CIRCLE8 GROUP INC

Previous wording

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 wording

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. 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 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 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.

Previous wording

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

Current wording

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.

Previous wording

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 wording

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.

Previous wording

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 wording

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: people. 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 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.

Previous wording

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

Current wording

Circle8’s acquisition of Circle8 Group B.V. demonstrated its strategic rationale, as follows:

Previous wording

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

Current wording

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

Previous 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.

Current wording

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. 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

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 wording

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 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous 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.

Current wording

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.

Previous 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:

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

Previous wording

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 wording

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 $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.

Previous wording

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

Current wording

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

Previous wording

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 wording

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 $3,934,493 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.

Previous 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.

Current wording

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.

Previous wording

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 wording

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 $1,224,245 and $1,232,750 for the three months ended June 30, 2026 and 2025, respectively.

Previous wording

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

Current wording

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

Previous wording

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 wording

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. Laurent.

Previous wording

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

Current wording

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

Previous 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”).

Current wording

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 $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”).

Previous wording

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

Current wording

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

Previous wording

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 wording

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.

Previous wording

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

Current wording

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

Previous 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.

Current wording

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.

Previous wording

Atlantic’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.

Current wording

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.

Previous 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.

Current wording

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.

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 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.

Current wording

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.

Previous wording

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 wording

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.

Previous 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.

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 ($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. 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 and Note 20: Subsequent Events for further information related to the SPP settlement.

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. 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.

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. See Note 8: Debt for further information.

Previous wording

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

Current wording

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

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

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 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.

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 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. 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

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 wording

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

Previous wording

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 wording

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.

Previous 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.

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. See Note 20: Subsequent Eventsfor information related to the Company and SPP subsequently entering into a settlement agreement.