CIRC 10-K & 10-Q changes, risk factors and insider trading

Atlantic has reported a net loss of $135,479,890$59,430,919 for the year ended December 31, 20242025 and net losses of $15,252,020$135,479,890 and $3,221,058$15,252,020 for the years ended December 31, 20232024 and 2022,2023, respectively. The consolidated financial statements of Lyneer since August 31, 2021 reflect the post-acquisition activity of Lyneer since its acquisition by IDC. The loss for the year ended December 31, 2024,2025, resulted primarily from: (i) selling, general and administrative costs of $45,441,659$64,021,052 due primarily to higher transaction costs related to the Merger, (ii) $43,000,000 of stock based compensation paid to the stockholders of Atlantic Acquisition Corp. for advisory services in connection with the Merger and (iii) $52,047,957 related to a potential settlement for legacy stockholders and stock compensation expense related to third parties as advisors to the Company.expense. There can be no assurance that Lyneer will operate profitably in the future.

In addition to the Merger Note to IDC, in the principal amount of $35 million, issued at the closing of the Merger, Lyneer’s existing debt obligations currently include all of the debt obligations of IDC as a co-borrower as all of the loan arrangements entered into by Lyneer and IDC provide that such parties are jointly and severally liable for the full amount of the indebtedness. While Lyneer is legally jointly and severally liable for IDC’s debt obligations, as of the date of the Merger, the Company deconsolidated its joint and several debt obligations as it is reasonably probable that IDC has the ability to repay their portion. At December 31, 2024,2025, such indebtedness totaled approximately $104,045,357.$70,373,516. The joint indebtedness of Lyneer and IDC is made up of a revolving$6 credit facility and amillion term loan from theirthe Company’s prior senior lenderslender and promissory notes that are payable to the two prior owners of Lyneer. Currently, and until such obligations are either repaid in full or restructured by the lenders to release Lyneer as an obligor on such indebtedness, if IDC cannot, or does not, repay any portion of the debt owed by IDC, Lyneer could be responsible for repaying all of the outstanding obligations and Lyneer’s current operations aremay not be expected to be sufficient to make all of the necessary payments. Pursuant to an Allocation Agreement dated as of December 31, 2023, IDC agreed with Lyneer to assume responsibility for allthe payments$6 under themillion term loan and the promissory notes payable to the two prior owners of Lyneer (the “Assumed Debt”), and all but $42,508,379 that was outstanding under the revolving credit facility as of December 31, 2024.. However, until such time as Lyneer’s joint and several debt obligations are restructured, the agreement of IDC to assume all but Lyneer’s $42,508,379 of the joint indebtedness is being given effect solely for accounting purposes, although Lyneer will remain a joint and several obligor on such indebtedness and will be obligated to pay such indebtedness if IDC does not do so.

Lyneer entered into several debt facilities under which it is jointly and severally liable for repayment with IDC. On AugustApril 12,29, 2024,2025, Lyneer entered into a Loan and Security Agreement providing for a $70 million senior secured credit facility to replace the prior one which was joint and several with IDC. IDC and Lyneer entered into newa limitedterm consent and forbearance agreementsloan with the lendersprior under which the lenders agreed,lender to waiveaddress alla existing events of default and to forbear from exercising their rights and remedies and any Initial Capital Raise with respect to such events of default through December 31, 2024. However, Lyneer was unable to complete an Initial Capital Raise of at least $20$6 million priorshortfall. to September 15, 2024. As of the date of this Report, the dates for compliance have passed without being fulfilled; however, the respective lenders are working with Lyneer and have given no indication that they intend to default Lyneer. Even if IDC pays in full the term loan and the promissory notes payable to the prior sellers of Lyneer and Lyneer is successful in restructuring its obligations under the revolving credit facilities, thereThere can be no assurance that all conditions subsequent will be satisfied and that Lyneer will be able to comply with all of its obligations under such credit facilities. Any failure on the part of Lyneer to comply with its obligations under the credit facilities could result in a default which would be expected to have a material adverse impact on Lyneer’s financial condition and its long-term viability and there is no guarantee that the lenders will continue to work with Lyneer amicably. See Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We believe our cash on hand and cash generated from operations, will not be sufficient to pay the Merger Note and our other outstanding indebtedness in full when due and to fund our ongoing operations. As stated above, Lyneer has been in default under its principal credit facilities and outstanding promissory notes and any future defaults by Lyneer under its credit facilities could have a material adverse impact on Lyneer’s financial condition and long-term viability. Under the forbearance agreements dated August 12, 2024, we were required to seek at least $20 million future financing prior to September 15, 2024, and on or before September 30, 2024, to restructure the outstanding indebtedness that is the subject of such forbearance agreements. We will be required to seek financing to pay or refinance our other outstanding indebtedness. As of the date of this Report, the dates for compliance have passed without being fulfilled;fulfilled. however, theThe respective lenders are working with Lyneer and have given no indication that they intend to default Lyneer; however, there can be no guarantee that the lenders will continue to work with Lyneer amicably.

Lyneer and certain of its subsidiaries may be named as defendants in lawsuits from time to time that could cause them to incur substantial liabilities. Lyneer and certain of its subsidiaries are currently defendants in several actual or asserted class and representative action lawsuits brought by or on behalf of their current and former employees alleging violations of federal and state law with respect to certain wage and hour related matters, among other claims. The various claims made in one or more of such lawsuits include, among other things, the misclassification of certain employees as exempt employees under applicable law, failure to comply with wage statement requirements, failure to compensate certain employees for time spent performing activities related to the interviewing process, and other related wage and hour violations. Such suits seek, as applicable, unspecified amounts for unpaid overtime compensation, penalties, and other damages, as well as attorneys’ fees. While all of Lyneer’s existing material litigation are subject to pending settlement approvals by the applicable courts, there can be no assurance that such settlements will be approved by the courts. As a result, it is not possible to predict the outcome of these lawsuits. Notwithstanding the proposed settlements, these lawsuits, and future lawsuits that may be brought against Lyneer or its subsidiaries, may consume substantial amounts of Lyneer’s financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome of the lawsuits. An unfavorable outcome with respect to these lawsuits and any future lawsuits or regulatory proceedings could, individually or in the aggregate, cause Lyneer to incur substantial liabilities or impact its operations in such a way that may have a material adverse effect upon Lyneer’s business, financial condition or results of operations. In addition, an unfavorable outcome in one or more of these cases could cause Lyneer to change its compensation plans for its employees, which could have a material adverse effect upon Lyneer’s business. See Part I, Item 3 — Business — Legal Proceedings.

Lyneer’s service revenue increaseddecreased by $41,235,113,$6,731,084, or 10.3%,1.5%, during the year ended December 31, 2024,2025, as compared to the prior fiscal year. This increase wasdecrease was predominately due to the higherlower revenues from Lyneer’s temporary placement services business due primarily to a strongdecrease sales initiative byin the Company.revenues associated with our largest client. Permanent placement and other services decreasedincreased by $846,229,$688,480 or 18.3%,18.2% due to lowerhigher permanent job demand as companies cut back on hiring permanent positions.demand.

Lyneer has one client that represented approximately 16% of Lyneer’s 2024 and 2023 revenues, respectively.revenues. No other customer accounted for more than 10% of Lyneer’s revenues in either period.2024. The client’s contract with Lyneer consists of a master service agreement (“MSA”) for temporary employee services with various customer locations entering into separate service annexes. None of the revenues from a specific location exceeded 5% of the aggregate revenue associated with the client. The current term of the MSA expires in January 20262027 and automatically renews for one-year subsequent terms. However, the client may terminate the agreement for convenience at any time, subject to any accrued payment obligations. If this client were to terminate its relationship with Lyneer, Lyneer would face a material decrease in revenues if it is unable to replace the client’s lost revenues. This, in turn, would be expected to have a material adverse effect on Lyneer’s business and financial condition.

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 IV, Item 8.— Financial Statements and Supplementary Data.

Service revenue, net was $442,609,814$435,878,730 and $401,374,701$442,609,814 for the years ended December 31, 20242025 and 2023,2024, respectively, ana increasedecrease of $41,235,113,$6,731,084, or 10.3%.1.5%. This increasedecrease was predominately due to the higherlower revenues from Lyneer’s temporary placement services business, which increaseddecreased $42,081,342$7,419,564 or 10.6%1.7% in the year ended December 31, 20242025 as compared to the same period in 20232024 due primarily to a strongdecrease sales initiative byin the Company.revenues associated with our largest client. Permanent placement and other services decreasedincreased $846,229$688,480 or 18.3%18.2% due to lowerhigher permanent job demand as companies cut back on hiring permanent positions.demand.

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 directsdirect costs, including payroll, payroll taxes and employee benefit costs. Cost of revenue and gross profit for the years ended December 31, 20242025 and 20232024 consisted of the following:

Cost of revenue for the years ended December 31, 20242025 and 20232024 was $395,431,491$389,892,967 and $354,496,441,$395,431,491, respectively, ana increasedecrease of $40,935,050$5,538,524 or 11.5%.1.4%. The increasedecrease in cost of revenue was due primarily to higherlower service revenue, net driven primarily by higherlower temporary placement services revenue,revenue due primarily to a decrease in the revenues associated with our largest client., net which increaseddecreased $42,081,342$7,419,564 or 10.6%.1.7%.

Gross profit for the years ended December 31, 20242025 and 20232024 was $47,178,323$45,985,763 and $46,878,260,$47,178,323, respectively, ana increasedecrease of $300,063$1,192,560 or 0.6%.2.5%. As a percentage of service revenue, net, gross profit was 10.7%10.6% and 11.7%10.7% for the years ended December 31, 20242025 and 2023,2024, respectively, whicha decreasedslight due to increasing labor costs and reduced permanent placements.decrease.

Selling, general and administrative expenses for the years ended December 31, 20242025 and 20232024 were $64,021,052$91,289,682 and $45,441,659,$64,021,052, respectively, an increase of $18,579,393,$27,268,630, or 40.9%,42.6%, due primarily to higher transaction costs related to the Merger, stock compensation expense and bada debtfull expenseyear of $957,031expenses as a result of the Merger compared to five and $1,526,985one-half months during the years ended December 31, 20242025 and 2023,2024, respectively, partially offset by cost cutting measures.measures and lower transactional expenses related to the Merger.

As a percentage of service revenue, net, selling, general and administrative costs were 20.9% in the year ended December 31, 2025 as compared to 14.5% in the year ended December 31, 2024 as compared to 11.3% in the year ended December 31, 2023.2024. The increase in selling, general and administrative costs as a percentage of service revenue, net was due primarily to higher stock compensation expense and lower transactions costs related to the Merger in the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024.

Depreciation and amortization expense for the years ended December 31, 20242025 and 20232024 was $4,991,863$4,928,514 and $5,038,218,$4,991,863, respectively, a decrease of $46,355$63,349 or 0.9%,1.3%, a slight decrease on a year-over yearyear-over-year basis.

Loss on debt extinguishment during the year ended December 31, 20232024 relates to the FourthSeventh Amendment and Forbearance Agreement to the Revolver being treated as a debt extinguishment after the Company’s analysis of ASC Topic 470 –— Debt.Debt (“ASC 470”).

Interest expense for years December 31, 20242025 and 20232024 was $12,004,860$9,164,495 and $17,538,816,$12,004,860, respectively. The decrease of $5,533,956,$2,840,365, or 31.6%,23.7%, in year ended December 31, 20242025 compared to year ended December 31, 20232024 was attributed to the Company deconsolidating the joint and several debt obligations as of the Merger date,date and a lower interest rate from the previous Revolver as compared to the new Revolver entered into on April 29, 2025, partially offset by higherthe Company incurring $3,588,223 of interest ratesexpense onrelated to an agreement with a professional employer organization (“PEO”) which processes the revolvingpayroll credit facility on a year-over-year basis, an increase infor the ratesCompany, onrelated to the term,unpaid seller and earnout notes due to amendments in May 2023 and August 2023, and, new earnout notes issued in January 2024.balance.

Income Tax (Expense) Benefit

Income tax expense was $33,991 and $5,379,102 for the yearyears ended December 31, 20242025 and an2024, incomerespectively, taxa benefitdecrease of $5,928,271 for the year ended December 31, 2023, an increase of $11,307,373,$5,345,111, was primarily due to the establishment of a valuation allowance on the Company’s deferred tax assets.assets in 2024.

In accordance with ASC Topic 205-40,205-40 — 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 financial and other covenants contained in Atlantic’s credit facilities, as well as Atlantic’s forecasted liquidity.liquidity for the new combined company including Circle8. 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 consolidated financial statements. This conclusion was reached primarily because the consolidated financial information as of the acquisition date is still being prepared and compiled, including an analysis of liabilities extinguished pursuant to the terms of the Acquisition Agreement. The Company haswill receivedcontinue conditionalto approvalevaluate the provisions in Topic 205-40 in future filings upon completion of all acquisition accounting activities and afiling preliminaryof termCircle8’s sheetaudited byconsolidated financial statements and combined pro forma financial statements. The Company expects that the combination with Circle8 will enhance scale, liquidity, and access to capital, positioning the combined entity for potential premium valuation multiples and expanded international reach with established global clients. Management further anticipates that the transaction will drive operating efficiencies, improve profitability, and strengthen revenue stability through a newdiversified ABLcustomer lenderbase and expectsbalanced togeographic closeexposure onacross the newUnited creditStates facilityand by the end of April 2025.Europe.

On December 31, 2023, IDC, Lyneer and Prateek Gattani, IDC’s Chief Executive Officer and our then Chairman of the Board followinguntil theApril Merger, have2025, entered into an Allocation Agreement dated(“Allocation asAgreement”). Pursuant to the terms of Decemberthe 31,Allocation 2023, pursuant to whichAgreement, 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 all but $35 million of the Revolver will 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 andindebtedness, Lyneer will remain jointly and severally liable with IDC to such lenders until such time as such joint and several indebtedness is restructured,restructured. atAt whichthat time IDC will be obligated to repay in full all remaining amounts payable under the Term Note and($36,062,862), the Seller Notes and($7,875,000), willthe repayEarnout orNotes assume($20,435,654), allalong butwith approximatelythe $35term millionnote underfor Revolver.the shortfall from the restructuring of the previous revolving credit facility ($6,000,000). 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,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 deconsolidated 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 21: Subsequent Events for further discussion related to the SPP Term Note purported default.

In the Allocation Agreement, IDC and Mr. Gattani have agreed to implement a plan to refinance or otherwise satisfy the joint and several indebtedness. IDC and Mr. Gattani are currently exploring refinancing opportunities with several lenders to address the assumed debt, as well as the IDC portion of the Revolver. However, itIt 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. TheOn 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 ABL revolver, replacing the previous Revolver, with a maturity date of April 29, 2028. On April 29, 2025, the Mergerprevious 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 has8: beenDebt extendedfor tofurther March 31, 2026. The Company has received conditional approval by a new ABL lender and expects to close on a new credit facility by the end of April 2025.information.

Cash flows used in operating activities for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 was higherlower due to an increase in accounts receivable and accrued expenses.expenses and other current liabilities.

Cash provided by financing activities decreased for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 and consisted of borrowings and payments under the Company’s debt arrangements of the RevolverRevolver, and Seller Notes (as described below). Additionally, during the yearNew endedRevolving DecemberCredit 31,Facility 2024, the Company issued shares,and entered into additional debt obligations, and had a deemed contribution as a result of the Merger.obligations.

TheUntil April 29, 2025 as described below, the Company currently maintainsmaintained the Revolver as a co-borrower withits IDCformer parent, 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 are currentlywere linked with bank accounts associated with the lender and funded using the Revolver. These borrowings arewere determined by Lyneer’s availability based on a formula of billed and unbilled accounts receivable as defined in the loan agreement.

As of December 31, 20242025, and December 31, 2023,2024, the totalCompany balancehas recognized liability balances on the Revolver wasof $53,983,962$49,308,253, including $146,148 of unamortized deferred issuance costs and $90,906,217,$42,508,379, respectively.including As$0 of Decemberunamortized 31,deferred 2024issuance and December 31, 2023, the Company recorded a liability of $42,508,379 and $85,092,695, respectively, and IDC owed the remaining $11,475,583 and $5,813,522,costs, respectively. Total available borrowing capacity on the Revolver as of December 31, 20242025 was over-advanced by $1,299,463, net of a $5,000,000 reserve required on the Revolver.$422,756. The borrowing base calculation is based on Lyneer’s eligiblegross assets.accounts receivable less the balance of ineligible balances (defined in the Loan Agreement).

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.annum, and currently has a default interest rate of 19%.

On August 12, 20242024, 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. TheAdditionally, the Tenth Amendment revised the Initial Capital Raise milestone wasand the uplisting milestone dates were subsequently extended to September 15,30, 20242025, withor additionalas milestonesagreed includingbetween anthe uplistingparties. milestoneThe dateTenth Amendment was superseded by the terms of Septemberthe 15,new 2024.Revolving Credit Facility.

Lyneer and IDC did not make the principal and interest payments due July 31, 2023 and October 31, 2023 and any subsequent dates on the Seller Notes as payments to any other debt holders waswere prohibited by the administrative agent of the lender under the previous lender 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 form Lyneer.

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 arewere 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%.

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 hashad not refinanced or restrictedrestructured the credit facility and missed all payments of the Seller Notes and the Earnout Notes during 2024 and is currently in default of the Seller Notes and Earnout Notes.Notes, but the note holders can take no action pursuant to the inter-creditor agreement with SLR. The Seller Notes and the Earnout Notes are covered by the Allocation Agreement discussed above.above; and as such, the Company deconsolidated the Earnout Notes obligations as of the Merger date. See Note 8: Debt for further information.

TheAs Lenders’ consent to IDC’s transfer of ownershippart 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 intoMerger on June 18, 2024, the Company entered into a secured bridge loan (“Credit Agreement”), which was entered into on the same day, in the principal amount of $1,950,000 at an interest rate of 5% per annum. The Company has accrued interest of $152,208 included in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets as of December 31, 2025.The maturity date of the Credit Agreement was originally September 30, 2024. However, mandatory prepayments shall be made from the Initial Capital Raise, on the issuance of new debt or new equity interests, or upon a change of control. Conditions have not been met to make mandatory prepayments.

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. The Company has accrued interest of $220,161 included in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets as of December 31, 2025. On January 23, 2026, the Company and St. Laurent entered into a Confidential Settlement Agreement which satisfied the Promissory Notes in total. See Note 21: Subsequent Events for further information.

In connection with the closing of the Merger,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. However, as Prateek Gattani, our Chairman of the Board following the Merger, is also the Chief Executive Officer and controlling stockholder of IDC, we also believe we will be able to negotiate an extension of the Merger Note if we are unable to pay it in full at maturity. 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.

•the expected benefits and synergies of the Acquisitionacquisition of Circle8 Group B.V.;

Other than the litigation set forth in Item 1. Legal Proceedings there have been no material changes to the Risk Factors included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15,202615, 2026 to the date of this filing. A summary of those risk factors is outlined below.

•Lyneer has a significant amount of debt obligations and its failure to restructure or pay such obligations when due could have a material adverse impact on Lyneer’s financial condition and long-term viability. Furthermore, Lyneer is in default under its principalcertain credit facilities and outstanding promissory notes and any future defaults by Lyneer under its credit facilities could also have a material adverse impact on Lyneer’s financial condition and long-term viability.

Risks Related to Circle8’sCircle8 Group B.V.’s Business

•As a staffing company, Circle8 Group B.V. is prone to cash flow imbalances. If it is unable to satisfy those needs from cash generated from its operations or borrowings under its debt instruments, upon mutual agreement we will be required to fund such shortfall.

•Circle8’sCircle8 Group B.V.’s clients come from a variety of enterprises and their needs may change rapidly as their businesses and industries evolve.

•Circle8’sCircle8 Group B.V.’s international operations subject us to numerous risks outside of our control, including risks arising from political unrest, military conflicts, natural disasters, severe weather conditions, and global health emergencies.

•Our growth strategy and our expansion and acquisition strategy may not be executed effectively. Following the acquisition of Circle8,Circle8 Group B.V., we have not reached any definitive agreement with any acquisition targets, and we cannot assure you that we will consummate any future acquisition on favorable terms or at all.

•Each of Atlantic and Circle8 Group B.V. have incurred significant costs in connection with the Acquisition. The Purchase Price under the Acquisition Agreement is not adjustable based on the market price of Atlantic Common Stock, so the Share consideration received by Axiom may have a greater or lesser value than at the time the Acquisition Agreement was signed.

Atlantic,On June 29, 2026, Atlantic changed its name from Atlantic International Corp to Circle8 Group Inc. (“Circle8” or the “Company”). The Company started trading under the Nasdaq ticker CIRC on July 2, 2026 Circle8, through its subsidiaries, is a worldwide strategic staffing firm. The Company was formed under the principles of honesty and integrity, and with the view of becoming the preferred outside employer of choice. 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 8,5008,300 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 Atlantic’sthe Company’s Board of Directors as Executive Chairman.Chairman and further was appointed as the Company’s Chief Executive Officer on June 29, 2026.

AtlanticCircle8 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.

AtlanticCircle8 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, AtlanticCircle8 is building a global staffing organization that redefines the way companies grow professional teams. Our mission is to leverage new technologies and business partnerships to create streamlined hiring processes that resolve the challenges of modern-day employment economics.

Atlantic’sCircle8’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’sCircle8’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’sCircle8’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 AtlanticCircle8 believes is ripe for strategic consolidation. AtlanticCircle8 plans to integrate companies and maximize synergies and economics to improve sales and lower operating costs, while, at the same time, continuing to focus and expand on its acquisition strategy of high-margin profitable outsourced services and workforce solution providers.

Atlantic’sCircle8’s acquisition of Circle8 Group B.V. demonstrated its strategic rationale, as follows:

•Platform for disciplined future growth, leveraging Circle8'sCircle8 Group B.V.’s completed acquisition phase and transition to operational excellence.

At Atlantic,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.

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’sCircle8 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.

The following discussion summarizes the key factors Atlantic’sCircle8’s management team believes are necessary for an understanding of Atlantic’sCircle8’s financial statements.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025:

Service revenue, net of discounts, for the three and six months ended MarchJune 31,30, 2026 and 2025 consisted of the following:

Service revenue, net was $249,886,893$319,806,775 and $102,808,807$102,896,993 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $147,078,086,$216,909,782, or 143.1%.210.8%. The Circle8 Acquisition accounted for $145,248,041$205,991,065 of the increase.increase, including the full increase in brokerage and payrolling services. The remaining $1,830,045$10,918,717 increase is primarily a result of the historical Company’s temporary placement services business, increasing $1,755,516$10,404,988 in the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 due to a strong sales initiative which resulted in new customers.

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 MarchJune 31,30, 2026 and 2025 consisted of the following:

Cost of revenue for the three months ended MarchJune 31,30, 2026 and 2025 was $228,460,840$296,003,512 and $91,622,685,$91,478,299, respectively, an increase of $136,838,155$204,525,213 or 149.3%.223.6%. The Circle8 Acquisition accounted for 134,938,646$192,163,225 of the increase. The remaining $1,830,045$12,361,988 increase was due to the historical Company’s higher service revenues. Gross profit for the three months ended MarchJune 31,30, 2026 and 2025 was $21,426,053$23,803,263 and $11,186,122,$11,418,694, respectively, an increase of $10,239,931$12,384,569 or 91.5%.108.5%. The Circle8 Acquisition accounted for $10,309,395$13,827,840 of the increase. The historical Company wasdecreased essentially flat.$1,443,271. As a percentage of service revenue, net, gross profit was 8.6%7.4% and 10.9%11.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The reduction in margin primarily attributed to international operations including certain European jurisdictions which have lower margins compared to the Company’s domestic business. As a percentage of service revenue, net, the gross profit was 10.6%8.8% and 10.9%11.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, for the historical Company, which wasdecreased adue slightto decrease.higher workers compensation premiums.

Total operating expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 consisted of the following:

Selling, general and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $31,997,753$34,765,727 and $19,399,479,$18,870,535, respectively, an increase of $12,598,274,$15,895,192, or 64.9%.84.2%. The Circle8 Acquisition accounted for $8,969,658$11,960,700 of the increase. The remaining $3,628,616$3,934,493 increase primarily relates to transaction costs related to the Circle8 AcquisitionAcquisition, a one-time non-customer valuation allowance of $2,903,284 and bad debt expense of $1,233,099$729,946 in the three months ended MarchJune 31,30, 2026.

As a percentage of service revenue, net, selling, general and administrative costs were 12.8%10.9% in the three months ended MarchJune 31,30, 2026 as compared to 18.9%18.3% in the three months ended MarchJune 31,30, 2025. As a percentage of service revenue, net, selling, general and administrative costs were 22.0%20.0% and 18.9%18.3% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, for the historical Company, due primarily to increased costs related to the Circle8 AcquisitionAcquisition, a one-time non-customer valuation expense of $2,903,284 and bad debt expense of $1,233,099.$729,946.

Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 and 2025 was $4,332,094$4,433,807 and $1,236,389,$1,232,750, respectively, an increase of $3,095,705$3,201,057 or 250.4%.259.7%. The Circle8 Acquisition accounted for $3,103,592$3,209,561 of the increase. The historical Company was essentially flat with expense of $1,228,502$1,224,245 and $1,236,389$1,232,750 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

GainLoss on Debt Extinguishment

GainLoss on debt extinguishment,extinguishment for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

GainLoss on debt extinguishment during the threesix months ended MarchJune 31,30, 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.

Interest expense for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

Interest expense for the three months ended MarchJune 31,30, 2026 and 2025 was $3,554,670$4,276,743 and $1,284,822,$2,023,960, respectively. The Circle8 Acquisition accounted for $1,027,272$1,195,452 of the increase. The historical Company’s interest expense was $2,527,398$3,081,291 and $1,284,822$2,023,960 for the three months ended MarchJune 31,30, 2026 and 2025. The increase of $1,242,576,$1,057,331, primarily attributed to the Company incurring interest expense on unpaid balance related to an agreement with a professional employer organization (“PEO”) whowhich processes the payroll for the Company, and interest expense related to the new factoring agreements,agreements and other short-term debt, partially offset by lower interest rates for the Revolver as compared to the Revolver with BMO Bank, N.A. (“BMO” and “BMO Revolver”).

Other expenses, gains and losses for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

Other expenses, gains and losses for the three and six months ended MarchJune 31,30, 2026, primarily relates to the loss on the preferred stock and warrant offerings, the change in fair value of the Preferred Stock warrants and thebifurcated derivatives, change in fair value of the Circle8 Benelux warrants.warrants, the gain on exercise of the Preferred Stock warrants and facility fees related to the International factoring agreements.

Income tax expense for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

Income tax (expense)/benefit for the three months ended MarchJune 31,30, 2026 and 2025 was $73,181$1,383,048 and $(9,6179,618), respectively. The change between the periods was primarily due to the tax benefit recorded in jurisdictions where we do not maintain a valuation allowance.

Atlantic’sCircle8’s working capital requirements are primarily driven by personnel payments and client accounts receivable receipts. As receipts from client partners lag behind payments to personnel, working capital requirements increase substantially in periods of growth.

Prior to its acquisition of Circle8,Circle8 Atlantic’sGroup B.V., the Company’s primary sources of liquidity have been cash generated from operations supported through borrowings under its Revolver. Atlantic’sThe Company’s primary uses of cash are payments to engagement personnel, corporate personnel, related payroll costs and liabilities, operating expenses, capital expenditures, cash interest, cash taxes, and debt payments.

In accordance with ASC Topic 205-40 — Going Concern, AtlanticCircle8 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’sCircle8’s credit facilities, forecasted liquidity, net losses and negative net working capital. AtlanticCircle8 has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of its unaudited consolidated financial statements.

The Company expects that theCircle8 acquisition of Circle8Acquisition 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.

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$56,872,782 as of MarchJune 31,30, 2026), the Seller Notes ($7,875,000 as of MarchJune 31,30, 2026), the Earnout Notes ($20,435,654 as of MarchJune 31,30, 2026), along with the term note for the shortfall from the restructuring of the previous revolving credit facility ($5,661,881 as of MarchJune 31,30, 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.default and Note 20: Subsequent Events for further information related to the SPP settlement.

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.collateral. See Note 8: Debt for further information.

Cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 consisted of the following:

Cash flows provided by (used in) operating activities for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months MarchJune 31,30, 2025 was lower primarily due to a the Circle8 Acquisition.

Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 increased compared to MarchJune 31,30, 2025 and consisted entirely of purchases of property and equipment.

Cash (used in) provided by financing activities increased for the threesix months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 primarily due to the Circle8 AcquisitionAcquisition, proceeds from issuance of preferred stock and warrants, proceeds received upon exercise of warrants, and also primarily consisted of borrowings and payments under the Company’s debt arrangements of the Revolver.Revolver, factoring agreements and other short-term debt.

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 requirerequired 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 MarchDecember 31, 20262024 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.

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 $130,453$188,351 in issuance costs and, according to ASC 470 — Debt (“ASC 470”),470, is deferring these costs and will amortize as an adjustment to interest expense over the remaining term using the effective interest method.

As of MarchJune 31,30, 2026, and December 31, 2025, the Company has recognized liability balances on the Revolver of $45,141,541,$41,198,353, including $130,453$114,757 of unamortized deferred issuance costs and $49,308,253, including $146,148 of unamortized deferred issuances costs, respectively.

On April 28, 2025, the Term Note lender foreclosed on certain amounts of IDC’s stock of Atlantic International CorpCorp. See Note 8: Debt for further information.

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

Lyneer had recognized liability balances on the Term Note of $0$56,872,782 as of both MarchJune 31,30, 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.

Lyneer had recognized Seller Note liability balances of $0 for both MarchJune 31,30, 2026 and December 31, 2025. The Seller Notes are currently in default, but the note holders can take no action pursuant to the inter-creditor agreement with SLR.

The Earnout Note liability was $0 for both MarchJune 31,30, 2026 and December 31, 2025. The Earnout Notes are currently in default, but the note holders can take no action pursuant to the inter-creditor agreement with SLR.

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$211,513 included in “accrued expenses and other current liabilities” on the accompanying unaudited condensed consolidated balance sheets as of MarchJune 31,30, 2026. The maturity date of the Credit Agreement was originally September 30, 2024. However, mandatory prepayments shall be made from the Initial Capital Raise (as defined), on the issuance of new debt or new equity interests, or upon a change of control. Conditions hashave not been met to make mandatory prepayments.

On July 22, 2024, the Company entered into an amendment to extend the maturity date of the Credit Agreement to June 18, 2026. The Company did not make the payment by the maturity date and is in default. On April 17, 2026, the lender notified the Company of certain defaults. See Note 11: Commitments and Contingencies for discussion.