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Debt | 6 Months Ended
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Jun. 30, 2025
Debt Disclosure [Abstract] |
Debt | Note 8: Debt Some of the Company’s debt obligations consist of joint and several liabilities with the IDC Technologies Inc. (“IDC”) which are accounted for under ASC 405 – Debt (“ASC 405”). Lyneer will remain jointly and severally liable with the IDC to the lenders of the debt obligations until such time as such joint and several indebtedness is repaid. 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, 2024, between Lyneer and IDC. See below for further discussion. The table below provides a breakdown of the Company’s recognized debt:
| June 30, 2025 |  | December 31, 2024
Revolver | $ | 37,385,643 |  |  | $ | 42,508,379 |
Credit Agreement | 1,950,000 |  |  | 1,950,000 |
Promissory Note | 1,375,000 |  |  | 1,375,000 |
Merger Note | 35,000,000 |  |  | 35,000,000 |
Less: unamortized debt issuance costs | (341,808) |  |  | (244,565) |
Total debt | $ | 75,368,835 |  |  | $ | 80,588,814 |
Current portion | $ | 3,325,000 |  |  | $ | 43,883,379 |
Non-current portion | $ | 72,043,835 |  |  | $ | 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 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 The Company maintained a Revolver as a co-borrower with 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 were linked with bank accounts associated with the Lender and funded using the Revolver. These borrowings were 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”) providing for a $70 million 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 Bank, N.A. (“BMO”). Lyneer’s previous lender funded the shortfall of $6,000,000, the portion of the joint and several debt owed to BMO by IDC, and IDC and Lyneer entered into a term loan with BMO 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 with IDC discussed above. BMO has assumed 3,439,803 shares of Atlantic International Corp. previously owned by IDC as collateral. 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 June 30, 2025 was 8.50% 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 June 30, 2025, and December 31, 2024, the Company has recognized liability balances on the New Revolving Credit Facility and the Revolver of $37,385,643 and $42,508,379, respectively. The New Revolving Credit Facility contains certain customary covenants, including affirmative and negative covenants. Total available borrowing capacity on the New Revolving Credit Facility as of June 30, 2025 was $7,832,330. 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 30, 2025, or later as agreed to between the parties. As of June 30, 2025, and December 31, 2024, the Company has deconsolidated the Term Note, as discussed above; therefore, the Company recognized liability balances of $0, and $0, respectively. The Term Note obligation is joint-and-several with IDC and is fully covered 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. This foreclosure was only related to IDC’s security provided to the lender under the Term Note and did not extend to the Company. The Company believes that the foreclosed assets satisfied the Term Note in full and is reviewing the implications of the foreclosure on the Company’s obligations under the Term Note. The Term Note contains certain customary financial and non-financial covenants that the Company is required to comply with. 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 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 June 30, 2025, and December 31, 2024, the Company has deconsolidated the Seller Notes, as discussed above; therefore, the Company’s recognized liability balances of $0 and $0, respectively. The Seller Notes obligation is joint-and-several with IDC and is fully covered by the Allocation Agreement with IDC discussed above. 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 June 30, 2025, and December 31, 2024, the Company has deconsolidated the Earnout Notes, as discussed above; therefore, the Company’s recognized liability balances of $0 and $0, respectively. The Earnout Notes obligation is joint-and-several with IDC and is fully covered by the Allocation Agreement with IDC discussed above. 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 six months ended June 30, 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 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. 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 Investments LLC 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. The Company is in negotiations with the lender to extend the agreement two years and the lender has waived default. 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 if our common stock is then listed on a National Stock Exchange. 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. 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:
| June 30, 2025
Remainder of 2025 | $ | 1,375,000 |
2026 | 1,950,000 |
2027 | 35,000,000 |
2028 | 37,385,643 |
2029 | — |
Thereafter | — |
Total | $ | 75,710,643 |
Interest Expense The Company recognized total interest expense of $2,023,960 and $4,000,024 during the three months ended June 30, 2025 and 2024, respectively and $3,308,782 and $9,022,254 during the six months ended June 30, 2025, and 2024. The Company also incurred interest expense related to an agreement with a professional employer organization (“PEO”) who processes the payroll for the Company, related to the unpaid balance, at 1.5% per calendar month. Interest expense related to the PEO was $838,327 for each of the three and six month periods ended June 30, 2025, and $0 for each of the three and six month periods ended June 30, 2024. $42,195 and $233,591 of deferred financing costs were recognized as a component of “interest expense” on the accompanying unaudited condensed consolidated statements of operations for the three months ended June 30, 2025 and 2024, respectively and $91,108 and $538,840 for the six months ended June 30, 2025 and 2024, respectively.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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