ATLANTIC INTERNATIONAL CORP.
For the period ended Mar 31, 2026. Filed Jun 22, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Jun 22, 2026
CIRC$0.19-6.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001605888-25-000055
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-06-22.
0001605888-26-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 131 previous paragraphs and 205 current paragraphs.
51 unchanged; 49 reworded; 100 added; 31 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (100)
Current report
Atlantic, 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. Since its formation, the Company has grown from a regional operation to a worldwide staffing firm with offices and geographic reach across the United States and Europe. The Company’s domestic operations 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. 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. Circle8 manages over 8,500 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.
Current report
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. Our mission is to leverage new technologies and business partnerships to create streamlined hiring processes that resolve the challenges of modern-day employment economics.
Current report
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: people. 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. 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.
Current report
Atlantic’s acquisition of Circle8 demonstrated its strategic rationale, as follows:
Current report
•Diversification of revenue and end markets, balancing industrial staffing with higher-margin, higher-growth IT and technology talent solutions;
Current report
•Expanded multinational customer coverage, enabling cross-regional workforce support for global enterprises;
Current report
•Enhanced scale and operating leverage, supporting long-term margin expansion and cash flow generation;
Current report
•Increased revenue visibility, driven by long-term government contracts and blue-chip enterprise customers; and
Current report
•Platform for disciplined future growth, leveraging Circle8's completed acquisition phase and transition to operational excellence.
Current report
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.
Current report
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%. The Circle8 Acquisition accounted for 134,938,646 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 Circle8 Acquisition accounted for $10,309,395 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. 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.
Current report
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%. The Circle8 Acquisition accounted for $8,969,658 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.
Current report
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%. The Circle8 Acquisition accounted for $3,103,592 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.
Current report
Gain on Debt Extinguishment
Current report
Gain on debt extinguishment during the three months ended March 31, 2026, relates to 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. Laurent.
Current report
Other Expenses, gains and losses
Current report
Other expenses, gains and losses for the three months ended March 31, 2026 and 2025 were as follows:
Current report
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.
Current report
Income Tax Expense
Current report
Income tax expense for the three months ended March 31, 2026 and 2025 were as follows:
Current report
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. 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.
Current report
The unaudited condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Current report
The Company is also actively pursuing additional equity and debt financing alternatives and strategic partnerships. These plans are subject to successful execution and prevailing market conditions, and there can be no assurance that they will generate sufficient liquidity to alleviate the substantial doubt.
Current report
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/a SLR Business Credit (“SLR”)), providing for a $70 million (“Advanced Limit”) senior secured revolving credit facility (the “Revolver”). 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 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
Current report
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.
Current report
Lyneer had recognized liability balances on the Term Note of $0 as of both March 31, 2026 and December 31, 2025. The Term Note is allegedly in default and the Company has sued the Term Note Lender. See Note 11: Commitments and Contingencies for discussion on lawsuits related to the Term Note.
Current report
The Seller Note obligation is joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement discussed above; and as such, the Company derecognized its joint and several debt obligations as of the Merger date. See Note 8: Debt for further information.
Current report
Lyneer had recognized Seller Note liability balances of $0 for both March 31, 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.
Current report
The Earnout Note liability was $0 for both March 31, 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.
Current report
Pursuant to the Amended and Restated Convertible Promissory Note, any amounts paid to BMO will be in satisfaction of this Note. The Company offset the December 31, 2025 balance related to the IDC receivable that was remaining on the BMO Revolver and rolled into the current Revolver as allowed per the Amended and Restated Convertible Promissory Note. See Note 16: 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 as of December 31, 2025.
Current report
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.
Current report
Convertible Note
Current report
As discussed in Note 2: Merger and Acquisition, on January 23, 2026, in connection with the Circle8 Acquisition, the Company issued a Convertible Note to Axiom as a component of consideration transferred for the business. The Convertible Note has a stated principal amount of $161,961,751 and is non‑interest‑bearing. The Convertible Note matures twelve months from the issuance date, at which time the principal amount becomes payable in cash; however, the Convertible Note may be settled prior to this date through the issuance of shares of the Company’s Common Stock if a majority of the Company’s stockholders vote to approve this conversion. If the aforementioned stockholder approval is obtained, the Convertible Note will convert into an aggregate of 53,291,744 shares of the Company’s Common Stock. The number of shares issuable in settlement of the Convertible Note is fixed at inception and is not subject to variability, other than customary anti-dilution provisions for stock splits, stock dividends, and similar recapitalization events.
Current report
The Convertible Note was measured initially at fair value of $205,706,132 (53,291,744 shares valued at the Company’s closing stock price on the Circle8 Closing Date of $3.86) on the Circle8 Closing Date. The fair value of the Convertible Note exceeds the stated principal amount resulting in a substantial premium of $43,744,381. Accordingly, the Company recorded the Convertible Note as short-term debt at its stated principal amount of $161,961,751, with the substantial premium recorded as a component of additional paid-in-capital within permanent equity. Issuance costs incurred to issue the Convertible Note were de minimis and expensed when incurred.
Current report
The Convertible Note contains provisions that relate to certain defined events of default, including bankruptcy, change of control or liquidation, cessation of operations, or failure to satisfy certain covenants contained in the Acquisition Agreement. Upon the occurrence of an event of default, the holder may declare the entire outstanding principal amount immediately due and payable. 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. 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.
Current report
Other than in the case of default, the Convertible Note does not provide the holder with one or more contingent redemption options.
Current report
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. 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. The
Current report
Convertible Note is included in “convertible note payable - related parties” in the accompanying unaudited condensed consolidated balance sheet.
Current report
Factoring Agreements
Current report
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. 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. The Company pays a facility fee to Argentum monthly which is recognized in “other expenses, gains and losses” on the unaudited condensed consolidated statements of operations and comprehensive loss. The Company can repay the facility at any time. 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.
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Removed paragraphs (31)
Previous report
The Company’s management believes, based on their knowledge of the industry, that it is one of the prominent and leading staffing firms in the ever-evolving staffing industry. Its management also believes that it is an industry leader in permanent, temporary and temp-to-perm placement services in a wide variety of areas, including, but not limited to, accounting & finance, administrative & clerical, hospitality, IT, legal, light industrial and medical fields. Its deep expertise and extensive experience have helped world class companies revolutionize their operations, resulting in greater efficiency and streamlined processes. Its comprehensive suite of solutions covers all aspects of workforce management, from recruitment and hiring to time and attendance tracking, scheduling, performance management, and predictive analytics. Atlantic takes a personalized approach to each client, working closely with them to understand their unique needs and develop a tailored roadmap for success. In addition, Atlantic offers a comprehensive range of recruiting services, including temporary and permanent staffing, within the light industrial, administrative, and financial sectors. Its services are designed to meet each client’s needs, including payroll services and vendor management services/managed service provider solutions. Its extensive network of offices and onsite operations provide local support for its clients, while its national presence gives Atlantic the resources to tackle even the most complex staffing needs. With a focus on integrity, transparency and customer service and a commitment to results over a 25-year period, management believes it has earned a reputation as one of the premier workforce solutions partners in the United States.
Previous report
Service revenue, net was $315,833,003 and $313,063,328 for the nine months ended September 30, 2025 and 2024, respectively, an increase of $2,769,675, or 0.9%. The Company’s temporary placement services business, slightly increased $2,323,462 or 0.7% in the nine months ended September 30, 2025 as compared to the same period in 2024. Permanent placement and other services increased $446,213 or 16.4% due to strong demand from our current clients.
Previous report
Cost of revenue for the three months ended September 30, 2025 and 2024 was $97,725,227 and $95,918,373, respectively, an increase of $1,806,854 or 1.9%. The increase in cost of revenue was due primarily to higher service revenue, net driven primarily by higher temporary placement services revenue, which increased $2,034,230 or 1.9%. Gross profit for the three months ended September 30, 2025 and 2024 was $12,401,976 and $11,885,470, respectively, an increase of $516,506 or 4.3%. As a percentage of service revenue, net, gross profit was 11.3% and 11.0% for the three months ended September 30, 2025 and 2024, respectively, which increased due to the Company’s initiative to sell higher margin accounts.
Previous report
Cost of revenue for the nine months ended September 30, 2025 and 2024 was $280,826,211 and $279,222,830, respectively, an increase of $1,603,381 or 0.6%, essentially flat on year-to-date over year-to-date basis. Gross profit for the nine months ended September 30, 2025 and 2024 was $35,006,792 and $33,840,498, respectively, an increase of $1,166,294 or 3.4%. As a percentage of service revenue, net, gross profit was 11.1% and 10.8% for the nine months ended September 30, 2025 and 2024, respectively, which increased due to the Company’s initiative to sell higher margin accounts.
Previous report
Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 were $58,158,706 and $46,045,754, respectively, an increase of $12,112,952, or 26.3%, due primarily to higher stock compensation expense, a full nine months of expenses incurred as a result of the Merger compared to a three and a half months, partially offset by lower transaction costs related to the Merger. As a percentage of service revenue, net, selling, general and administrative costs were 18.4% in the nine months ended September 30, 2025 as compared to 14.7% in the nine months ended September 30, 2024. The increase in selling, general and administrative costs as a percentage of service revenue, net was due primarily to stock compensation expense, a full nine months of expenses incurred as a result of the Merger compared to three and a half months, partially offset by lower transaction costs related to the Merger in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
Previous report
Depreciation and amortization expense for the three months ended September 30, 2025 and 2024 was $1,230,307 and $1,245,557, respectively, a decrease of $15,250 or 1.2%, which was slightly lower on a year-over year basis primarily due to more of the Company’s computer software being fully depreciated at the end of 2024.
Previous report
Depreciation and amortization expense for the nine months ended September 30, 2025 and 2024 was $3,699,446 and $3,754,165, respectively, a decrease of $54,719 or 1.5%, which was slightly lower on a year-over year basis primarily due to more of the Company’s computer software being fully depreciated at the end of 2024.
Previous report
Loss on Debt Extinguishment
Previous report
Loss on debt extinguishment during the nine months ended September 30, 2024 relates to the Seventh Amendment and Forbearance Agreement to the previous Revolver being treated as a debt extinguishment after the Company’s analysis of Accounting Standards Codification (“ASC”) Topic 470 –Debt. See Note 8: Debt for further information.
Previous report
Advisory Fees Paid in the Merger
Previous report
Advisory fees incurred in connection with the Merger for the three and nine months ended September 30, 2025 and 2024 were as follows:
Previous report
Certain shareholders 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 on the date of the Merger.
Previous report
Interest expense for the nine months ended September 30, 2025 and 2024 was $5,402,959 and $10,494,818, respectively. The decrease of $5,091,859, or 48.5%, in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was attributed to the Company deconsolidating the joint and several debt obligations as of the Merger date and a lower interest rate from the previous Revolver as compared to the new Revolver entered into on April 29, 2025.
Previous report
Other Expense
Previous report
Other expense for the three and nine months ended September 30, 2025 and 2024 were as follows:
Previous report
Other expense for the three and nine months ended September 30, 2024 relates to accrued amounts pertaining to a potential settlement for legacy shareholders and stock compensation expense related to third parties as advisors to the Company.
Previous report
Income Tax (Expense)/Benefit
Previous report
Provision for income taxes for the three and nine months ended September 30, 2025 and 2024 were as follows:
Previous report
Income tax (expense)/benefit for the nine months ended September 30, 2025 and 2024 was $(28,379) and $19,732,646, respectively. The change between the periods was primarily due to the establishment of a valuation allowance on the Company’s deferred tax assets, initially recorded during the fourth quarter of 2024.
Previous report
On April 29, 2025, the Company closed on a new ABL credit facility, replacing the current Revolver, with a maturity date of April 29, 2028. The previous lender funded the shortfall of $6,000,000, the IDC portion owed, and IDC entered into a term loan for this amount, plus a $1,000,000 exit fee. The $6,000,000 term loan and $1,000,000 exit fee are joint-and-several between the Company and IDC and is fully covered by the Allocation Agreement with IDC discussed above. The current Revolver’s lender has assumed IDC’s publicly owned stock of Atlantic International Corp as collateral. The interest rate on the New Revolving Credit Facility is calculated as 1.00% per annum above the
Previous report
Prime Rate, but not less than 5.75% per annum. The interest rate as of September 30, 2025 was 8.50% per annum. See Note 8: Debt for further information.
Previous report
As of September 30, 2025 and December 31, 2024, the Company recorded a liability of $38,363,904 and $42,508,379, respectively. Total available borrowing capacity on the Revolver as of September 30, 2025 was $342,712. The borrowing base calculation is based on Lyneer’s eligible assets.
Previous report
The Seller Notes obligation are joint-and-several with IDC and are fully covered by the Allocation Agreement discussed above and as such the Company deconsolidated the Seller Notes obligations as of the Merger date. See Note 8: Debt for further information.
Previous report
Earnout Notes
Previous report
2023 Amendment to Seller and Earnout Notes
Previous report
Lyneer and IDC did not make the principal and interest payments due on the Seller Notes and the Earnout Notes during 2023 or the first six months of 2024. On May 14, 2023, Lyneer signed an amendment, dated as of May 11, 2023 (the “Omnibus Amendment”), to defer the missed payments under the Seller Notes and Earnout Notes until the amended maturity dates of such notes of April 30, 2024 and January 31, 2025, respectively. The Omnibus Amendment changed the interest rate of the Seller Notes and the Earnout Notes to 11.25% per annum from 6.25% per annum for all remaining payments.
Previous report
On January 16, 2024, Lyneer and IDC signed an amendment to the Omnibus Agreement with the holders of the Seller Notes and the Earnout Notes to defer the missed July 31, 2023 and October 31, 2023 principal and interest payments, each in the amount of $1,575,000 plus accrued interest, together with the principal payment in the amount of $1,575,000 plus accrued interest that is payable on January 31, 2024, all of which were payable on February 28, 2024. Lyneer has not refinanced or restructured the credit facility and missed all payments of the Seller Notes and the Earnout Notes during 2024 and is in default of the Seller Notes and Earnout Notes. The Seller Noes and the Earnout Notes are covered by the Allocation Agreement discussed above.
Previous report
Interest expense incurred on the Earnout Notes to LMH totaled $0 and $174,058 for the three months ended September 30, 2025 and 2024, respectively and $0 and $347,766 for the nine months ended September 30, 2025 and 2024, respectively.
Previous report
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.
Previous report
Total amounts receivable from IDC, including the above taxes payable to IDC, amounted to $7,417,863 as of September 30, 2025 and total amounts payable to IDC of $2,091,035 as of December 31, 2024, and are included in “due from related parties” and “due to related parties”, respectively, on the accompanying condensed consolidated balance sheets. There are no formalized repayment terms.
Previous report
During the nine months ended September 30, 2024, Lyneer included $402,500 as an expense paid for by IDC and recorded as a deemed capital contribution to Lyneer, of which all related to interest. Additionally, IDC agreed to reimburse certain expenses paid by Lyneer totaling $631,469 also recorded as deemed capital contributions, by reducing the payable balance owed to IDC. Of this amount, $611,969 related to professional fees and $19,500 related to a debt amendment fee.
Reworded paragraphs (49)
Previous wording
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 Consolidated Financial Statements and accompanying notes included in Part I, Item 1.—Financial Statements of this Quarterly Report on Form 10-Q.
Current wording
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.
Previous wording
Atlantic, through its subsidiaries, is a national strategic staffing firm servicing the commercial, professional, finance, direct placement, and managed service provider verticals. Lyneer was formed under the principles of honesty and integrity, and with the view of becoming the preferred outside employer of choice. Since its formation, the Company has grown from a regional operation to a national staffing firm with offices and geographic reach across the United States. 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. Atlantic is headquartered in Englewood Cliffs, New Jersey and has more than 100 locations in the USA.
Current wording
Atlantic is headquartered in Englewood Cliffs, New Jersey and has more than 100 locations in the USA. Circle8 is headquartered in Amsterdam, Netherlands.
Previous wording
At Atlantic, management understands that finding the perfect candidate starts before the job requisition even comes in. 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. Comprising over 60% of the Company’s revenue base, 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. As a result, employment services firms with a large network of offices compete most effectively for this business, which generally has agreed-upon pricing or mark-up on services performed.
Current wording
At Atlantic, 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. As a result, employment services firms with a large network of offices compete most effectively for this business, which generally has agreed-upon pricing or mark-up on services performed.
Previous wording
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024:
Current wording
Comparison of the Three Months Ended March 31, 2026 and 2025:
Previous wording
Service revenue, net of discounts, for the three and nine months ended September 30, 2025 and 2024 consisted of the following:
Current wording
Service revenue, net of discounts, for the three months ended March 31, 2026 and 2025 consisted of the following:
Previous wording
Service revenue, net was $110,127,203 and $107,803,843 for the three months ended September 30, 2025 and 2024, respectively, an increase of $2,323,360, or 2.2%. This increase was predominately due to higher revenues from the Company’s temporary placement services business, which increased $2,034,230 or 1.9% in the three months ended September 30, 2025 as compared to the same period in 2024 due primarily a strong sales initiative by the Company. Permanent placement and other services increased $289,130 or 28.0% due to strong demand from our current clients.
Current wording
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.
Previous wording
Gross profit reflects the difference between realized service revenue, net and cost of revenues for providing temporary and permanent placement solutions. 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 and nine months ended September 30, 2025 and 2024 consisted of the following:
Current wording
Gross profit reflects the difference between realized service revenue, net and cost of revenues. 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:
Previous wording
Total operating expenses for the three and nine months ended September 30, 2025 and 2024 consisted of the following:
Current wording
Total operating expenses for the three months ended March 31, 2026 and 2025 consisted of the following:
Previous wording
Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024 were $19,888,692 and $17,151,567, respectively, an increase of $2,737,125, or 16.0%, due primarily to stock compensation expense, partially offset by lower transaction costs attributed to the Merger in 2024. As a percentage of service revenue, net, selling, general and administrative costs were 18.1% in the three months ended September 30, 2025 as compared to 15.9% in the three months ended September 30, 2024. The increase in selling, general and administrative costs as a percentage of service revenue, net was due primarily to stock compensation expense, partially offset by lower transaction costs related to the Merger.
Current wording
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.
Previous wording
Loss on debt extinguishment, for the three and nine months ended September 30, 2025 and 2024 were as follows:
Current wording
Gain on debt extinguishment, for the three months ended March 31, 2026 and 2025 were as follows:
Previous wording
Interest expense for the three and nine months ended September 30, 2025 and 2024 were as follows:
Current wording
Interest expense for the three months ended March 31, 2026 and 2025 were as follows:
Previous wording
Interest expense for the three months ended September 30, 2025 and 2024 was $2,094,177 and $1,472,564, respectively. The increase of $621,613, or 42.2%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily attributed to the Company incurring interest expense related to an agreement with a professional employer organization (“PEO”) who processes the payroll for the Company, related to the unpaid balance, partially offset by the Company deconsolidating the joint and several debt obligations as of the Merger date and a lower interest rate from the previous Revolver as compared to the new Revolver entered into on April 29, 2025.
Current wording
Interest expense for the three months ended March 31, 2026 and 2025 was $3,554,670 and $1,284,822, respectively. The Circle8 Acquisition accounted for $1,027,272 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. (“BMO” and “BMO Revolver”).
Previous wording
Income tax (expense)/benefit for the three months ended September 30, 2025 and 2024 was $(9,144) and $1,220,072, respectively. The change between the periods was primarily due to the establishment of a valuation allowance on the Company’s deferred tax assets, initially recorded during the fourth quarter of 2024.
Current wording
Income tax (expense)/benefit for the three months ended March 31, 2026 and 2025 was $73,181 and $(9,617), respectively. The change between the periods was primarily due to the tax benefit recorded in jurisdictions where we do not maintain a valuation allowance.
Previous wording
In accordance with ASC 740, the effects of new tax legislation are recognized in the period of enactment. Management has evaluated the provisions of OBBBA, recalculated temporary differences, reassessed valuation allowances, and considered any necessary adjustments. Based on this evaluation, management concluded that the effects of the OBBBA are not material to the Company’s consolidated financial statements for the current period. Management will continue to monitor forthcoming guidance, interpretations, and technical clarifications to assess whether any future adjustments or additional disclosures may be required.
Current wording
In accordance with ASC 740, the effects of new tax legislation are recognized in the period of enactment. Management has evaluated the provisions of OBBBA, recalculated temporary differences, reassessed valuation allowances, and considered any necessary adjustments. Based on this evaluation, management concluded that the effects of the OBBBA are not material to the Company’s unaudited condensed consolidated financial statements for the current period. Management will continue to monitor forthcoming guidance, interpretations, and technical clarifications to assess whether any future adjustments or additional disclosures may be required.
Previous wording
Atlantic’s primary sources of liquidity have historically been cash generated from operations and borrowings under its previous Revolver. The Company entered into a new revolving credit facility (the “New Revolving Credit Facility”) on April 29, 2025. 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. Atlantic believes that the cash generated from operations, together with the borrowing availability under the New Revolving Credit Facility is sufficient to meet its normal working capital needs for at least the 12-month period following the issue date of its financial statements, including investments made, and expenses incurred, in connection with opening new markets throughout the next year. Atlantic’s ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of Atlantic’s control. If Atlantic’s future cash flow from operations and other capital resources are insufficient to fund its liquidity needs, Atlantic may be forced to obtain additional debt or equity capital or refinance all or a portion of its debt.
Current wording
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.
Previous wording
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 financials are issued. This evaluation includes considerations related to covenants contained in Atlantic’s credit facilities, as well as Atlantic’s forecasted liquidity. Atlantic has concluded that there is no substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of its condensed consolidated financial statements. On April 29, 2025, the Company closed on a new ABL lender, replacing the previous Revolver and converting it into a term loan, with a maturity date of April 29, 2028. On April 29, 2025, the previous BMO Revolver lender has funded the shortfall of $6,000,000, the IDC portion owed, and IDC and Lyneer entered into a term loan for this amount, plus a $1,000,000 exit fee for the remaining joint and several previous ABL lender debt. The previous lenders have acquired IDC’s publicly owned stock of Atlantic International Corp as collateral and intends to sell these shares to pay down the amounts due related to the joint and several debt. See Note 8: Debt for further information.
Current wording
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.
Previous wording
IDC, Lyneer and Prateek Gattani, IDC’s Chief Executive Officer and then our Chairman of the Board following the Merger, have entered into an Allocation Agreement dated as of December 31, 2023, pursuant to which IDC agreed that, subject to subordination to the taxes as between IDC and Lyneer, in connection with the Merger, the Term Note and the Seller Notes, will either be paid in full or assumed by IDC, and Lyneer will have no further liability or responsibility for such indebtedness. However, as IDC and Lyneer were unable to obtain the release of Lyneer from the holders of such indebtedness for accounting purposes, with respect to any of such indebtedness that was not repaid by IDC with the Allocation Agreement not being given effect for accounting purposes and Lyneer will remain jointly and severally liable with IDC to such lenders until such time as such joint and several indebtedness is restructured, at which time IDC will be obligated to repay in full all remaining amounts payable under the Term Note, the Seller Notes the Earnout Notes, along with the term note for the shortfall from the restructuring of the previous revolving credit facility. 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. Upon the consummation of the Merger, the Company determined that it was no longer probable that IDC would default on its portion of the joint and several obligations and deconsolidated the joint and several debt obligations in the accompanying financial statements.
Current wording
On December 31, 2023, IDC, Lyneer and Prateek Gattani, IDC’s Chief Executive Officer and our then Chairman of the Board until April 2025, entered into an Allocation Agreement (“Allocation Agreement”). Pursuant to the terms of the Allocation Agreement, IDC agreed that, subject to subordination to the taxes as between IDC and Lyneer, in connection with the Merger, the Term Note and the Seller Notes, will either be paid in full or assumed by IDC, and Lyneer will have no further liability or responsibility for such indebtedness. 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). 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. Upon the consummation of the Merger on June 18, 2024, the Company determined that it was no longer probable that IDC would default on its portion of the joint and several obligations and derecognized the joint and several debt obligations in the accompanying financial statements. 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. See Note 8: Debt for further information related to the SPP Term Note purported default.
Previous wording
In the Allocation Agreement, IDC and Mr. Gattani agreed to implement a plan to refinance or otherwise satisfy the joint and several indebtedness. It is expected that the Company will not be legally released from its joint and several obligations with respect to the indebtedness to be assumed by IDC until payment in full of the Merger Note, which originally matured on September 30, 2024. The maturity date of the Merger Note has been extended to March 31, 2027 when the Company entered into an Amended and Restated Convertible Promissory Note. On April 29, 2025, the Company closed on a new ABL lender, replacing the previous Revolver, with a maturity date of April 29, 2028. 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 their respective joint and several debt. See Note 8: Debt for further information.
Current wording
In the Allocation Agreement, IDC and Mr. Gattani agreed to implement a plan to refinance or otherwise satisfy the joint and several indebtedness. It is expected that the Company will not be legally released from its joint and several obligations with respect to the indebtedness to be assumed by IDC until payment in full of the Merger Note, which originally matured on September 30, 2024. On April 29, 2025, the Company and IDC entered into an Amended and Restated Convertible Promissory Note for the Merger Note which extended the maturity date to March 31, 2027. On April 29, 2025, the Company closed on a new revolving credit facility, replacing the BMO Revolver, with a maturity date of April 29, 2028. 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. See Note 8: Debt for further information.
Previous wording
Cash flows for the nine months ended September 30, 2025 and 2024 consisted of the following:
Current wording
Cash flows for the three months ended March 31, 2026 and 2025 consisted of the following:
Previous wording
Cash flows provided by (used in) operating activities for the nine months ended September 30, 2025 compared to the nine months September 30, 2024 was higher primarily due to a decrease in deferred income taxes and a decrease in accounts receivable from the prior year end, partially offset by a decrease in accrued expenses from the prior year end and an increase in due from related parties.
Current wording
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.
Previous wording
Cash used in investing activities for the nine months ended September 30, 2025 decreased compared to September 30, 2024 and consisted entirely of purchases of property and equipment.
Current wording
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.
Previous wording
Cash (used in) provided by financing activities increased for the nine months ended September 30, 2025 compared to September 30, 2024 and consisted of borrowings and payments under the Company’s debt arrangements of the Revolver and the New Revolving Credit Facility.
Current wording
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.
Previous wording
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 it’s 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.
Current wording
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 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. As a result, the Company has not recorded any liability related to these joint and several debt obligations in accordance with ASC 405-40. See Revolver (discussing the BMO Revolver), Term Note, Seller Notes and Earnout Notes below for those joint-and-several debts that are applicable to the Allocation Agreement.
Previous wording
Until April 29, 2025, as described below, the Company maintained the Revolver as a co-borrower with IDC with an available borrowing capacity of up to $60,000,000. The facility was partially used to finance the acquisition of Lyneer by IDC in August 2021, with additional borrowing capacity available under the Revolver to finance Lyneer’s working capital. All of Lyneer’s cash collections and disbursements were linked with bank accounts associated with the lender and funded using the Revolver. These borrowings were determined by Lyneer’s availability based on a formula of billed and unbilled accounts receivable as defined in the loan agreement.
Current wording
Until April 29, 2025, as described below, the Company maintained the BMO Revolver as a co-borrower with IDC with an available initial borrowing capacity of up to $125,000,000. The facility was partially used to finance the acquisition of Lyneer by IDC in August 2021, with additional borrowing capacity available under the BMO Revolver to finance Lyneer’s working capital. All of Lyneer’s cash collections and disbursements were linked with bank accounts associated with the lender and funded using the Revolver. These borrowings were determined by Lyneer’s availability based on a formula of billed and unbilled accounts receivable as defined in the loan agreement.
Previous wording
On August 31, 2021, Lyneer 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 initially bore interest at the stated interest rate of 14% per annum.
Current wording
On August 31, 2021, Lyneer 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 matured on February 28, 2026, at which time all outstanding balances were 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 initially bore interest at the stated interest rate of 14% per annum, and currently has a default interest rate of 16%.
Previous wording
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 30, 2025, or as agreed between the parties.
Current wording
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. Additionally, the Tenth Amendment revised the Initial Capital Raise milestone and the uplisting milestone dates were subsequently extended to September 15, 2025, or as agreed between the parties. 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.
Previous wording
The Term Note obligation is joint-and-several with IDC and is fully covered by the Allocation Agreement discussed above and as such the Company deconsolidated it’s joint and several debt obligations as of the Merger date. See Note 8: Debt for further information.
Current wording
The Term Note obligation is joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement discussed above and as such the Company derecognized its joint and several debt obligations as of the Merger date. See Note 8: Debt for further information.
Previous wording
Lyneer and IDC did not make the principal and interest payments due July 31, 2023 and October 31, 2023 on the Seller Notes as 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 Seller Note holders, Lyneer is prevented from making payments and the Seller Note holder are prevented from accepting payments from Lyneer.
Current wording
Lyneer and IDC did not make the principal and interest payments due July 31, 2023 and any subsequent dates on the Seller Notes as payments to any other debt holders were prohibited by the administrative agent of the lender under the BMO Revolver and also the current Revolver. As provided in the inter-creditor agreement between SLR and the Seller Note holders, Lyneer is prevented from making payments and the Seller Note holders are prevented from accepting payments from Lyneer.
Previous wording
As contingent consideration milestones are met in connection with the Transaction Agreement, Lyneer and IDC can elect to pay the milestone payments in cash or to issue notes payable. 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. On January 16, 2024, Lyneer 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 missed the March 31, 2024 principal and interest payment and the interest rate increased to the default rate of 11.25%.
Current wording
As contingent consideration milestones are met in connection with the Transaction Agreement, Lyneer and IDC can elect to pay the milestone payments in cash or to issue notes payable. 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. On January 16, 2024, Lyneer and IDC as co-borrowers issued six notes payable with an aggregate value of $6,941,521. Payments on each of the Earnout Notes were 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 missed the March 31, 2024 principal and interest payment and all subsequent payments and the interest rate increased to the default rate of 11.25%.
Previous wording
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.
Current wording
Payments to any other debt holders was prohibited by the administrative agent of the previous lender under the BMO 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.
Previous wording
The Earnout Notes obligation are joint-and-several with IDC and are fully covered by the Allocation Agreement discussed above and as such the Company deconsolidated the Earnout Notes obligations as of the Merger date. See Note 8: Debt for further information.
Current wording
The Earnout Notes obligation are joint-and-several with IDC and are subject to IDC’s obligation under the Allocation Agreement discussed above and as such the Company derecognized the Earnout Notes obligations as of the Merger date. See Note 8: Debt for further information.
Previous wording
The Lenders’ consent to IDC’s transfer of ownership of the equity of Lyneer was conditioned upon substantially the same terms stated above under the Revolver, as well as issuance of a secured bridge loan (“Credit Agreement”), which was entered into 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 (as defined), on the issuance of new debt or new equity interests, or upon a change of control.
Current wording
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 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.
Previous wording
From April 29, 2019 to April 29, 2020, the Company entered into a series of non-convertible promissory notes (the “Promissory Notes”) with St. Laurent Investments LLC amounting to $1,375,000. 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. The Company is in negotiations with the lender to extend the agreement for two years and the lender has agreed to waive default. In any event, the Company is in negotiations to extended the Promissory Note and is confident that it will be extended at least through December 31, 2025.
Current wording
From April 29, 2019 to April 29, 2020, the Company entered into a series of non-convertible promissory notes (the “Promissory Notes”) with St. Laurent Investments LLC (“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 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.
Previous wording
In connection with the closing of the Merger, we issued to IDC the Merger Note in the principal amount of $35,000,000 that originally matured on 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. 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. 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.
Current wording
In connection with the closing of the Merger on June 18, 2024, we issued to IDC the Merger Note in the principal amount of $35,000,000 that originally matured on 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. 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. 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.
Previous wording
On April 29, 2025, the Company 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. See Note 8: Debt for further information.
Current wording
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. See Note 8: Debt for further information.
Previous wording
Total interest expense is comprised of a cash and non-cash component as described in the debt arrangements described above. Additionally, the Company has incurred interest expense related to an agreement with a professional employer organization (“PEO”) who processes the payroll for the Company, related to the unpaid balance at 1.5% per calendar month.
Current wording
Total interest expense is comprised of a cash and non-cash component as described in the debt arrangements described 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 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.
Previous wording
For the three and nine months ended September 30, 2025 total interest expense was $2,094,177 and $5,402,959, respectively. For the three and nine months ended September 30, 2024 total interest expense was $1,472,564 and $10,494,818 respectively. Interest expense related to the PEO was $863,402 and $1,701,729 for the three and nine month periods ended September 30, 2025, respectively, and $0 for each of the three and nine month periods ended September 30, 2024. Total cash paid for interest for the three and nine months ended September 30, 2025 totaled $1,202,388 and $3,509,168, respectively, and $1,386,833 and $5,437,928 for the three and nine months ended September 30, 2024, respectively, with the remaining portion of the interest expense as non-cash due to the paid-in-kind interest and change in values of the accrued interest liability and amortization of deferred financing costs.
Current wording
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 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.
Previous wording
The Company closed on a new ABL lender credit facility on April 29, 2025, replacing its obligations under the previous Revolver, with an increased borrowing capacity of up to $70 million. The Company believes the borrowing capacity under this new credit facility and its cash flow from operations will provide sufficient liquidity and capital resources to conduct its planned operations for at least one year.
Current wording
The Company closed on a new ABL lender credit facility on April 29, 2025, replacing its obligations under the BMO Revolver, with an increased borrowing capacity of up to $70 million.
Previous wording
Refer To Note 3: Summary of Significant Accounting Policies, Liquidity.
Current wording
Refer to Note 3: Summary of Significant Accounting Policies.
Previous wording
LMH was 90% owned by Lyneer’s Chief Financial Officer, James Radvany, and its Chief Executive Officer, Todd McNulty, each of whom owns 44.5% of LMH. On February 28, 2024, LMH exercised its right to put its 10% ownership interest in the Company to IDC. On November 15, 2022, Lyneer and IDC as co-borrowers issued Year 1 Earnout Notes to LMH with total balances of $5,127,218. On January 16, 2024, Lyneer and IDC as co-borrowers issued Year 2 Earnout Notes to LMH with total balances of $2,013,041. On the date of the Merger, the Company deconsolidated this debt. Refer to Note 8: Debt for additional information.
Current wording
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. 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. On the date of the Merger, the Company derecognized this debt. Refer to Note 8: 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.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
$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.
Current report — wording carried from elsewhere
LMH was a non-controlling member of the Company with a 10% ownership interest at December 31, 2023. LMH was 90% owned by Lyneer’s Chief Financial Officer, James Radvany, and its Chief Executive Officer, Todd McNulty, each of whom owned 44.5% of LMH.
Current report — wording carried from elsewhere
Payrolling revenue is recognized in the amount which the Company has a right to invoice when the services are rendered by its engagement professionals. The Company invoices its customers for temporary placement services concurrently with each periodic payroll which coincides with the services provided. While all customers are invoiced weekly and payment terms vary, the majority of our customers have payments terms of 14 to 30 days. As such, revenue is recognized over time with the delivery of services. 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. Terms of collection vary based on the customer; however, payment generally is due within 30 days.
Current report — wording carried from elsewhere
The engagement professionals placed on assignment by the Company are legally our employees while they are working on assignments. The Company pays all related costs of employment, including workers’ compensation insurance, state and federal unemployment taxes, social security, and certain fringe benefits. The Company assumes the risk of acceptability of its employees to its customers.
Current report — wording carried from elsewhere
The Company records Payrolling revenue on a gross basis as a principal. 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 acceptability of its employees to its customers.