Company: ATLN
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001605888-25-000006
Chunk: 153

Company: ATLANTIC INTERNATIONAL CORP.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 153
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 base salary; unreimbursed expenses; accrued but unpaid benefits; and any unpaid bonus for any then completed fiscal year.Board of Directors Agreement (Chairman) with Prateek GattaniUpon the closing of the Merger, the Company adopted the Board of Director’s Agreement dated as of April 15, 2024 with Prateek Gattani to serve as Chairman of the Board for a two-year period from the closing of the Merger. The agreement provides for Mr. Gattani to have all responsibilities of a director of the Company. He is to be paid an annual fee equal to the higher of $200,000 or the highest amount any other director is being paid. Mr. Gattani was granted RSUs to purchase 1,300,000 shares of common stock vested upon the date of grant and which have been issued. The agreement provides that he cannot be removed except by the Company’s stockholders.

Note 12: Fair Value Measurements

Earnout LiabilityThe Company may be required to make certain earnout payments in connection with the Transaction, which would be payable upon the future achievement of revenues less certain identified expenses and other performance targets. The fair value of these contingent consideration payments is determined using a Monte Carlo simulation, with key inputs being standard deviation applied to the Company’s revenues, revenue multiple, and gross profit discount rate. The fair value measurement of the contingent consideration is considered a Level 3 measurement within the fair value hierarchy.The measurement period for the Company’s contingent consideration arrangements expired on August 31, 2023, at which time amounts owed by the Company to its former owners were computed and represent fixed amounts.

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A summary of the activities of Level 3 fair value measurements is as follows:December 31,2024Beginning balance$7,100,000 Issuance of Earnout Notes— Change in fair value(150,093)Transfer to purchase consideration(6,949,907)Ending balance$— See Note 17: Related Party Transactions for a discussion of the Company’s contingent consideration liabilities attributed to LMH.The Company did not have any transfers between Levels 2 and 3 within the fair value hierarchy during the years ended December 31, 2024 and 2023.On January 16, 2024, the Company converted the Earnout liability to Subordinated promissory notes. See Note 8: Debt for further discussion.Financial Instruments not Carried at Fair Value The Carrying values of the Company’s cash and cash equivalents approx