Acceleration/Increase of Financial Obligation, Financial Obligation (Form 8-K)

Item 8.01 Other Events

On April 1, 2026, Atlantic International Corp. ("Atlantic") and its Lyneer subsidiaries, Lyneer Investments, LLC, Lyneer Holdings, Inc. and Lyneer Staffing Solutions, LLC (collectively the "Lyneer Subsidiaries") commenced a lawsuit in the Supreme Court of the State of New York, County of New York against SPP Credit Advisors, LLC ("SPP"). At the same time Atlantic is seeking a preliminary injunction with an Order to Show Cause and Temporary Restraining Order to enjoin SPP from: (i) purporting to take any management, operational or governance action on behalf of Atlantic and the Lyneer Subsidiaries; (ii) interfering with the management of the Lyneer Subsidiaries by, among other things, removing officers, appointing managers, amending any governing documents, making managerial or operation decisions and seizing any property; (iii) taking possession, control, or hypothecating any and all property owned by Atlantic and its Lyneer Subsidiaries, and (iv) exercising any remedies under any of the loan documents identified in SPP's March 30, 2026 Notices of Default issued to Atlantic, the Lyneer Subsidiaries, and IDC Technologies, Inc. ("IDC") as described in Item 2.04 below, and Atlantic is seeking a preliminary injunction enjoining SPP from continuing to proceed as if the outstanding indebtedness owed under the loans at issue had not been satisfied.

Atlantic has alleged in its complaint, that SPP launched a coordinated, pre-planned attack to seize control of the Lyneer subsidiaries based on a fabricated default, set forth in the Default Notices, described in Item 2.04 below, and in bad faith of its own financial interests. As part of a refinancing transaction in April 2025, SPP obtained, and would ultimately sell in satisfaction of the debt, over $77 million worth of publicly traded shares in Atlantic acquired from non-party IDC. SPP was required to apply the proceeds to satisfy the outstanding debt owed under the term loan that originated in 2021. The value of the NASDAQ publicly traded shares significantly exceeded any outstanding indebtedness arguably remaining owing to SPP (less than $50 million) and, as such, upon SPP's receipt of the collateral, the indebtedness was satisfied and extinguished. SPP acknowledged and understood it took stock worth more than its debt, and agreed to remit the surplus back to IDC. It should be noted that SPP's default notices did not demand repayment of the loans. They did not even include payoff amounts. Instead, they only reflected a hostile takeover. Furthermore, as a subordinate mezzanine lender, SPP has no contractual right to receive capital raise proceeds ahead of the senior lenders in line before it.

Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.