Company: ATLN
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001605888-25-000019
Chunk: 111

Company: ATLANTIC INTERNATIONAL CORP.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 8
Chunk 111
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,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.The Earnout Notes are subordinated to the Revolver and Term Note and represent unsecured borrowings.The Earnout Note liability was $0 and $0 at the periods ended March 31, 2025 and December 31, 2024, respectively.2023 and 2024 Amendments to Seller and Earnout NotesThe Company did not make the Seller Note and Earnout Note principal and interest payments due during 2024 or the three months ended March 31, 2025. 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