CIRCLE8 GROUP INC 10-K

Item 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Atlantic International Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Atlantic International Corp. 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 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ RBSM LLP We have served as the Company’s auditor since 2022. Las Vegas, Nevada April 15, 2026 PCAOB ID Number 587 51 ATLANTIC INTERNATIONAL CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 81,134 $ 678,676 Accounts receivable, net of allowance of $ 3,222,723 and $ 2,726,107 65,750,593 64,074,337 Unbilled accounts receivable 4,242,245 9,368,565 Prepaid income taxes 1,162,127 1,202,405 Prepaid expenses and other current assets 1,961,320 1,696,010 Deposits, current 8,000,000 8,000,000 Total current assets 81,197,419 85,019,993 Non-current assets Property and equipment, net 239,207 307,620 Right-of-use assets 2,933,582 2,067,906 Intangible assets, net 26,602,223 31,395,556 Deposits, long-term 279,769 271,318 Other assets 1,977,636 689,283 Total non-current assets 32,032,417 34,731,683 Total assets $ 113,229,836 $ 119,751,676 Liabilities and stockholders' deficit Current liabilities Accounts payable $ 5,110,155 $ 2,028,100 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 Current operating lease liabilities 1,459,704 1,313,128 Line of credit, current portion 49,308,253 42,508,379 Notes payable, current portion 1,375,000 1,375,000 Notes payable, current portion - related parties 1,950,000 — Other debt, current portion 3,205,506 — Total current liabilities 114,950,734 94,249,157 Non-current liabilities 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 Total non-current liabilities 30,369,372 37,519,175 Total liabilities 145,320,106 131,768,332 Commitments and contingencies 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; 300,000,000 shares authorized; 55,713,259 and 53,130,946 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 557 531 Additional paid-in capital 162,819,982 123,462,703 Accumulated deficit ( 194,910,809 ) ( 135,479,890 ) 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. 52 ATLANTIC INTERNATIONAL CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2025 2024 Service revenue, net $ 435,878,730 $ 442,609,814 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 — 1,213,379 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 ) Net loss $ ( 59,430,919 ) $ ( 135,479,890 ) Net loss per share, basic and diluted $ ( 1.08 ) $ ( 3.68 ) Weighted-average shares outstanding, basic and diluted 54,846,155 36,783,626 The accompanying notes are an integral part of these consolidated financial statements. 53 ATLANTIC INTERNATIONAL CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT Mezzanine Capital Members’ Capital (Deficit) Stockholders’ Deficit Non-Redeemable Interests Common Stock Redeemable Interests Total Mezzanine Capital Contributed Capital Accumulated (Deficit) Total Members’ (Deficit) Shares Amount Additional Paid in Capital Accumulated Deficit Total Stockholders’ Deficit 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 ) Capital contribution - - 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 - - - - - Effect from merger - - ( 23,484,032 ) 61,804,116 38,320,084 - - ( 1,804,116 ) 61,804,116 60,000,000 Stock based compensation - - - - - - - 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 ) Net loss - - - - - - - - ( 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. 54 ATLANTIC INTERNATIONAL CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2025 2024 Net loss $ ( 59,430,919 ) $ ( 135,479,890 ) Adjustments to reconcile net loss to net cash used in/provided by operating activities: Bad debt expense 1,037,806 957,031 Amortization, deferred financing cost 210,495 594,275 Loss on debt extinguishment — 1,213,379 Interest paid in kind — 1,239,373 Deferred income taxes — 5,242,610 Settlement claim to be paid in shares — 11,101,671 Shares issued for services 836,400 43,000,000 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 Changes in operating assets and liabilities: Accounts receivable ( 2,714,062 ) ( 6,212,536 ) Unbilled accounts receivable 5,126,320 ( 3,707,812 ) Prepaid expenses and other current assets ( 265,310 ) ( 1,011,999 ) Prepaid income taxes 40,278 79,520 Deposits ( 8,451 ) 5,049 Other assets ( 1,288,353 ) ( 230,360 ) Accounts payable 3,082,055 1,228,532 Due to related parties ( 2,091,035 ) 1,033,969 Income taxes payable — 13,913 Accrued expenses and other current liabilities 9,987,072 31,685,592 Contingent consideration liability — ( 6,941,521 ) Operating lease liability ( 1,652,646 ) ( 1,665,138 ) Net cash used in operating activities ( 4,396,505 ) ( 5,985,036 ) Cash flows from investing activities Purchase of property and equipment, net ( 66,768 ) ( 73,456 ) Net cash used in investing activities ( 66,768 ) ( 73,456 ) Cash flows from financing activities Borrowings on revolving line of credit 478,368,176 440,079,628 Payments on revolving line of credit ( 471,422,154 ) ( 442,992,103 ) 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 ) Net cash provided by financing activities 3,865,731 5,384,241 Net decrease in cash and cash equivalents ( 597,542 ) ( 674,251 ) Cash and Cash Equivalents – Beginning of period 678,676 1,352,927 Cash and Cash Equivalents – End of period $ 81,134 $ 678,676 Supplemental Disclosures of Cash Flow Information Cash paid during the year for: Interest $ 4,776,722 $ 6,926,853 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 debt issuance costs added to Term Note $ — $ 600,000 Notes payable issued for amounts due under contingent consideration arrangements $ — $ 6,941,521 Deemed capital contribution $ — $ 1,033,969 Change in related parties $ — $ ( 6,338,027 ) Deemed capital contribution from Merger $ — $ 8,617,962 Liabilities assumed in Merger $ — $ 1,703,193 Recapitalization of equity as a result of the Merger $ — $ 73,580,989 The accompanying notes are an integral part of these consolidated financial statements. 55 ATLANTIC INTERNATIONAL CORP AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 1: Organization, Nature of Operations and Basis of Presentation On June 18, 2024 (the “Closing Date”), Atlantic International Corp. (“Atlantic” or the “Company,” formerly known as SeqLL Inc.) completed the acquisition (the “Merger”) of Lyneer Investments LLC and its operating subsidiaries, including Lyneer Staffing Solutions, LLC (collectively, “Lyneer”). See Note 2: Merger and Acquisition for further information. The Company was incorporated in Delaware under the name SeqLL Inc. on April 1, 2014. The Company historically operated as a commercial-stage life science instrumentation and research services company engaged in development of scientific assets and novel intellectual property across multiple “Omics” fields. Pursuant to the terms and Conditions of the Amended and Restated Agreement and Plan of Reorganization dated as of June 4, 2024, as amended (the “Merger Agreement”), all of our current business operations have been sold to SeqLL Omics, a newly formed company owned by our former employees and management, our operating business is now that of Lyneer. 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, 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. Lyneer Holdings, Inc. (“Lyneer Holdings”), a wholly-owned subsidiary of Lyneer Investments, and Lyneer Staffing Solutions, LLC (“LSS”), a wholly-owned subsidiary of Lyneer Holdings, were also incorporated and formed, respectively, in the State of Delaware on January 9, 2018. Lyneer Investments, Lyneer Holdings, and LSS are collectively referred to herein as “Lyneer.” The Company specializes in the placement of temporary and temporary-to-permanent labor across various industries throughout the United States of America (“USA”). The Company primarily places individuals in accounting and finance, administrative and clerical, information technology, legal, light industrial, and medical roles. The Company is also a leading provider of productivity consulting and workforce management solutions. 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 (“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. (“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”). 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 a 10 % equity interest in Lyneer. 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. 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. 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. 56 Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates its estimated assumptions based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and outcomes may differ from management’s estimates and assumptions. Changes in estimates are reflected in reported results in the period in which they become known. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. 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 cash flows. Note 2: 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: (i) fixed the number of shares of SeqLL common stock to be issued, (ii) replaced the Cash Consideration that was to be paid with a short-term promissory note, (iii) deleted the requirements of the closing of the Capital Raise and the listing of SeqLL common stock on a national securities exchange as conditions to the closing of the Merger, and (iv) provided for certain additional issuances of SeqLL common stock to IDC if such common stock is not listed on a national securities exchange on or prior to September 30, 2024. On June 12, 2024, the Amended Merger Agreement was amended (“Amendment 1”) to reflect a per share price change from the previous $ 3.10 to $ 2.36 and to reflect the Merger price determined by the parties at the time of the Merger. On June 18, 2024 (the “Closing Date”), Atlantic International Corp. (“Atlantic” or the “Company,” formerly known as SeqLL Inc.) completed the acquisition (the “Merger”) of Lyneer. Pursuant to the terms of the Merger, the Company changed its corporate name from SeqLL Inc. to Atlantic International Corp. and its trading symbol to ATLN. The consideration for the Acquisition was the issuance to IDC, the then current owner of Lyneer: (a) a convertible promissory note in the principal amount of $ 35,000,000 that was originally due on or before September 30, 2024, which has been extended to March 31, 2027 (see Note 8: Debt for further discussion); and (b) 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. The stockholders of Atlantic Acquisition Corp. were issued an aggregate of 18,220,338 shares of Company’s common stock at a market value of $ 2.36 per share or $ 43,000,000 in the aggregate (the “Atlantic Consideration”). In the event of default, IDC shall be issued $ 10 million of additional shares of Atlantic common stock, valued at the then current price of ATLN common stock. The Company is currently not in default of the convertible promissory note. 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 57 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. See Note 9: Accrued Expenses and Other Current Liabilities for further discussion. • 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. See Note 21: Subsequent Events for further information. Determination of Accounting Acquirer The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although SeqLL acquired all of the outstanding equity interests of Lyneer in the Merger, we will be treated as the “acquiree” and Lyneer will be treated as the “acquirer” for financial reporting purposes. Accordingly, the Merger is reflected as the equivalent of Lyneer issuing shares for SeqLL’s net assets, followed by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Merger will be those of Lyneer. 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, 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. We considered the following factors in completing the accounting analysis, with greater weight being given to (a), (d) and (e): a) Lyneer is the largest entity, in terms of substantive operations; b) Subsequent to SeqLL’s sale of assets to SeqLL Omics, SeqLL had no or nominal assets and no or nominal operations, and did not meet the definition of a business; c) Atlantic Merger LLC has no operations and does not meet the definition of a business; d) Lyneer will comprise the ongoing operations of the combined entity as the only company with historical operations; e) All of the Lyneer employees will continue with the combined entity; f) No affiliate entities or individual stockholders of Lyneer, Atlantic or SeqLL will have voting control on our board of directors following the Merger; and 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 58 Corp. (“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. Note 3: Summary of Significant Accounting Policies Cash and Cash Equivalents Cash includes funds deposited in banks. The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Accounts Receivable Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment upon receipt of invoice. The Company extends credit to customers with normal payment terms of 30 days; however the Company may extend to 150 days from the invoice date. Customer account balances which have not been timely paid according to the customer-specific payment terms are considered delinquent. Accounts receivable are stated at the amount billed to the customer. Upon determination by management, accounts receivable balances are placed into legal, collect and bankruptcy classification, usually on balances over ninety days past the due date. Payments of accounts receivable are allocated to the invoices specified on the customer’s remittance advice or, if unspecified, are applied as payments on account until the specific invoices paid are determined. Contracts with certain customers allow the Company to charge interest at a rate of 1.5 % per month once invoices are considered delinquent, which varies based on the terms of the contracts. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management assesses the valuation allowance in accordance with ASU 2016-13, Financial Instruments — Credit Losses , estimating for all credit losses inherent in the receivable portfolio, not just on receivables that are showing signs of impairment. Management individually reviews all past due accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Management performs a comprehensive analysis of its entire accounts receivable portfolio and identifies potentially impaired receivables in each aging bucket. Additionally, management calculates and applies a loss rate to each aging bucket in its receivable portfolio to reserve for all expected credit losses on accounts receivable. Unbilled Accounts Receivable Unbilled receivables represent revenue recognized for temporary placement services related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Management believes that unbilled receivables are similar in risk profile to the “current” receivable aging bucket and applied the same loss rate as accounts receivable on all outstanding unbilled receivables. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation of property and equipment is computed principally using the straight-line method over the lesser of the estimated useful lives or, in the case of leasehold improvements over the shorter of the useful life of the asset or the remaining term of the lease. 59 Major improvements are capitalized, while replacements, maintenance and repairs that do not extend the lives of the assets are charged directly to expense as incurred. Upon the disposition of property and equipment, the cost of the asset and the associated accumulated depreciation are eliminated from the related accounts and any resulting gain or loss is recognized as a component of income or loss. Joint and Several Liability Arrangements In connection with the Transaction, the Company has entered into several debt facilities under which it is jointly and severally liable for repayment with its parent IDC. The Company measures obligations resulting from joint and several liability arrangements in accordance with ASC 405-40 — Obligations Resulting from Joint and Several Liability Arrangements (“ASC 405-40”). ASC 405-40 requires that when determining the amount of liability to recognize under a joint and several obligation, a reporting entity which is an obligor under a joint and several liability arrangement first look to the terms of a related agreement with its co-obligors and record an amount equal to what it is obligated to pay under that agreement, plus any amount it expects to pay on behalf of the co-obligors. If no agreement with the co-obligors exists a reporting entity should recognize the full amount that it could be required to pay under the joint and several liability obligation. 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 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). The Company records associated interest expense and associated debt issuance costs for all amounts that it has recognized in its financial statements under joint and several liability obligations. Amounts recognized in the Company’s financial statements represents its portion of amounts Lyneer expects to repay under its respective joint and several liability agreements as of December 31, 2025 and December 31, 2024, respectively. As of the date of the Merger, the Company deconsolidated its joint and several debt obligations as it believes it is reasonably probable that IDC has the ability to repay their portion. See Note 8: Debt for more information. Segments 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. The Company’s Chief Executive Officer (“CEO”) is the CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has one operating segment, which is the business of providing commercial staffing solutions. Redeemable Units Certain outstanding ownership interests of the Company were redeemable upon certain defined events that were determined to be outside of the Company’s control during the period ended December 31, 2022. Accordingly, these ownership interests were initially recorded in mezzanine capital and subject to subsequent measurement under the guidance provided under ASC Topic 480 — Distinguishing Liabilities from Equity (“ASC 480”). Pursuant to ASC 480, contingently redeemable equity instruments that are not redeemable as of the balance sheet date but probable of becoming redeemable in the future, should be accreted to their redemption value either immediately or ratably. The Company performs an assessment as to whether an outstanding contingently redeemable instrument is probable of becoming redeemable in the future at each reporting date. The Company has elected to recognize changes in redemption value immediately upon the determination that an outstanding instrument is probable of becoming redeemable in the future. Increases in the redemption value of contingently redeemable units are recorded as an increase in mezzanine capital and a reduction of members’ capital. These units were exercised on February 28, 2024 and were reclassed to permanent equity. Intangible Assets The Company’s identifiable intangible assets as of December 31, 2025 and 2024 consist of the Company’s customer relationships and tradenames and were initially recognized as a result of the Transaction. The Company’s intangible assets are amortized using the straight-line method over their estimated useful lives. 60 Impairment of Long-Lived Assets 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. Leases The Company is a lessee under various noncancellable operating leases. The Company accounts for leases in accordance with ASC Topic 842 — Leases (“ASC 842”). The Company determines if an arrangement is or contains a lease at contract inception. If a contract is or contains a lease, the Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term, and (3) lease payments. • ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. • The lease term for all the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. • Lease payments included in the measurement of the lease liability are fixed payments, including in-substance fixed payments, owed over the lease term. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the ROU asset is reduced to zero and the remainder of the adjustment is recorded in profit or loss. Deferred Financing Costs Costs that are incremental and direct to obtaining debt financing are capitalized and amortized as a component of “interest expense” on the accompanying consolidated statements of operation, over the term of the related debt based on the effective interest method. Unamortized deferred financing fees are presented as a contra-liability with respect to the associated outstanding debt on the Company’s consolidated balance sheets. 61 Revenue Recognition Service Revenues The Company derives its revenues from two service lines: temporary placement services and permanent placement and other services. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606 — Revenue from Contracts with Customers (“ASC 606”), the Company performs the following five steps: (i) it identifies the contract with a customer; (ii) it identifies the performance obligations in the contract; (iii) it determines the transaction price; (iv) it allocates the transaction price to the performance obligations in the contract; and (v) it recognizes revenue when (or as) the Company satisfies a performance obligation. Temporary Placement Services Revenue Temporary placement services revenue from contracts with customers are recognized in the amount which the Company has a right to invoice when the services are rendered by the Company’s engagement professionals. The Company invoices its customers for temporary placement services concurrently with each periodic payroll which coincides with the services provided. Revenues that have been recognized but not invoiced for temporary staffing customers are included in “unbilled accounts receivable” on the Company’s consolidated balance sheets and represent a contract asset under ASC 606. Most engagement professionals placed on assignment by the Company are employed by a third-party professional employer organization (“PEO”) while they are working on assignments. The PEO pays all related costs of employment, including workers’ compensation insurance, state and federal unemployment taxes, social security, and certain fringe benefits which is invoiced back to the Company on a weekly basis. The Company assumes the risk of acceptability of its employees to its customers. The Company records temporary placement services revenue on a gross basis as a principal, rather than on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified employees, (ii) has the discretion to select the employees and establish their price and duties, and (iii) bears the risk for services that are not fully paid for by customers. Permanent Placement and Other Services Revenue Permanent placement and other services revenue from contracts with customers are primarily recognized when employment candidates accept offers of permanent employment and begin work for the Company’s clients. Certain of the Company’s permanent placement contracts contain a thirty-day guarantee period. The Company has a substantial history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the thirty-day guarantee period. If a candidate voluntarily leaves or is terminated for cause prior to the completion of thirty days of employment, the Company will provide a replacement candidate at no additional cost to the customer, as long as the placement fee is paid within thirty days of the candidate’s start date. When required to provide a replacement candidate, the Company defers the recognition of revenue until a replacement candidate is found and hired, and any associated fees collected from the customer is recorded as a contract liability. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement talent solutions services are charged to employment candidates, regardless of whether the candidate is placed. Contract liabilities are recorded when cash payments are received or due in advance of performance and are reflected in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets. Cost of Revenue Direct costs of temporary placement services consist of payroll, payroll taxes, and benefit costs for the Company’s engagement professionals. There are no material direct costs of permanent placement and other services. 62 Advertising Expense The Company expenses advertising costs as incurred. For the years ended December 31, 2025 and December 31, 2024, the Company recorded advertising expense of $ 674,958 and $ 968,077 , respectively. Advertising expense is included in “selling, general and administrative” on the accompanying consolidated statements of operations. Stock-based Compensation The Company has a stock-based compensation plan, which is described more fully in Note 18: Stock-Based Compensation . 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. Income Taxes 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. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company assesses, on a quarterly basis, the likelihood that deferred tax assets will be realized in accordance with the provisions of ASC Topic 740 — Income Taxes (“ASC 740”). ASC 740 requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. The assessment considers all available positive or negative evidence, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. The Company recognizes uncertain tax positions that it has taken or expects to take on a tax return. Management makes a determination as to whether it is more likely than not that an income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the Company were to incur an income tax liability from an uncertain tax position in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof as well as other factors. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has applied the framework for measuring fair value which requires a fair value hierarchy to be applied to all fair value measurements. All financial instruments recognized at fair value are classified into one of three levels in the fair value hierarchy as follows: Level 1 - Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 - Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means. Level 3 - Valuation techniques with significant unobservable market inputs. The Company measures certain non-financial assets and liabilities, including long-lived assets and intangible assets, at fair value on a nonrecurring basis. The fair value of contingent consideration is classified within Level 3 of the fair value hierarchy. 63 Loss Contingencies From time to time, the Company may become involved in various claims, disputes and legal or regulatory proceedings that arise in the ordinary course of business. The Company assesses its potential contingent and other liabilities by analyzing its claims, disputes and legal and regulatory matters using all available information and developing its views on estimated losses in consultation with its legal and other advisors. The Company determines whether a loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. If the contingency is not probable or cannot be reasonably estimated, disclosure of the contingency shall be made when there is at least a reasonable possibility that a loss may be incurred. Legal fees incurred by the Company related to contingent liabilities are expensed as incurred. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potentially dilutive securities if their effect is antidilutive. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury stock and if-converted methods. 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 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 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 2023-09 have a material effect on its consolidated financial statements. Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 — Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”) to improve the disclosures about an entity’s expenses and provide more detailed information about the types of expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026. Early adoption is permitted. The Company plans to adopt ASU 2024-03 for the reporting period December 31, 2026. 64 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. Early adoption is permitted. 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. Note 4: Revenue Recognition and Accounts Receivable The Company’s disaggregated revenues are as follows: Year Ended December 31, 2025 2024 Temporary placement services $ 431,401,261 $ 438,820,825 Permanent placement and other services 4,477,469 3,788,989 Total service revenues, net $ 435,878,730 $ 442,609,814 When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. 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 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. Economic factors specific to this customer could impact the nature, timing and uncertainty of the Company’s revenues and cash flows. Contract assets consists of unbilled accounts receivable of $ 4,242,245 and $ 9,368,565 as of December 31, 2025 and December 31, 2024, respectively. Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment upon receipt of invoice. Accounts receivable is as follows: December 31, 2025 December 31, 2024 Accounts receivable $ 68,973,316 $ 66,800,444 Allowance for doubtful accounts ( 3,222,723 ) ( 2,726,107 ) Accounts receivable, net $ 65,750,593 $ 64,074,337 The Company’s accounts receivable serves as collateral for the current Revolver and the Term Note has a second lien after the Revolver. 65 The Company recognized $ 1,037,806 and $ 957,031 of bad debt expense during the years ended December 31, 2025 and 2024, respectively. None of the Company’s customers accounted for more than 10% of the Company’s accounts receivable as of December 31, 2025 and December 31, 2024. Note 5: Property and Equipment Property and equipment consisted of the following: December 31, 2025 December 31, 2024 Estimated Useful Life Computer equipment and software $ 870,685 $ 803,917 3 years Office equipment 94,876 94,876 5 years Furniture and fixtures 169,258 169,258 7 years Leasehold improvements 18,420 18,420 Lesser of lease term or asset life Total $ 1,153,239 $ 1,086,471 Less: accumulated depreciation and amortization ( 914,032 ) ( 778,851 ) Property and equipment, net $ 239,207 $ 307,620 Total depreciation expense of $ 135,181 and $ 198,531 was recorded during the years ended December 31, 2025 and 2024, respectively and is included in “depreciation and amortization” in the accompanying consolidated statements of operations. The carrying value of the Company’s property and equipment serving as collateral for the Company’s outstanding indebtedness amounted to $ 239,207 and $ 305,922 as of December 31, 2025 and 2024, respectively. Note 6: Intangible Assets Intangible assets consisted of the following: December 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer Relationships $ 35,000,000 $ ( 10,117,777 ) $ 24,882,223 $ 35,000,000 $ ( 7,784,444 ) $ 27,215,556 Trade Name 12,400,000 ( 10,680,000 ) 1,720,000 12,400,000 ( 8,220,000 ) 4,180,000 Total intangible assets $ 47,400,000 $ ( 20,797,777 ) $ 26,602,223 $ 47,400,000 $ ( 16,004,444 ) $ 31,395,556 Total amortization expense of $ 4,793,333 was recorded during both the years ended December 31, 2025 and 2024. Amortization expense related to intangible assets is included in “depreciation and amortization” on the accompanying consolidated statements of operations. As of December 31, 2025 scheduled future amortization of the Company’s intangible assets is as follows for each of the next five years and thereafter: 2026 $ 4,053,333 2027 2,333,334 2028 2,333,333 2029 2,333,333 2030 2,333,334 Thereafter 13,215,556 Total $ 26,602,223 66 The Company continuously monitors for events and circumstances that could indicate that it is more likely than not that its finite lived intangible assets and other long-lived assets are impaired or not recoverable (a triggering event). During the year ended December 31, 2025, the Company considered a number of factors including, but not limited to, current macroeconomic conditions such as inflation, economic growth, and interest rate movements, industry and market considerations, and overall financial performance of the Company. Based on the analysis of relevant events and circumstances, the Company concluded a triggering event had not occurred as of December 31, 2025. Note 7: Leases We determine whether an arrangement is a lease at inception and whether such leases are operating or financing leases. The Company does not have any material leases, individually or in the aggregate, classified as finance leases. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. We use these options in determining our capitalized financing and right-of-use assets and lease liabilities. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. To determine the discount rate to use in determining the present value of the lease payments, we use the rate implicit in the lease if determinable, otherwise we use our incremental borrowing rate. The Company maintains operating leases for corporate and field offices. The Company’s leases have initial terms ranging from one month to three years , some of which include the option to renew, and some of which include an early termination option. During the year ended December 31, 2025, the Company extended certain of its leases for periods ranging from one to five years . Variable Lease Costs Certain of the Company’s leases require payments for taxes, insurance, and other costs applicable to the property, in addition to the minimum lease payments. These costs are considered variable costs which are based on actual expenses incurred by the lessor. Therefore, these amounts are not included in the calculation of the right-of-use assets and lease liabilities. The Company has lease agreements which provide for fixed and scheduled escalations, which are included in the calculation of the right-of-use assets and lease liabilities. The Company does not generally enter into lease agreements with increases in the base rent amount based on changes to the consumer price index. Further, the Company has several locations in which its lease tenancy is month-to-month. For purposes of the Company’s lease liability calculations, the Company has estimated the length of time that it is reasonably certain to occupy the space. There is inherent variability risk due to these month-to-month tenancies. Options to Extend or Terminate Leases Many of the Company’s leases contain options to extend the lease term. The leases generally contain a single option of one-year to three-year renewal terms. The exercise of lease renewal options is at the Company’s sole discretion. If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the Company’s right-of-use assets and lease liabilities. The Company’s leases do not generally contain options to early terminate; however, leases with month-to-month tenancy can be terminated at any time. Discount Rate and Lease Term The following table summarizes the weighted average remaining lease term and discount rate for operating leases as of December 31, 2025 and December 31, 2024: December 31, 2025 December 31, 2024 Weighted average remaining lease term for operating leases 2.31 years 2.07 years Weighted average discount rate for operating leases 6.15 % 6.29 % 67 Lease Costs and Activity The Company’s lease costs and activity are as follows: Year Ended December 31, Operating Lease Cost 2025 2024 Fixed lease costs to non-related parties $ 1,695,195 $ 1,723,037 Variable lease costs to non-related parties 238,593 224,041 Total lease cost $ 1,933,788 $ 1,947,078 Year Ended December 31, Supplemental Cash Flow Disclosures 2025 2024 Cash paid to non-related parties for the amounts included in the measurement of operating lease liabilities $ 1,685,281 $ 1,703,706 Right-of-use assets obtained in exchange of new operating lease liabilities $ 456,396 $ 429,121 Maturity of Lease Liabilities The following table summarizes the future minimum payments for operating leases as of December 31, 2025, due in each year ending December 31: Year Minimum Lease Payments 2026 $ 1,589,387 2027 1,144,197 2028 312,307 2029 117,217 2030 38,499 Thereafter 6,448 Total lease payments $ 3,208,055 Less: imputed interest ( 205,260 ) Present value of operating lease liabilities $ 3,002,795 Note 8: Debt 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. See below for further discussion. 68 The table below provides a breakdown of the Company’s recognized debt: December 31, 2025 December 31, 2024 Revolver $ 49,454,401 $ 42,508,379 Credit Agreement 1,950,000 1,950,000 Promissory Note 1,375,000 1,375,000 Merger Note 28,943,615 35,000,000 Other debt 3,266,445 — Less: unamortized debt issuance costs ( 324,421 ) ( 244,565 ) Total debt $ 84,665,040 $ 80,588,814 Current portion $ 55,838,759 $ 43,883,379 Non-current portion $ 28,826,281 $ 36,705,435 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 . Revolver 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. All the Company’s cash collections and disbursements are currently linked with bank accounts associated with the Lender and funded using the Revolver. 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. 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. 69 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 • Base Rate FILO Loans • Swing-Line Loans 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, 2025 2024 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 . Term Note On August 31, 2021, the Company and IDC as co-borrowers entered into a Term Note in the amount of $ 30,300,000 . The proceeds of this loan were primarily used to finance the acquisition of Lyneer by IDC in August 2021. The Term Note matures on February 28, 2026, at which time all outstanding balances are due and payable. There are no scheduled principal payments on the Term Note prior to its maturity date. The Term Note is subordinated to the Revolver and bears an initial stated rate of 14 % per annum. 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 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 70 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. See Note 21: Subsequent Events for further discussion related to the SPP Term Note purported default. Seller Notes 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. 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 As contingent consideration milestones are met in connection with the Transaction Agreement, the Company can elect to pay the obligation in cash or issue notes payable. During 2023, the Company and IDC as co-borrowers issued nine notes payable with an aggregate value of $ 13,494,133 . Payments on each of the Earnout Notes are due in quarterly installments through their amended maturity date of January 31, 2025, and each note bears an amended stated interest rate of 11.25 % per annum. On January 16, 2024, the Company and IDC as co-borrowers issued six notes payable with an aggregate value of $ 6,941,521 . Payments on each of the Earnout Notes are due in quarterly installments through their maturity date of January 16, 2026, and each note bears interest at a rate of 6.25 % per annum. 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. 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 The Company did not make the Seller Note and Earnout Note principal and interest payments due during 2024 or the nine months ended September 30, 2024. On May 14, 2023, the Company signed an amendment (the “Omnibus Amendment”) to defer the missed Seller Note and Earnout Note payments through the amendment date until their amended maturity dates of April 30, 2024, and January 31, 2025, respectively. 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 71 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. 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. On January 16, 2024, the Company signed the Second Omnibus agreement to defer the missed July 31, 2023 and October 31, 2023, principal and interest payments until February 28, 2024, in addition to the payment of $ 1,575,000 , along with accrued interest, scheduled for payment on January 31, 2024, which shall now be due and payable on February 28, 2024. The Company missed the payment due on February 28, 2024. Credit Agreement On June 18, 2024, the Company entered into a secured bridge loan (“Credit Agreement”) in the principal amount of $ 1,950,000 at an interest rate of 5 % per annum. The maturity date of the Credit Agreement was originally September 30, 2024. 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. Promissory Note 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 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. See Note 21: Subsequent Events for further information. Merger Note 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. The Merger Note does not bear interest and is not convertible prior to an event of default under the Merger Note. If an event of default should occur under the Merger Note, the Merger Note will bear interest at the rate of 7 % per annum commencing upon the date of such event of default and will be convertible into shares of our common stock at a price per share that equals the lowest daily volume weighted average price per share (VWAP) during the five trading days immediately preceding the date on which the applicable conversion notice is delivered to us, but not less than 80 % of the price per share in our Initial Capital Raise, provided, however, that the number of shares of our common stock issuable upon conversion of the Merger Note will not exceed 19.99 % of the number of our outstanding shares of common stock without shareholder approval. An event of default under the Merger Note may result in an additional event of default under the Revolver and our other indebtedness for borrowed funds. On September 12, 2024 the Company entered into Amendment No 1 to the Convertible Promissory Note (“Amendment 1 to the Merger Note”) which extended the maturity date to the earlier of March 31, 2026 or the completion of at least a $ 40 million capital raise. 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. 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. See Note 17: 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 72 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: As of December 31, 2025 2026 $ 6,591,445 2027 28,943,615 2028 49,454,401 2029 — 2030 — Thereafter — Total $ 84,989,461 Interest Expense 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. 73 Note 9: Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: December 31, 2025 December 31, 2024 Potential settlement offer for legacy stockholders $ 8,723,200 $ 11,101,671 Accrued wages and salaries 1,839,016 2,463,693 Accrued commissions and bonuses 2,166,004 3,515,821 Accrued interest 767,717 683,046 Income tax payable 13,913 13,913 Accrued other expenses and current liabilities 6,137,935 3,834,109 Total accrued expenses and other current liabilities $ 19,647,785 $ 21,612,253 Legacy Stockholder Dividend Settlements 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: • $ 25,000 cash payment as an initial payment under the Consulting Agreement • Consulting fees will be paid at the sum of $ 7,500 per month, paid quarterly • 757,833 shares will be issued as additional consideration for up to 10 hours of services a week. Any weekly hours in excess of those hours will be billed at a negotiated rate • 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 On December 5, 2024, the Company and its legal counsel entered into an exchange agreement whereby the Company shall issue to legal counsel 20,000 restricted shares of common stock in satisfaction of $ 101,400 of accounts payable to legal counsel at the closing price of $ 5.07 per share. These shares were transferred to legal counsel on February 12, 2025. Note 10: Retirement Plan The Company maintains a 401(k) plan for qualified employees. 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 74 match employee contributions to the plan. The Company did not contribute to the plan during the years ended December 31, 2025 and 2024. Note 11: Commitments and Contingencies Litigation The Company is subject to lawsuits and other claims arising in the ordinary course of business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new developments in a particular matter or changes in approach, such as a change in settlement strategy in dealing with these matters. With respect to material matters for which the Company believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and an estimate of potential exposure. The Company believes that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s results of operations, financial position or cash flows, although such litigation is subject to certain inherent uncertainties. On February 2, 2018, Michael Smith on his own behalf and on behalf of a putative class of allegedly similarly situated individuals, filed a complaint against various defendants in the Superior Court of California, Los Angeles County, that was subsequently amended to add Lyneer as a defendant on April 28, 2022. The complaint alleges wage and hour claims, and inaccurate wage statement claims on behalf of the class and plaintiff. 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. The case is now closed as to all parties. As a result of the matter, Lyneer’s client sought indemnification from Lyneer pursuant to an indemnification demand issued to Lyneer on June 10, 2022. 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. The Complaint was filed only against the Company’s client. 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. 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. On June 16, 2021, a complaint was filed in the Superior Court of New Jersey Law Division, Middlesex County. The complaint alleges a former minor employee (who obtained employment by providing false information) was injured on October 15, 2020, at the Co-Defendant’s worksite. 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 April 14, 2025, but was unsuccessful. 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. 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 75 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 Upon the closing of the Merger, Jeffrey Jagid entered into an employment agreement with our Company as Chief Executive Officer. 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. 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. Mr. 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. Mr. 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. Mr. 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. If we terminate the employment agreement for any reason other than Cause (as defined), all of Mr. Jagid’s then-outstanding restricted stock, restricted stock units and warrants will immediately vest, and Mr. Jagid 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. Jagid, 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. If Mr. Jagid 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. Jagid’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. Mr. Jagid 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 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 his employment. 76 Employment Agreement with Kevin J. Murphy Effective February 2, 2026, Mr. Murphy entered into an employment agreement with our Company as Chief Financial Officer. See Note 21: Subsequent Events for further discussion. Employment Agreement with Michael Tenore Upon the closing of the Merger, Michael Tenore entered into an employment agreement with our company as General Counsel and Secretary. 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. Mr. Tenore’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 April 1, 2023, with Atlantic and $ 300,000 per annum. Mr. Tenore is entitled to receive an annual bonus of $ 100,000 for every year commencing in 2024. The bonus is predicated upon our receiving a minimum of $ 250,000,000 in revenues and adjusted EBITDA of $ 5,000,000 . Mr. Tenore will also be paid a $ 75,000 transaction bonus as a result of the closing of the Merger, and he will be paid additional transaction bonuses in the amount of $ 150,000 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 our board of directors. If we terminate the employment agreement for any reason other than Cause (as defined), all of Mr. Tenore’s then-outstanding restricted stock, restricted stock units and warrants will immediately vest, and Mr. Tenore 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. Tenore, 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. If Mr. Tenore 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. Tenore’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. Mr. Tenore will be subject to a one-year non-compete covenant from termination of his employment anywhere in the United States if his termination is for Cause, and six months if 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 terminated for any other reason. He also will be covered under our directors and officers’ liability insurance for up to one year from termination of employment. Employment Agreement with Todd McNulty On June 18, 2024, Lyneer entered into a new employment agreement, with Todd McNulty to be its Chief Executive Officer. The employment agreement is for three years with successive one-year extensions unless terminated by either party upon 90 days’ prior written notice. Mr. McNulty’s current base salary is $ 750,000 per annum. Mr. McNulty is entitled to receive: (a) a transaction bonus of $ 100,000 ; (b) accrued compensation of $ 300,000 on or before June 28, 2024; (c) a 2025 Special Bonus of $ 1,375,000 on or before September 18, 2024; (d) an additional cash bonus of $ 1,375,000 on or before December 18, 2024; (e) beginning in 2025 and each fiscal year thereafter an annual bonus increasing from $ 100,000 to $ 300,000 on total revenues increasing from $ 350 million to $ 390 million, and (f) restricted stock units equal to 1 % of the Company’s issued and outstanding shares of common stock. He is also eligible for an annual discretionary bonus to be set by the compensation committee of our board of directors. In case of termination without Cause (as defined), or termination by Mr. McNulty with Good Reason (as defined), or termination upon expiration date with notice of termination/non-renewal by Lyneer, unless Lyneer provides notice of termination prior to the expiration of the Agreement in which case Mr. McNulty shall receive the severance amount. Mr. 77 McNulty will be entitled to severance defined as: (i) in the event of a termination date on or prior to the second anniversary date of the Merger, an amount equal to 1.5 times his annual base salary as in effect immediately prior to the termination date, and continuation of medical insurance benefits, as provided on the termination date until the end of the applicable severance term (as defined, or, at the sole discretion of Lyneer, reimburse Mr. McNulty for COBRA insurance; (ii) in the event of a termination date after the second anniversary of the Merger, an amount equal to one time his annual base salary as in effect immediately prior to the termination date, and continuation of medical insurance benefits or COBRA insurance until the end of the applicable severance term; or (iii) in the case of non-renewal of the employment agreement by Lyneer after the initial term or any renewal term and the subsequent termination of employment within three months following such non-renewal of the employment agreement by Lyneer, an amount equal to six months of his annual base salary as in effect immediately prior to the termination date, and continuation of medical insurance benefits or COBRA insurance. In case of termination by Lyneer with Cause or by Mr. McNulty without Good Reason, Mr. McNulty will only be entitled to accrued obligations consisting of accrued but unpaid base salary; unreimbursed expenses; accrued but unpaid benefits; and any unpaid bonus for any then completed fiscal year. Mr. McNulty is subject to one-year non-compete and non-solicitation covenants from termination of his employment. Employment Agreement with James Radvany On June 18, 2024, Lyneer entered into a new employment agreement with James Radvany to continue as its Chief Financial Officer. The employment agreement has a term of three years with successive one-year extensions unless terminated by either party upon 90 days’ prior written notice. Mr. Radvany’s base salary is $ 500,000 per annum. Mr. Radvany is entitled to the same transactions bonus, accrued compensation, 2025 Special Bonuses, annual bonuses starting in 2025, discretionary bonuses and 1 % restricted stock units as Mr. McNulty is entitled to. Mr. Radvany’s employment agreement provides for the same severance provisions, non-competition and non-solicitation covenants as those in Mr. Radvany’s employment agreement discussed above. In case of termination by Lyneer with Cause or by Mr. Radvany without Good Reason, Mr. Radvany will only be entitled to accrued obligations consisting of accrued but unpaid base salary; unreimbursed expenses; accrued but unpaid benefits; and any unpaid bonus for any then completed fiscal year. Note 12: Fair Value Measurements Financial Instruments not Carried at Fair Value The Carrying values of the Company’s cash and cash equivalents approximated their fair values due to their short-term maturities. 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, 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: December 31, 2025 December 31, 2024 Carrying Value Fair Value Carrying Value Fair Value Variable Rate Debt $ 49,454,401 $ 49,454,401 $ 42,508,379 $ 42,508,379 Fixed Rate Debt $ 41,600,000 $ 41,800,000 $ 38,325,000 $ 38,400,000 Note 13: Segment Reporting 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 78 employees at its customers. Revenues are accounted for and tracked by each branch location by temporary or permanent placement. The direct costs are not reported by temporary or permanent placement, but rather reported together. Direct costs, primarily payroll and payroll related costs are included in cost of revenue which is deducted from revenues to determine gross profit. Each branch’s operating expenses, which, similar to direct costs, are not separated into temporary or permanent placement costs are then deducted from gross profit. So ultimately the segment manager does not review discrete financial information summarized by temporary or permanent placement, but rather total by operating branch. Therefore, the Company has one reportable segment, which is the business of providing commercial staffing solutions. The accounting policies of the commercial staffing solutions segment are the same as those described in Note 3: 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 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 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 — 1,213,379 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 ) Net loss $ ( 59,430,919 ) $ ( 135,479,890 ) Note 14: Concentrations of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash in Excess of FDIC Insured Limits The Company places its cash and cash equivalents with financial institutions which it believes are of high creditworthiness and where deposits are insured by the United States Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 . The Company’s cash balances in excess of FDIC insured limits amounted to $ 0 and $ 424,188 as of December 31, 2025 and December 31, 2024, respectively. 79 The Company has not experienced any losses with regard to its bank accounts and believes it does not pose a significant credit risk to the Company. Other Concentrations As of December 31, 2025 and December 31, 2024, the Company has a deposit in the amount of $ 8,000,000 with a professional employer organization (“PEO”). The PEO is the employer of record for substantially all of the Company’s engagement professionals, and as such certain costs of revenue are paid to the PEO and subsequently distributed to Company engagement professionals. Note 15: Members’ Capital and Mezzanine Capital 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. These units were exercised on February 28, 2024 and as of March 31, 2024 were reclassified to permanent equity. See below for further detail. Accordingly, these ownership interests were recorded in mezzanine capital, and subject to subsequent measurement under the guidance provided under ASC Topic 480 — Distinguishing Liabilities from Equity (“ASC 480”). Pursuant to ASC 480, contingently redeemable equity instruments that are not redeemable as of the balance sheet date but probable of becoming redeemable in the future should be accreted to their redemption value either immediately or ratably; the Company has elected to recognize changes in redemption value immediately upon the determination that an outstanding instrument is probable of becoming redeemable in the future. Net income and losses are allocated to Members’ capital accounts in accordance with the terms of the Operating Agreement which generally provides that these items are allocated in proportion to each Member’s percentage ownership interest in the Company. Distributions to the Members are made at the discretion of the Board of Managers and in accordance with the terms of the Operating Agreement. The LMH Put is payable by IDC and will be paid by the issuance of the Put-Call Notes. The Put-Call period was extended until February 29, 2024. 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. 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. The Put-Call Option Note provides for the acceleration of payment principal under certain conditions, including upon a change of control, as defined. The Put-Call Option Note bears interest at a stated annual interest rate of 5.25 % which is payable quarterly in arrears commencing December 31, 2024. IDC may prepay the Put-Call Option Note at any time without premium or penalty. The Put-Call Option Note contains customary covenants. 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. Note 16: 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. 80 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”). Fair Market Value generally with respect to the Put-Call Purchase Price is the amount determined between LMH and IDC in good faith to be the market value of the LMH Units, unless IDC and LMH are unable to agree on this value, in which case pursuant to the August 31, 2021 Operating Agreement, the amount will be determined by an independent appraiser. Upon exercise of the IDC Call or the LMH Put, IDC is required to issue to LMH an unsecured subordinated promissory note in the amount of the Put-Call Purchase Price pursuant to the terms prescribed by August 31, 2021 Operating Agreement (the “Put-Call Note”). The Put-Call Note entitles the holder to payment of 50 % of outstanding principal six months after issuance with the remaining 50 % payable in six equal quarterly payments beginning on the last date of each successive calendar quarter following the initial 50 % payment, with the last payment of principal due and payable on the Put-Call Note’s maturity date unless the payment of the Put-Call Note is otherwise accelerated pursuant to its terms. The Put-Call Note provides for the acceleration of payment principal under certain conditions, including upon a change of control, as defined. The August 31, 2021 Operating Agreement provides that the Put-Call Note, if issued, will bear interest at a stated annual interest rate of 5.25 % which is payable quarterly in arrears. Redemption Requirements LMH may put the LMH Units to IDC upon the occurrence of a Triggering Event or during the Put-Call Period. If redeemed, the redemption amount is the greater of the Fair Market Value of the LMH Units or $ 9,500,000 plus an additional amount calculated at a rate of 5.25 % per annum from August 31, 2021 through the date of the redemption request. The Put-Call Purchase Price is payable by IDC and will be paid by the issuance of the Put-Call Notes. The Put-Call period was extended until February 29, 2024. On February 28, 2024, LMH exercised its right to put the LMH Units to IDC. Note 17: Related Party Transactions Transactions with Lyneer Management Holdings LMH was a non-controlling member of the Company with a 10 % ownership interest at December 31, 2023. 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 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. 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 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 81 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 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. 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. See Note 8: 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. See Note 8: 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. See Note 8: Debt for further information. 82 Note 18: Stock-Based Compensation Upon the consummation of the Merger, the 2023 Equity Incentive Plan (the “2023 Incentive Plan”) became effective. 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. 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 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 . The following table summarizes the Company’s restricted stock activity consisting of RSUs: Non-vested Shares Outstanding Weighted Average Grant Date Fair Value per Share Outstanding at December 31, 2024 241,932 $ 2.36 Granted 8,331,295 $ 4.64 Vested ( 1,241,932 ) $ 2.17 Forfeited ( 577,171 ) $ 5.85 Unvested at December 31, 2025 6,754,124 $ 4.91 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. The vesting date fair value of RSUs that vested in 2025 and 2024 was $ 2.17 and $ 4.54 , respectively. 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 83 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: Year Ended 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 Average 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: Year Ended December 31, 2025 2024 Stock-based compensation expense $ 36,142,434 $ 45,202,329 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. 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 . 84 Note 19: Income Taxes 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 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 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, 2025 2024 United States $ ( 59,396,928 ) $ ( 130,100,788 ) Foreign — — $ ( 59,396,928 ) $ ( 130,100,788 ) The income tax expense consists of the following expenses: Year Ended December 31, 2025 2024 Current Federal $ — $ 34,523 State 33,991 104,573 Deferred Federal — 3,649,803 State — 1,590,203 Income tax expense $ 33,991 $ 5,379,102 85 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, 2025 Amount Percent U.S. 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, 2024 Amount Percent Tax benefit at federal statutory rate $ ( 27,321,165 ) 21.0 % Change in valuation allowance 39,869,545 ( 30.6 ) % State income taxes, net of federal benefit ( 9,791,363 ) 7.5 % Permanent differences 3,006,784 ( 2.3 ) % Federal and state refunds — — % Other ( 384,699 ) 0.3 % Effective tax rate $ 5,379,102 ( 4.1 ) % 86 Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows: December 31, 2025 December 31, 2024 Deferred tax assets: Federal net operating loss carryforwards $ 23,795,168 $ 20,983,881 State net operating loss carryforwards 6,864,380 8,434,775 Compensation 598,736 1,035,288 Allowance for doubtful accounts 891,937 802,744 Interest expense limitation 11,091,236 9,499,927 Other 52,084 61,539 Accrued expenses 667,006 539,784 Stock based compensation expense 251,002 — Lease liability 830,997 626,289 Property and equipment 190,978 164,064 Total deferred tax assets 45,233,524 42,148,291 Valuation allowance ( 43,574,177 ) ( 40,178,754 ) Net total deferred tax assets $ 1,659,347 $ 1,969,537 Deferred tax liabilities: Right of use asset $ ( 811,850 ) $ ( 608,927 ) Intangible assets ( 847,497 ) ( 1,360,610 ) Total deferred tax liabilities $ ( 1,659,347 ) $ ( 1,969,537 ) Net deferred tax assets $ — $ — 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, 2025 Federal $ ( 558,566 ) State and local Texas 43,821 Other 10,540 Foreign — 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, 2024 Federal income taxes, net of refunds received $ — State income taxes, net of refunds received 17,100 Total cash paid for taxes, net $ 17,100 87 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. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. 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 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. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2025, the Company has recorded no unrecognized tax benefits. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2025, there were no interest or penalties associated with unrecognized tax benefits. Note 20: Earnings per Share The following table summarizes the computation of basic and diluted net loss per share: Year Ended December 31, 2025 2024 Numerator: Net loss $ ( 59,430,919 ) $ ( 135,479,890 ) Denominator: Weighted average common shares outstanding, basic and diluted 54,846,155 36,783,626 Net loss per share, basic and diluted $ ( 1.08 ) $ ( 3.68 ) Excluded anti-dilutive shares 7,501,482 1,077,091 In 2025 and 2024, the dilutive impact of outstanding RSUs were excluded from the computation of weighted-average diluted shares as a result of the Company’s net loss as its inclusion would have been anti-dilutive. Note 21: Subsequent Events The Company has evaluated subsequent events through April 15, 2026, as detailed below. Kevin J. 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. Mr. Murphy’s base salary is $ 375,000 per annum. Mr. Murphy will be eligible to receive a yearly bonus of $ 200,000 based upon mutually agreed upon goals. Mr. 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. Mr. Murphy shall be eligible to participate fully in annual stock option grants, and any other 88 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. Mr. 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: no severance • 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. If Mr. 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: no severance • 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. Mr. 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. Laurent. 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 89 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; and 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 90 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. The 91 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. Mr. 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. 92 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. None.