What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-04-15 compared with 2025-03-28 · 570 added, 387 removed, 823 unchanged (54% of the section changed)

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We have audited the accompanying consolidated balance sheets of Atlantic International Corp.

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements).

and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the consolidated financial statements, the Company has an accumulated deficit, recurring losses and expects future losses that raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 3.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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Las Vegas, Nevada

March 28, 2025

April 15, 2026

PCAOB ID Number 587

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Intangible assets, net 26,602,223 31,395,556

Due from related parties — 1,150,000

Deferred tax assets, net — 5,242,610

Deposits, long-term 279,769 271,318

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Total assets $ 113,229,836 $ 119,751,676

Liabilities and stockholders' equity (deficit)

Liabilities and stockholders' deficit

Current liabilities

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Accrued expenses and other current liabilities 19,647,785 21,612,253

PEO liability and accrued interest

32,894,331 23,321,262

Due to related parties — 2,091,035

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Notes payable, current portion - related parties 1,950,000 —

Other debt, current portion

Total current liabilities 114,950,734 94,249,157

Non-current liabilities

Line of credit, net of current portion 1,950,000 —

Notes payable, net of current 34,755,435 —

Notes payable, net of current portion 28,826,281 1,950,000

Notes payable, net of current portion - related parties — 34,755,435

Non-current operating lease liabilities 1,543,091 813,740

Other liabilities — 3,474,954

Total non-current liabilities 30,369,372 37,519,175

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Commitments and contingencies

Stockholders’ equity (deficit)

Stockholders’ deficit

Preferred stock, $ 0.00001 par value;

20,000,000 shares authorized and none issued at December 31, 2025 and December 31, 2024, respectively

Common stock, $ 0.00001 par value;

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55,713,259 and 53,130,946 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively

Preferred stock, $ 0.00001 par value;

20,000,000 shares authorized and none issued at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 162,819,982 123,462,703

Accumulated deficit ( 194,910,809 ) ( 135,479,890 )

Total stockholders’ equity (deficit) ( 12,016,656 ) ( 39,354,053 )

Total liabilities and stockholders’ equity (deficit) $ 122,751,676 $ 126,666,609

Total stockholders’ deficit ( 32,090,270 ) ( 12,016,656 )

Total liabilities and stockholders’ deficit $ 113,229,836 $ 119,751,676

The accompanying notes are an integral part of these consolidated financial statements.

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Selling, general and administrative 91,289,682 64,021,052

Change in fair value of contingent consideration liabilities — ( 150,093 )

Depreciation and amortization 4,928,514 4,991,863

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Other expense — 52,047,957

Net loss before (provision for)/benefit from income taxes ( 130,100,788 ) ( 21,180,291 )

Income tax (expense)/benefit ( 5,379,102 ) 5,928,271

Net loss before provision for income taxes ( 59,396,928 ) ( 130,100,788 )

Income tax expense ( 33,991 ) ( 5,379,102 )

Net loss $ ( 59,430,919 ) $ ( 135,479,890 )

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ATLANTIC INTERNATIONAL CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Mezzanine Capital Members’ Capital (Deficit) Stockholders’ Equity (Deficit)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

Mezzanine Capital Members’ Capital (Deficit) Stockholders’ Deficit

Non-Redeemable Interests Common Stock

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Balance - December 31, 2023 $ 10,663,750 $ 10,663,750 $ 11,786,313 $ ( 61,804,116 ) $ ( 50,017,803 ) 25,423,729 $ 254 $ 22,449,809 $ ( 61,804,116 ) $ ( 39,354,053 )

Effect of recapitalization - - - - - 25,423,729 254 ( 254 ) - -

Accretion to redemption value 498,750 498,750 ( 498,750 ) - ( 498,750 ) - - - - -

Net loss - - - ( 15,252,020 ) ( 15,252,020 ) - - - ( 15,252,020 ) ( 15,252,020 )

Capital contribution - - 3,200,464 - 3,200,464 - - 3,200,464 - 3,200,464

Balance - December 31, 2023 $ 10,663,750 $ 10,663,750 $ 11,786,313 $ ( 61,804,116 ) $ ( 50,017,803 ) 25,423,729 $ 254 $ 22,449,809 $ ( 61,804,116 ) $ ( 39,354,053 )

Net loss - - - - - - - - ( 135,479,890 ) ( 135,479,890 )

- - - - - - - - ( 135,479,890 ) ( 135,479,890 )

Capital contribution

Effect of recapitalization - - - - - - - - - -

- - 1,033,969 - 1,033,969 - - 1,033,969 - 1,033,969

Accretion to redemption value

133,162 133,162 ( 133,162 ) - ( 133,162 ) - - - - -

Redemption of redeemable interests ( 10,796,912 ) ( 10,796,912 ) 10,796,912 - 10,796,912 - - - - -

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Stock based compensation

Stock issued - - - - - 9,106,231 91 ( 91 ) - -

- - - - - - - 45,202,329 - 45,202,329

Stock issued for RSUs

- - - - - 9,106,231 91 ( 91 ) - -

Recapitalization of legacy company

- - - - - 380,648 4 ( 1,703,193 ) - ( 1,703,189 )

Deemed contribution of debt deconsolidation from related party

- - - - - - - 15,284,178 - 15,284,178

Advisory fees paid in merger

- - - - - 18,220,338 182 42,999,818 - 43,000,000

Balance - December 31, 2024 $ - $ - $ - $ - $ - 53,130,946 - $ 531 $ - $ 123,462,703 $ - $ ( 135,479,890 ) $ - $ ( 12,016,656 )

- - - - - - - - ( 59,430,919 ) ( 59,430,919 )

Stock based compensation

- - - - - - - 36,142,434 - 36,142,434

Shares issued for services - - - - - 215,148 2 836,398 - 836,400

Shares issued to legacy stockholders - - - - - 773,944 8 2,378,463 - 2,378,471

Stock issued for RSUs

- - - - - 1,593,221 16 ( 16 ) - -

Balance - December 31, 2025 $ - $ - $ - $ - $ - 55,713,259 $ 557 $ 162,819,982 $ ( 194,910,809 ) $ ( 32,090,270 )

The accompanying notes are an integral part of these consolidated financial statements.

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Interest paid in kind — 1,239,373

Change in estimated fair value of contingent consideration — ( 150,093 )

Deferred income taxes — 5,242,610

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Depreciation and amortization expense 4,928,514 4,991,864

Right-of-use amortization expense 1,662,897 1,675,791

Share based compensation 36,142,434 45,202,329

Expenses paid by IDC — 1,840,855

Changes in operating assets and liabilities:

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Prepaid income taxes 40,278 79,520

Due from related parties — ( 1,689,764 )

Deposits ( 8,451 ) 5,049

Other assets ( 1,288,353 ) ( 230,360 )

Right of use assets 300,771 1,472,096

Accounts payable 3,082,055 1,228,532

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Payments on revolving line of credit ( 471,422,154 ) ( 442,992,103 )

Borrowings on credit agreement 1,950,000 —

Borrowings on notes payable — 1,950,000

Payments on notes payable ( 6,056,385 ) —

Borrowings on other debt 4,000,000 —

Payments on other debt ( 733,555 ) —

Deemed capital contribution from recapitalization — 6,666,216

Debt issuance costs payment ( 290,351 ) ( 319,500 )

Transaction consideration paid on behalf of Parent — —

Net cash provided by financing activities 3,865,731 5,384,241

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Interest $ 4,776,722 $ 6,926,853

State Income Taxes, net of refunds received $ 17,100 $ 73,541

Non-cash investing and financing activities:

Settlement shares issued to legacy stockholders $ 2,378,471 $ —

Derecognition of debt, net related to debt deconsolidation $ — $ ( 68,946,155 )

Accretion of redeemable units to redemption value $ — $ 133,162

Unpaid interest added to Term Note $ — $ 357,500

Unpaid debt issuance costs added to Term Note $ — $ 600,000

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Our corporate headquarters have been relocated to 270 Sylvan Avenue, Suite 2230, Englewood Cliffs, New Jersey 07632.

Lyneer Investments, LLC (“Lyneer Investments”) is a limited liability company formed in the State of Delaware on January 9, 2018.

Lyneer Investments is owned by its members and is now a wholly-owned subsidiary of the Company.

Lyneer Investments, LLC (“Lyneer Investments”) is a limited liability company formed in the State of Delaware on January 9, 2018, which was owned by its members and is now a wholly-owned subsidiary of the Company.

The members of Lyneer Investments have limited personal liability for the obligations and debts of Lyneer Investments under Delaware law.

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The Company has more than one hundred locations throughout the USA.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) pursuant to the accounting and disclosure rules and regulations of the United States Securities and Exchange Commission ("SEC").

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) pursuant to the accounting and disclosure rules and regulations of the United States Securities and Exchange Commission ("SEC").

The accompanying consolidated financial statements include the consolidated accounts of Atlantic International Corp, Lyneer Investments, Lyneer Holdings and LSS.

All significant intercompany transactions and balances have been eliminated in consolidation.

On August 31, 2021 (the “Acquisition Date” or the “Transaction Date”), IDC Technologies, Inc., a California corporation (“Parent” “IDC” or the “Acquirer”) obtained a controlling financial interest in Lyneer Investments by acquiring ninety ( 90 %) percent of Lyneer Investments’ outstanding equity (the “Transaction”) pursuant to a membership interest purchase agreement (the “Transaction Agreement”) executed with the selling parties (“Sellers”).

Following the closing of the Transaction, one of the Sellers, Lyneer Management Holdings, LLC (“LMH”) an entity owned primarily by certain members of the executive management team of the Company continued to own 10 % equity interest in Lyneer.

On August 31, 2021 (the “Acquisition Date” or the “Transaction Date”), IDC Technologies, Inc.

(“IDC”), a California corporation (“Parent”, “IDC” or the “Acquirer”) obtained a controlling financial interest in Lyneer Investments by acquiring ninety ( 90 %) percent of Lyneer Investments’ outstanding equity (the “Transaction”) pursuant to a membership interest purchase agreement (the “Transaction Agreement”) executed with the selling parties (“Sellers”).

The Transaction represented a change of control with respect to Lyneer Investments and was accounted for as a business combination in accordance with the guidance prescribed in Accounting Standard Codification (“ASC”) Topic 805 — Business Combinations (“ASC 805”).

Lyneer Investments applied pushdown accounting as of the Acquisition Date.

In connection with the Transaction, IDC or Lyneer as co-obligors are required to make additional payments to the Sellers should Lyneer meet certain financial targets, as defined in the Transaction Agreement, within certain timeframes after the Transaction Date.

These amounts represent contingent consideration liabilities remeasured at fair value each reporting period, with changes recorded in earnings.

In connection with the Transaction, the Sellers agreed to indemnify Lyneer for payment of claims or settlement amounts related to any pending or unasserted actions against Lyneer that arise from events that occurred on or prior to the Transaction Date, as well as legal expenses incurred by Lyneer related to its defense in such matters.

Total amounts due from the Sellers under the indemnification provisions of the Transaction amounted to $ 0 and $ 2,500,000 as of December 31, 2024 and December 31, 2023, respectively and represented reimbursement for legal fees incurred to which the Company has a right to reimbursement under the Transaction Agreement.

On February 28, 2024, LMH exercised its right to put the LMH Units to IDC and IDC owned 100 % of all the membership interests in Lyneer Investments.

On October 29, 2024, the Company formed a subsidiary in Delaware.

The subsidiary is named A36 Merger Sub, Inc.

This inactive subsidiary is named A36 Merger Sub, Inc.

and all 100 shares of its common stock are owned by the Company.

Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) pursuant to the accounting and disclosure rules and regulations of the United States Securities and Exchange Commission ("SEC").

The accompanying consolidated financial statements include the consolidated accounts of Atlantic International Corp, Lyneer Investments, Lyneer Holdings and LSS.

All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

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These reclassifications had no effect on the reported results of operations.

An adjustment has been made to the consolidated balance sheets and consolidated statements of changes of stockholders’ equity (deficit) giving effect to December 31, 2022 for the audit at December 31, 2024 for the recapitalization related to the Merger.

On May 29, 2023 and subsequently amended on June 23, 2023, October 5, 2023, October 17, 2023, November 3, 2023, January 16, 2024, March 7, 2024 and April 15, 2024, the Company, now known as Atlantic International Corp., a Delaware corporation (“SeqLL”), a Delaware corporation, SeqLL Merger, LLC, a Delaware limited liability company (“SeqLL Merger Sub”), Atlantic Acquisition Corp., a Delaware corporation (“Atlantic”), Atlantic Merger LLC, a Delaware limited liability company and a majority-owned subsidiary of Atlantic (“Atlantic Merger Sub”), Lyneer, IDC and LMH, a Delaware limited liability company (“Lyneer Management”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which (i) Atlantic Merger Sub was merged with and into Lyneer with the Lyneer continuing as the surviving entity and as an approximately 41.7 %- owned subsidiary of Atlantic, and an approximately 58.3 %-owned subsidiary of IDC, and (ii) SeqLL Merger Sub was subsequently be merged with and into Lyneer, with Lyneer continuing as the surviving entity and a wholly-owned subsidiary of SeqLL (collectively referred to as the “Merger”).

An adjustment has been made to the consolidated balance sheets and consolidated statements of cash flows.

Merger and Acquisition

On May 29, 2023 and subsequently amended on June 23, 2023, October 5, 2023, October 17, 2023, November 3, 2023, January 16, 2024, March 7, 2024 and April 15, 2024, the Company, now known as Atlantic International Corp., a Delaware corporation (“SeqLL”), a Delaware corporation, SeqLL Merger, LLC, a Delaware limited liability company (“SeqLL Merger Sub”), Atlantic Acquisition Corp., a Delaware corporation (“Atlantic”), Atlantic Merger LLC, a Delaware limited liability company and a majority-owned subsidiary of Atlantic (“Atlantic Merger Sub”), Lyneer, IDC and LMH, a Delaware limited liability company (“Lyneer Management”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which (i) Atlantic Merger Sub was merged with and into Lyneer with Lyneer continuing as the surviving entity and as an approximately 41.7 %-owned subsidiary of Atlantic, and an approximately 58.3 %-owned subsidiary of IDC, and (ii) SeqLL Merger Sub was subsequently be merged with and into Lyneer, with Lyneer continuing as the surviving entity and a wholly-owned subsidiary of the Company (collectively referred to as the “Merger”).

On June 4, 2024, the Company entered into an Amended and Restated Agreement and Plan of Reorganization (the “Amended Merger Agreement”), which amended certain provisions of the Merger Agreement:

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In addition, upon the closing of the Merger:

• Atlantic Acquisition Corp (“AAC”) entered into an Assignment and Assumption Agreement pursuant to which AAC irrevocably assigned and transferred to the Company all of AAC’s rights, title and interest to various intangible assets in exchange for a portion of the Atlantic Consideration.

The Company assumed all of the employment agreements of AAC personnel and paid/or expects to pay approximately $ 4.4 million of accrued wages and bonuses.

intangible assets in exchange for a portion of the Atlantic Consideration.

The Company assumed all of the employment and consulting agreements of AAC personnel and paid/or expects to pay approximately $ 4.4 million of accrued wages and bonuses.

The Company assumed obligations of AAC to issue 593,221 shares to certain advisors upon completion of the Merger, and an additional 1.3 million shares under a directors agreement.

Accrued Expenses and Other Current Liabilities for further discussion.

• The Company escrowed 4,704,098 shares of common stock that may be issued to the Company’s stockholders of record as of September 26, 2023, as part of a settlement offer (the “Settlement Offer”) to be commenced within 90 days of the closing of the Merger to settle any claims for the failure to declare and pay certain previously-announced dividends of cash and common stock.

• In addition, following completion of the Merger, subject to the terms and conditions of an Asset Purchase Agreement dated as of May 29, 2023, between the Company and SeqLL Omics, an entity formed by Daniel Jones, the Company’s former Chairman and Chief Executive Officer, and certain other former employees of the Company for the purpose of carrying on the Company’s pre-Merger business following the Merger, SeqLL Omics purchased from the Company for a purchase price of $ 1,000 all of the Company’s assets, including cash and cash equivalents, and transferred all liabilities other than a promissory note in the principal amount of $ 1,375,000 to a former co-founder of SeqLL that is due on July 31, 2025 and a one-year leasehold obligation.

• The Company escrowed 4,704,098 shares of common stock that may be issued to certain of the Company’s stockholders of record as of September 26, 2023, as part of a settlement offer (the “Settlement Offer”) to be commenced within 90 days of the closing of the Merger to settle any claims for the failure to declare and pay certain previously-announced dividends of cash and common stock.

• In addition, following completion of the Merger, subject to the terms and conditions of an Asset Purchase Agreement dated as of May 29, 2023, between the Company and SeqLL Omics, an entity formed by Daniel Jones, the Company’s former Chairman and Chief Executive Officer, and certain other former employees of the Company for the purpose of carrying on the Company’s pre-Merger business following the Merger, SeqLL Omics purchased from the Company for a purchase price of $ 1,000 all of the Company’s assets, including cash and cash equivalents, and transferred all liabilities other than a promissory note in the principal amount of $ 1,375,000 to a former co-founder of SeqLL that was due on July 31, 2025 and a one-year leasehold obligation.

On January 23, 2026, the Company and St.

Laurent Investments LLC (“St.

Laurent”) entered into a Confidential Settlement Agreement which satisfied the Promissory Notes in total.

Subsequent Events for further information.

Determination of Accounting Acquirer

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There is no accounting effect or change in the carrying amount of the assets and liabilities because of the Merger.

The Merger does not represent a business combination accounted for accounting purposes under ASC 805 – Business Combinations , because neither Atlantic Merger LLC nor SeqLL will meet the definition of a business.

The Merger does not represent a business combination accounted for accounting purposes under ASC 805, because neither Atlantic Merger LLC nor SeqLL will meet the definition of a business.

Having considered Topic 12 of the SEC Financial Reporting Manual, Lyneer has been determined to be the continuing entity for accounting purposes and the Merger represents a reverse recapitalization with regard to Atlantic.

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g) Individuals affiliated with Atlantic will be appointed as the Chief Executive Officer and Chief Financial Officer of our company following the Merger.

Staffing 360 Acquisition

On November 1, 2024, as amended on January 7, 2025, Atlantic, Staffing 360 Solutions, Inc.

a Delaware corporation (“STAF”), and A36 Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of the Company entered into an Agreement and Plan of Merger (the “Staffing 360 Merger Agreement”), pursuant to which Merger Sub would merge with and into STAF, with STAF surviving as a wholly-owned subsidiary of the Company (the “Staffing 360 Merger”).

Subject to the terms and conditions of the Staffing 360 Merger Agreement, upon completion of the Staffing 360 Merger, Atlantic would acquire all outstanding shares of STAF’s common stock.

On February 26, 2025, Atlantic International

(“Atlantic,” or the “Company”) sent a notice of termination to STAF pursuant to the terms and conditions of the Staffing 360 Merger Agreement.

There was no material relationship between the Company and its affiliates and STAF other than in respect of the Staffing 360 Merger Agreement.

The Staffing 360 Merger Agreement required STAF to execute and/or deliver:

“a signed agreement between the Internal Revenue Service and Company [i.e., STAF] concerning the terms of settlement mutually agreeable to Atlantic”.

Without the Company’s knowledge, STAF entered into agreements with the Internal Revenue Service that were not agreeable to Atlantic.

STAF materially failed to satisfy the terms of the Staffing 360 Merger Agreement and has done so in a manner that cannot be cured.

Accordingly, this was a material breach of the covenant and agreement set forth in the Staffing 360 Merger Agreement to deliver:

“a signed agreement between the Internal Revenue Service and Company (i.e., STAF) concerning the terms of settlement mutually agreeable to Atlantic.”

Finally, as stated in the February 26, 2025 termination notice, STAF has failed to demonstrate compliance under the Staffing 360 Merger Agreement, namely to (i) operate the Business in the ordinary course in all material respects and (ii) use commercially reasonable efforts to preserve intact the business organization, assets, properties and material business relations of STAF, both as reflected by STAF’s failure to satisfy its obligations and maintain its material business relations.

It is for these reasons, among other reasons, that the Staffing 360 Merger was terminated.

Summary of Significant Accounting Policies

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The offsetting journal entry upon the Company’s recognition of amounts under joint and several liability arrangements will differ based on the substance of the transactions or events that gave rise to recognition.

In cases where a

joint and several liability arises because the Company has received cash proceeds for use in its own operations the offsetting entry is generally a debit to cash.

In cases where a joint and several liability arises because the Company has received cash proceeds for use in its own operations the offsetting entry is generally a debit to cash.

In cases where the Company has recognized a liability and funds were borrowed for the benefit of IDC, the Company generally recognizes a deemed distribution within its consolidated statements of changes in stockholders’ equity (deficit).

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Debt for more information.

Contingent Consideration

For business combinations that require additional assets — such as cash, notes, or equity securities — to be transferred to the selling parties in the event certain future events occur or conditions are met (“contingent consideration”), the Company recognizes the acquisition-date fair value of contingent consideration as part of the consideration transferred in exchange for the business combination.

The Company’s contingent consideration is classified as a liability and measured at fair value at each reporting date until the contingency is resolved, with any changes in fair value recognized in the Company’s consolidated statements of operations.

The measurement period for the Company’s contingent consideration arrangements expired on August 31, 2023, at which time amounts owed by the Company to its former owners were computed and represent fixed amounts, included in “accrued expenses and other current liabilities” and “other liabilities” on the accompanying consolidated balance sheets.

On January 16, 2024, six notes payable with equivalent terms, except to the amount of principal and interest were issued to the Sellers.

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance.

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In accordance with ASC Topic 360 — Property, Plant, and Equipment , the Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.

For long-lived assets to be held and used, the Company recognizes an impairment loss only if the asset’s carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference

between the carrying amount and fair value.

For the years ended December 31, 2025 and 2024, there was no impairment of the Company’s long-lived assets.

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(ii) it identifies the performance obligations in the contract;

(iii) it determines

the transaction price;

(iii) it determines the transaction price;

(iv) it allocates the transaction price to the performance obligations in the contract;

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In accordance with ASC Topic 718 — Compensation-Stock Compensation , compensation expense associated with restricted stock units is equal to the closing price of the Company’s stock on the date of grant and is recorded pro rata over the required service period.

Compensation expense associated with stock options is equal to the fair market value of the stock on the date of grant and is recorded pro rata over the exercise period.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

Liquidity and Going Concern

Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with lenders will remain available to us.

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40 – Going Concern , Management evaluates whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern.

This evaluation includes considerations related to financial and other covenants contained in the Company’s credit facilities, as well as forecasted liquidity.

The Company’s milestone for its capital raise of not less than $20,000,000 was been due on January 15, 2025 and Management believes it is likely that the milestone will either be eliminated upon the debt paid off or amended by the lenders.

The Company has entered into and has been approved by a new ABL lender and expects to close funding on the new credit facility by the end of April 2025.

Our current ABL lender has agree to continue extending the credit facility under normal course.

The bridge lender has also agreed to extend the maturity date of the $ 1,950,000 Credit Agreement to June 18, 2026.

The Company will continue to borrow under the existing facility in its normal course of business until closing.

In accordance with ASC Topic 205-40 — Going Concern , Management evaluates whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern.

This evaluation includes considerations related to financial and other covenants contained in the Company’s credit facilities, as well as forecasted liquidity for the new combined company including Circle8.

Atlantic has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of its consolidated financial statements.

This conclusion was reached primarily because the consolidated financial information as of the acquisition date is still being prepared and compiled, including an analysis of liabilities extinguished pursuant to the terms of the Acquisition Agreement.

The Company will continue to evaluate the provisions in Topic 205-40 in future filings upon completion of all acquisition accounting activities and filing of Circle8’s audited consolidated financial statements and combined pro forma financial statements.

The Company expects that the combination with Circle8 will enhance scale, liquidity, and access to capital, positioning the combined entity for potential premium valuation multiples and expanded international reach with established global clients.

Management further anticipates that the transaction will drive operating efficiencies, improve profitability, and strengthen revenue stability through a diversified customer base and balanced geographic exposure across the United States and Europe.

Recent Accounting Pronouncements

Standards Recently Adopted

In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

The Company adopted the new standards in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In December 2023, the FASB issued ASU 2023-09 — Income Taxes (“ASU 2023-09”) to enhance income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The Company adopted ASU 2023-09 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company does not believe ASU 2023-07 or ASU 2024-03 have a material effect on its consolidated financial statements.

The Company does not believe ASU 2023-09 have a material effect on its consolidated financial statements.

Standards Not Yet Adopted

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Early adoption is permitted.

The Company plan to adopt ASU 2024-03 for the reporting period December 31, 2026.

The Company plans to adopt ASU 2024-03 for the reporting period December 31, 2026.

In January 2025, the FASB issued ASU 2025-01 — Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2025-01”) to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

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The Company plans to adopt ASU 2025-01 for the annual reporting period December 31, 2026 and interim periods for the quarterly reporting period March 31, 2027.

In May 2025, the FASB issued ASU 2025-03 — Business Combinations (Topic 805) and Consolidation (Topic 810) (“ASU 2025-03”) to improve the requirements for identifying the accounting acquirer in Topic 805.

Under ASU 2025‑03, when a business combination is effected primarily through the exchange of equity interests, the reporting entity must apply the factors in ASC 805‑10‑55‑12 through 55‑15 to determine the accounting acquirer, regardless of whether the legal acquiree is a variable interest entity (“VIE”).

Accordingly, we evaluate the guidance in ASC 805‑10‑55‑12 through 55‑15 to determine which entity should be identified as the accounting acquirer.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those reporting periods.

Early adoption is permitted as of the beginning of an interim or annual reporting period.

The Company plans to early adopt ASU 2025-03 to account for the Circle8 acquisition.

In December 2025, the FASB issued ASU 2025-11 — Interim Reporting (Topic 270) (“ASU 2025-11”) to clarify interim disclosure requirement and the applicability of Topic 270.

An amendment added a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities.

The Company plans to adopt ASU 2025-11 for the reporting period December 31, 2027.

The Company does not believe any other recently issued but not yet effective accounting pronouncements will have a material effect on its consolidated financial statements.

7 unchanged sentences

Because all its revenues are from placement services, there are no differences in the nature, timing and uncertainty of the Company’s revenues and cash flows from its revenue generating activities.

For the periods ended December 31, 2024 and December 31, 2023, revenues from the Company’s largest customer accounted for approximately 16 % and 16 % of consolidated revenues, respectively;

For the period ended December 31, 2024, revenues from the Company’s largest customer accounted for approximately 16 % of consolidated revenues;

no other customers accounted for more than 10% of the Company’s consolidated revenues in either period.

7 unchanged sentences

Accounts receivable, net $ 65,750,593 $ 64,074,337

The Company’s accounts receivable serves as collateral for the Revolver and the Term Note has a second lien after the Revolver.

The Company’s accounts receivable serves as collateral for the current Revolver and the Term Note has a second lien after the Revolver.

The Company recognized $ 1,037,806 and $ 957,031 of bad debt expense during the years ended December 31, 2025 and 2024, respectively.

66 unchanged sentences

Lease Costs and Activity

The Companies lease costs and activity are as follows:

The Company’s lease costs and activity are as follows:

Year Ended December 31,

10 unchanged sentences

2026 $ 1,589,387

2027 1,144,197

Thereafter 6,448

2 unchanged sentences

Present value of operating lease liabilities $ 3,002,795

Some of the Company’s debt obligations consist of joint and several liabilities with the Company’s parent which are accounted for under ASC 405 – Debt (“ASC 405”).

Lyneer will remain jointly and severally liable with the Company’s parent to the lenders of the debt obligations until such time as such joint and several indebtedness is restructured.

Some of the Company’s debt obligations consist of joint and several liabilities with the Company’s parent which are accounted for under ASC 405-40.

Lyneer will remain jointly and severally liable with IDC to the lenders of the debt obligations until such time as such joint and several indebtedness is restructured.

As of the date of the Merger, the Company deconsolidated the joint and several liabilities with regard to the Debt Allocation Agreement, dated December 31, 2023, between Lyneer and IDC.

3 unchanged sentences

Revolver $ 49,454,401 $ 42,508,379

Term note — 34,223,489

Seller notes — 7,875,000

Earnout notes — 8,366,915

Earnout notes – related party — 5,127,218

Credit Agreement 1,950,000 1,950,000

1 unchanged sentence

Merger Note 28,943,615 35,000,000

Other debt 3,266,445 —

unamortized debt issuance costs ( 324,421 ) ( 244,565 )

2 unchanged sentences

Non-current portion $ 28,826,281 $ 36,705,435

The revolving credit facility (the “Revolver”) and Term Note contain certain customary financial and non-financial covenants that the Company is required to comply with.

The Company and its lenders executed multiple amendments to its debt facilities in anticipation of the closing of the Merger.

The multiple amendments executed since 2023 were in response to the delayed closing of the Merger.

As of the issuance date of the Company’s December 31, 2024 financial statements, the Ninth Amendment to the Revolver and Tenth Amendment to the Term Note represent the currently effective amendments to each respective debt facility, as described further below.

As of August 12, 2024, the lenders waived all existing events of default as of the date of the agreement and agreed to forbear from exercising their rights and remedies with respect to such events of default under the credit facilities through September 30, 2024.

The Company has received conditional approval and preliminary term sheet by a new ABL lender and expects to close on a new credit facility by the end of April 2025.

The Company will continue to borrow under the existing facility in its normal course of business until closing.

The Company maintains a Revolver as a co-borrower with its parent company IDC with an initial available borrowing capacity of up to $ 125,000,000 , when originally executed in 2021.

On April 29, 2025, the Company closed on a new ABL lender with a maturity date of April 29, 2028.

See below for further discussion.

Debt Allocation Agreement

Lyneer and IDC entered into a debt allocation agreement (the “Allocation Agreement”) dated as of December 31, 2023, which specifies and allocates responsibility for repaying (or refinancing) the joint-and-several debts between Lyneer and IDC.

The Company reassessed its accounting for joint-and-several liabilities under ASC 405-40 as of the Merger date and concluded it is reasonably probable that IDC can repay their portion of the debt allocated per the Allocation Agreement.

As a result, the Company deconsolidated its joint and several debt obligations.

See Revolver (discussing the previous BMO Revolver), Term Note, Seller Notes and Earnout Notes below for those joint-and-several debts that are applicable to the Allocation Agreement.

At December 31, 2025, such indebtedness totaled $ 70,373,516 .

The Company maintained a Revolver with BMO Bank, N.A.

(“BMO”) as a co-borrower with its former parent company, IDC, with an initial available borrowing capacity of up to $ 125,000,000 , when originally executed in 2022.

The facility was partially used to finance the acquisition of Lyneer Investments by IDC in August 2021, with additional borrowing capacity available under the Revolver to finance the Company’s working capital.

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These borrowings are determined by the Company’s availability based on a formula of billed and unbilled accounts receivable as defined in the loan agreement.

The Revolver matures on August 31, 2025, at which time all outstanding balances are due and payable.

There are no scheduled or required principal payments on the Revolver prior to its maturity date.

The Company may prepay amounts owed under the Revolver at any time prior to its maturity date without penalty.

As of December 31, 2024, and December 31, 2023, the Company has recognized liability balances on the Revolver of $ 42,508,379 and $ 85,092,695 , respectively.

Borrowings under the Revolver (as amended on November 15, 2022) are classified as one of the following:

• SOFR Revolving Credit Loans

• SOFR FILO (“first-in-last-out”) Loans

On April 29, 2025, the Company’s subsidiary, Lyneer Staffing Solutions, LLC (“Lyneer”) entered into a Loan and Security Agreement (the “Loan Agreement”) with North Mill Capital, LLC (d/b/ SLR Business Credit (“SLR”)), providing for a $ 70 million (“Advance Limit”) senior secured revolving credit facility (the “New Revolving Credit Facility”).

The Loan Agreement replaced Lyneer’s prior senior secured revolving credit facility provided by BMO.

Lyneer’s previous lender entered into a term loan of $ 6,000,000 with IDC and Lyneer for IDC’s shortfall owed to BMO, plus a $ 1,000,000 exit fee.

The $ 6,000,000 term loan and $ 1,000,000 exit fee are joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement with IDC discussed above.

BMO also assumed 3,439,803 shares of Atlantic International Corp.

previously owned by IDC as collateral for the new term loan.

The Company incurred $ 188,351 in issuance costs and, according to ASC 470 – Debt, is deferring these costs and will amortize as an adjustment to interest expense over the remaining term using the effective interest method.

The interest rate on the New Revolving Credit Facility is calculated as 1.00 % per annum above the Prime Rate, but not less than 5.75 % per annum.

The interest rate as of December 31, 2025 was 7.75 % per annum.

The New Revolving Credit Facility matures on April 29, 2028, unless the lender, at its option, in writing agrees to extend for a period of one year .

As of December 31, 2025, and December 31, 2024, the Company has recognized liability balances on the Revolver of $ 49,308,253 , including $ 146,148 of unamortized deferred issuance costs and $ 42,508,379 , including $ 0 of unamortized deferred issuance costs, respectively.

Borrowings under the Revolver (as amended on November 15, 2022) were classified as one of the following:

• Secured overnight financing rate (“SOFR”) Revolving Credit Loans

• SOFR First-in-last-out (“FILO”) Loans

• Base Rate Revolving Credit Loans

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• Swing-Line Loans

Applicable Margins for each loan type under the original facility are as follows:

Average Availability SOFR

Credit Loans Base Rate

Credit Loans SOFR

Loans Base Rate

Greater than $83,333,333.33

1.75 % 0.75 % 2.75 % 1.75 %

Greater than $41,666,666.66 but less than or equal to $83,333,333.33

2.00 % 1.00 % 3.00 % 2.00 %

Less than $41,666,666.66

2.25 % 1.25 % 3.25 % 2.25 %

Swing Line Loans on the Revolver bear interest at a rate equal to the Base Rate plus the Applicable Margin.

On May 5, 2023, the Company entered into the Third Amendment to the Revolver.

The Third Amendment to the Revolver was treated as a modification after the Company’s analysis according to ASC 470 – Debt and as such, the Company is deferring the amendment fee and will amortize as an adjustment to interest expense over the remaining term, along with any existing unamortized costs using the effective interest method.

The amendment fee was $ 750,000 , split evenly between IDC and the Company.

Fees paid to third parties are expensed as incurred, and no gain or loss was recorded on the modification.

The Third Amendment to the Revolver increased the applicable margin thresholds for various products as follows:

Average Availability SOFR

Credit Loans Base Rate

Credit Loans SOFR

Loans Base Rate

Greater than $83,333,333.33

2.25 % 1.25 % 3.25 % 2.25 %

Greater than $41,666,666.66 but less than or equal to $83,333,333.33

2.50 % 1.50 % 3.50 % 2.50 %

Less than $41,666,666.66

2.75 % 1.75 % 3.75 % 2.75 %

On August 31, 2023, the Company entered into the Fourth Amendment and Forbearance Agreement to the Revolver (the “Fourth Amendment to the Revolver”) which decreased the available borrowing capacity to $ 100,000,000 .

The applicable margins were raised to:

(i) 4.75 % per annum with respect to SOFR Revolving Credit Loans, (ii) 3.75 % per annum with respect to Base Rate Revolving Credit Loans, (iii) 5.75 % per annum with respect to SOFR FILO Loans, and (iv) 4.75 % per annum with respect to Base Rate FILO Loans.

Pursuant to the terms of the Fourth Amendment to the

Revolver, the remaining amounts owed under the Revolver will be split between IDC and Lyneer at the closing of the Merger, with Lyneer retaining availability of up to $ 40,000,000 under a new revolving credit facility having terms similar to those under the existing Revolver.

The Fourth Amendment to the Revolver was treated as a debt extinguishment after the Company’s analysis according to ASC 470.

The total amendment fee was $ 1,550,000 and the structuring fee was $ 100,000 , split evenly between IDC and the Company, and will be amortized as an adjustment to interest expense over the remaining term, along with any existing unamortized costs using the effective interest method.

Fees paid other than to the lenders are expensed as incurred.

The Company and its lenders did not execute a fifth amendment and forbearance agreement.

Instead, on January 30, 2024, the Company entered into the Limited Consent and Sixth Amendment and Forbearance Agreement (the “Sixth Amendment to the Revolver”) with its lender, under which the lender, waived all existing events of default as of the date of the agreement and agreed to forbear from exercising its rights and remedies with respect to such events of default under the Revolver through March 15, 2024, revising financial ratios with the first ratio being due September 30, 2024, and entering into a schedule for repayment of the over-advance.

The Sixth Amendment to the Revolver represents a limited waiver and requires the Company to complete certain actions subsequent to completion of the proposed Merger and the public offering.

Following the closing of the proposed Merger, issuance of the Merger Note and successfully raising $ 20 million of gross proceeds in a public offering of securities, the Company will be required to direct a portion of the proceeds raised to specified creditors, execute limited pledge and guarantee agreements and provide other customary covenants.

The events of default are waived for a limited period until March 15, 2024, at which time the Company is required to refinance or restructure the credit facility.

The Sixth Amendment to the Revolver contains certain customary financial and non-financial covenants.

The Sixth Amendment to the Revolver was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $ 750,000 amendment, forbearance and structuring fees, split evenly between IDC and the Company, and will amortize as an adjustment to interest expense over the remaining term, along with any existing unamortized costs using the effective interest method.

Fees paid to third parties are expensed as incurred, and no gain or loss was recorded on the modification.

On April 17, 2024, the Company entered into the Limited Consent and Seventh Amendment and Forbearance Agreement (the “Seventh Amendment to the Revolver”) with its lender, under which the lender, waived all existing events of default as of the date of the agreement and agreed to forbear from exercising its rights and remedies with respect to such events of default under the Revolver through July 31, 2024, and eliminated certain financial ratios.

The maturity date of the Revolver was accelerated to July 31, 2024 and the available borrowing capacity decreased to $ 70,000,000 and further decreasing to $ 40,000,000 upon the consummation of the Merger.

Additionally, the sublimit for letters of credit was decreased to $ 6,000,000 , further decreasing to $ 0 upon the consummation of the Merger.

The Seventh Amendment to the Revolver was treated as a debt extinguishment after the Company’s analysis according to ASC 470 and a loss of $ 1,213,379 is included in “loss on debt extinguishment” in the accompanying consolidated statements of operations.

Any existing unamortized costs will be amortized as an adjustment to interest expense over the remaining term using the effective interest method.

Fees paid other than to the lenders are expensed as incurred.

The additional forbearances represent limited waivers and require the Company to complete certain actions subsequent to completion of the proposed Merger and the public offering.

The events of default are waived for a limited period until July 31, 2024, at which time the Company is required to refinance or restructure the credit facility.

The extended forbearances contain certain customary financial and non-financial covenants.

On June 18, 2024, the Company entered into the Limited Consent and Eighth Amendment and Forbearance Agreement (the “Eighth Amendment to the Revolver”) with its lender, under which the lender, waived all existing events of default as of the date of the agreement and agreed to forbear from exercising its rights and remedies with respect to such events of default under the Revolver through July 15, 2024.

The maturity date of the Revolver was extended to August 31, 2025 and the available borrowing capacity was decreased to $ 60,000,000 , decreasing to $ 40,000,000 upon Atlantic International and/or its subsidiaries or affiliates issuing equity interests generating gross proceeds in an amount not less than $ 20,000,000 (the “Initial Capital Raise”) and further decreasing upon the issuance or disposition of any indebtedness or equity interest after the Initial Capital Raise of or by (i) any loan party or subsidiary or affiliate thereof or (ii) Atlantic International or any subsidiary or affiliate thereof (the “Secondary Capital Raise”).

The maximum consolidated cash balance at the end of any business day was reduced to $ 1,000,000 .

On August 12, 2024 the Company entered into extended forbearance agreements with its lender, under which the lenders, waived all existing events of default as of the date of the agreements and agreed to forbear from exercising their rights and remedies with respect to such events of default under the Revolver and Term Note through September 30, 2024.

The maximum aggregate principal amount of $ 60,000,000 will be reduced by $ 500,000 on each Thursday starting August 15, 2024 and continuing through and including September 26, 2024.

The Initial Capital Raise milestone and the uplisting milestone dates were extended to September 15, 2024.

The Company has received conditional approval to extend the current milestone for the Company’s Initial Capital Raise to a future undetermined date.

The Company has received conditional approval and a preliminary term sheet by a new ABL lender and expects to close on a new credit facility by the end of April 2025.

The Company will continue to borrow under the existing facility in its normal course of business until closing.

Borrowings under the New Revolving Credit Facility are calculated as 1.00 % per annum above the Prime Rate, but not less than 5.75 % per annum.

The interest rate as of December 31, 2025 was 7.75 % per annum.

The table below summarizes the interest rates, per annum, on each loan type as of December 31, 2025 and 2024, respectively.

As of December 31,

Base Rate Revolving Credit Loans 12.25 % 12.25 %

Swing-Line Loans — % — %

Base Rate FILO Loans — % 11.21 %

SOFR Revolving Credit Loans 9.21 % 10.21 %

The Company must pay a fee for unused borrowing capacity on the Revolver in an amount calculated at a rate of 0.25 % per annum of the unused amount.

The Revolver requires that the co-borrowers comply with certain financial and non-financial covenants.

The Revolver requires that the Company together with IDC meet certain financial covenants which are generally calculated with reference to the financial performance, asset balances, and borrowings of IDC together with all of its consolidated subsidiaries (including the Company).

Under the terms of the Revolver, the Company is prohibited from making dividends or distributions to owners who are not also co-borrowers on the Revolver.

Pursuant to the credit agreement for the Revolver, co-borrowers are required to make a mandatory principal prepayment in the event cash proceeds are received from the following (unless specifically authorized by terms of the Revolver):

issuance of equity securities, incurrence of additional debt and/or disposition of assets.

Pursuant to the credit agreement for the Revolver, upon the receipt of certain payments outside of ordinary course of business, the co-borrowers are required to remit such proceeds to the Revolver Lenders as a prepayment.

Total available borrowing capacity on the Revolver as of December 31, 2024 was over-advanced by $ 1,299,463 .

New Revolving Credit Agreement 7.75 % N/A

Previous Revolver

Base Rate Revolving Credit Loans N/A 12.25 %

Swing-Line Loans N/A — %

Base Rate FILO Loans N/A — %

SOFR Revolving Credit Loans N/A 9.21 %

The Company must pay a facility fee on the New Revolving Credit Agreement in an amount calculated at a rate of 0.50 % per annum on the Advance Limit.

The New Revolving Credit Agreement contains certain customary covenants, including affirmative and negative covenants.

Under the terms of the New Revolving Credit Agreement, the Company is prohibited from making dividends or distributions to owners who are not also co-borrowers on the Revolver.

Total available borrowing capacity on the New Revolving Credit Agreement as of December 31, 2025 was over-advanced by $ 422,756 .

On August 31, 2021, the Company and IDC as co-borrowers entered into a Term Note in the amount of $ 30,300,000 .

3 unchanged sentences

The Term Note is subordinated to the Revolver and bears an initial stated rate of 14 % per annum.

As of December 31, 2024, and December 31, 2023, the Company has recognized liability balances on the Term Note of $ 0 , and $ 34,223,489 , respectively.

On May 5, 2023, the Third Amendment to the Term Note revised the stated interest rate which may vary between 14 % and 16 % per annum, with the cash portion of the stated rate varying from 10 % to 11 % per annum, and the Paid-in-Kind (“PIK”) portion varying from 4 % to 5 % per annum, based on specified financial ratios and similar metrics.

The Third Amendment to the Term Note was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $ 100,000 amendment fee and will amortize as an adjustment to interest expense over the remaining term, along with any existing unamortized costs using the effective interest method.

IDC paid the $ 100,000 amendment fee which is included in “capital contribution” on the accompanying consolidated statements of

changes in stockholders’ equity (deficit).

Fees paid to third parties are expensed as incurred, and no gain or loss was recorded on the modification.

The Term Note was further amended on September 30, 2023 (the “Fourth Amendment to the Term Note”) to defer the July 1, 2023 Cash Interest payment until August 1, 2023.

The Company did not make this payment due to the notice received from the Revolver’s administrative agent of the lender restricting payment on the Term Note.

$ 15,000 was paid with respect to the Fourth Amendment to the Term Note.

On August 4, 2023, the Company received notice from the administrative agent of the Term Note that it was in default of the loan agreement due to non-payment of the August 1, 2023, interest payment due and the default rate became effective which is the stated rate plus 2 % per annum.

The Term Note was further amended and provided a forbearance on August 31, 2023 (the “Fifth Amendment to the Term Note”).

The lender waived all existing events of default as of the date of the Fifth Amendment to the Term Note and agreed to forbear from exercising its rights and remedies through November 17, 2023.

The Fifth Agreement to the Term Note increased the stated interest rate to 19 % per annum and the cash portion of the stated rate increased to 14 % per annum.

The Fifth Amendment to the Term Note has the same contingencies as the Fourth Amendment to the Revolver.

The Fifth Amendment to the Term Note was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company will amortize any existing unamortized costs using the effective interest method, as an adjustment to interest expense over the remaining term.

The structuring fee of $ 32,500 and the total forbearance fee of $ 325,000 , are the responsibility of IDC, which is included in “capital contribution” on the accompanying consolidated statements of changes in and stockholders’ earnings (deficit).

These fees were not paid and as such, was added to the principal of the Term Note.

Fees paid other than to the lenders are expensed as incurred, and no gain or loss was recorded on the modification.

The Company and IDC did not execute a sixth amendment and forbearance agreement.

On January 30, 2024, the Company entered into the Limited Consent and Seventh Amendment (the “Seventh Amendment to the Term Note”) with its lender, under which the lender, waived all existing events of default and agreed to forbear from exercising its rights and remedies with respect to the Term Note through March 15, 2024.

The Seventh Amendment to the Term Note has the same contingencies as the Sixth Amendment to the Revolver.

The Seventh Amendment to the Term Note was treated as a modification after Lyneer’s analysis according to ASC 470 and as such, Lyneer will amortize any existing unamortized costs using the effective interest method, as an adjustment to interest expense over the remaining term.

The structuring fee of $ 100,000 , the forbearance fee of $ 500,000 and the amendment fee of $ 150,000 are the responsibility of IDC.

These fees were not paid and as such, was added to the principal of the Term Note.

Fees paid other than to the lenders are expensed as incurred, and no gain or loss was recorded on the modification.

On April 17, 2024, the Company entered into the Limited Consent and Eighth Amendment and Forbearance Agreement (the “Eighth Amendment to the Term Note”) with its lender, under which the lender, waived all existing events of default and agreed to forbear from exercising its rights and remedies with respect to the Term Note through July 31, 2024.

The Eighth Amendment to the Term Note has the same contingencies as the Seventh Amendment to the Revolver.

On June 18, 2024, the Company entered into the Limited Consent and Ninth Amendment and Forbearance Agreement (the “Ninth Amendment to the Term Note”) with its lender, under which the lender, waived all existing events of default and agreed to forbear from exercising its rights and remedies with respect to the Term Note through July 15, 2024.

The Ninth Amendment to the Term Note has the same contingencies as the Eighth Amendment to the Revolver.

The Seventh Amendment to the Term Note, Eighth Amendment to the Term Note and Ninth Amendment to the Term Note were all accounted for as modifications.

On August 12, 2024, the Company entered into the Tenth Amendment and with its lender, under which the lender, waived all existing events of default as of the date of the agreement and agreed to forbear from exercising its rights and remedies with respect to such events of default under the Term Note through September 30, 2024.

The Initial Capital Raise milestone and the uplisting milestone dates were extended to September 15, 2024.

The Company has received conditional approval to extend the current milestone for the Company’s Initial Capital Raise and the future date hasn’t been determined.

Additionally, the Term Note obligation is fully covered by the Allocation agreement with IDC, as discussed below.

The Term Note includes certain financial and non-financial covenants.

The Term Note requires that the Company, together with IDC, meet certain financial covenants which are generally calculated with reference to the financial performance, asset balances, and borrowings of IDC together with all its consolidated subsidiaries.

The Initial Capital Raise milestone and the uplisting milestone dates were subsequently extended to September 15, 2025, or later as agreed to between the parties.

The Tenth Amendment was superseded by the terms of the new Revolving Credit Facility.

As of both December 31, 2025, and December 31, 2024, the Company has deconsolidated the Term Note, as discussed above;

therefore, the Company recognized liability balances on the Term Note of $ 0 , respectively.

The Term Note obligation is joint-and-several with IDC and is subject to IDC’s obligation under by the Allocation Agreement with IDC discussed above.

On April 28, 2025, the Term Note lender foreclosed on IDC’s remaining 21,983,926 shares of Atlantic International Corp.

common stock (“IDC Shares”).

This foreclosure was only related to IDC’s security provided to the lender under the

Term Note and did not extend to the Company or its subsidiaries.

The value of the IDC Shares on the day of the foreclosure was approximately $ 77,383,420 which far exceeded the liability due under the Term Note.

As of this report, the IDC Shares are pending transfer to the Term Note Lender due to litigation between IDC and an unrelated third party creditor of IDC.

The Company is reviewing the implications of the foreclosure on the Company’s obligations under the Term Note as the collateral received by the Term Note holders significantly exceeded the purported amounts due under the Term Note and the value of the securities is readily ascertainable.

The Company believes the resolution of this matter will not have an impact on the Company’s financial position or results of operations.

The Term Note includes certain financial and non-financial covenants that the Company is required to comply with.

The Term Note is allegedly in default and the Company has sued the Term Note Lender.

Subsequent Events for further discussion related to the SPP Term Note purported default.

As part of the purchase price consideration for the Transaction, the Company and IDC as co-borrowers issued various Seller Notes to former owners totaling $ 15,750,000 .

Payments on the Seller Notes are due in quarterly installments of $ 1,575,000 , and $ 3,150,000 due at their amended maturity date of April 30, 2024, and bear interest at an amended fixed rate of 11.25 % per annum.

The Seller Notes represent unsecured borrowings and are subordinated to the Revolver and to the Term Note.

The Company has recognized Seller Note liability balances of $ 0 and $ 7,875,000 as of December 31, 2024, and December 31, 2023, respectively.

Payments to Seller Notes debt holders was prohibited by the administrative agent of the previous lender under the Revolver and the current Revolver.

As provided in the inter-creditor agreement between North Mill Capital, LLC (d/b/ SLR Business Credit (“SLR”)) and the Seller Note holders, Lyneer is prevented from making payments and the Seller Note holder are prevented from accepting payments from Lyneer.

As of both December 31, 2025, and December 31, 2024, the Company has deconsolidated the Seller Notes, as discussed above;

therefore, the Company recognized liability balances of $ 0 .

The Seller Notes obligation is joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement with IDC discussed above.

The Seller Notes are currently in default, but the note holders can take no action pursuant to the inter-creditor agreement with SLR.

Earnout Notes

5 unchanged sentences

The Company did not make principal and interest payments due to the notice received from the Revolver’s administrative agent of the lender restricting payments to other lenders and the interest rate was increased to the default rate of 11.25 % for the January Earnout Notes.

The Earnout Notes are subordinated to the Revolver and Term Note and represent unsecured borrowings.

The Earnout Note liability was $ 0 and $ 13,494,133 at the periods ended December 31, 2024 and December 31, 2023, respectively.

Payments to any other debt holders was prohibited by the administrative agent of the previous lender under the Revolver and the current Revolver.

As provided in the inter-creditor agreement between SLR and the Earnout Note holders, Lyneer is prevented from making payments and the Earnout Note holder are prevented from accepting payments from Lyneer.

As of both December 31, 2025 and December 31, 2024, the Company has deconsolidated the Earnout Notes, as discussed above;

therefore, the Company recognized liability balances of $ 0 .

The Earnout Notes obligation is joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement with IDC discussed above.

The Earnout Notes are currently in default, but the note holders can take no action pursuant to the inter-creditor agreement with SLR.

2023 and 2024 Amendments to Seller and Earnout Notes

2 unchanged sentences

The amendment increased the interest rate of the Seller Note and the Earnout Notes to 11.25 % per annum from 6.25 % for all remaining payments.

The Omnibus Amendment was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $ 40,000 amendment fee and will amortize as an adjustment to interest expense over the remaining term, along with any existing unamortized costs using the effective interest method.

remaining term, along with any existing unamortized costs using the effective interest method.

Lyneer paid the $ 40,000 amendment fee and will be reimbursed from IDC.

3 unchanged sentences

The Company missed the payment due on February 28, 2024.

The Second Omnibus Amendment was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $ 19,500 amendment fee and will amortize as an adjustment to interest expense over the remaining term, along with any existing unamortized costs using the effective interest method.

Lyneer paid the $ 19,500 amendment fee and will be reimbursed from IDC.

These fees were included in “capital contribution” on the accompanying consolidated statements of stockholders’ earnings (deficit).

Fees paid to third parties are expensed as incurred, and no gain or loss was recorded on the modification.

Credit Agreement

2 unchanged sentences

However, mandatory prepayments shall be made from the Initial Capital Raise, on the issuance of new debt or new equity interests, or upon a change of control.

Conditions have not been met to make mandatory prepayments.

On July 22, 2024, the Company entered into an amendment to extend the maturity date of the Credit Agreement to June 18, 2026.

1 unchanged sentence

From April 29, 2019 to April 29, 2020, the Company entered into a series of non-convertible promissory notes (the “Promissory Notes”) with St.

Laurent Investments LLC amounting to $ 1,375,000 .

Laurent amounting to $ 1,375,000 .

The Promissory Notes had a one-year term, most recently extended through July 31, 2025 or a later date to be mutually agreed upon.

The Promissory Notes bear interest accruing at the rate of 5 % per annum, and increased to 10 % for the period from August 1, 2024, through July 31, 2025.

On January 23, 2026, the Company and St.

Laurent entered into a Confidential Settlement Agreement.

Subsequent Events for further information.

In connection with the closing of the Merger, we issued to IDC the Merger Note in the principal amount of $ 35,000,000 with an original maturity date of September 30, 2024.

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Amendment 1 to the Merger Note was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $ 300,000 amendment fee and will amortize as an adjustment to interest expense over the remaining term using the effective interest method.

Debt Allocation Agreement

As a result, the Company deconsolidated it’s joint and several debt obligations.

On April 29, 2025, the Company and IDC entered into an Amended and Restated Convertible Promissory Note which further extended the maturity date to the earlier of March 31, 2027 or the completion of at least a $ 40 million capital raise.

Pursuant to the Amended and Restated Convertible Promissory Note, any amounts paid to BMO will be in satisfaction of this Note.

The Company is offsetting the balance related to IDC that was remaining on the previous Revolver and rolled into the New Revolving Credit Facility.

Related Party Transactions for IDC’s gross and net offsetting receivables amounts.

Below is presented the calculation of the net liability of the Merger Note, excluding unamortized deferred issuance costs.

Gross Amount Amount Offset Net Amount on Consolidating Balance Sheet

Merger Note $ 34,882,666 $ ( 6,056,385 ) $ 28,826,281

As of December 31, 2025, and December 31, 2024, the Company has recognized liability balances on the Merger Note of $ 28,826,281 , including $ 117,334 of unamortized deferred issuance costs and $ 34,755,435 , including $ 244,565 of unamortized deferred issuance costs, respectively.

Factoring Agreements

During 2025, the Company entered into two agreements to sell future receivables which allows for the factoring of receivables.

• On October 1, 2025, the Company sold $ 3,150,000 of receivables and received cash proceeds of $ 2,500,000 less $ 50,000 in origination fees.

The weekly payments are $ 62,500 and the imputed interest rate is 48.58 %.

• On October 21, 2025, the Company sold $ 1,905,000 of receivables and received cash proceeds of $ 1,500,000 less $ 30,000 in origination fees.

The weekly payments are $ 37,798 and the imputed interest rate is 50.61 %.

These agreements also allow for a discounted repurchase price if the Company pays the cash proceeds back early.

As of December 31, 2025, and December 31, 2024, the Company has recognized liability balances on the factoring agreements of $ 3,205,506 , including $ 60,939 of unamortized deferred issuance costs and $ 0 , including $ 0 of unamortized deferred issuance costs, respectively.

Subsequent to the executed amendments of the Company’s debt obligations described herein, the future minimum principal payments on the Company’s outstanding debt are as follows:

December 31, 2025

Remainder of 2024 $ —

2026 $ 6,591,445

2027 28,943,615

2028 49,454,401

Total $ 84,989,461

Interest Expense

The Company recognized total interest expense of $ 12,004,860 and $ 17,538,816 during the years ended December 31, 2024 and 2023, respectively.

Total interest expense is comprised of a cash and non-cash component as described in the debt arrangements above.

The Company also incurred interest expense related to an agreement with a professional employer organization (“PEO”) which processes the payroll for the Company related to the unpaid balance, at 1.5 % per calendar month.

Additionally, the Company entered into an agreement with Citibank, N.A.

(“Citibank”) on March 5, 2019, whereby Citibank purchases specific receivables and pays the invoices at the discounted amount and the Company incurs a discount charge equal to SOFR plus 0.75 % to process the payments.

The discount charged ranged from 4.76 % to 5.43 % during 2025.

For the years ended December 31, 2025 and December 31, 2024 total interest expense totaled $ 9,164,495 and $ 12,004,860 , respectively.

Interest expense related to the PEO was $ 3,588,223 and $ 0 for the years ended December 31, 2025 and December 31, 2024, respectively.

Interest expense related to the discount charge was $ 646,634 and $ 1,093,680 for the years ended December 31, 2025 and December 31, 2024, respectively.

$ 210,495 and $ 594,275 of deferred financing costs were recognized as a component of “interest expense” on the accompanying consolidated statements of operations for the years ended December 31, 2025 and 2024, respectively.

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Income tax payable 13,913 13,913

Earnout due to sellers – current portion — 3,474,954

Accrued other expenses and current liabilities 6,137,935 3,834,109

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Legacy Stockholder Dividend Settlements

The Company has extended offers for settlement to stockholders as a result of the Company failing to declare and pay a declared dividend as described in the Company’s filings.

The Company has issued 764,486 shares in partial satisfaction of this settlement as of the issuance date of the Company’s December 31, 2024 financial statements at the September 10, 2024 closing stock price of $ 6.45 .

Subsequent Events for further discussion on these settlements.

On October 24, 2024 the Company entered into an Amended and Restated Settlement Agreement and General Release of Claims with regard to the Company’s failing to declare and pay a declared dividend as described in the Company’s filings and the shareholder agreed to provide consulting services to the Company.

The Company, upon the Merger on June 18, 2024, put in escrow 4,704,098 shares at a closing price of $ 2.36 per share valued at $ 11,101,671 , as a reserve for the potential settlement amounts of Legacy SeqLL stockholders and was required to extend a settlement offer within 90 days from June 18, 2024.

The Company extended offers for settlement to the legacy stockholders, as a result of the Company failing to declare and pay a declared dividend as described in the Company’s filings, to issue shares of Atlantic International Corp.

stock at the September 10, 2024 closing stock price of $ 6.45 .

The Company has issued 773,944 shares in partial satisfaction of this settlement as of the issuance date of the Company’s December 31, 2025 financial statements with an issuance stock price range of $ 2.03 - $ 6.20 per shares, with an estimated additional 1,000,701 shares pending issuance as of December 31, 2025.

On October 24, 2024 the Company entered into an Amended and Restated Settlement Agreement and General Release of Claims with the Company’s former Chief Executive Officer with regard to the Company’s failing to declare and pay a declared dividend as described in the Company’s filings and the former Chief Executive Officer agreed to provide consulting services to the Company.

In full and final satisfaction of any and all obligations related to the dividend and consulting services, the Company agreed to the following:

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• 230,027 shares will be issued as a Dividend settlement

Professional Employer Organization

The PEO is engaged to process the Company’s payroll which is subject to a periodic charge of 1.5 % per calendar month for any unpaid balances.

The total liability due to the PEO as of December 31, 2025 was $ 32,894,331 , consisting of $ 29,306,108 of wages and salaries paid by the PEO and $ 3,588,223 of accrued interest.

The total liability due to the PEO as of December 31, 2024 was $ 23,321,262 , consisting of $ 23,321,262 of wages and salaries paid by the PEO and $ 0 of accrued interest.

Legal Counsel Exchange Agreement

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The plan covers substantially all full-time employees of the Company who meet certain age and length of service requirements.

There is no requirement for the Company to match employee contributions to the plan.

There is no requirement for the Company to

match employee contributions to the plan.

The Company did not contribute to the plan during the years ended December 31, 2025 and 2024.

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The complaint alleges wage and hour claims, and inaccurate wage statement claims on behalf of the class and plaintiff.

The parties have agreed to a $ 300,000 settlement which is pending court approval.

The $ 300,000 final settlement funds were disbursed on March 21, 2024.

On October 30, 2019, Rosanna Vargas filed a complaint in the Superior Court of New Jersey at Camden County against Lyneer and various defendants, including Lyneer’s client, alleging severe personal injury sustained at work.

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Accordingly, Lyneer agreed to pay approximately $ 1,030,000 over 36 months, beginning in July 2023, to settle the claim.

As of December 31, 2025, the Company owes $ 230,000 and has accrued this full amount, which is recognized in “accrued expenses and other current liabilities on the accompanying consolidated balance sheets”.

On January 6, 2021, a class action wage and hour complaint was filed in the Superior Court of California, Los Angeles County, by Enrique Briseno as class representative.

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The matter settled for $ 425,000 , $ 300,000 of which is to be paid by the Company, and the remaining $ 125,000 is to be paid by the client.

The settlement agreement was signed on December 17, 2024 and has been finalized and executed and provided to the Court for approval , and the Company is currently awaiting such approval.

If approved, it is anticipated that the settlement payment will be due in the second quarter of 2025.

The settlement agreement was signed on December 17, 2024 and has been finalized and executed and provided to the Court for approval.

The settlement was approved by the Court, and the Company’s settlement payment is now overdue.

The Company has accrued the full amount of the $ 300,000 settlement payment due, which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets.

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A settlement conference was held on August 28, 2024, but was unsuccessful.

The Company’s liability insurance carrier and the Company's worker's compensation insurance carrier and the liability insurance carrier for the client held a settlement conference on March 11, 2025, but was unsuccessful and the matter is listed now listed for trial on April 28, 2025.

The Company believes it has issues for appeal, but believes it is probable to receive an unfavorable outcome.

The Company believes that the insurance carriers will contribute a significant amount, if not all, of the potential settlement.

The Company has accrued $ 291,667 towards the potential settlement, which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets.

On October 8, 2021, a class action wage and hour complaint was filed in the Superior Court of California, Orange County, by Maria Reyes and Teresa Alvarez as class representatives.

The trial commenced April 28, 2025 and a settlement was reached on May 2, 2025 for a total value of $ 3,050,000 , $ 2,800,000 in cash and $ 250,000 by virtue of a lien release, of which the Company is responsible for $ 200,000 , with the insurance carriers collectively responsible for the remainder.

The Company has accrued the full amount of the $ 200,000 settlement payment due, which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets.

The final settlement agreement was executed, and the full settlement amount was paid by the Company in January 2026.

On October 8, 2021, a class action wage and hour complaint was filed in the Superior Court of California, Orange County, by Teresa Alvarez and Mirna Flores as class representatives.

The Complaint was filed against the Company as well as the Company’s client.

The matter settled for $ 750,000 , $ 650,000 of which is to be paid by the Company, and the remaining $ 100,000 is to be paid by the client.

The settlement agreement was signed November 16, 2023 and has been finalized and executed and provided to the Court for approval, and the Company is currently awaiting such approval.

If approved, it is anticipated that the settlement payment will be due in the first or second quarter of 2025.

The Company has accrued the full amount of the $ 650,000 settlement payment due, which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets.

Executive Employment and Consulting Agreements

Consulting Agreement with Robert Machinist

Upon the closing of the Merger, Robert Machinist entered into a one-year consulting agreement with our company as Executive Vice Chairman of the Board.

Machinist’s consulting fee is $ 180,000 per annum.

Machinist is entitled to

a $ 100,000 transaction bonus upon the completion of the Merger.

Machinist is eligible for discretionary annual bonuses as determined by the compensation committee of our board of directors.

If the consulting agreement is terminated for any reason other than for Cause (as defined) or if Mr.

Machinist voluntarily terminates his consulting engagement for any reason, he will be entitled to full benefits and all previously granted restricted stock, restricted stock units and warrants will immediately vest.

He will be entitled to six months of severance payments of his base salary upon termination, in equal monthly installments, other than for Cause.

For Cause, he will be entitled to three months of severance paid in three equal monthly installments, and all unvested restricted stock, restricted stock units and warrants then held by Mr.

Machinist will be forfeited.

The settlement agreement was signed November 16, 2023 and has been finalized and executed.

The full settlement amount of $ 671,858 , which includes employment taxes, was paid on October 23, 2025, and Lyneer’s portion of the settlement has now been paid in full.

On August 1, 2023, a class action wage and hour PAGA complaint was filed in the Superior Court of California, County of San Bernardino, by Maria Reyes as class representative.

The matter settled at a mandatory settlement conference

held on October 10, 2025, for $ 925,000 , which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets.

The settlement funds will be due from the Company within 90 days after final approval of the settlement, but in no event less than six months from October 10, 2025.

The final settlement agreement has been presented to the Court for approval.

On December 9, 2024, BAC Rhino 3 Federal LLC (“Rhino”) filed a complaint in Suffolk County Superior Court, against Atlantic for breach of contract, seeking damages for accelerated rent, plus costs of collection and outstanding rent to date, for Atlantic’s default under the lease and failure to pay monies owed thereunder.

On December 18, 2025, the Company and Rhino entered into a settlement agreement whereby the Company shall pay $ 1,000,000 .

As of December 31, 2025, the Company owes $ 950,000 and has accrued this full amount, which is recognized in “accrued expenses and other current liabilities on the accompanying consolidated balance sheets”.

The Company has agreed to monthly payments of $ 30,000 until the balance is paid in full.

Executive Employment Agreements

Employment Agreement with Jeffrey Jagid

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The agreement is for a term of five years with an additional one-year extension unless terminated by either party upon 90 days written notice prior to the end of the initial term.

Jagid’s base salary is $ 500,000 per annum.

Jagid is entitled to a true-up payment in an amount equal to the pro-rated difference between his salary of $ 120,000 per year under his employment contract dated February 1, 2023 with Atlantic and $ 500,000 per annum.

Jagid is eligible to receive an annual bonus in an amount equal to his base salary for every year commencing in 2023.

On January 23, 2026, the Company entered into a First Amendment (the “Amendment”) to Executive Employment Agreement with Jeffrey Jagid, as Chief Executive Officer.

The Amendment is to the Executive Employment Agreement dated as of June 18, 2024 (the ”Agreement”).

Pursuant to the terms of the Amendment, the Employment Term was extended from June 18, 2029 to January 31, 2031;

the Annual Base Salary was increased from $ 500,000 to $ 800,000 ;

the Annual Bonus was increased from $ 500,000 to $ 800,000 , and the Transaction Bonus was increased from $ 100,000 to $ 225,000 , effective January 1, 2026.

In addition, Mr.

Jagid shall be entitled to a one-time bonus of $ 300,000 should the Company complete a registered direct offering or any other type of financing of at least $ 5,000,000 in 2026.

Each of the Company’s enumerated subsidiaries shall be jointly and severally liable for and unconditionally guarantees the payment and performance of all obligations and agreements under the Amendment.

Furthermore, upon an Event of Default Mr.

Jagid shall be entitled to file an executed Confession of Judgement against the Company and its subsidiaries for severance.

Jagid was entitled to a true-up payment in an amount equal to the pro-rated difference between his salary of $ 120,000 per year under his employment contract dated February 1, 2023 with Atlantic and $ 500,000 per annum.

Jagid was eligible to receive an annual bonus in an amount equal to his base salary for every year commencing in 2023.

The bonus will be predicated upon our recording a minimum of $ 250,000,000 in revenues.

Jagid will also be paid a $ 200,000 transaction bonus as a result of the closing of the Merger, and he will be paid additional transaction bonuses in the amount of $ 100,000 for the closing of any subsequent acquisition that is valued in excess of $ 8,000,000 .

Jagid was also paid a $ 200,000 transaction bonus as a result of the closing of the Merger, and he will be paid additional transaction bonuses in the amount of $ 100,000 for the closing of any subsequent acquisition that is valued in excess of $ 8,000,000 .

He is also eligible for an annual discretionary bonus to be set by the compensation committee of our board of directors.

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He will also be covered under our directors and officers’ liability insurance for up to one year from termination of his employment.

Employment Agreement with Christopher Broderick

Upon the closing of the Merger, Christopher Broderick entered into an employment agreement with our company as Chief Financial Officer.

The employment agreement is for three years with an additional one-year extension unless terminated by either party upon 90 days’ written notice prior to the end of the initial term.

Broderick’s base salary is $ 300,000 per annum.

He is also entitled to a true-up payment equal to the pro-rated difference between his salary of $ 120,000 per year under his employment agreement dated February 1, 2023 with Atlantic and $ 300,000 per annum.

Broderick will be eligible to receive a yearly bonus equal to his annual base salary for every year commencing in 2023.

The bonus will be predicated upon our recording a minimum of $ 250,000,000 in revenues and adjusted EBITDA of $ 5,000,000 .

Broderick will also be paid a $ 150,000 transaction bonus as a result of the closing of the Merger and he will be paid additional transaction bonuses in the amount of $ 75,000 for the closing of any subsequent acquisition that is valued in excess of $ 8,000,000 .

He also will be eligible for an annual discretionary bonus to be set by the compensation committee of the board of directors.

If we terminate the employment agreement for any reason other than Cause (as defined), all of Mr.

Broderick’s then-outstanding restricted stock, restricted stock units and warrants will immediately vest, and Mr.

Broderick will be entitled to (i) 12 months of severance payments of his base salary, (ii) a prorated annual bonus if we are on pace to meet the above-

stated performance milestones, (iii) the right to 12 months of COBRA insurance, and (iv) reasonable outplacement services for a period of up to 90 days from termination.

Upon death or disability, Mr.

Broderick, or his estate, will receive all accrued compensation and any prorated bonus, and any equity that would have vested during the 24-month period beginning on the date of death or disability will immediately vest.

Broderick is terminated for Cause, or resigns without Good Reason (as defined), he will receive accrued compensation and any vested equity.

Upon a Change of Control (as defined), all of Mr.

Broderick’s non-vested equity will immediately vest in full, and he will be entitled to his full severance payments stated above if he chooses to terminate his employment with our company.

Broderick will be subject to a one-year non-compete covenant from termination of his employment anywhere in the United States if termination is for Cause, and six months if his termination is for any other reason.

He will be subject to a two-year non-solicitation covenant from termination if he is terminated for Cause and 12 months if he is terminated for any other reason.

He will also be covered under our directors and officers’ liability insurance for up to one year from termination of employment.

Employment Agreement with Kevin J.

Effective February 2, 2026, Mr.

Murphy entered into an employment agreement with our Company as Chief Financial Officer.

Subsequent Events for further discussion.

Employment Agreement with Michael Tenore

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The employment agreement is for three years with an additional one-year extension unless terminated by either party upon 90 days written notice prior to the end of the initial term.

On January 23, 2026, the Company entered into a First Amendment (the “Amendment”) to Executive Employment Agreement with Michael Tenore, as Secretary and General Counsel.

The Amendment is to the Executive Employment Agreement dated as of June 18, 2024 (the ”Agreement”).

Pursuant to the terms of the Amendment, the Employment Term was extended from June 18, 2029 to January 31, 2031;

the Annual Base Salary was increased from $ 300,000 to $ 325,000 ;

the Annual Bonus was increased from $ 100,000 to $ 150,000 and the Transaction Bonus was increased from $ 75,000 to $ 150,000 effective January 1, 2026.

In addition, Mr.

Tenore shall be entitled to a one-time bonus of $ 50,000 should the Company complete a registered direct offering or any other type of financing of at least $ 5,000,000 in 2026.

Upon an Event of Default Mr.

Tenore shall be entitled to file an executed Confession of Judgement against the Company and its subsidiaries for severance.

Tenore’s base salary is $ 300,000 per annum.

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and any unpaid bonus for any then completed fiscal year.

Board of Directors Agreement (Chairman) with Prateek Gattani

Upon the closing of the Merger, the Company adopted the Board of Director’s Agreement dated as of April 15, 2024 with Prateek Gattani to serve as Chairman of the Board for a two-year period from the closing of the Merger.

The agreement provides for Mr.

Gattani to have all responsibilities of a director of the Company.

He is to be paid an annual fee equal to the higher of $ 200,000 or the highest amount any other director is being paid.

Gattani was granted RSUs to purchase 1,300,000 shares of common stock vested upon the date of grant and which have been issued.

The agreement provides that he cannot be removed except by the Company’s stockholders.

Fair Value Measurements

Earnout Liability

The Company may be required to make certain earnout payments in connection with the Transaction, which would be payable upon the future achievement of revenues less certain identified expenses and other performance targets.

The fair value of these contingent consideration payments is determined using a Monte Carlo simulation, with key inputs being standard deviation applied to the Company’s revenues, revenue multiple, and gross profit discount rate.

The fair value measurement of the contingent consideration is considered a Level 3 measurement within the fair value hierarchy.

A summary of the activities of Level 3 fair value measurements is as follows:

Beginning balance $ 7,100,000

Issuance of Earnout Notes —

Change in fair value ( 150,093 )

Transfer to purchase consideration ( 6,949,907 )

Ending balance $ —

Related Party Transactions for a discussion of the Company’s contingent consideration liabilities attributed to LMH.

The Company did not have any transfers between Levels 2 and 3 within the fair value hierarchy during the years ended December 31, 2024 and 2023.

On January 16, 2024, the Company converted the Earnout liability to Subordinated promissory notes.

Debt for further discussion.

Financial Instruments not Carried at Fair Value

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The carrying values of other current assets and liabilities including accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their fair value due to their short-term maturities.

As of December 31, 2024 and 2023 the Company’s variable rate indebtedness consists of the Revolver which bears interest at variable rates (SOFR or a Base Rate plus a margin, and LIBOR or a Base Rate plus a margin on December 31, 2024 and 2023, respectively).

The carrying value of the Company’s recognized borrowings under the Revolver approximates their fair value as the debt is at variable rates currently available and resets on a monthly basis.

The fair value of the Company’s fixed rate debt, which consists of the Merger Note, Credit Agreement and Promissory Note as of December 31, 2024 and the Term Note, the Seller Note and the Earnout Notes as of December 31, 2023 is estimated using Level 2 inputs by discounting future cash flows using estimated rates which the Company believes approximate current market interest rate for similar obligations.

As of December 31, 2025 and 2024 the Company’s variable rate indebtedness consists of the new Revolving Credit Facility and the Revolver, respectively which bears interest at variable rates.

The carrying value of the Company’s recognized borrowings under the new Revolving Credit Facility and the Revolver approximates their fair value as the debt is at variable rates currently available and resets on a monthly basis.

The fair value of the Company’s fixed rate debt, which consists of the Merger Note, Credit Agreement, Promissory Note as of December 31, 2025 and December 31, 2024 and the Factoring Agreements at December 31, 2025 is estimated using Level 2 inputs by discounting future cash flows using estimated rates which the Company believes approximate current market interest rate for similar obligations.

A summary of the carrying value and fair value of the Company’s debt is as follows:

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The Company reports information about operating segments in accordance with ASU 2023-07, which requires financial information to be reported based on the way management organizes segments within a company for making operating decision and evaluating performance.

The Company derives revenue from hourly fees charged from the placement of “light industrial” temporary staffing and placement fees earned from the placement of professional permanent employees at its customers.

The Company derives revenue from hourly fees charged from the placement of “light industrial” temporary staffing and placement fees earned from the placement of professional permanent

employees at its customers.

Revenues are accounted for and tracked by each branch location by temporary or permanent placement.

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Summary of Significant Accounting Policies .

The Company’s CEO is the CODM and reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial

The Company’s CEO is the CODM and reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

The CODM assess performance for the commercial staffing solutions segment and decides how to allocate resources based on net income/(loss) that is also reported on the consolidated statement of operations as consolidated net income/(loss).

The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the current business segment or into other parts of the entity or parent, such as for acquistions or other public costs such as investor relations and marketing.

The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the current business segment or into other parts of the entity or parent, such as for acquisitions or other public costs such as investor relations and marketing and does not evaluate operating segments using asset or liability information.

The Company does not have intra-entity sales or transfers.

Segment information for the years ended December 31, 2025 and 2024 is as follows:

Year Ended December 31,

December 31, 2025 December 31, 2024

Service revenue, net $ 435,878,730 $ 442,609,814

Cost of revenue:

Payroll and payroll related costs 387,678,534 393,773,643

Other costs of revenue 2,214,433 1,657,848

Total cost of revenue 389,892,967 395,431,491

Gross profit 45,985,763 47,178,323

Selling, general and administrative

91,289,682 64,021,052

Depreciation and amortization

4,928,514 4,991,863

(Loss) income from operations

( 50,232,433 ) ( 21,834,592 )

Loss on debt extinguishment

Advisory fees paid in merger — 43,000,000

Interest expense

9,164,495 12,004,860

Other expense — 52,047,957

Net loss before provision for income taxes

( 59,396,928 ) ( 130,100,788 )

Income tax expense

( 33,991 ) ( 5,379,102 )

$ ( 59,430,919 ) $ ( 135,479,890 )

Concentrations of Credit Risk

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Members’ Capital and Mezzanine Capital

As of December 31, 2023, 90 %, of the outstanding membership units of Lyneer were held by IDC, and 10 % were held by LMH.

Under the Operating Agreement, LMH has the right, but not the obligation to require IDC to purchase LMH’s interest in the Company (the “LMH Put”) upon the occurrence of any Triggering Event, or during the Put-Call Period.

As of March 31, 2024, 100 %, of the outstanding membership units of Lyneer were held by IDC.

Under the Operating Agreement, LMH had the right, but not the obligation to require IDC to purchase LMH’s 10 % interest in the Company (the “LMH Put”) upon the occurrence of any Triggering Event, or during the Put-Call Period.

Upon the occurrence of certain triggering events as defined in the Company’s operating agreement, LMH had the right to require IDC to purchase its membership units in the Company.

The Company has determined the LMH Units to be redeemable upon an event that is outside the control of the Company, and accordingly has classified the LMH Units as a component of mezzanine capital and outside of permanent equity as of December 31, 2023.

The LMH Put was exercised on February 28, 2024 and as of December 31, 2024 were reclassed to permanent equity.

These units were exercised on February 28, 2024 and as of March 31, 2024 were reclassified to permanent equity.

See below for further detail.

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On February 28, 2024, LMH exercised its right to put the LMH Units to IDC and entered into a Put-Call Option Note on April 17, 2024, in the amount of $ 10,796,912 .

While not formalized until April 17, 2024, the terms of the Put-Call Option Note were agreed to by all parties prior to March 31, 2024 and as such, the Company gave

effect to the transaction as of March 31, 2024.

While not formalized until April 17, 2024, the terms of the Put-Call Option Note were agreed to by all parties prior to March 31, 2024 and as such, the Company gave effect to the transaction as of March 31, 2024.

The Put-Call Option Note provides that IDC owned one hundred percent ( 100 %) of all the membership interests in Lyneer Investments and requires IDC to pay 50 % of outstanding principal six months after issuance with the remaining 50 % payable in six equal quarterly payments beginning on December 31, 2024 and continuing until the maturity date of June 30, 2026.

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As part of the consummation of the Merger on June 18, 2024, IDC paid $ 2,000,000 to LMH as a partial payment on the Put-Call Option Note.

No additional payments have been received as of December 31, 2025, and IDC is in default to LMH.

Redeemable Units

Under the August 31, 2021 Operating Agreement LMH has the right, but not the obligation to require IDC to purchase LMH’s interest in the Company (the “LMH Put”) upon the occurrence of any Triggering Event, or during the Put-Call Period.

The Company has determined that the presence of the LMH Put has caused the LMH Units to be redeemable upon an event that is not entirely within the control of the Company and accordingly the Company has classified the LMH Units as a component of mezzanine capital in the accompanying consolidated financial statements as of December 31, 2023 and 2022.

The Company has determined that the presence of the LMH Put has caused the LMH Units to be redeemable upon an event that is not entirely within the control of the Company.

Upon the exercise of the LMH Put or the IDC Call the amount payable to LMH is equal to the greater of the Fair Market Value of the LMH Units (as defined in the August 31, 2021 Operating Agreement) or $ 9,500,000 plus an additional accrued amount equal to 5.25 % per annum accruing ratably over a calendar year and commencing on August 31, 2021 and through the date of a timely put/call exercise notice (the “Put-Call Purchase Price”).

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LMH was a non-controlling member of the Company with a 10 % ownership interest at December 31, 2023.

Two of the Company’s officers, specifically its CEO and CFO, each owned 44.5 % of LMH, respectively.

Two of Lyneer’s officers, specifically its CEO and CFO, each owned 44.5 % of LMH, respectively.

On November 15, 2022, Lyneer and IDC as co-borrowers issued Year 1 Earnout Notes to LMH with total balances of $ 5,127,218 .

The balance of the Year 1 Earnout Notes payable to LMH was $ 0 and $ 5,127,218 as of December 31, 2024 and December 31, 2023, respectively.

On January 16, 2024, Lyneer and IDC as co-borrowers issued Year 2 Earnout Notes to LMH with total balances of $ 2,013,041 .

The balance of the Year 2 Earnout Notes payable to LMH was $ 0 as of both December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024 and December 31, 2023, the combined Earnout Note balances payable to LMH of $ 0 and $ 5,127,218 are included in “notes payable, current portion – related parties”, respectively on the accompanying consolidated balance sheets.

The balance of the Year 1 Earnout Notes payable to LMH was $ 0 as of both December 31, 2025 and December 31, 2024.

On January 16, 2024, Lyneer and IDC as co-borrowers issued Year 2 Earnout Notes to LMH with a total balance of $ 2,013,041 .

The balance of the Year 2 Earnout Notes payable to LMH was $ 0 as of both December 31, 2025 and December 31, 2024.

As of both December 31, 2025 and December 31, 2024, the combined Earnout Note balances payable to LMH was $ 0 .

Interest expense incurred on the Earnout Notes to LMH totaled $ 0 and $ 292,996 for the years ended December 31, 2025 and 2024, respectively.

Total amounts due from LMH under the indemnification provisions of the Transaction Agreement amounted to $ 0 and $ 750,000 as of December 30, 2024 and December 31, 2023, respectively and are included in “other assets” in the accompanying consolidated balance sheets.

Refer to Note 1:

Organization, Nature of Operations and Basis of Presentation for additional information.

The balance of the earnout liability payable to LMH as of December 31, 2024 and December 31, 2023, was $ 0 and $ 2,015,473 , respectively, which is included in “other liabilities” on the accompanying consolidated balance sheets.

The balance of the earnout liability payable to LMH as of both December 31, 2025 and December 31, 2024, was $ 0 .

On June 18, 2024 as part of the Merger, LMH entered into a $ 6,000,000 guarantee agreement with the PEO, replacing and cancelling the $ 6,000,000 letter of credit previously held by the lenders of the Revolver.

This obligation was terminated on December 31, 2024.

Transactions with IDC

The Company and IDC are co-borrowers and jointly and severally liable for principal and interest payments under the Revolver, the Term Note, the Seller Notes and the Earnout Notes.

The Company and IDC were co-borrowers and were jointly and severally liable for principal and interest payments under the previous Revolver, the Term Loan related to the previous Revolver, the Term Note, the Seller Notes and the Earnout Notes.

In the case of certain of those obligations IDC generally makes certain interest and principal payments to the lenders and collects reimbursement from the Company.

For interest payments of that nature, the Company recognizes interest expense when interest is incurred under the relevant loan agreement and a corresponding payable to IDC, which is subsequently removed from the Company’s consolidated balance sheet upon Company’s remittance of the reimbursement funds to IDC.

funds to IDC.

Additionally, when principal payments are made by IDC the Company recognizes a reduction of the associated loan balance, with a corresponding increase in the payable to IDC which is then reduced upon the Company’s payment of funds to IDC.

As a result of the Merger, the Company is required to file short-term income tax returns for the periods of January 1, 2024 to June 18, 2024 and June 19, 2024 to December 31, 2024.

For the first short-period, Lyneer and IDC will file consolidated income tax returns in certain states.

In connection with this arrangement, Lyneer has recorded a liability payable to IDC for taxes payable by IDC which represent taxes attributable to Lyneer’s operations included on consolidated state and local income tax returns filed by IDC.

These amounts are calculated by determining Lyneer’s taxable income multiplied by the applicable tax rate.

Amounts payable to IDC of this nature amounted to $ 548,432 and $ 522,472 as of December 31, 2024 and December 31, 2023, respectively, and are included in “accrued expenses and other current liabilities” and “due to related parties” on the accompanying consolidated balance sheets as of December 31, 2024, and December 31, 2023, respectively.

For the second short-period ended December 31, 2024, Lyneer will file consolidated income tax returns with Atlantic International Corp.

Total amounts payable to IDC, including the above taxes payable to IDC, amounted to $ 2,091,035 and $ 4,384,178 as of December 31, 2024, and December 31, 2023, respectively and are included in “accrued expenses and other current liabilities” and “due to related parties” on the accompanying consolidated balance sheets as of December 31, 2024, and December 31, 2023, respectively.

As a result of the Merger, the Company was required to file short-term income tax returns for the periods of January 1, 2024 to June 18, 2024 and June 19, 2024 to December 31, 2024.

For the first short-period, Lyneer and IDC filed consolidated income tax returns in certain states.

In connection with this arrangement the Company recorded a liability payable to IDC for taxes payable by IDC which represented taxes attributable to the Company’s operations included on consolidated state and local income tax returns filed by IDC.

These amounts were determined by calculating the Company’s taxable income multiplied by the applicable tax rate.

Amounts payable to IDC of this nature amounted to $ 548,432 as of both December 31, 2025 and December 31, 2024, respectively, and are included in “other receivables” and “due to related parties” on the accompanying consolidated balance sheets as of December 31, 2025, and December 31, 2024, respectively.

For the second short-period ended December 31, 2024, Lyneer has filed consolidated income tax returns with Atlantic International Corp.

Total amounts receivable from IDC, amounted to $ 1,369,833 as of December 31, 2025 and is included in “other assets” on the accompanying consolidated balance sheets.

This consists of $ 500,000 related to the expenses paid by Lyneer for the balance remaining on the previous Revolver rolled into the New Revolving Credit Facility, $ 1,418,265 related to expenses incurred by IDC and paid by Lyneer and $ 548,432 payable to IDC for taxes payable.

The total amounts payable to IDC amounted to $ 2,091,035 as of December 31, 2024 and is included in “due to related parties” on the accompanying consolidated balance sheets.

This consists of $ 1,542,603 related to a payable to IDC for expenses they paid for Lyneer and $ 548,432 payable to IDC for taxes payable.

There are no formalized repayment terms.

During the year ended December 31, 2024, Lyneer included $ 402,500 as an expense paid for by IDC and recorded as a deemed capital contribution to Lyneer, of which all related to transaction bonuses.

Additionally, IDC agreed to reimburse certain expenses paid by Lyneer totaling $ 631,469 also recorded as deemed capital contributions, by reducing the payable balance owed to IDC.

Of this amount, $ 611,969 related to professional fees and $ 19,500 related to a debt amendment fee.

Advance to Officer

Lyneer advanced $ 400,000 to the CEO of the Company in 2022.

The advance did not bear interest.

This advance is recorded in “other assets” on the accompanying consolidated balance sheets as of December 31, 2023.

The officer loan settled from a portion of the recapitalization proceeds at the closing of the Merger.

Pursuant to the Amended and Restated Convertible Promissory Note, any amounts paid to BMO will be in satisfaction of this Note.

The Company is offsetting the balance related to IDC that was remaining on the previous Revolver and rolled into the New Revolving Credit Facility.

Debt for the Company’s gross and net offsetting liability amounts.

Below is presented the calculation of the net amount of the receivable from IDC included in “other assets” on the accompanying consolidated balance sheets.

Gross Amount Amount Offset Net Receivable from IDC included in “Other assets” on Consolidating Balance Sheet

Receivable from IDC included in “Other assets” $ 7,426,218 $ ( 6,056,385 ) $ 1,369,833

On June 18, 2024, the Company entered into a $ 35,000,000 Merger Note with IDC.

Debt for further discussion.

Additionally, IDC was issued 25,423,729 shares of the Company’s common stock at a market value of $ 2.36 per share, or $ 60,000,000 in the aggregate

On April 28, 2025, IDC was no longer considered a related party according to ASC Topic 850 — Related-party Disclosures .

Transactions with SPP Credit Advisors, LLC (“SPP”)

On June 18, 2024, the Company entered into a Credit Agreement with SPP in the principal amount of $ 1,950,000 at an interest rate of 5 % per annum.

Debt for further information.

Stock-Based Compensation

Upon the consummation of the Merger, the 2023 Equity Incentive Plan (the “2023 Incentive Plan”) became effective.

The Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, RSUs, dividend equivalents, and other stock or cash-based awards, or collectively, awards to officers, employees, non-employee directors, and consultants and those of our subsidiaries as selected from time to time by the plan administrator in its discretion.

The 2023 Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), dividend equivalents, and other stock or cash-based awards, or collectively, awards to officers, employees, non-employee directors, and consultants and those of our subsidiaries as selected from time to time by the plan administrator in its discretion.

Unless otherwise set forth in an individual award agreement, each award shall vest over a four-year period, with one-quarter of the award vesting on the first annual anniversary of the date of grant, with the remainder of the award vesting monthly thereafter.

On July 22, 2024 the Company filed a registration statement on Form S-8 to register up to 15 % (initially 7,309,322 shares) of the number of shares of common stock, par value $ 0.00001 , to be outstanding immediately following consummation of the Initial Capital Raise following the Merger issuable pursuant to outstanding unvested or unexercised stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, and other stock or cash based awards (collectively, “Awards”) granted under the Company’s 2023 Incentive Plan which became effective upon the consummation and completion of the Merger.

Shares underlying any awards under the Incentive Plan that are forfeited, cancelled, held back to cover the exercise price or tax withholding, satisfied without the issuance of stock or otherwise terminated (other than by exercise) will be added back to the shares available for issuance under the Incentive Plan.

On November 7, 2025, the stockholders approved the 2025 Omnibus Equity Incentive Plan (the “2025 Incentive Plan”).

The Company initially reserved 10,000,000 shares of our common stock, par value $ 0.00001 , for issuance under the 2025 Incentive Plan.

The number of shares of common stock reserved for issuance under the 2025 Incentive Plan shall be adjusted upward to reflect 15 % of the number of shares issued and outstanding as of December 31st of each year.

Shares underlying any awards under the 2023 Incentive Plan and 2025 Incentive Plan that are forfeited, cancelled, held back to cover the exercise price or tax withholding, satisfied without the issuance of stock or otherwise terminated (other than by exercise) will be added back to the shares available for issuance under the 2023 Incentive Plan and 2025 Incentive Plan.

The payment of dividend equivalents in cash shall not count against the share reserve.

Restricted Stock Units

The Company has granted 10,065,397 restricted stock units to non-employees under its Incentive Plan.

The Company has granted 8,331,295 restricted stock units to employees in 2025, of which 6,754,124 unvested shares vested in January 2026 and 1,000,000 restricted stock units to non-employees, which are fully vested and 10,065,397 restricted stock units to non-employees during the years ended December 31, 2025 and December 31, 2024, respectively.

As of December 31, 2025, the Company had 6,754,124 unvested RSUs with a grant date fair value of $ 4.91 .

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Vested ( 1,241,932 ) $ 2.17

( 577,171 ) $ 5.85

Unvested at December 31, 2025 6,754,124 $ 4.91

Of the shares granted, 4,771,255 shares are for compensation for transaction costs related to the Merger incurred by a third party on behalf of the Company.

Of the shares granted during the year ended December 31, 2024, 4,771,255 shares are for compensation for transaction costs related to the Merger incurred by a third party on behalf of the Company.

An assumption agreement was entered into on June 18, 2024, whereby the Company agreed to assume those obligations and issue equity of Atlantic to satisfy these obligations in full.

1 unchanged sentence

The weighted average grant date fair value per share of awards granted in 2025 and 2024 was $ 4.64 and $ 4.49 , respectively.

As of December 31, 2025, there was $ 0 of unrecognized stock-based compensation related to RSUs outstanding.

Stock Options

Stock options to purchase the Company’s common stock are granted to employees and directors, upon approval by the Board of Directors, with an exercise price equal to the fair market value of the stock on the date of grant.

Options generally

become exercisable in four years , in equal installments beginning one year from the date of grant, and generally expire five years from the date of grant.

The fair value of the Company’s stock options is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used:

December 31, 2025 December 31, 2024

Expected life 3.95 years N/A

Expected volatility 40.00 % N/A

Expected dividend rate 0.00 % N/A

Risk-free rate 3.95 % N/A

The following table summarizes the Company’s stock option activity:

Stock Options Weighted

Exercise Price

Per Share Aggregate Intrinsic Value

Outstanding at December 31, 2024 — $ — $ —

Granted 1,000,000 $ 2.67

Outstanding at December 31, 2025 1,000,000 $ 2.67 $ —

Exercisable at December 31, 2025 — $ — $ —

Vested or expected to vest at December 31, 2025 1,000,000 $ 2.67 $ —

The grant date fair value of the stock options granted during the years ended December 31, 2025 and December 31, 2024 was $ 2.37 and $ 0.00 , respectively.

As of December 31, 2025, there was $ 2,022,238 of unrecognized stock-based compensation related to stock options outstanding and the average remaining contractual life on outstanding options was 4.42 years.

Stock-based compensation expense included in the accompanying consolidated statements of operations was:

1 unchanged sentence

Stock-based compensation expense $ 36,142,434 $ 45,202,329

As of December 31, 2024, there was $ 532,902 of unrecognized stock-based compensation related to RSUs outstanding, which is expected to be recognized over a weighted-average remaining service period of less than one year .

Stock Issuance

On October 25, 2024, the Company issued 117,925 shares of the Company’s common stock to its employees at a per share price of $ 4.91 outside of the Incentive Plan as a special incentive for employees.

For the years ended December 31, 2024 and 2023, the Company recorded an income tax expense/(benefit) of $ 5,379,102 and $( 5,928,271 ), respectively.

During 2025, the Company issued 215,148 shares of the Company’s common stock outside of the Incentive Plan, as settlements for several prior services performed at an issuance stock price range $ 3.40 - $ 5.85 .

For the years ended December 31, 2025 and 2024, the Company recorded an income tax expense of $ 33,991 and $ 5,379,102 , respectively.

The Company’s effective tax rate for the years ended December 31, 2025 and 2024 was ( 0.1 )% and ( 4.1 )%, respectively.

The increase in effective tax rates between the periods was primarily due to the establishment of a valuation allowance on the Company’s deferred tax assets.

Lyneer Investments files as a partnership for US federal income tax purposes and is considered a “pass-through” entity.

As such, the taxable activities of Lyneer Investments for the first short-period, leading up to the merger, are allocated to its two Members, IDC and LMH, both of which report those results on separate income tax returns.

For the second short-period, post-merger, Lyneer Investments’ taxable activities will be included on Atlantic International Corp’s income tax returns.

For the period of June 18, 2024 to December 31, 2024, the Company plans to file consolidated income tax returns for federal and state income tax purposes.

As a single member LLC (owned 100% by Lyneer Holdings, a corporation), LSS is a disregarded entity for US federal tax income tax purposes and its activities will be included on the corporate returns filed by Atlantic International Corp.

The decrease in effective tax rates between the periods was primarily due to the establishment of a valuation allowance on the Company’s deferred tax assets in 2024.

Prior to the Merger, Lyneer Investments filed as a partnership for US federal income tax purposes and was considered a “pass-through” entity.

As such, the taxable activities of Lyneer Investments for the first short-period, leading up to the Merger, were allocated to its two Members, IDC and LMH, both of which reported those results on separate income tax returns.

For all periods post-merger, Lyneer Investments’ taxable activities are included on Atlantic International Corp.’s income tax returns.

For the period of June 18, 2024 to December 31, 2024, along with the full 2025 tax year, the Company filed consolidated income tax returns for federal and state income tax purposes.

As a single member LLC (owned 100% by Lyneer Holdings, a corporation), LSS is a disregarded entity for US federal tax income tax purposes and its activities were included on the corporate returns filed by Atlantic International Corp.

Prior to the Merger, IDC included the activities and balances of the Company on designated IDC consolidated state and local income tax returns.

In these returns, the Company’s income tax will be paid on returns filed by IDC.

During the years ended December 31, 2024 and 2023, the Company recognized income tax expense of approximately $ 25,960 and $ 119,658 , respectively, representing the tax arising from the inclusion of the Company’s activities on IDC’s consolidated state and local returns, and a corresponding cumulative related party payable to IDC of $ 548,432 and $ 522,472 as of December 31, 2024 and 2023, respectively.

The domestic and foreign components of total loss before provision for (benefit from) income taxes are as follows:

In these returns, the Company’s income tax were paid on returns filed by IDC.

During the years ended December 31, 2025 and 2024, the Company recognized income tax expense of approximately $ 0 and $ 25,960 , respectively, representing the tax arising from the inclusion of the Company’s activities on IDC’s consolidated state and local returns, and a corresponding cumulative related party payable to IDC of $ 548,432 for both December 31, 2025 and 2024.

The domestic and foreign components of total loss before income tax expense are as follows:

Year Ended December 31,

1 unchanged sentence

$ ( 59,396,928 ) $ ( 130,100,788 )

The provision for)/(benefit from) income taxes consists of the following expenses (benefits):

The income tax expense consists of the following expenses:

Year Ended December 31,

Current $ 34,523 $ ( 736,797 )

Deferred 3,649,803 ( 3,923,706 )

State and Local

Current 104,573 ( 46,627 )

Deferred 1,590,203 ( 1,221,141 )

Income tax (expense)/benefit $ 5,379,102 $ ( 5,928,271 )

The provision for/(benefit from) income taxes differs from the United States Federal statutory rate as follows:

Federal $ — $ 34,523

State 33,991 104,573

Federal — 3,649,803

State — 1,590,203

Income tax expense $ 33,991 $ 5,379,102

A reconciliation of the Company’s effective tax rate to the statutory federal income tax rate pursuant to the disclosure requirements ASU 2023-09, for the year ended December 31, 2025 is as follows:

Year Ended December 31,

Amount Percent Amount Percent

Amount Percent

federal statutory tax rate $ ( 12,473,354 ) 21.0 %

State and local income tax, net of federal income tax effect $ 23,908 — %

Change in valuation allowances $ 4,937,433 ( 7.6 ) %

Nontaxable or nondeductible items

Share based payment awards ( 82,597 ) 0.1 %

Executive compensation 6,964,297 ( 12.4 ) %

Other 664,304 ( 1.2 ) %

Effective tax rate $ 33,991 ( 0.1 ) %

A reconciliation of the Company’s effective tax rate to the statutory federal income tax rate as previously disclosed, and prior to the adoption of ASU 2023-09, for the year ended December 31, 2024 is as follows:

Year Ended December 31,

Amount Percent

Tax benefit at federal statutory rate $ ( 27,321,165 ) 21.0 %

16 unchanged sentences

Accrued expenses 667,006 539,784

Stock based compensation expense 251,002 —

Lease liability 830,997 626,289

8 unchanged sentences

Net deferred tax assets $ — $ —

As of December 31, 2024, the Company had federal net operating loss carryforwards of approximately $ 99,923,243 and state net operating loss carryforwards of approximately $ 130,767,950 , which are available to reduce future taxable income.

The net operating loss (“NOL”) and tax credits will expire at various dates through 2038.

Supplemental Disclosure of Cash Flow Information

Supplemental cash flow information related to cash paid, net for income taxes pursuant to the disclosure requirements ASU 2023-09, for the year ended December 31, 2025 is as follows:

Year Ended December 31,

Federal $ ( 558,566 )

State and local

Total cash paid for taxes, net $ ( 504,205 )

Supplemental cash flow information related to cash paid, net for income taxes as previously disclosed, and prior to the adoption of ASU 2023-09, for the year ended December 31, 2024 is as follows:

Year Ended December 31,

Federal income taxes, net of refunds received $ —

State income taxes, net of refunds received 17,100

Total cash paid for taxes, net $ 17,100

As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $ 113,310,319 which were generated in tax years beginning after December 31, 2017, and can be carried forward indefinitely and state net operating loss carryforwards of approximately $ 104,760,771 , which will expire at various dates through 2037.

The NOL is subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

4 unchanged sentences

ASC Topic 740 — Income Taxes (“ASC 740”) requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

After consideration of all the evidence, both positive and negative, the Company has recorded a valuation allowance against its deferred tax assets at December 31, 2024 because the Company's management has determined that it is more likely than not that these assets will not be fully realized.

The increase in the valuation allowance recorded during the year primarily relates to the establishment of a valuation allowance on the net deferred tax assets as of the beginning of the year, in addition to a valuation allowance against the current year net operating loss generation.

After consideration of all the evidence, both positive and negative, the Company has maintained a valuation allowance against its deferred tax assets as of December 31, 2025 because the Company's management has determined that it is more likely than not that these assets will not be fully realized.

The increase in the valuation allowance recorded during the year of $ 3,395,423 primarily relates to the current year net operating loss generation.

The Company accounts for Uncertainty in Income Taxes under the provisions of ASC 740 which defines the thresholds for recognizing the benefits of tax return positions in the financial statements as "more likely than not" to be sustained by the taxing authority.

12 unchanged sentences

Subsequent Events

The Company has evaluated subsequent events through March 21, 2025, as detailed below.

Shareholder Dividend Settlements

The Company has extended offers for settlement to shareholders as a result of the Company’s failing to declare and pay a declared dividend as described in the Company’s filings.

Staffing 360 Acquisition

On November 1, 2024, as amended on January 7, 2025, Atlantic, Staffing 360 Solutions, Inc.

Subject to the terms and conditions of the Staffing 360 Merger Agreement, upon completion of the Staffing 360 Merger, Atlantic would acquire all outstanding shares of STAF’s common stock.

On February 26, 2025, Atlantic International Corp.

(“Atlantic,” or the “Company”) sent a notice of termination to STAF pursuant to the terms and conditions of the Staffing 360 Merger Agreement by and among the Company, A36 Merger Sub, Inc.

and STAF, dated as of November 1, 2024, as amended as of January 7, 2025.

There was no material relationship between the Company and its affiliates and STAF other than in respect of the Staffing 360 Merger Agreement.

The Staffing 360 Merger Agreement required STAF to execute and/or deliver:

“a signed agreement between the Internal Revenue Service and Company [i.e., STAF] concerning the terms of settlement mutually agreeable to Atlantic ” (Emphasis Added).

Without the Company’s knowledge, STAF entered into agreements with the Internal Revenue Service that were not agreeable to Atlantic.

STAF materially failed to satisfy the terms of the Staffing 360 Merger Agreement and has done so in a manner that cannot be cured.

Accordingly, this was a material breach of the covenant and agreement set forth in the Staffing 360 Merger Agreement to deliver:

“a signed agreement between the Internal Revenue Service and Company (i.e., STAF) concerning the terms of settlement mutually agreeable to Atlantic.”

Finally, STAF has failed to demonstrate compliance under the Staffing 360 Merger Agreement, namely to (i) operate the Business in the ordinary course in all material respects and (ii) use commercially reasonable efforts to preserve intact the business organization, assets, properties and material business relations of STAF, both as reflected by STAF’s failure to satisfy its obligations and maintain its material business relations, among other reasons.

Share Issuance to Legal Counsel

On February 12, 2025, 20,000 shares were transferred to legal counsel in satisfaction of the exchange agreement entered into on December 5, 2024.

The Company has evaluated subsequent events through April 15, 2026, as detailed below.

Murphy Appointed CFO

Effective February 2, 2026, Mr.

Murphy entered into an employment agreement with our Company as Chief Financial Officer.

The employment agreement is for one year with an additional one-year extension unless terminated by either party upon 60 days written notice prior to the end of the initial term.

Murphy’s base salary is $ 375,000 per annum.

Murphy will be eligible to receive a yearly bonus of $ 200,000 based upon mutually agreed upon goals.

Murphy will also be eligible to earn annual variable compensation, the amount of which will be set by the Company’s Compensation Committee based upon the Company’s achievement of stated financial and strategic goals, as established by the Compensation Committee.

Murphy shall be eligible to participate fully in annual stock option grants, and any other

long-term equity incentive program at levels commensurate with Mr.

Murphy’s position and as determined by the Compensation Committee.

The Company shall provide to Mr.

Murphy, at the Company’s cost, health insurance pursuant to the terms of the Company’s health insurance plans.

Murphy received an initial grant of 400,000 stock options under the Company’s equity incentive plan.

The options have an exercise price of $ 3.46 equal to the fair market value of the underlying shares on the day prior to grant.

The options will vest over four years , with 25 % vesting on each anniversary of the grant date.

If we terminate the employment agreement for any reason other than Cause (as defined), all of Mr.

Murphy’s then-outstanding stock options, restricted stock, RSUs and warrants will immediately vest, and Mr.

Murphy will be entitled to (i) any accrued benefits, (ii) a prorated annual bonus if we are on pace to meet the performance milestones necessary for such bonus, (iii) all shares of unvested stock options, restricted stock awards, RSUs, Options, Warrants or other equity awards shall immediately become vested, (iv) the right to 12 months of COBRA insurance paid for by the Company, and (iv) reasonable outplacement services for a period of up to 90 days from termination.

After three months of employment, Mr.

Murphy shall receive a severance amount based upon the following schedule:

• zero to three months:

• Four months to a year:

6 months of severance

• After the first anniversary:

9 months of severance

• After the second anniversary:

12 months of severance

Upon death or disability, Mr.

Murphy, or his estate, will receive all accrued compensation and any prorated bonus, and any equity that would have vested during the 24-month period beginning on the date of death or disability will immediately vest.

Murphy is terminated for Cause, or resigns without Good Reason (as defined), he will receive accrued compensation, including prorated bonus amount and any vested equity.

After three months of employment, Mr.

Murphy shall receive a severance amount based upon the following schedule:

• zero to three months:

• Four months to a year:

6 months of severance

• After the first anniversary:

9 months of severance

• After the second anniversary:

12 months of severance

Upon a Change of Control (as defined), all of Mr.

Murphy’s non-vested equity will immediately vest in full, and he will be entitled to his full severance payments stated above if he chooses to terminate his employment with our Company.

Murphy will be subject to a 1 year non-compete covenant from termination of his employment anywhere in the United States if termination is for Cause, and six months if his termination is for any other reason.

He will be subject to a 1 year non-solicitation covenant from termination if he is terminated for Cause and 1 year if he is terminated for any other reason.

He will also be covered under our directors and officers’ liability insurance both during and, while potential liability exists, after the employment term.

Promissory Notes Settlement

On January 23, 2026, the Company and St.

Laurent entered into a Confidential Settlement Agreement pursuant to which the entire $ 1,375,000 principal amount of the Notes were paid in full on January 29, 2026.

All interest and penalties were waived by St.

Factoring Agreements

During January 2026, the Company entered into agreements to sell future receivables which allows for the factoring of $ 3,750,000 of receivables.

The Company received cash proceeds of $ 3,000,000 , less $ 30,000 in origination fees.

The weekly payments are $ 27,879 and the imputed interest rate ranges from 45.67 % - 47.10 %.

These agreements were made without recourse and also allow for a discounted repurchase price if the Company pays the cash proceeds back early.

Circle8 Acquisition

On January 23, 2026, (the “Circle8 Closing Date”), the Company completed the acquisition (the “Acquisition”) of Circle8 Group B.V.

(“Circle8”), a company organized under the laws of the Netherlands, pursuant to the terms of the Acquisition Agreement, dated January 22, 2026 (the “Acquisition Agreement”), by and among the Company, Axiom Partners GmbH (“Axiom”) and Circle8.

Atlantic acquired 100 % of the equity of Circle8 from Axiom.

Atlantic will be the accounting acquirer for this transaction.

The Acquisition will be accounted for as a business combination using the acquisition method of accounting under ASC 805.

The accounting impact of the Acquisition and the results of operations for Circle8 will be included in our consolidated financial statements beginning in the first quarter of 2026.

The allocation of

the purchase price to the fair value of the assets acquired and liabilities assumed has not been completed at this time.

The measurement period for purchase price allocation will end no later than twelve months after the Acquisition date.

Through its mergers and acquisitions strategy, Atlantic is building a global staffing organization and with the addition of Circle8, Atlantic extended its capabilities into specialized high-growth IT and technology staffing capabilities across Europe, complementing Atlantic’s North American industrial staffing operations.

The aggregate consideration delivered to Axiom (the “Purchase Price”) for the Circle8 equity was delivered as follows:

a) Atlantic issued to Guus Franke (or his assignees) 12,516,070 shares of common stock, par value $ 0.00001 per share (an acquisition date fair value of $ 48.3 million based on the Company’s closing share price of $ 3.86 as of January 23, 2026), equal to 19.99 % of the issued and outstanding shares of Common Stock as of 12:01 a.m.

on the Circle8 Closing Date in compliance with Nasdaq Listing Rule 5635;

b) Atlantic issued a convertible promissory note (the “Convertible Note”) to Axiom in the principal amount of $ 161,961,751 convertible into an aggregate of 53,291,744 shares of Common Stock equal to (i) 65,807,814 shares of Common Stock on a Fully Diluted Basis minus (ii) the 19.99 % shares ( 12,516,070 ) of Common Stock issued to Mr.

Franke as an Initial Share Consideration (the “Convertible Note Consideration”).

The Convertible Note will automatically convert into common shares of the Company upon the approval of the issuance of the shares by the shareholders of the Company.

c) Additionally, Axiom shall be entitled to an additional bonus (an earnout) of US $ 2.5 million based on revenue metrics.

In addition to the Purchase Price, Atlantic shall pay to Axiom a one-time Profit Payment equal to the net profit of Circle8 Group Financial Statements for the year ended December 31, 2025.

The Profit Payment shall be paid the earlier of:

(i) when there is sufficient funds for Atlantic to pay as determined in good faith by Axiom and Atlantic or (ii) three years from the Circle8 Closing Date.

d) Atlantic settled certain seller-side acquisition-related costs on behalf of Axiom through the issuance of 4,000,000 shares of Atlantic Common Stock, valued at $ 15.4 million based on Atlantic's closing stock price of $ 3.86 per share on the acquisition date, to Axiom's financial advisor.

In addition, in the event there is a forced conversion of the Convertible Promissory Note issued on June 18, 2024, as amended, to IDC (as assigned), Atlantic shall increase the number of shares issued to Mr.

Franke (or his assignees) as necessary, so that Mr.

Franke shall receive the Convertible Note Consideration taking into account any shares issued under the Convertible Promissory Note as if the shares were issued prior to the Circle8 Closing Date upon the same formula used to determine the Convertible Note Consideration.

Executive Chairman of the Board appointment

On January 23, 2026, in connection with the acquisition discussed above, the Board of Directors was expanded to six (6) members and Mr.

Franke was appointed the Executive Chairman of the Board of Atlantic and entered into a five -year Employment and Board Service Agreement with the Company.

The Employment and Board Service Agreement shall automatically renew for successive two-year periods, unless cancelled by either party upon written notice of at least 90 days prior to the end of the initial five -year term.

The Employment and Board Service Agreement provides for an annual base salary of $ 800,000 (“Base Salary”) for the term, with five ( 5 %) percent automatic annual increases each year.

Commencing in 2027, Mr.

Franke will be eligible to receive his annual Base Salary as a bonus (“Annual Bonus”) for every calendar year his Employment and Board Service Agreement is in effect, contingent upon the Company meeting certain revenue targets.

The Company shall pay a transaction bonus in the amount of USD $ 200,000 for any subsequent completed transaction in excess of $ 8,000,000 gross, in consideration of Mr.

Franke’s assistance in closing each such transaction.

In the event Mr.

Franke’s services are terminated other than for Cause, he shall be entitled to:

two years of Base Salary;

pro-rated Annual Bonus provided he is on pace to achieve the required performance milestone for such bonus;

all Accrued Benefits, and all unvested equity awards shall immediately be vested.

In the event of a Change of Control, other than with Circle8, 100% of Mr.

Franke’s equity and any unvested equity awards shall be immediately due and payable;

performance bonuses (both current and future) shall be immediately due and payable, regardless of whether the milestone has been achieved;

and all of the severance benefits set forth above shall be due and payable.

Notwithstanding the

foregoing, any Contract Benefits to be received upon a Change of Control that would constitute a “parachute payment” shall be reduced to the extent necessary so that no portion shall be subject to Section 4999 of the Internal Revenue Code.

The Employment and Board Service Agreement provides for a non-compete provision of one year from the termination if terminated for Cause, or six months if terminated for any other reason;

and a non-solicitation provision for two years from the termination date if terminated for Cause, and one year for any other reason.

The foregoing description of the Employment and Board Service Agreement is qualified in its entirety by reference to the full text of the agreement, which is attached hereto as exhibit 10.3 and is incorporated by reference herein.

Series B Preferred Stock

On March 20, 2026, the Company closed on a Securities Purchase Agreement with an institutional investor to sell 5,600 shares of Series B 5% Convertible Preferred Stock with a stated value of $ 1,070 per share (total value of $ 5,992,000 ).

Proceeds from the transaction were $ 5,565,000 , net of applicable closing costs.

The 5,600 shares of Preferred Stock were be sold with one (1) Warrant to purchase 5,600 shares of the Company’s Preferred stock at an exercise price of $ 1,000 per share.

Lawsuit against SPP Credit Advisors

On April 2, 2026, Atlantic and its Lyneer subsidiaries, Lyneer Investments, LLC, Lyneer Holdings, Inc.

and Lyneer Staffing Solutions, LLC (collectively the “Lyneer Subsidiaries”) commenced a lawsuit in the Supreme Court of the State of New York, County of New York (Civil Index No.

154264/2026) against SPP.

At the same time Atlantic is seeking a preliminary injunction with an Order to Show Cause and Temporary Restraining Order.

Atlantic is seeking a preliminary injunction enjoining SPP from continuing to proceed as if the outstanding indebtedness owed under the loans at issue had not been satisfied.

Atlantic has alleged in its complaint, that SPP launched a coordinated, pre-planned attack to seize control of the Lyneer subsidiaries based on a fabricated default, set forth in the Default Notices, and in bad faith of its own financial interests.

As part of a refinancing transaction in April 2025, SPP obtained, and was supposed to ultimately sell, over $ 77 million worth of publicly traded shares in Atlantic acquired from non-party IDC.

SPP was required to apply the proceeds to satisfy the outstanding debt owed under the term loan that originated in 2021.

The value of the Nasdaq publicly traded shares significantly exceeded any outstanding indebtedness arguably remaining owing to SPP (less than $ 50 million) and, as such, upon SPP’s receipt of the collateral, the indebtedness was satisfied and extinguished.

SPP acknowledged and understood it took stock worth more than its debt, and agreed to remit the surplus back to IDC.

It should be noted that SPP’s default notices did not demand repayment of the loans, nor include payoff amounts.

Instead, they only reflected a hostile takeover.

Furthermore, as a subordinate mezzanine lender, SPP has no contractual right to receive capital raise proceeds ahead of the senior lenders in line before it.

Lawsuit against Atlantic, et al

Later on April 2, 2026, Rick Arrowsmith, on behalf of SPP, and in response to the above-described lawsuit brought by the Company, commenced a lawsuit in the Court of Chancery of the State of Delaware against the Company and its officers.

Based on the unfounded alleged events of default, the plaintiff, appointed by SPP to take managerial control of the Lyneer subsidiaries.

The plaintiff is seeking declaratory relief that he was able to remove all officers of the Company and is entitled to declaratory, preliminary and permanent injunctive relief to take control of the Company.

SPP Lyneer Term Note Default Notice

On March 30, 2026, SPP notified Atlantic and the Lyneer Subsidiaries that certain events of default have occurred and are continuing under the Amended and Restated Loan Agreement dated as of April 29, 2025 (the "Financing Agreement"), SPP asserted that the events of default relate to our failure to satisfy certain financial and non-financial covenants under the Financing Agreement.

In its notice to Atlantic, SPP confirmed that the Agents (as defined in the Financing Agreement) and SPP have not waived the specified events of default, and that the Agent and SPP reserve all of their rights and remedies under the Financing Agreement, the Loan Documents (as defined in the Financing Agreement), and any applicable law with respect to the specified events of default, including, without limitation:

(i) the right to accelerate the Obligations (as defined in the Financing Agreement);

(ii) the right to exercise the Pledge Agreement associated with the ownership of the Lyneer entities;

(iii) the right to exercise all voting and economic interests in the Lyneer entities;

and (iv) the right to take all actions and exercise all remedies available to the Agents and/or the Lenders under the Loan Documents and applicable law.

Additionally, SPP has attempted to exercise its pledge and has sought to try to replace the management of Lyneer.

Company believes it has meritorious defenses to the claims of SPP and, as described above, has commenced a lawsuit to contest SPP’s actions.

SPP Credit Agreement Default Notice

Simultaneous with the default letter under the Financing Agreement as described above, SPP notified the Company of certain events of default under (a) the Credit Agreement, dated June 18, 2024, and (b) the Pledge and Security Agreement dated as of June 18, 2024.

Similar to the Financing Agreement default notice, SPP has asserted that the events of default also relate to our failure to satisfy certain financial and non-financial covenants under the Credit Agreement.

In its notice to Atlantic, SPP has confirmed that the Agent and SPP have not waived the specified events of default, and that the Agent and SPP reserve all of their rights and remedies under the Credit Agreement, the Loan Documents, and any applicable law with respect to the specified events of default, including, without limitation:

(i) the right to accelerate the Obligations;

(ii) the right to exercise the Pledge Agreement associated with the ownership of the Lyneer Subsidiaries;

(iii) the right to exercise all voting and economic interests in the Lyneer Subsidiaries;

and (iv) the right to take all actions and exercise all remedies available to the Agents and/or the Lenders under the Loan Documents and applicable law.

In addition, SPP has attempted to exercise its pledge and has sought to try to replace the management of Lyneer.

The Company believes it has meritorious defenses to the claims of SPP and, as described above, and has commenced a lawsuit to contest SPP’s actions.

Matthew Evelt Resignation and Termination

On March 30, 2026, Matthew Evelt, the then Company’s Chief Operating Officer, informed the Company that he was resigning his position immediately.

Evelt alleged that his reasons for resigning resulted from the SPP default notices and made specious claims related to differences in strategic direction and purported lack of payment.

The Company disputes these claims.

It was at this time that the Company became aware that Mr.

Evelt had accepted a position with SPP and was actively supporting SPP in its efforts associated with the matters disclosed above.

As a result, the Company provided Mr.

Evelt with a letter dated March 30, 2026, stating that his actions have resulted in a “for Cause” (as defined) termination effective March 30, 2026 and that he was in violation of his agreements with the Company due to his egregious misconduct that is materially injurious to the Company.

The Company is evaluating this matter and intends to pursue all legal and equitable remedies depending on the results of its investigation.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data