Material Agreement, Asset Transaction (Form 8-K)

Item 1.01. Entry into a Material Definitive Agreement.

The information contained in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

Preferred Stock Purchase Agreement

On March 20, 2026, Atlantic International Corp (the "Company") entered into a Securities Purchase Agreement (the "Purchase Agreement") with an institutional investor (the "Purchaser"), whereby it agreed to sell to the Purchaser (the "Offering"), for an aggregate gross purchase price of $5,600,000: (i) an aggregate of 5,600 shares of a newly established series of preferred stock designated as "Series B 5% Convertible Preferred Stock, par value $0.00001 per share" (the "Preferred Stock"), which have a stated value of $1,070 per share, reflecting the original issue discount of 6.5%, and (ii) Preferred Stock Purchase Warrants (the "Warrants") to purchase an aggregate of an additional 5,600 shares of Preferred Stock (the "Warrant Shares").

The Offering was completed on March 20, 2026 (the "Closing Date"), subject to customary closing conditions. The net proceeds from the Offering were $5,565,000 after transaction expenses. The Company plans to use the net proceeds for working capital and other general corporate purposes.

As provided in the Purchase Agreement, before the closing of the Offering, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences, Rights and Limitations of Series B 5% Convertible Preferred Stock (the "Certificate of Designations") to its Amended and Restated Certificate of Incorporation. The Certificate of Designations establishes and sets forth the designations, preferences, powers and rights of the Preferred Stock.

The Preferred Stock ranks senior to the Company's common stock (the "Common Stock") with respect to dividends (the Preferred Stock shall pay a dividend of 5.0%, payable in cash or shares of the Preferred Stock) redemption rights, distributions and payments upon the liquidation, dissolution and winding up of the Company, unless the holders of a majority of the outstanding shares of the Preferred Stock consent to the creation of series of preferred stock which will be pari passu or senior to the Preferred Stock.

The Preferred Stock may be converted into such number of shares of Common Stock as equals the stated value of the Preferred Stock divided by the applicable Conversion Price. The Conversion Price is initially equal to $4.38, which was the Closing Price of the Common Stock at the opening of trading on the Closing Date, and will remain fixed for the first 30 calendar days following the Closing Date (the "Initial Conversion Price Period") (the "Initial Conversion Price"). The Initial Conversion Price is subject to adjustment as set forth in the Certificate of Designations.