ATLANTIC INTERNATIONAL CORP.ATLN
ATLANTIC INTERNATIONAL CORP. Debt Disclosure
Debt
Some of the Company’s debt obligations consist of joint and several liabilities with the Company’s parent which are accounted for under ASC 405-40. Lyneer will remain jointly and severally liable with IDC to the lenders of the debt obligations until such time as such joint and several indebtedness is restructured. As of the date of the Merger, the Company deconsolidated the joint and several liabilities with regard to the Debt Allocation Agreement, dated December 31, 2023, between Lyneer and IDC. See below for further discussion.
The table below provides a breakdown of the Company’s recognized debt:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Revolver | $ | 49,454,401 | $ | 42,508,379 | |||||||
| Credit Agreement | 1,950,000 | 1,950,000 | |||||||||
| Promissory Note | 1,375,000 | 1,375,000 | |||||||||
| Merger Note | 28,943,615 | 35,000,000 | |||||||||
| Other debt | 3,266,445 | — | |||||||||
| Less: unamortized debt issuance costs | (324,421) | (244,565) | |||||||||
| Total debt | $ | 84,665,040 | $ | 80,588,814 | |||||||
| Current portion | $ | 55,838,759 | $ | 43,883,379 | |||||||
| Non-current portion | $ | 28,826,281 | $ | 36,705,435 | |||||||
On April 29, 2025, the Company closed on a new ABL lender with a maturity date of April 29, 2028. See below for further discussion.
Debt Allocation Agreement
Lyneer and IDC entered into a debt allocation agreement (the “Allocation Agreement”) dated as of December 31, 2023, which specifies and allocates responsibility for repaying (or refinancing) the joint-and-several debts between Lyneer and IDC. The Company reassessed its accounting for joint-and-several liabilities under ASC 405-40 as of the Merger date and concluded it is reasonably probable that IDC can repay their portion of the debt allocated per the Allocation Agreement. As a result, the Company deconsolidated its joint and several debt obligations. See Revolver (discussing the previous BMO Revolver), Term Note, Seller Notes and Earnout Notes below for those joint-and-several debts that are applicable to the Allocation Agreement. At December 31, 2025, such indebtedness totaled $70,373,516.
Revolver
The Company maintained a Revolver with BMO Bank, N.A. (“BMO”) as a co-borrower with its former parent company, IDC, with an initial available borrowing capacity of up to $125,000,000, when originally executed in 2022. The facility was partially used to finance the acquisition of Lyneer Investments by IDC in August 2021, with additional borrowing capacity available under the Revolver to finance the Company’s working capital. All the Company’s cash collections and disbursements are currently linked with bank accounts associated with the Lender and funded using the Revolver. These borrowings are determined by the Company’s availability based on a formula of billed and unbilled accounts receivable as defined in the loan agreement.
On April 29, 2025, the Company’s subsidiary, Lyneer Staffing Solutions, LLC (“Lyneer”) entered into a Loan and Security Agreement (the “Loan Agreement”) with North Mill Capital, LLC (d/b/ SLR Business Credit (“SLR”)), providing for a $70 million (“Advance Limit”) senior secured revolving credit facility (the “New Revolving Credit Facility”). The Loan Agreement replaced Lyneer’s prior senior secured revolving credit facility provided by BMO. Lyneer’s previous lender entered into a term loan of $6,000,000 with IDC and Lyneer for IDC’s shortfall owed to BMO, plus a $1,000,000 exit fee. The $6,000,000 term loan and $1,000,000 exit fee are joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement with IDC discussed above. BMO also assumed 3,439,803 shares of Atlantic International Corp. previously owned by IDC as collateral for the new term loan. The Company incurred $188,351 in issuance costs and, according to ASC 470 – Debt, is deferring these costs and will amortize as an adjustment to interest expense over the remaining term using the effective interest method.
The interest rate on the New Revolving Credit Facility is calculated as 1.00% per annum above the Prime Rate, but not less than 5.75% per annum. The interest rate as of December 31, 2025 was 7.75% per annum.
The New Revolving Credit Facility matures on April 29, 2028, unless the lender, at its option, in writing agrees to extend for a period of one year.
As of December 31, 2025, and December 31, 2024, the Company has recognized liability balances on the Revolver of $49,308,253, including $146,148 of unamortized deferred issuance costs and $42,508,379, including $0 of unamortized deferred issuance costs, respectively.
Borrowings under the Revolver (as amended on November 15, 2022) were classified as one of the following:
•Secured overnight financing rate (“SOFR”) Revolving Credit Loans
•SOFR First-in-last-out (“FILO”) Loans
•Base Rate Revolving Credit Loans
•Base Rate FILO Loans
•Swing-Line Loans
Borrowings under the New Revolving Credit Facility are calculated as 1.00% per annum above the Prime Rate, but not less than 5.75% per annum. The interest rate as of December 31, 2025 was 7.75% per annum.
The table below summarizes the interest rates, per annum, on each loan type as of December 31, 2025 and 2024, respectively.
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| New Revolving Credit Agreement | 7.75% | N/A | ||||||
| Previous Revolver | ||||||||
| Base Rate Revolving Credit Loans | N/A | 12.25% | ||||||
| Swing-Line Loans | N/A | —% | ||||||
| Base Rate FILO Loans | N/A | —% | ||||||
| SOFR Revolving Credit Loans | N/A | 9.21% | ||||||
The Company must pay a facility fee on the New Revolving Credit Agreement in an amount calculated at a rate of 0.50% per annum on the Advance Limit.
The New Revolving Credit Agreement contains certain customary covenants, including affirmative and negative covenants.
Under the terms of the New Revolving Credit Agreement, the Company is prohibited from making dividends or distributions to owners who are not also co-borrowers on the Revolver.
Total available borrowing capacity on the New Revolving Credit Agreement as of December 31, 2025 was over-advanced by $422,756.
Term Note
On August 31, 2021, the Company and IDC as co-borrowers entered into a Term Note in the amount of $30,300,000. The proceeds of this loan were primarily used to finance the acquisition of Lyneer by IDC in August 2021. The Term Note matures on February 28, 2026, at which time all outstanding balances are due and payable. There are no scheduled principal payments on the Term Note prior to its maturity date. The Term Note is subordinated to the Revolver and bears an initial stated rate of 14% per annum.
On August 12, 2024, the Company entered into the Tenth Amendment and with its lender, under which the lender, waived all existing events of default as of the date of the agreement and agreed to forbear from exercising its rights and remedies with respect to such events of default under the Term Note through September 30, 2024. The Initial Capital Raise milestone and the uplisting milestone dates were subsequently extended to September 15, 2025, or later as agreed to between the parties. The Tenth Amendment was superseded by the terms of the new Revolving Credit Facility.
As of both December 31, 2025, and December 31, 2024, the Company has deconsolidated the Term Note, as discussed above; therefore, the Company recognized liability balances on the Term Note of $0, respectively. The Term Note obligation is joint-and-several with IDC and is subject to IDC’s obligation under by the Allocation Agreement with IDC discussed above.
On April 28, 2025, the Term Note lender foreclosed on IDC’s remaining 21,983,926 shares of Atlantic International Corp. common stock (“IDC Shares”). This foreclosure was only related to IDC’s security provided to the lender under the
Term Note and did not extend to the Company or its subsidiaries. The value of the IDC Shares on the day of the foreclosure was approximately $77,383,420 which far exceeded the liability due under the Term Note. As of this report, the IDC Shares are pending transfer to the Term Note Lender due to litigation between IDC and an unrelated third party creditor of IDC. The Company is reviewing the implications of the foreclosure on the Company’s obligations under the Term Note as the collateral received by the Term Note holders significantly exceeded the purported amounts due under the Term Note and the value of the securities is readily ascertainable. The Company believes the resolution of this matter will not have an impact on the Company’s financial position or results of operations.
The Term Note includes certain financial and non-financial covenants that the Company is required to comply with. The Term Note is allegedly in default and the Company has sued the Term Note Lender. See Note 21: Subsequent Events for further discussion related to the SPP Term Note purported default.
Seller Notes
As part of the purchase price consideration for the Transaction, the Company and IDC as co-borrowers issued various Seller Notes to former owners totaling $15,750,000. Payments on the Seller Notes are due in quarterly installments of $1,575,000, and $3,150,000 due at their amended maturity date of April 30, 2024, and bear interest at an amended fixed rate of 11.25% per annum. Payments to Seller Notes debt holders was prohibited by the administrative agent of the previous lender under the Revolver and the current Revolver. As provided in the inter-creditor agreement between North Mill Capital, LLC (d/b/ SLR Business Credit (“SLR”)) and the Seller Note holders, Lyneer is prevented from making payments and the Seller Note holder are prevented from accepting payments from Lyneer.
As of both December 31, 2025, and December 31, 2024, the Company has deconsolidated the Seller Notes, as discussed above; therefore, the Company recognized liability balances of $0. The Seller Notes obligation is joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement with IDC discussed above. The Seller Notes are currently in default, but the note holders can take no action pursuant to the inter-creditor agreement with SLR.
Earnout Notes
As contingent consideration milestones are met in connection with the Transaction Agreement, the Company can elect to pay the obligation in cash or issue notes payable. During 2023, the Company and IDC as co-borrowers issued nine notes payable with an aggregate value of $13,494,133. Payments on each of the Earnout Notes are due in quarterly installments through their amended maturity date of January 31, 2025, and each note bears an amended stated interest rate of 11.25% per annum. On January 16, 2024, the Company and IDC as co-borrowers issued six notes payable with an aggregate value of $6,941,521. Payments on each of the Earnout Notes are due in quarterly installments through their maturity date of January 16, 2026, and each note bears interest at a rate of 6.25% per annum. The Company did not make principal and interest payments due to the notice received from the Revolver’s administrative agent of the lender restricting payments to other lenders and the interest rate was increased to the default rate of 11.25% for the January Earnout Notes.
Payments to any other debt holders was prohibited by the administrative agent of the previous lender under the Revolver and the current Revolver. As provided in the inter-creditor agreement between SLR and the Earnout Note holders, Lyneer is prevented from making payments and the Earnout Note holder are prevented from accepting payments from Lyneer.
As of both December 31, 2025 and December 31, 2024, the Company has deconsolidated the Earnout Notes, as discussed above; therefore, the Company recognized liability balances of $0. The Earnout Notes obligation is joint-and-several with IDC and is subject to IDC’s obligation under the Allocation Agreement with IDC discussed above. The Earnout Notes are currently in default, but the note holders can take no action pursuant to the inter-creditor agreement with SLR.
2023 and 2024 Amendments to Seller and Earnout Notes
The Company did not make the Seller Note and Earnout Note principal and interest payments due during 2024 or the nine months ended September 30, 2024. On May 14, 2023, the Company signed an amendment (the “Omnibus Amendment”) to defer the missed Seller Note and Earnout Note payments through the amendment date until their amended maturity dates of April 30, 2024, and January 31, 2025, respectively. The amendment increased the interest rate of the Seller Note and the Earnout Notes to 11.25% per annum from 6.25% for all remaining payments.
The Omnibus Amendment was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $40,000 amendment fee and will amortize as an adjustment to interest expense over the
remaining term, along with any existing unamortized costs using the effective interest method. Lyneer paid the $40,000 amendment fee and will be reimbursed from IDC. These fees were included in “capital contribution” on the accompanying consolidated statements of stockholders’ earnings (deficit). Fees paid to third parties are expensed as incurred, and no gain or loss was recorded on the modification.
On January 16, 2024, the Company signed the Second Omnibus agreement to defer the missed July 31, 2023 and October 31, 2023, principal and interest payments until February 28, 2024, in addition to the payment of $1,575,000, along with accrued interest, scheduled for payment on January 31, 2024, which shall now be due and payable on February 28, 2024. The Company missed the payment due on February 28, 2024.
Credit Agreement
On June 18, 2024, the Company entered into a secured bridge loan (“Credit Agreement”) in the principal amount of $1,950,000 at an interest rate of 5% per annum. The maturity date of the Credit Agreement was originally September 30, 2024. However, mandatory prepayments shall be made from the Initial Capital Raise, on the issuance of new debt or new equity interests, or upon a change of control. Conditions have not been met to make mandatory prepayments.
On July 22, 2024, the Company entered into an amendment to extend the maturity date of the Credit Agreement to June 18, 2026.
Promissory Note
From April 29, 2019 to April 29, 2020, the Company entered into a series of non-convertible promissory notes (the “Promissory Notes”) with St. Laurent amounting to $1,375,000. The Promissory Notes had a one-year term, most recently extended through July 31, 2025 or a later date to be mutually agreed upon. The Promissory Notes bear interest accruing at the rate of 5% per annum, and increased to 10% for the period from August 1, 2024, through July 31, 2025. On January 23, 2026, the Company and St. Laurent entered into a Confidential Settlement Agreement. See Note 21: Subsequent Events for further information.
Merger Note
In connection with the closing of the Merger, we issued to IDC the Merger Note in the principal amount of $35,000,000 with an original maturity date of September 30, 2024. The Merger Note does not bear interest and is not convertible prior to an event of default under the Merger Note. If an event of default should occur under the Merger Note, the Merger Note will bear interest at the rate of 7% per annum commencing upon the date of such event of default and will be convertible into shares of our common stock at a price per share that equals the lowest daily volume weighted average price per share (VWAP) during the five trading days immediately preceding the date on which the applicable conversion notice is delivered to us, but not less than 80% of the price per share in our Initial Capital Raise, provided, however, that the number of shares of our common stock issuable upon conversion of the Merger Note will not exceed 19.99% of the number of our outstanding shares of common stock without shareholder approval. An event of default under the Merger Note may result in an additional event of default under the Revolver and our other indebtedness for borrowed funds.
On September 12, 2024 the Company entered into Amendment No 1 to the Convertible Promissory Note (“Amendment 1 to the Merger Note”) which extended the maturity date to the earlier of March 31, 2026 or the completion of at least a $40 million capital raise. Amendment 1 to the Merger Note was treated as a modification after the Company’s analysis according to ASC 470 and as such, the Company is deferring the $300,000 amendment fee and will amortize as an adjustment to interest expense over the remaining term using the effective interest method.
On April 29, 2025, the Company and IDC entered into an Amended and Restated Convertible Promissory Note which further extended the maturity date to the earlier of March 31, 2027 or the completion of at least a $40 million capital raise. Pursuant to the Amended and Restated Convertible Promissory Note, any amounts paid to BMO will be in satisfaction of this Note. The Company is offsetting the balance related to IDC that was remaining on the previous Revolver and rolled into the New Revolving Credit Facility. See Note 17: Related Party Transactions for IDC’s gross and net offsetting receivables amounts. Below is presented the calculation of the net liability of the Merger Note, excluding unamortized deferred issuance costs.
| Gross Amount | Amount Offset | Net Amount on Consolidating Balance Sheet | ||||||||||||||||||
| Merger Note | $ | 34,882,666 | $ | (6,056,385) | $ | 28,826,281 | ||||||||||||||
As of December 31, 2025, and December 31, 2024, the Company has recognized liability balances on the Merger Note of $28,826,281, including $117,334 of unamortized deferred issuance costs and $34,755,435, including $244,565 of unamortized deferred issuance costs, respectively.
Factoring Agreements
During 2025, the Company entered into two agreements to sell future receivables which allows for the factoring of receivables.
•On October 1, 2025, the Company sold $3,150,000 of receivables and received cash proceeds of $2,500,000 less $50,000 in origination fees. The weekly payments are $62,500 and the imputed interest rate is 48.58%.
•On October 21, 2025, the Company sold $1,905,000 of receivables and received cash proceeds of $1,500,000 less $30,000 in origination fees. The weekly payments are $37,798 and the imputed interest rate is 50.61%.
These agreements also allow for a discounted repurchase price if the Company pays the cash proceeds back early.
As of December 31, 2025, and December 31, 2024, the Company has recognized liability balances on the factoring agreements of $3,205,506, including $60,939 of unamortized deferred issuance costs and $0, including $0 of unamortized deferred issuance costs, respectively.
Subsequent to the executed amendments of the Company’s debt obligations described herein, the future minimum principal payments on the Company’s outstanding debt are as follows:
| As of December 31, 2025 | |||||
| 2026 | $ | 6,591,445 | |||
| 2027 | 28,943,615 | ||||
| 2028 | 49,454,401 | ||||
| 2029 | — | ||||
| 2030 | — | ||||
| Thereafter | — | ||||
| Total | $ | 84,989,461 | |||
Interest Expense
Total interest expense is comprised of a cash and non-cash component as described in the debt arrangements above. The Company also incurred interest expense related to an agreement with a professional employer organization (“PEO”) which processes the payroll for the Company related to the unpaid balance, at 1.5% per calendar month. Additionally, the Company entered into an agreement with Citibank, N.A. (“Citibank”) on March 5, 2019, whereby Citibank purchases specific receivables and pays the invoices at the discounted amount and the Company incurs a discount charge equal to SOFR plus 0.75% to process the payments. The discount charged ranged from 4.76% to 5.43% during 2025.
For the years ended December 31, 2025 and December 31, 2024 total interest expense totaled $9,164,495 and $12,004,860, respectively. Interest expense related to the PEO was $3,588,223 and $0 for the years ended December 31, 2025 and December 31, 2024, respectively. Interest expense related to the discount charge was $646,634 and $1,093,680 for the years ended December 31, 2025 and December 31, 2024, respectively. $210,495 and $594,275 of deferred financing costs were recognized as a component of “interest expense” on the accompanying consolidated statements of operations for the years ended December 31, 2025 and 2024, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 15, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.