Company: ATLN
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001605888-25-000031
Chunk: 181

Company: ATLANTIC INTERNATIONAL CORP.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 181
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Cash used in investing activities for the six months ended June 30, 2025 decreased compared to June 30, 2024 and consisted entirely of purchases of property and equipment.

Financing Activities

Cash used in financing activities increased for the six months ended June 30, 2025 compared to June 30, 2024 and consisted of borrowings and payments under the Company’s debt arrangements of the Revolver and the New Revolving Credit Facility.

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 it’s 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.

Revolver

Until April 29, 2025, as described below, the Company maintained the Revolver as a co-borrower with 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 were linked with bank accounts associated with the lender and funded using the Revolver. These borrowings were determined by Lyneer’s availability based on a formula of billed and unbilled accounts receivable as defined in the loan agreement.

On April 29, 2025, the Company closed on a new ABL credit facility, replacing the current Revolver, with a maturity date of April 29, 2028. The previous lender funded the shortfall of $6,000,000, the IDC portion owed, and IDC entered into a term loan for this amount, 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 fully covered by the Allocation Agreement