpa Group currently has three reportable operating segments: XpresSpa™, XpresTest™, and Treat™ brand. ​ 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 (“XpresSpa”). ​ Through XpresSpa Group’s subsidiary, XpresTest, Inc. (“XpresTest”), the Company launched XpresCheck™ Wellness Centers, also in airports. XpresCheck offers COVID-19 and other medical diagnostic testing services to the traveling public, as well as airline, airport and concessionaire employees, and TSA and U.S. Customs and Border Protection agents. XpresTest has entered into managed services agreements (“the MSAs”) with Professional Corporation or Professional Limited Liability Companies (“PCs”) that provide health care services to patients. PCs pay XpresTest a monthly fee to operate in the XpresCheck Wellness Centers. Under the terms of the MSAs, the Company provides office space, equipment, supplies, non-licensed staff, and management services in return for a management fee. PCs arrange requisite COVID-19 and other medical diagnostic testing services through contracting with physicians and other medical professional providers to render these COVID-19 and other medical diagnostic testing services. ​ XpresSpa Group is developing Treat™, a travel health and wellness brand that is positioned for a post-pandemic world. The Company anticipates delivering on-demand access to integrated healthcare through technology and personalized services, while leveraging XpresSpa’s historic travel wellness experience and XpresTest’s healthcare expertise under the XpresCheck brand. The Company sees this concept evolution as an opportunity in a new niche industry where XpresSpa Group can leverage technology in addition to its existing real estate and airport experience, providing travelers with peace of mind and access to integrated care. Over the long-term, we envision that digital channels will provide growth opportunities beyond the Company’s airport locations, achieved through subscription-based services that provide care and tools supporting travel health and wellness. Furthermore, the Company anticipates offering upstream content that can be monetized through affiliate revenue as well as curated retail through ecommerce through the Company’s dedicated website, www.treatcare.com launched during the second quarter of 2021, later converting to www.treat.com during the third quarter of 2021. ​ Basis of Presentation and Principles of Consolidation The unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles 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, 2020, as amended. The condensed consolidated balance sheet as of December 31, 2020 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 as well as variable interest entities of which we are the primary beneficiary. 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 periods ended September 30, 2021 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. Recent Developments ​ Effect of Novel Coronavirus (COVID-19) on Business In March 2020, the Company temporarily closed all global XpresSpa locations due to the categorization by local jurisdictions of the spa locations as “non-essential services.” A majority of the Company’s XpresSpa locations remain closed. The Company intends to reopen XpresSpa spa locations on a location-by-location basis and resume normal operations at such selected locations once restrictions are lifted and airport traffic returns to sufficient levels to support operations at a unit level. Between June 28th, 2021 and July 1st, 2021, the Company re-opened its four top performing XpresSpa™ locations with modified hours and top selling services: Hartsfield-Jackson Atlanta International Airport (ATL) Concourse A, Dallas/Fort Worth International Airport (DFW) Concourse A, Charlotte Douglas International Airport (CLT) Concourse D, and Las Vegas McCarran International Airport (LAS) Concourse D. There are also three XpresSpa locations operating in Dubai International Airport in the United Arab Emirates as well as three XpresSpa locations operating in Schiphol Amsterdam Airport in the Netherlands. ​ ​ During the third quarter of 2021, the Company re-opened following XpresSpa™ locations with modified hours and top selling services:
| ● | John F. Kennedy International Airport (JFK) on September 16, 2021;
| ● | Charlotte Douglas International Airport (CLT) Concourse A/B on September 20, 2021.
​ During the fourth quarter of 2021 to date, the Company re-opened the following XpresSpa™ locations with modified hours and top selling services:
| ● | Hartsfield-Jackson Atlanta International Airport (ATL) Concourse C on October 14, 2021;
| ● | Orlando International Airport (MCO) on October 18, 2021;
| ● | Dallas/Fort Worth International Airport (DFW) Concourse D on October 23, 2021;
| ● | William P. Hobby Airport (HOU) on November 8, 2021.
​ A majority of the domestic XpresSpa locations are operating approximately eight hours per day (compared to 16 hours pre-pandemic) with sales volumes about 30% to 60% of pre-pandemic levels. The Company implemented a price increase in mid-October and is planning to test some new touchless massage services and new retail items during the fourth quarter. ​ The Company will re-evaluate each airport on a month-by-month basis as well as review continued learnings as the portfolio is re-activated. An additional two XpresSpa reopenings are planned for the remainder of the year. ​ Since the beginning of that temporary closure, the Company successfully launched its XpresCheck™ Wellness Centers, offering such testing services, as described above and below. Also, the Company continues to evaluate alternative testing protocols and work in partnership with airlines for safe travels. While management has used all currently available information in assessing its business prospects, the ultimate impact of the COVID-19 pandemic and the Company’s XpresCheck™ Wellness Centers on its results of operations, financial condition and cash flows remains uncertain. The success or failure of the Company’s XpresCheck™ Wellness Centers could also have a material effect on the Company’s business. XpresCheck™ Wellness Centers Through the Company’s XpresCheck™ Wellness Centers and under the terms of the MSAs with physicians’ practices, the Company offers testing services from the Company’s 14 XpresCheck™ Wellness Centers at 12 Airports in 11 states to airline employees, contractors, concessionaire employees, TSA officers and U.S. Customs and Border Protection agents, as well as the traveling public. The Company has entered into MSAs with professional medical service entities that provide healthcare services to patients. Under the terms of the MSAs, XpresTest provides office space, equipment, supplies, non- licensed staff, and management services to be used for the purpose of COVID-19 and other medical diagnostic testing in return for a management fee. Since December 31, 2020, the Company announced the opening of the following XpresCheck™ Wellness Centers to provide diagnostic COVID-19 testing:
| ● | On January 12, 2021, the Company opened its second XpresCheck™ Wellness Center at Boston’s Logan International Airport. It contains four separate testing rooms to provide diagnostic COVID-19 testing.
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| ● | On January 20, 2021, the Company announced the opening of an XpresCheck™ Wellness Center at Salt Lake City International Airport. It contains four separate testing rooms to provide diagnostic COVID-19 testing.
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| ● | On February 16, 2021, the Company announced the opening of an XpresCheck™ Wellness Center of the Company’s second XpresCheck™ testing facility at Newark Liberty International Airport. It contains four separate testing rooms to provide diagnostic COVID-19 testing.
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| ● | On March 8, 2021, the Company announced the opening of an XpresCheck™ Wellness Center at Houston George Bush Intercontinental Airport. It contains four separate testing rooms to provide diagnostic COVID-19 testing.
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| ● | On March 15, 2021, the Company announced the opening of XpresCheck™ Wellness Centers at Dulles International and Reagan National Airports in Virginia, containing nine and four separate testing rooms, respectively, to provide diagnostic COVID-19 testing.
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| ● | On April 8, 2021, the Company announced the opening of an XpresCheck™ Wellness Center at Seattle-Tacoma International Airport. It contains eight separate testing rooms to provide diagnostic COVID-19 testing.
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| ● | On April 21, 2021, the Company announced the opening of an XpresCheck™ Wellness Center at San Francisco International Airport. It contains nine separate testing rooms to provide diagnostic COVID-19 testing.
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| ● | On October 13, 2021, the Company opened an XpresCheck™ Wellness Center at Hartsfield-Jackson Atlanta International Airport (ATL) Concourse E. It contains six separate testing rooms to provide diagnostic COVID-19 testing.
​ Airport Rent Concessions The Company has received rent concessions from landlords on a majority of our leases, allowing for the relief of minimum guaranteed payments in exchange for percentage-of-revenue rent or providing relief from rent through payment deferrals. Currently, the periods of relief from these payments, which began in March 2020, range from three to twenty-eight months. The Company received minimum guaranteed payment concessions of approximately $585 and $611 in the three months ended September 30, 2021 and 2020, respectively, $1,568 and $1,379 in the nine months ended September 30, 2021 and 2020, respectively, and $3,600 in the eighteen months ended September 30, 2021. The Company expects to realize additional rent concessions while a majority of its spas remain closed. ​ Liquidity and Financial Condition As of September 30, 2021, the Company had cash and cash equivalents, excluding restricted cash, of $109,161, total current assets of $113,100, total current liabilities of $17,198 and positive working capital of $95,902, compared to a positive working capital of $78,302 as of December 31, 2020. During the nine months ended September 30, 2021, holders of the Company’s December 2020 Investor Warrants, December 2020 Placement Agent Warrants and December 2020 Placement Agent Tail Fee Warrants exercised a total of 11,223,529 warrants for common shares. The Company received gross proceeds of approximately $19,161. In accordance with the placement agent agreements with H.C. Wainwright & Co., LLC and Palladium, the Company paid cash fees of $2,154 and issued 842,588 warrants to H.C. Wainwright & Co., LLC at an exercise price of $2.125 per share and 325,500 warrants to Palladium at an exercise price of $1.70 per share. See Note 11. Stockholders’ Equity for related discussion.

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