What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-19 compared with 2026-06-22 · 293 added, 169 removed, 439 unchanged (51% of the section changed)

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The following discussion relates to Atlantic International Corp (Atlantic or the Company) and its consolidated subsidiaries and should be read together with the Company’s Unaudited Condensed Consolidated Financial Statements and accompanying notes included in Part I, Item 1.—Financial Statements of this Quarterly Report on Form 10-Q.

Atlantic, through its subsidiaries, is a worldwide strategic staffing firm.

On June 29, 2026, Atlantic changed its name from Atlantic International Corp to Circle8 Group Inc.

(“Circle8” or the “Company”).

The Company started trading under the Nasdaq ticker CIRC on July 2, 2026

Circle8, through its subsidiaries, is a worldwide strategic staffing firm.

The Company was formed under the principles of honesty and integrity, and with the view of becoming the preferred outside employer of choice.

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The Company is also a leading provider of productivity consulting and workforce management solutions.

With the addition of Circle8 Group (“Circle8”) on January 23, 2026, Atlantic extended its capabilities into specialized high-growth IT and technology staffing capabilities across Europe, complementing Atlantic’s domestic industrial staffing operations.

Circle8 is a European IT-technology talent and consulting enablement platform that provides specialized workforce solutions to enterprises, technology companies, financial institutions, and public-sector organizations.

Circle8 focuses on sourcing, deploying, and managing highly skilled professionals in information technology and related digital disciplines.

Circle8 is one of the fastest-growing IT and technology staffing companies, operating across Europe through a portfolio of specialized brands.

With the addition of Circle8 Group (“Circle8 Group B.V.”) on January 23, 2026, Atlantic extended its capabilities into specialized high-growth IT and technology staffing capabilities across Europe, complementing Atlantic’s domestic industrial staffing operations.

Circle8 Group B.V.

is a European IT-technology talent and consulting enablement platform that provides specialized workforce solutions to enterprises, technology companies, financial institutions, and public-sector organizations.

Circle8 Group B.V.

focuses on sourcing, deploying, and managing highly skilled professionals in information technology and related digital disciplines.

Circle8 Group B.V.

is one of the fastest-growing IT and technology staffing companies, operating across Europe through a portfolio of specialized brands.

Circle8 manages over 8,300 technology professionals and specializes in software development, data analytics, cybersecurity, project management, and emerging technologies.

Circle8 is founder-led and will continue to be led by Mr.

Guus Franke who joined Atlantic’s Board of Directors as Executive Chairman.

Atlantic is headquartered in Englewood Cliffs, New Jersey and has more than 100 locations in the USA.

Circle8 is headquartered in Amsterdam, Netherlands.

Atlantic is a high-growth outsourced services and workforce solutions company with management who have more than a 28-year operating record.

Based on their knowledge of the industry, and through its mergers and acquisitions strategy, Atlantic is building a global staffing organization that redefines the way companies grow professional teams.

Circle8 Group B.V.

is founder-led and will continue to be led by Mr.

Guus Franke who joined the Company’s Board of Directors as Executive Chairman and further was appointed as the Company’s Chief Executive Officer on June 29, 2026.

Circle8 is headquartered in Englewood Cliffs, New Jersey and has more than 100 locations in the USA.

Circle8 Group B.V.

is headquartered in Amsterdam, Netherlands.

Circle8 is a high-growth outsourced services and workforce solutions company with management who have more than a 28-year operating record.

Based on their knowledge of the industry, and through its mergers and acquisitions strategy, Circle8 is building a global staffing organization that redefines the way companies grow professional teams.

Our mission is to leverage new technologies and business partnerships to create streamlined hiring processes that resolve the challenges of modern-day employment economics.

Atlantic’s corporate acquisition strategy is designed to assist its client companies in the transformation of stagnation into growth to achieve sustainable results through their most important asset:

Atlantic’s goal is to create a business designed to deliver to its clients targeted industry talent at speed and scale while also growing the pool of in-demand talent for this same constituency.

Atlantic’s recruiters will provide specific and data-driven guidance, development, training, and access to jobs.

Circle8’s corporate acquisition strategy is designed to assist its client companies in the transformation of stagnation into growth to achieve sustainable results through their most important asset:

Circle8’s goal is to create a business designed to deliver to its clients targeted industry talent at speed and scale while also growing the pool of in-demand talent for this same constituency.

Circle8’s recruiters will provide specific and data-driven guidance, development, training, and access to jobs.

It believes this approach is particularly applicable in several growth sectors, including legal and financial services, technology, and healthcare.

The current climate of industry fragmentation and overall economic uncertainty create a moment that Atlantic believes is ripe for strategic consolidation.

Atlantic plans to integrate companies and maximize synergies and economics to improve sales and lower operating costs, while, at the same time, continuing to focus and expand on its acquisition strategy of high-margin profitable outsourced services and workforce solution providers.

Atlantic’s acquisition of Circle8 demonstrated its strategic rationale, as follows:

The current climate of industry fragmentation and overall economic uncertainty create a moment that Circle8 believes is ripe for strategic consolidation.

Circle8 plans to integrate companies and maximize synergies and economics to improve sales and lower operating costs, while, at the same time, continuing to focus and expand on its acquisition strategy of high-margin profitable outsourced services and workforce solution providers.

Circle8’s acquisition of Circle8 Group B.V.

demonstrated its strategic rationale, as follows:

• Diversification of revenue and end markets, balancing industrial staffing with higher-margin, higher-growth IT and technology talent solutions;

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• Increased revenue visibility, driven by long-term government contracts and blue-chip enterprise customers;

• Platform for disciplined future growth, leveraging Circle8's completed acquisition phase and transition to operational excellence.

At Atlantic, management understands that finding the perfect candidate starts before the job requisition even comes in.

• Platform for disciplined future growth, leveraging Circle8 Group B.V.’s completed acquisition phase and transition to operational excellence.

At Circle8, management understands that finding the perfect candidate starts before the job requisition even comes in.

Domestically, the Company employs the strategy of proactive recruitment to build a pipeline of pre-vetted candidates for order fulfillment.

Atlantic’s client mix consists of both small- and medium-size businesses, and large national and multinational client relationships.

Client relationships with small- and medium-size businesses are based on a local or regional relationship, and tend to rely less on longer-term contracts, and the competitors for this business are primarily

locally owned businesses.

The large national and multinational clients, on the other hand, will frequently enter into non-exclusive arrangements with several firms, with the ultimate choice among them being left to local managers.

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Internationally, the Company’s specialized workplace solutions support organizations that require specialized technology capabilities to design, build, operate, and secure digital systems and digital infrastructure.

Circle8 operates through a portfolio of operating companies and brands that provide staffing, recruitment, and consulting-related services focused primarily on technology professionals.

Circle8 delivers services through a range of workforce solutions, including temporary staffing, contract staffing, and payrolling services.

Circle8’s clients include both private-sector enterprises and public-sector institutions that rely on specialized technology talent to support digital transformation initiatives and the ongoing operation of mission-critical IT systems.

Circle8 generates the substantial majority of its revenue from the placement of technology professionals on temporary and contract assignments, where it bills clients based on hourly or daily rates for services performed.

Circle8 Group B.V.

operates through a portfolio of operating companies and brands that provide staffing, recruitment, and consulting-related services focused primarily on technology professionals.

Circle8 Group B.V.

delivers services through a range of workforce solutions, including temporary staffing, contract staffing, and payrolling services.

Circle8 Group B.V.’s clients include both private-sector enterprises and public-sector institutions that rely on specialized technology talent to support digital transformation initiatives and the ongoing operation of mission-critical IT systems.

Circle8 Group B.V.

generates the substantial majority of its revenue from the placement of technology professionals on temporary and contract assignments, where it bills clients based on hourly or daily rates for services performed.

Results of Operations

The following discussion summarizes the key factors Atlantic’s management team believes are necessary for an understanding of Atlantic’s financial statements.

Comparison of the Three Months Ended March 31, 2026 and 2025:

The following discussion summarizes the key factors Circle8’s management team believes are necessary for an understanding of Circle8’s financial statements.

Comparison of the Three and Six Months Ended June 30, 2026 and 2025:

Certain related party and non-related party financial statement line-item amounts have been aggregated for purposes of analysis below, which is consistent with management’s evaluation of its business results.

The following table summarizes our results of operations for the periods presented:

Three Months Ended

March 31, Change

Three months ended June 30, Change

2026 2025 Amount Percent

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Loss from operations (15,396,271) (8,684,591) (6,711,680) 77.3 %

Gain on debt extinguishment (233,022) — (233,022) 100.0 %

Loss on debt extinguishment 237,848 — 237,848 100.0 %

Loss on settlement 60,414,821 — 60,414,821 100.0 %

Interest expense 4,276,743 2,023,960 2,252,783 +

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+ - change greater than ± 100%

Six Months Ended June 30, Change

2026 2025 Amount Percent

Service revenue, net $ 569,693,668 $ 205,705,800 $ 363,987,868 +

Service revenue, net of discounts, for the three months ended March 31, 2026 and 2025 consisted of the following:

Cost of revenue 524,464,352 183,100,984 341,363,368 +

Gross profit 45,229,316 22,604,816 22,624,500 +

Selling, general and administrative 66,763,480 38,270,014 28,493,466 74.5 %

Depreciation and amortization 8,765,901 2,469,139 6,296,762 +

Loss from operations (30,300,065) (18,134,337) (12,165,728) 67.1 %

Loss on debt extinguishment 4,826 — 4,826 100.0 %

Loss on settlement 60,414,821 — 60,414,821 100.0 %

Interest expense 7,831,413 3,308,782 4,522,631 +

Other expenses, gains and losses 19,962,946 — 19,962,946 100.0 %

Net loss before provision for income taxes (118,514,071) (21,443,119) (97,070,952) +

Income tax benefit/(expense) 1,456,229 (19,235) 1,475,464 +

Net loss $ (117,057,842) $ (21,462,354) $ (95,595,488) +

Net loss per share, basic and diluted $ (1.45) $ (0.40) $ (1.05) +

Weighted average shares outstanding, basic and diluted 77,508,866 54,266,337 23,242,529 42.8 %

+ - change greater than ± 100%

Service Revenue, Net

Service revenue, net of discounts, for the three and six months ended June 30, 2026 and 2025 consisted of the following:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Temporary placement services $ 313,961,556 $ 102,033,461 $ 559,531,850 $ 203,859,800

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Total service revenues, net $ 319,806,775 $ 102,896,993 $ 569,693,668 $ 205,705,800

Service revenue, net was $249,886,893 and $102,808,807 for the three months ended March 31, 2026 and 2025, respectively, an increase of $147,078,086, or 143.1%.

The Circle8 Acquisition accounted for $145,248,041 of the increase.

The remaining $1,830,045 increase is primarily a result of the historical Company’s temporary placement services business, increasing $1,755,516 in the three months ended March 31, 2026 as compared to the same period in 2025 due to a strong sales initiative which resulted in new customers.

Service revenue, net was $319,806,775 and $102,896,993 for the three months ended June 30, 2026 and 2025, respectively, an increase of $216,909,782, or 210.8%.

The Circle8 Acquisition accounted for $205,991,065 of the increase, including the full increase in brokerage and payrolling services.

The remaining $10,918,717 increase is primarily a result of the historical Company’s temporary placement services business, increasing $10,404,988 in the three months ended June 30, 2026 as compared to the same period in 2025 due to a strong sales initiative which resulted in new customers.

Service revenue, net was $569,693,668 and $205,705,800 for the six months ended June 30, 2026 and 2025, respectively, an increase of $363,987,868, or 176.9%.

The Circle8 Acquisition accounted for $350,891,319 of the increase, including the full increase in brokerage and payrolling services.

The remaining $13,096,549 increase is primarily a result of the historical Company’s temporary placement services business, increasing $12,160,504 in the six months ended June 30, 2026 as compared to the same period in 2025 due to a strong sales initiative which resulted in new customers.

Cost of Revenue and Gross Profit

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Cost of revenue consists primarily of fixed and variable directs costs, including payroll, payroll taxes and employee benefit costs.

Cost of revenue and gross profit for the three months ended March 31, 2026 and 2025 consisted of the following:

Cost of revenue and gross profit for the three and six months ended June 30, 2026 and 2025 consisted of the following:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Service revenue, net $ 319,806,775 $ 102,896,993 $ 569,693,668 $ 205,705,800

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Gross profit $ 23,803,263 $ 11,418,694 $ 45,229,316 $ 22,604,816

Cost of revenue for the three months ended March 31, 2026 and 2025 was $228,460,840 and $91,622,685, respectively, an increase of $136,838,155 or 149.3%.

Cost of revenue for the three months ended June 30, 2026 and 2025 was $296,003,512 and $91,478,299, respectively, an increase of $204,525,213 or 223.6%.

The Circle8 Acquisition accounted for $192,163,225 of the increase.

The remaining $1,830,045 increase due to the historical Company’s higher service revenues.

Gross profit for the three months ended March 31, 2026 and 2025 was $21,426,053 and $11,186,122, respectively, an increase of $10,239,931 or 91.5%.

The remaining $12,361,988 increase was due to the historical Company’s higher service revenues.

Gross profit for the three months ended June 30, 2026 and 2025 was $23,803,263 and $11,418,694, respectively, an increase of $12,384,569 or 108.5%.

The Circle8 Acquisition accounted for $13,827,840 of the increase.

The historical Company decreased $1,443,271.

As a percentage of service revenue, net, gross profit was 7.4% and 11.1% for the three months ended June 30, 2026 and 2025, respectively.

The reduction in margin primarily attributed to international operations including certain European jurisdictions which have lower margins compared to the Company’s domestic business.

As a percentage of service revenue, net, the gross profit was 8.8% and 11.1% for the three months ended June 30, 2026 and 2025, respectively, for the historical Company, which decreased due to higher workers compensation premiums.

Cost of revenue for the six months ended June 30, 2026 and 2025 was $524,464,352 and $183,100,984, respectively, an increase of $341,363,368 or 186.4%.

The Circle8 Acquisition accounted for $327,101,871 of the increase.

The remaining $14,261,497 increase was due to the historical Company’s higher service revenues.

Gross profit for the six months ended June 30, 2026 and 2025 was $45,229,316 and $22,604,816, respectively, an increase of $22,624,500 or 100.1%.

The Circle8 Acquisition accounted for $24,137,235 of the increase.

The historical Company was essentially flat.

As a percentage of service revenue, net, gross profit was 8.6% and 10.9% for the three months ended March 31, 2026 and 2025, respectively.

As a percentage of service revenue, net, gross profit was 7.9% and 11.0% for the six months ended June 30, 2026 and 2025, respectively.

The reduction in margin primarily attributed to international operations including certain European jurisdictions which have lower margins compared to the Company’s domestic business.

As a percentage of service revenue, net, the gross profit was 10.6% and 10.9% for the three months ended March 31, 2026 and 2025, respectively, for the historical Company, which was a slight decrease.

As a percentage of service revenue, net, the gross profit was 9.7% and 11.0% for the six months ended June 30, 2026 and 2025, respectively, for the historical Company, which decreased due to higher workers compensation premiums.

Total Operating Expenses

Total operating expenses for the three months ended March 31, 2026 and 2025 consisted of the following:

Total operating expenses for the three and six months ended June 30, 2026 and 2025 consisted of the following:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Selling, general and administrative $ 34,765,727 $ 18,870,535 $ 66,763,480 $ 38,270,014

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Selling, General and Administrative Costs

Selling, general and administrative expenses for the three months ended March 31, 2026 and 2025 were $31,997,753 and $19,399,479, respectively, an increase of $12,598,274, or 64.9%.

Selling, general and administrative expenses for the three months ended June 30, 2026 and 2025 were $34,765,727 and $18,870,535, respectively, an increase of $15,895,192, or 84.2%.

The Circle8 Acquisition accounted for $11,960,700 of the increase.

The remaining $3,628,616 increase primarily relates to transaction costs related to the Circle8 Acquisition and bad debt expense of $1,233,099 in the three months ended March 31, 2026.

As a percentage of service revenue, net, selling, general and administrative costs were 12.8% in the three months ended March 31, 2026 as compared to 18.9% in the three months ended March 31, 2025.

As a percentage of service revenue, net, selling, general and administrative costs were 22.0% and 18.9% for the three months ended March 31, 2026 and 2025, respectively, for the historical Company, due primarily to increased costs related to the Circle8 Acquisition and bad debt expense of $1,233,099.

The remaining $3,934,493 increase primarily relates to transaction costs related to the Circle8 Acquisition, a one-time non-customer valuation allowance of $2,903,284 and bad debt expense of $729,946 in the three months ended June 30, 2026.

As a percentage of service revenue, net, selling, general and administrative costs were 10.9% in the three months ended June 30, 2026 as compared to 18.3% in the three months ended June 30, 2025.

As a percentage of service revenue,

net, selling, general and administrative costs were 20.0% and 18.3% for the three months ended June 30, 2026 and 2025, respectively, for the historical Company, due primarily to increased costs related to the Circle8 Acquisition, a one-time non-customer valuation expense of $2,903,284 and bad debt expense of $729,946.

Selling, general and administrative expenses for the six months ended June 30, 2026 and 2025 were $66,763,480 and $38,270,014, respectively, an increase of $28,493,466, or 74.5%.

The Circle8 Acquisition accounted for $20,930,358 of the increase.

The remaining $7,563,109 increase primarily relates to transaction costs related to the Circle8 Acquisition, a one-time non-customer valuation expense of $2,903,284 and bad debt expense of $1,963,045 in the six months ended June 30, 2026.

As a percentage of service revenue, net, selling, general and administrative costs were 11.7% in the six months ended June 30, 2026 as compared to 18.6% in the six months ended June 30, 2025.

As a percentage of service revenue, net, selling, general and administrative costs were 21.0% and 18.6% for the six months ended June 30, 2026 and 2025, respectively, for the historical Company, due primarily to increased costs related to the Circle8 Acquisition, a one-time non-customer valuation charge of $2,903,284 and bad debt expense of $1,963,045.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended March 31, 2026 and 2025 was $4,332,094 and $1,236,389, respectively, an increase of $3,095,705 or 250.4%.

Depreciation and amortization expense for the three months ended June 30, 2026 and 2025 was $4,433,807 and $1,232,750, respectively, an increase of $3,201,057 or 259.7%.

The Circle8 Acquisition accounted for $3,209,561 of the increase.

The historical Company was essentially flat with expense of $1,228,502 and $1,236,389 for the three months ended March 31, 2026 and 2025, respectively.

Gain on Debt Extinguishment

Gain on debt extinguishment, for the three months ended March 31, 2026 and 2025 were as follows:

The historical Company was essentially flat with expense of $1,224,245 and $1,232,750 for the three months ended June 30, 2026 and 2025, respectively.

Depreciation and amortization expense for the six months ended June 30, 2026 and 2025 was $8,765,901 and $2,469,139, respectively, an increase of $6,296,762 or 255.0%.

The Circle8 Acquisition accounted for $6,313,153 of the increase.

The historical Company was essentially flat with expense of $2,452,747 and $2,469,139 for the six months ended June 30, 2026 and 2025, respectively.

Loss on Debt Extinguishment

Loss on debt extinguishment for the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

Gain on debt extinguishment $ (233,022) $ —

Gain on debt extinguishment during the three months ended March 31, 2026, relates to the Company and St.

June 30, Six Months Ended

2026 2025 2026 2025

Loss on debt extinguishment $ 237,848 $ — $ 4,826 $ —

Loss on debt extinguishment during the three months ended June 30, 2026, relates to the refinancing of certain factoring agreements which were treated as a debt extinguishment after the Company’s analysis according to ASC 470 — Debt (“ASC 470”).

Loss on debt extinguishment during the six months ended June 30, 2026, relates to the refinancing of certain factoring agreements which were treated as a debt extinguishment after the Company’s analysis according to ASC 470, partially offset by the Company and St.

Laurent entering 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.

Loss on Settlement

Loss on settlement for the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Loss on settlement

$ 60,414,821 $ — $ 60,414,821 $ —

Loss on settlement for the three and six months ended June 30, 2026, relates to the SPP settlement on August 7, 2026.

Interest Expense

Interest expense for the three months ended March 31, 2026 and 2025 were as follows:

Interest expense for the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Interest expense $ 4,276,743 $ 2,023,960 $ 7,831,413 $ 3,308,782

Interest expense for the three months ended March 31, 2026 and 2025 was $3,554,670 and $1,284,822, respectively.

Interest expense for the three months ended June 30, 2026 and 2025 was $4,276,743 and $2,023,960, respectively.

The Circle8 Acquisition accounted for $1,195,452 of the increase.

The historical Company’s interest expense was $2,527,398 and $1,284,822 for the three months ended March 31, 2026 and 2025.

The increase of $1,242,576, primarily attributed to the Company incurring interest expense on unpaid balance related to an agreement with a professional employer organization (“PEO”) who processes the payroll for the Company, and interest expense related to the new factoring agreements, partially offset by lower interest rates for the Revolver as compared to the Revolver with BMO Bank, N.A.

The historical Company’s interest expense was $3,081,291 and $2,023,960 for the three months ended June 30, 2026 and 2025.

The increase of $1,057,331, primarily attributed to the Company incurring interest expense on unpaid balance related to an agreement with a professional employer organization (“PEO”) which processes the payroll for the Company, and interest expense related to the new factoring agreements and other short-term debt, partially offset by lower interest rates for the Revolver as compared to the Revolver with BMO Bank, N.A.

(“BMO” and “BMO Revolver”).

Interest expense for the six months ended June 30, 2026 and 2025 was $7,831,413 and $3,308,782, respectively.

The Circle8 Acquisition accounted for $2,222,724 of the increase.

The historical Company’s interest expense was $5,608,689 and $3,308,782 for the six months ended June 30, 2026 and 2025.

The increase of $2,299,907, primarily attributed to the Company incurring interest expense on unpaid balance related to an agreement with a professional employer organization (“PEO”) who processes the payroll for the Company, and interest expense related to the new factoring agreements and other short-term debt, partially offset by lower interest rates for the Revolver as compared to the Revolver with BMO Bank, N.A.

(“BMO” and “BMO Revolver”).

Other Expenses, gains and losses

Other expenses, gains and losses for the three months ended March 31, 2026 and 2025 were as follows:

Other expenses, gains and losses for the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Other expenses, gains and losses $ 7,426,083 $ — $ 19,962,946 $ —

Other expenses, gains and losses for the three months ended March 31, 2026, primarily relates to the loss on the preferred stock and warrant offerings, and the change in fair value of the Circle8 Benelux warrants.

Other expenses, gains and losses for the three and six months ended June 30, 2026, primarily relates to the loss on the preferred stock and warrant offerings, the change in fair value of the Preferred Stock warrants and bifurcated derivatives, change in fair value of the Circle8 Benelux warrants, the gain on exercise of the Preferred Stock warrants and facility fees related to the International factoring agreements.

Income Tax Expense

Income tax expense for the three months ended March 31, 2026 and 2025 were as follows:

Income tax expense for the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Income tax benefit/(expense) $ 1,383,048 $ (9,618) $ 1,456,229 $ (19,235)

Income tax (expense)/benefit for the three months ended March 31, 2026 and 2025 was $73,181 and $(9,617), respectively.

Income tax (expense)/benefit for the three months ended June 30, 2026 and 2025 was $1,383,048 and $(9,618), respectively.

The change between the periods was primarily due to the tax benefit recorded in jurisdictions where we do not maintain a valuation allowance.

Income tax (expense)/benefit for the six months ended June 30, 2026 and 2025 was $1,456,229 and $(19,235), respectively.

The change between the periods was primarily due to the tax benefit recorded in jurisdictions where we do not maintain a valuation allowance.

On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”), was signed into law, which is considered the enactment date under U.S.

Key corporate tax provisions include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to Internal Revenue Service (“IRS”) Section 163(j) interest limitations, updates to “Global Intangible Low-Taxed Income” (“GILTI”), and “Foreign-Derived Intangible Income” (“FDII”) rules, amendments to energy credits, and expanded IRS Section 162(m) aggregation requirements.

Key corporate tax provisions include the restoration of 100% bonus depreciation,

immediate expensing for domestic research and experimental expenditures, changes to Internal Revenue Service (“IRS”) Section 163(j) interest limitations, updates to “Global Intangible Low-Taxed Income” (“GILTI”), and “Foreign-Derived Intangible Income” (“FDII”) rules, amendments to energy credits, and expanded IRS Section 162(m) aggregation requirements.

In accordance with ASC Topic 740 — Income Taxes (“ASC 740”), the effects of the new tax law were recognized in the period of enactment, our quarter ended September 30, 2025.

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Liquidity & Capital Resources

Atlantic’s working capital requirements are primarily driven by personnel payments and client accounts receivable receipts.

Circle8’s working capital requirements are primarily driven by personnel payments and client accounts receivable receipts.

As receipts from client partners lag behind payments to personnel, working capital requirements increase substantially in periods of growth.

Prior to its acquisition of Circle8, Atlantic’s primary sources of liquidity have been cash generated from operations supported through borrowings under its Revolver.

Atlantic’s primary uses of cash are payments to engagement personnel, corporate personnel, related payroll costs and liabilities, operating expenses, capital expenditures, cash interest, cash taxes, and debt payments.

In accordance with ASC Topic 205-40 — Going Concern , Atlantic 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 for one year from the date the financial statements are issued.

This evaluation includes considerations related to covenants contained in Atlantic’s credit facilities, forecasted liquidity, net losses and negative net working capital.

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 unaudited consolidated financial statements.

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

Prior to its acquisition of Circle8 Group B.V., the Company’s primary sources of liquidity have been cash generated from operations supported through borrowings under its Revolver.

The Company’s primary uses of cash are payments to engagement personnel, corporate personnel, related payroll costs and liabilities, operating expenses, capital expenditures, cash interest, cash taxes, and debt payments.

In accordance with ASC Topic 205-40 — Going Concern , Circle8 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 for one year from the date the financial statements are issued.

This evaluation includes considerations related to covenants contained in Circle8’s credit facilities, forecasted liquidity, net losses and negative net working capital.

Circle8 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 unaudited consolidated financial statements.

The Company expects that Circle8 Acquisition will enhance its 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.

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However, as IDC and Lyneer were unable to obtain the release of Lyneer from the holders of such indebtedness, Lyneer will remain jointly and severally liable with IDC to such lenders until such time as such joint and several indebtedness is restructured.

At that time IDC will be obligated to repay in full all remaining amounts payable under the Term Note ($36,062,862 as of March 31, 2026), the Seller Notes ($7,875,000 as of March 31, 2026), the Earnout Notes ($20,435,654 as of March 31, 2026), along with the term note for the shortfall from the restructuring of the previous revolving credit facility ($5,661,881 as of March 31, 2026).

At that time IDC will be obligated to repay in full all remaining amounts payable under the Term Note ($56,872,782 as of June 30, 2026), the Seller Notes ($7,875,000 as of June 30, 2026), the Earnout Notes ($20,435,654 as of June 30, 2026), along with the term note for the shortfall from the restructuring of the previous revolving credit facility ($5,661,881 as of June 30, 2026).

In the event IDC does not repay any of this debt and the Company is required to make payments, IDC will be obligated to repay the Company for the amounts paid on IDC’s behalf.

1 unchanged sentence

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

Debt for further information related to the SPP Term Note purported default.

Debt for further information related to the SPP Term Note purported default and Note 20:

Subsequent Events for further information related to the SPP settlement.

In the Allocation Agreement, IDC and Mr.

4 unchanged sentences

On April 29, 2025, the previous BMO Revolver lender funded the shortfall of $6,000,000, the IDC portion owed, and IDC entered into a term note for this amount, plus a $1,000,000 exit fee.

The certain junior lenders assumed portions of IDC’s publicly owned stock of Atlantic International Corp as collateral and intends to sell these shares to settle their respective joint and several debt.

certain junior lenders assumed portions of IDC’s publicly owned stock of Atlantic International Corp as collateral.

Debt for further information.

Cash flows for the three months ended March 31, 2026 and 2025 consisted of the following:

Three Months Ended

Cash flows for the six months ended June 30, 2026 and 2025 consisted of the following:

Six Months Ended

Net cash provided by (used in) operating activities $ (13,732,690) $ 5,037,229

4 unchanged sentences

Operating Activities

Cash flows provided by (used in) operating activities for the three months ended March 31, 2026 compared to the three months March 31, 2025 was lower primarily due to a the Circle8 Acquisition.

Cash flows provided by (used in) operating activities for the six months ended June 30, 2026 compared to the six months June 30, 2025 was lower primarily due to the Circle8 Acquisition.

Investing Activities

Cash used in investing activities for the three months ended March 31, 2026 increased compared to March 31, 2025 and consisted entirely of purchases of property and equipment.

Cash used in investing activities for the six months ended June 30, 2026 increased compared to June 30, 2025 and consisted entirely of purchases of property and equipment.

Financing Activities

Cash (used in) provided by financing activities increased for the three months ended March 31, 2026 compared to March 31, 2025 primarily due to the Circle8 Acquisition and also primarily consisted of borrowings and payments under the Company’s debt arrangements of the Revolver.

Cash (used in) provided by financing activities increased for the six months ended June 30, 2026 compared to June 30, 2025 primarily due to the Circle8 Acquisition, proceeds from issuance of preferred stock and warrants, proceeds received upon exercise of warrants, and also consisted of borrowings and payments under the Company’s debt arrangements of the Revolver, factoring agreements and other short-term debt.

Debt Allocation Agreement

1 unchanged sentence

The Allocation Agreement, which continues to be a valid and enforceable contract between Lyneer and IDC, states that repayment (or refinancing) of the Term Note, Seller Notes and Earnout Notes was assumed by and the responsibility of IDC.

In the event IDC cannot repay any of the assumed debt and Lyneer is require to make payments, IDC is obligated to repay Lyneer for amounts paid on IDC’s behalf.

The Company reassessed its accounting for joint-and-several liabilities under ASC 405-40 as of March 31, 2026 and concluded it is reasonably probable that IDC can repay their portion of the debt allocated per the Allocation Agreement and the Company does not expect to repay additional amounts on behalf of IDC.

In the event IDC cannot repay any of the assumed debt and Lyneer is required to make payments, IDC is obligated to repay Lyneer for amounts paid on IDC’s behalf.

The Company reassessed its accounting for joint-and-several liabilities under ASC 405-40 as of December 31, 2024 and concluded it is reasonably probable that IDC can repay their portion of the debt allocated per the Allocation Agreement and the Company does not expect to repay additional amounts on behalf of IDC.

As a result, the Company has not recorded any liability related to these joint and several debt obligations in accordance with ASC 405-40.

6 unchanged sentences

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.

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 are 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

$130,453 in issuance costs and, according to ASC 470 — Debt (“ASC 470”) , is deferring these costs and will amortize as an adjustment to interest expense over the remaining term using the effective interest method.

As of March 31, 2026, and December 31, 2025, the Company has recognized liability balances on the Revolver of $45,141,541, including $130,453 of unamortized deferred issuance costs and $49,308,253, including $146,148 of unamortized deferred issuances costs, respectively.

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

The Revolver contains certain customary covenants, including affirmative and negative covenants.

On April 17, 2026, SLR notified Lyneer Staffing Solutions, LLC (“Lyneer”) of certain Events of Default as a result of (a) the occurrence of Events of Default described in the below-described letter from SPP to Atlantic dated March 30, 2026, and (b) Lyneer making certain payments to or for the benefit of Atlantic.

Commitments and Contingencies for further discussion.

On August 7, 2026, the Company and SPP entered into a settlement agreement.

Subsequent Events for further discussion.

As of June 30, 2026, and December 31, 2025, the Company has recognized liability balances on the Revolver of $41,198,353, including $114,757 of unamortized deferred issuance costs and $49,308,253, including $146,148 of unamortized deferred issuances costs, respectively.

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

6 unchanged sentences

Due to the remaining amount outstanding from IDC on the BMO Revolver being converted to a term loan and the new Revolver taking first position, the terms of the Tenth Amendment were superseded by the terms of the Revolver.

On April 28, 2025, the Term Note lender foreclosed on certain amounts of IDC’s stock of Atlantic International Corp See Note 8:

On April 28, 2025, the Term Note lender foreclosed on certain amounts of IDC’s stock of Atlantic International Corp.

Debt for further information.

1 unchanged sentence

Debt for further information.

Lyneer had recognized liability balances on the Term Note of $0 as of both March 31, 2026 and December 31, 2025.

Subsequent Events for information related to the Company and SPP subsequently entering into a settlement agreement.

Lyneer had recognized liability balances on the Term Note of $56,872,782 as of both June 30, 2026 and December 31, 2025.

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

9 unchanged sentences

Debt for further information.

Lyneer had recognized Seller Note liability balances of $0 for both March 31, 2026 and December 31, 2025.

Lyneer had recognized Seller Note liability balances of $0 for both June 30, 2026 and December 31, 2025.

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

2 unchanged sentences

During 2022, Lyneer and IDC as co-borrowers have issued nine promissory notes in the aggregate principal amount 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.

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, Lyneer and IDC as co-borrowers issued six notes payable with an aggregate value of $6,941,521.

5 unchanged sentences

Debt for further information.

The Earnout Note liability was $0 for both March 31, 2026 and December 31, 2025.

The Earnout Note liability was $0 for both June 30, 2026 and December 31, 2025.

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

1 unchanged sentence

As part of the Merger 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 Company has accrued interest of $184,422 included in “accrued expenses and other current liabilities” on the accompanying unaudited condensed consolidated balance sheets as of March 31, 2026.

The Company has accrued interest of $211,513 included in “accrued expenses and other current liabilities” on the accompanying unaudited condensed consolidated balance sheets as of June 30, 2026.

The maturity date of the Credit Agreement was originally September 30, 2024.

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

Conditions has not been met to make mandatory prepayments.

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.

The Company did not make the payment by the maturity date and is in default.

On April 17, 2026, the lender notified the Company of certain defaults.

Commitments and Contingencies for discussion.

Promissory Note

9 unchanged sentences

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.

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.

As we do not currently believe we will have sufficient liquidity and capital resources to pay the Merger Note in full when due, as well as to restructure our joint and several debt obligations, we believe we will have to sell additional equity or debt securities prior to the maturity date of the Merger Note to pay or refinance the Merger Note when due.

1 unchanged sentence

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.

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.

Debt for further information.

On August 7, 2026, the Company and SPP entered into a settlement agreement.

Subsequent Events for further discussion regarding the release, discharge and cancellation of the Merger Note.

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

4 unchanged sentences

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

As of March 31, 2026, and December 31, 2025, the Company has recognized liability balances on the Merger Note of $28,849,748, including $93,867 of unamortized deferred issuance costs and $28,826,281, including $117,334 of unamortized deferred issuance costs, respectively.

As of June 30, 2026, and December 31, 2025, the Company has recognized liability balances on the Merger Note of $28,873,215, including $70,400 of unamortized deferred issuance costs and $28,826,281, including $117,334 of unamortized deferred issuance costs, respectively.

Subsequent Events for information concerning the release, discharge and cancellation of the Merger Note as a result of the SPP settlement agreement entered into on August 7, 2026.

Convertible Note

13 unchanged sentences

In addition, in the event of a default, interest accrues on the outstanding principal amount at a rate of 10% per annum from the date of the event of default until payment, together with any other amounts due under the Convertible Note.

As of March 31, 2026, no events of default have occurred.

As of June 30, 2026, no events of default have occurred.

The Company concluded the holder’s put option upon an event of default meets the definition of a derivative requiring bifurcation, however the fair value of such derivative was of nominal value.

Other than in the case of default, the Convertible Note does not provide the holder with one or more contingent redemption options.

As of March 31, 2026, the outstanding principal balance of the Convertible Note is $161,961,751, which reflects its carrying amount as of that date.

The Company is accounting for the liability portion of the note using the stated interest rate of zero, accordingly no interest has been recognized for the quarter ended March 31, 2026.

As of June 30, 2026, the outstanding principal balance of the Convertible Note is $161,961,751, which reflects its carrying amount as of that date.

The Company is accounting for the liability portion of the note using the stated interest rate of zero, accordingly no interest has been recognized for the quarter ended June 30, 2026.

Due to the amount of the Company’s outstanding stock owned by the holder of the Convertible Note, the holder is a related party with respect to the Company and accordingly the Convertible Note is considered a note payable to a related party.

Convertible Note is included in “convertible note payable - related parties” in the accompanying unaudited condensed consolidated balance sheet.

The Convertible Note is included in “convertible note payable - related parties” in the accompanying unaudited condensed consolidated balance sheet.

Factoring Agreements

In connection with the Circle8 Acquisition, the Company assumed a receivables purchase agreement between Circle8 and Argentum Securities Ireland Plc (“Argentum”), which permits Circle8 to sell eligible billed and unbilled receivables to Argentum for cash proceeds in certain circumstances.

This arrangement is akin to a revolving line of credit with a borrowing base of approximately 90% of Circle8’s eligible receivables and a borrowing capacity limit of €174.9 million approximately $201.1 million as of March 31, 2026).

As of the acquisition date of January 23, 2026, Circle8 had previously borrowed up to the facility limit of €174.9 million (approximately $201.1 million as of March 31, 2026).

The facility includes multiple financial and non-financial covenants, including an over-collateralization provision requiring Circle8 to maintain an eligible receivables balance greater than 1.1111 times the amount borrowed under the facility.

In connection with the Circle8 Acquisition, the Company assumed a receivables purchase agreement between Circle8 Group B.V.

and Argentum Securities Ireland Plc (“Argentum”), which permits Circle8 Group B.V.

to sell eligible billed and unbilled receivables to Argentum for cash proceeds in certain circumstances.

This arrangement is akin to a revolving line of credit with a borrowing base of approximately 90% of Circle8 Group B.V.’s eligible receivables and a borrowing capacity limit of €174.9 million approximately $199.3 million as of June 30, 2026).

As of the acquisition date of January 23, 2026, Circle8 Group B.V.

had previously borrowed up to the facility limit of €174.9 million (approximately $199.3 million as of June 30, 2026).

The facility includes multiple financial and non-financial covenants, including an over-collateralization provision requiring Circle8 Group B.V.

to maintain an eligible receivables balance greater than 1.1111 times the amount borrowed under the facility.

The facility matures on the earlier of May 18, 2029, or (i) upon an event of default or (ii) if Argentum exercises a subjective acceleration clause, which would require the facility to be repaid within 85 days.

2 unchanged sentences

The Company concluded that the facility, while legally described as a factoring agreement, does not qualify as a sale of a financial instrument under ASC Topic 860 — Transfers and Servicing, and continues to recognize receivables on the balance sheet and a liability recorded to reflect the consideration received.

Circle8 was in compliance with all provisions of the facility as of March 31, 2026.

During 2025 and the first quarter of 2026, the Company entered into four agreements to sell future receivables which allows for the factoring of receivables.

Circle8 was in compliance with all provisions of the facility as of June 30, 2026.

During 2025 and the six months ended June 30, 2026, the Company entered into the following 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.

4 unchanged sentences

The weekly payments are $24,802 and the imputed interest rate is 47.10%.

• On January 23, 2026, the Company also sold $2,500,000 of receivables and received cash proceeds of $2,000,000 less $20,000 in origination fees.

• On April 29, 2026, the Company refinanced the then outstanding balances of its October 2025 factoring agreements above, into a new factoring agreement for $2,805,511 of receivables.

The cash of $2,221,965, less $22,444 in origination fees, was used for the payoff.

The refinancing was treated as a debt extinguishment after the Company’s analysis of ASC 470 and the Company recorded a $237,848 loss on debt extinguishment.

The weekly payments are $55,665 and the imputed interest rate is 47.10%.

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

On April 29, 2026, the Company refinanced the October agreements described above.

Subsequent Events for further information.

As of March 31, 2026, and December 31, 2025, the Company has recognized liability balances on the factoring agreements of $205,933,405, including $47,771 of unamortized deferred issuance costs and $3,205,506, including $60,939 of unamortized deferred issuance costs, respectively.

These agreements have a good faith term of twelve months, were made without recourse and also allow for a discounted repurchase price if the Company pays the cash proceeds back early.

The Company has not made payments on the above remaining agreements since May 21, 2026 and is in default as of June 30, 2026.

On August 6, 2026, the Company received a notice of default from the lender.

Subsequent Events for further discussion.,

As of June 30, 2026, and December 31, 2025, the Company has recognized liability balances on the factoring agreements of $202,127,079, including $21,639 of unamortized deferred issuance costs and $3,205,506, including $60,939 of unamortized deferred issuance costs, respectively.

Other short-term debt

During the six months ended June 30, 2026, the Company entered into the following business loan service agreements with the same lender of the domestic factoring agreements above.

• On January 23, 2026, the Company entered into a loan for $2,000,000 and $20,000 in origination fees, with contractual payments totaling $2,500,000.

The weekly payments are $48,077 and the imputed interest rate is 45.67%.

• On April 30, 2026, the Company entered into a loan for $1,050,000 and $10,500 in origination fees, with contractual payments totaling $1,312,500.

The weekly payments are $25,240 and the imputed interest rate is 45.67%.

These agreements have a good faith term of twelve months, were made without recourse and also allow for a discounted repurchase price if the Company pays the cash proceeds back early.

The Company has not made payments on the above remaining agreements since May 21, 2026 and is in default as of June 30, 2026.

On August 6, 2026, the Company received a notice of default from the lender.

Subsequent Events for further discussion.,

As of June 30, 2026, and December 31, 2025, the Company has recognized liability balances on other short-term debts of $2,463,482, including $16,361 of unamortized deferred issuance costs and $0, including $0 of unamortized deferred issuance costs, respectively.

Acquisition Loans

Swisslinx Acquisition Loan

In February 2023, Circle8 entered into a loan agreement with Luzerner Kantonalbank AG as Lender, for a credit facility of up to Fr.29,000,000 (approximately $36,285,000 as of March 31, 2026) to partially finance the acquisition of 100% of the shares in Swisslinx AG and Swisslinx International Ltd.

In February 2023, Circle8 Switzerland AG entered into a loan agreement with Luzerner Kantonalbank AG (“LUKB”) as Lender, for a credit facility of up to Fr.29,000,000 (approximately $35,822,000 as of June 30, 2026) to partially finance the acquisition of 100% of the shares in Swisslinx AG and Swisslinx International Ltd.

The facility has a maturity date of June 30, 2028.

The facility provides for fixed advances with 3 or 6 month terms, or fixed loans with 2 to 5 year terms.

The minimum amount per fixed advance or loan is Fr.2,000,000 (approximately $2,502,000 as of March 31, 2026), with a maximum of 5 credit tranches.

The facility was fully drawn down at inception, with no additional advances as of March 31, 2026.

The interest rate consists of the Swiss Average Overnight Rate (“SARON”) plus an applicable margin based on the net debt ratio as of March 31 each reporting period.

The minimum amount per fixed advance or loan is Fr.2,000,000 (approximately $2,471,000 as of June 30, 2026), with a maximum of 5 credit tranches.

The facility was fully drawn down at inception, with no additional advances as of June 30, 2026.

The interest rate consists of the Swiss Average Overnight Rate (“SARON”) plus an applicable margin based on the net debt ratio each reporting period.

If the SARON rate is negative, a rate of 0.00% is used as the base rate.

As of March 31, 2026, the margin was 3.70% and the interest rate was 3.70%.

As of March 31, 2026, the Company has a recognized liability balance on the Swisslinx acquisition loan of $28,890,147.

As of June 30, 2026, the margin was 3.70% and the interest rate was 3.70%.

As of June 30, 2026, the Company has a recognized liability balance on the Swisslinx acquisition loan of $28,574,850.

The Company did not make the June 30, 2026 principal payment of Fr.3,750,000 (approximately $4,632,000 as of June 30, 2026);

however, a formal default has not been declared by LUKB.

Circle8 Switzerland AG and LUKB are in discussions on renegotiation of the loan terms.

Seven Stars Acquisition Loan

On October 26, 2022, Circle8 entered into a credit agreement with Beechbrook Capital, LLP, to partially fund the acquisition of all outstanding shares in the capital of Seven Stars Holding B.V.

On October 26, 2022, Circle8 Group B.V.

entered into a credit agreement with Beechbrook Capital, LLP, to partially fund the acquisition of all outstanding shares in the capital of Seven Stars Holding B.V.

and each of its subsidiaries.

The agreement provides a credit facility (“Facility B”) in the aggregate amount of €15,000,000 (approximately $17,330,000 as of March 31, 2026), and an available Accordion Facility for up to €15,000,000 (approximately $17,330,000 as of March 31, 2026) of additional borrowing capacity as an increase to Facility B or, alternatively, an additional term facility on a pari passu basis with Facility B.

The agreement provides a credit facility (“Facility B”) in the aggregate amount of €15,000,000 (approximately $17,091,000 as of June 30, 2026), and an available Accordion Facility for up to €15,000,000 (approximately $17,091,000 as of June 30, 2026) of additional borrowing capacity as an increase to Facility B or, alternatively, an additional term facility on a pari passu basis with Facility B.

The maturity date is October 26, 2027.

2 unchanged sentences

Interest payments became due on December 31, 2022, and each March 31, June 30, September 30, and December 31, thereafter.

As of March 31, 2026, the interest rate was 10.53%.

As of March 31, 2026, the Company has a recognized liability balance on the Seven Stars acquisition loan of $16,932,099.

As of June 30, 2026, the interest rate was 10.68%.

As of June 30, 2026, the Company has a recognized liability balance on the Seven Stars acquisition loan of $16,824,365.

Königstein Acquisition Loans

On April 26, 2023, Circle8 entered into a loan agreement with Sparkasse KölnBonn to finance a portion of the purchase price payable under a share purchase agreement for the acquisition of 80% of the shares outstanding in Konigstein Beratungsgesellschaft für EDV-Dienstleistungen GmbH.

This loan agreement provided Circle8 with loans totalling up to €7,000,000 (approximately $8,087,000 as of March 31, 2026) in the following tranches:

On April 26, 2023, Circle8 Group B.V.

entered into a loan agreement with Sparkasse KölnBonn to finance a portion of the purchase price payable under a share purchase agreement for the acquisition of 80% of the shares outstanding in Konigstein Beratungsgesellschaft für EDV-Dienstleistungen GmbH.

This loan agreement provided Circle8 Group B.V.

with loans totaling up to €7,000,000 (approximately $7,976,000 as of June 30, 2026) in the following tranches:

Investment Loan A:

Up to €4,500,000 (approximately $5,199,000 as of March 31, 2026) as an amortizing loan with payments of €250,000 (approximately $289,000 as of March 31, 2026) due at the end of each quarter, starting on December 30, 2023.

The maturity date is March 31, 2028, with quarterly payments of €250,000 (approximately $289,000 as of March 31, 2026) The interest rate on the utilized amounts consists of the EURIBOR 3M, which resets quarterly, plus a margin of 3.20% per annum.

As of March 31, 2026, the interest rate was 5.23%.

As of March 31, 2026, the Company has a recognized liability balance on the Königstein Investment Loan A of $2,463,294.

The Investment A loan is currently in default in the amount of €250,000 (approximately $289,000 as of March 31, 2026).

Up to €4,500,000 (approximately $5,127,000 as of June 30, 2026) as an amortizing loan with payments of €250,000 (approximately $285,000 as of June 30, 2026) due at the end of each quarter, starting on December 30, 2023.

The maturity date is March 31, 2028, with quarterly payments of €250,000 (approximately $285,000 as of June 30, 2026) The interest rate on the utilized amounts consists of the EURIBOR 3M, which resets quarterly, plus a margin of 3.20% per annum.

As of June 30, 2026, the interest rate was 5.38%.

As of June 30, 2026, the Company has a recognized liability balance on the Königstein Investment Loan A of $2,182,508.

The Investment A loan is currently in default in the amount of €250,000 (approximately $285,000 as of June 30, 2026).

The €250,000 payment was made in July 2026.

Investment Loan B:

Up to €2,500,000 (approximately $2,888,000 as of March 31, 2026) as a bullet loan, with payment in full due on the maturity date of September 30, 2028.

Up to €2,500,000 (approximately $2,849,000 as of June 30, 2026) as a bullet loan, with payment in full due on the maturity date of September 30, 2028.

The interest rate on the utilized amounts consists of the EURIBOR 3M, which resets quarterly, plus a margin of 3.60% per annum.

As of March 31, 2026, the interest rate was 5.63%.

As of March 31, 2026, the Company has a recognized liability balance on the Königstein Investment Loan B of $2,498,072.

As of June 30, 2026, the interest rate was 5.78%.

As of June 30, 2026, the Company has a recognized liability balance on the Königstein Investment Loan B of $2,507,929.

The loan agreement stipulates that certain financial indicators in the form of annual financial statements are due no later than 180 days after the end of each financial year and no later than 45 days after the end of each quarter.

Failure to submit these required reports timely constitutes a breach of financial indicators under the loan agreement, and will increase the corresponding margin of each loan by 1.50% per annum until such financial reports are submitted to the lender.

Seller Loans Entered into by Circle8

Seller Loans Entered into by Circle8 Group B.V.

Swisslinx Seller Loan

In March 2023, Circle8 entered into a seller loan agreement with Swisslinx AG and Swisslinx International Limited to partially fund the acquisition of 100% of the shares in Swisslinx AG and Swisslinx International Limited.

The agreement provided Circle8 with a loan of Fr.13,500,000 (approximately $16,891,000 as of March 31, 2026) with a maturity date of July 1, 2028.

In March 2023, Circle8 Group B.V.

entered into a seller loan agreement with Swisslinx AG and Swisslinx International Limited to partially fund the acquisition of 100% of the shares in Swisslinx AG and Swisslinx International Limited.

The agreement provided Circle8 Group B.V.

with a loan of Fr.13,500,000 (approximately $16,676,000 as of June 30, 2026) with a maturity date of July 1, 2028.

The interest rate is 5.00% per annum.

Principal payments of Fr.3,623,569 (approximately $4,534,000 as of March 31, 2026) and interest payments are due annually.

As of March 31, 2026, the Company has a recognized liability balance on the Swisslinx seller loan of $16,252,462.

The Swisslinx seller loan is currently in default in the amount of Fr.3,375,000 (approximately $4,223,000 as of March 31, 2026).

Principal payments of Fr.3,375,000 (approximately $4,169,000 as of June 30, 2026) and interest payments are due annually.

As of June 30, 2026, the Company has a recognized liability balance on the Swisslinx seller loan of $16,165,000.

The Swisslinx seller loan is currently in default in the amount of Fr.3,375,000 (approximately $4,169,000 as of June 30, 2026).

Fixed Today Seller Loan

In April 2022, Circle8 entered into a seller loan agreement with Payment Secured B.V.

In April 2022, Circle8 Group B.V.

entered into a seller loan agreement with Payment Secured B.V.

to partially fund the acquisition of 100% of the shares in Fixed Today Holding B.V.

The agreement provided Circle8 with €2,000,000 (approximately $2,311,000 as of March 31, 2026).

The agreement provided Circle8 Group B.V.

with €2,000,000 (approximately $2,279,000 as of March 31, 2026).

The Fixed Today seller loan had a maturity date of April 14, 2024.

As of March 31, 2026, the Company has a recognized liability balance on the Fixed Today seller loan liability of $2,299,600.

The Fixed Today seller loan is currently in default in the amount of €2,000,000 (approximately $2,311,000 as of March 31, 2026).

As of June 30, 2026, the Company has a recognized liability balance on the Fixed Today seller loan liability of $2,278,800.

The Fixed Today seller loan is currently in default in the amount of €2,000,000 (approximately $2,279,000 as of June 30, 2026).

Preferred Stock Financing

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The Company believes the transaction provided an efficient and executable source of capital that enhanced financial flexibility and supported the Company’s strategic objectives.

While the financing includes terms that may be viewed as more expensive or potentially dilutive than traditional financing arrangements, management and the Board determined that the structure reflected prevailing market conditions and the structure of comparable financing transactions available to similarly situated public companies, while also providing committed capital with execution certainty and without restrictive operational covenants.

While the financing includes terms that may be

viewed as more expensive or potentially dilutive than traditional financing arrangements, management and the Board determined that the structure reflected prevailing market conditions and the structure of comparable financing transactions available to similarly situated public companies, while also providing committed capital with execution certainty and without restrictive operational covenants.

Management and the Board also considered the Company’s ongoing strategic initiatives, including acquisition integration efforts, operational expansion opportunities, and broader corporate development objectives, and concluded that the financing was appropriate and in the best interests of the Company and its stockholders at the time the transaction was entered into.

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The Company is required to prepay collateral in the amount of one or up to two weeks estimated weekly payroll at the discretion of the PEO, which is fully refundable to the Company within 1 year of the date of the final statement.

Total amount due to the PEO of 39,908,098 is included in “PEO liability and accrued interest” on the accompanying consolidated balance sheets as of March 31, 2026.

Total amount due to the PEO of $44,200,332 is included in “PEO liability and accrued interest” on the accompanying unaudited consolidated balance sheets as of June 30, 2026.

On May 4, 2026, the PEO notified the Company it was in default and subsequently withdrew the notice of default on May 11, 2026.

Subsequent Events for further discussion.

Interest Expense

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(“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 the Secured Overnight Financing Rate plus 0.75% to process the payments.

The discount charged ranged from 4.71% to 4.83% for the three months ended March 31, 2026.

For the three months ended March 31, 2026 and 2025 total interest expense was $3,554,670 and $1,284,822, respectively.

Interest expense related to the PEO was $1,018,013 and $0 for the three month periods ended March 31, 2026 and 2025, respectively.

Total cash paid for interest for the three months ended March 31, 2026 and 2025 totaled $3,509,168 and $2,306,490, respectively.

Interest expense related to the discount charge was $67,869 and $331,763 for the three months ended March 31, 2026 and 2025, respectively.

The discount charged ranged from 4.71% to 4.88% for the six months ended June 30, 2026.

For the three and six months ended June 30, 2026 total interest expense was $4,276,743 and $7,831,413, respectively.

For the three and six months ended June 30, 2025 total interest expense was $2,023,960 and $3,308,782, respectively.

Interest expense related to the PEO was $1,018,013 and $2,150,746 for the three and six month periods ended June 30, 2026, respectively and $838,327 for both the three and six months ended June 30, 2025.

Total cash paid for interest for the three and six months ended June 30, 2026 totaled $2,464,754 and $4,244,003, respectively, and $847,891 and $2,306,780 for the three and six months ended June 30, 2025, respectively.

Interest expense related to the discount charge was $67,869 and $145,705 for the three and six months ended June 30, 2026, respectively, and $139,721 and $471,484 for the three and six months ended June 30, 2025, respectively.

The remaining portion of the interest expense was non-cash due to the change in values of the accrued interest liability and amortization of deferred financing costs.

Assessment of Liquidity Position

The Company has assessed its liquidity position as of March 31, 2026 and December 31, 2025.

As of March 31, 2026 and December 31, 2025, the total committed resources available were as follows:

The Company has assessed its liquidity position as of June 30, 2026 and December 31, 2025.

As of June 30, 2026 and December 31, 2025, the total committed resources available were as follows:

2026 December 31,

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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 for both March 31, 2026 and December 31, 2025.

The balance of the Year 1 Earnout Notes payable to LMH was $0 for both June 30, 2026 and December 31, 2025.

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

The balance of the Year 2 Earnout Notes payable to LMH was $0 for both March 31, 2026 and December 31, 2025.

The balance of the Year 2 Earnout Notes payable to LMH was $0 for both June 30, 2026 and December 31, 2025.

On the date of the Merger, the Company derecognized this debt.

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Debt for additional information.

The principal balance of the combined Earnout Notes payable to LMH was $0 or both March 31, 2026 and December 31, 2025.

Interest expense incurred on the Earnout Notes to LMH totaled $0 for both the three months ended March 31, 2026 and 2025.

The principal balance of the combined Earnout Notes payable to LMH was $0 or both June 30, 2026 and December 31, 2025.

Interest expense incurred on the Earnout Notes to LMH totaled $0 for both the three months ended June 30, 2026 and 2025.

Transactions with Officers

As of June 30, 2026, the Company has a receivable from officers of $628,809 related to payroll taxes as a result of RSU vestings, which is included in “due from related parties, current” in the accompanying unaudited condensed consolidated balance sheets.

Transactions with IDC

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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 March 31, 2026 and December 31, 2025, and are included in “other assets” on the accompanying condensed consolidated balance sheets.

Amounts payable to IDC of this nature amounted to $548,432 as of both June 30, 2026 and December 31, 2025, and are included in “other assets” on the accompanying condensed consolidated balance sheets.

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

Total amounts receivable from IDC, amounted to $2,692,867 as of March 31, 2026 and is included in “other assets”, on the accompanying condensed consolidated balance sheets.

This consists of $500,000 related to the expenses paid by Lyneer for the balance remaining on the BMO Revolver rolled into the current Revolver, $2,741,299 related to expenses incurred by IDC and paid by the Company and $548,432 payable to IDC for taxes payable.

Total amounts receivable from IDC, amounted to $0 as of June 30, 2026 due to a one-time valuation allowance of $2,903,284 related to the two year anniversary of carrying balances related to IDC, thereby fully reserving the receivable balance.

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

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Debt for further information.

On August 7, 2026, the Company and SPP entered into a settlement agreement.

Subsequent Events 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.

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The Axiom Consulting Agreements have an initial term of one year, and thereafter automatically renew for successive periods of one year, unless terminated by either party giving at least 3 months prior written notice.

Pursuant to the Axiom Netherlands Consulting Agreement, the Company is required to pay Axiom Netherlands €2,400,000 (approximately $2,759,000 as of March 31, 2026) annually, with four equal payments invoiced in advance on a quarterly basis and payable within 30 days of the invoice date.

Pursuant to the Axiom Consulting Agreement, the Company is required to pay Axiom €1,200,000 (approximately $1,379,000 as of March 31, 2026) annually, with four equal payments invoiced in advance on a quarterly basis and payable within 30 days of the invoice date.

The Company recognized $693,879 as expense under the Axiom Consulting Agreements during the quarter ended March 31, 2026 and this amount is included in “selling, general and administrative” in the accompanying unaudited condensed consolidated statement of operations.

The Company additionally incurred $33,962 related to independent contractors placed by Axiom during the quarter ended March 31, 2026 and are included in “selling, general and administrative” in the accompanying unaudited condensed consolidated statement of operations.

Pursuant to the Axiom Netherlands Consulting Agreement, the Company is required to pay Axiom Netherlands €2,400,000 (approximately $2,735,000 as of June 30, 2026) annually, with four equal payments invoiced in advance on a quarterly basis and payable within 30 days of the invoice date.

Pursuant to the Axiom Consulting Agreement, the Company is required to pay Axiom €1,200,000 (approximately $1,367,000 as of June 30, 2026) annually, with four equal payments invoiced in advance on a quarterly basis and payable within 30 days of the invoice date.

The Company recognized $1,161,164 as expense under the Axiom Consulting Agreements during the quarter ended June 30, 2026 and this amount is included in “selling, general and administrative” in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss.

The Company additionally incurred $33,962 related to independent contractors placed by Axiom during the quarter ended June 30, 2026 and are included in “selling, general and administrative” in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss.

Off Balance Sheet Arrangements

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As the business is driven primarily by large customers with high credit scores, credit checks are not usually performed.

Revenues that have been recognized but not invoiced for Contract Management customers are included in “contract assets” on the accompanying condensed consolidated balance

sheet and represent a contract asset under ASC 606.

Revenues that have been recognized but not invoiced for Contract Management customers are included in “contract assets” on the accompanying condensed consolidated balance sheet and represent a contract asset under ASC 606.

Terms of collection vary based on the customer;

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The Company assumes employer obligations;

social contributions, compliance, and other legal responsibilities, while the client maintains operational supervision over the specific assignment.

social contributions, compliance, and other legal responsibilities, while the client

maintains operational supervision over the specific assignment.

As these services are interrelated, they are not considered to be individually distinct and therefore are accounted for as a single performance obligation.

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As the business is driven primarily by large customers with high credit scores, credit checks are not usually performed.

Revenues that have been recognized but not invoiced for temporary staffing customers are included in “contract assets” on the accompanying condensed consolidated balance sheets and

represent a contract asset under ASC 606.

Revenues that have been recognized but not invoiced for temporary staffing customers are included in “contract assets” on the accompanying condensed consolidated balance sheets and represent a contract asset under ASC 606.

Terms of collection vary based on the customer;

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Intangible Assets

The Company’s identifiable intangible assets as of March 31, 2026 and December 31, 2025 consisted of customer relationships, trade name, trademarks, software and website which were initially recognized as a result of the Transaction and the Circle8 Acquisition and represent definite lived intangible assets.

The Company’s identifiable intangible assets as of June 30, 2026 and December 31, 2025 consisted of customer relationships, trade name, trademarks, software and website which were initially recognized as a result of the Transaction and the Circle8 Acquisition and represent definite-lived intangible assets.

The Company does not currently have any indefinite-lived intangible assets, excluding goodwill.

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For long-lived assets to be held and used, the Company recognizes an impairment loss only if the 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 three months ended March 31, 2026 and the year ended December 31, 2025 no impairments were recognized on our intangible assets.

For the six months ended June 30, 2026 and the year ended December 31, 2025 no impairments were recognized on our intangible assets.

We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred.

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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 basis.

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.

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.

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The fair value of customer relationship intangibles is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about expected future revenue growth rates, customer attrition rates, profit margins and discount rates.

Determining the useful lives of intangible assets also requires judgment and are inherently uncertain.

Determining the useful lives of intangible assets requires judgment and is inherently uncertain.

There is a measurement period of up to one year in which to finalize the fair value determinations and preliminary fair value estimates may be revised if new information is obtained during this period.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis