Company: ATLN
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001605888-25-000055
Chunk: 73

Company: ATLANTIC INTERNATIONAL CORP.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 73
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, 2021, a class action wage and hour complaint was filed in the Superior Court of California, Orange County, by Teresa Alvarez and Mirna Reyes as class representatives.  The Complaint was filed against the Company as well as the Company’s client.  The matter settled for $750,000, $650,000 of which is to be paid by the Company, and the remaining $100,000 is to be paid by the client. The settlement agreement was signed November 16, 2023 and has been finalized and executed. The Company has accrued the $650,000 settlement payment due, which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets. The full settlement amount of 

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$671,858, which includes employment taxes, was paid on October 23, 2025, and Lyneer’s portion of the settlement has now been paid in full.

On August 1, 2023, a class action wage and hour PAGA complaint was filed in the Superior Court of California, County of San Bernardino, by Maria Reyes as class representative. The matter settled at a mandatory settlement conference held on October 10, 2025, for $925,000, which is recognized in “accrued expenses and other current liabilities” on the accompanying consolidated balance sheets. The settlement funds will be due from the Company within 90 days after final approval of the settlement, but in no event less than six months from October 10, 2025.  The settlement agreement is still being prepared/negotiated. 

Note 11: Segment ReportingThe Company reports information about operating segments in accordance with ASU 2023-07, which requires financial information to be reported based on the way management organizes segments within a company for making operating decision and evaluating performance. The Company derives revenue from hourly fees charged from the placement of “light industrial” temporary staffing and placement fees earned from the placement of professional permanent employees at its customers. Revenues are accounted for and tracked by each branch location by temporary or permanent placement. The direct costs are not reported by temporary or permanent placement, but rather reported together. Direct costs, primarily payroll and payroll related costs are included in cost of revenue which is deducted from revenues to determine gross profit. Each branch’s operating expenses, which, similar to direct costs, are not separated into temporary or permanent placement costs are then deducted from gross profit. So ultimately the segment manager does not review discrete financial information summarized by temporary or permanent placement,