S-1/A: Atlantic International Corp. Files Amendment No. 1 to Form S-1, Registers 13.7 Million Shares for Resale

Atlantic International Corp. files an amendment to its Form S-1 registration statement to register 13,711,743 shares of common stock for resale by selling shareholders.

Summary

• Atlantic International Corp. (formerly SeqLL Inc.) has filed Amendment No. 1 to its Form S-1 registration statement with the SEC.
• The filing registers 13,711,743 shares of common stock for resale by selling shareholders.
• These shares were issued in connection with the acquisition of Lyneer Investments LLC, including shares held in escrow for legacy shareholders related to a settlement offer.
• The company's common stock is quoted on the OTC Pink under the symbol ATLN, with a last reported sale price of $5.01 on July 18, 2024.
• The selling shareholders will offer the shares at a fixed price of $9.00 per share, but may sell at prevailing market prices if the stock is listed on a National Securities Exchange.
• Atlantic International Corp. will not receive any proceeds from the sale of these shares by the selling shareholders.
• The company completed the acquisition of Lyneer Investments LLC on June 18, 2024, changing its name and business focus.
• Lyneer is a workforce solutions firm that generated over $400 million in revenues and $5.4 million in adjusted EBITDA in 2023.
• The merger consideration included a $35 million convertible promissory note and 25,423,729 shares of common stock issued to IDC Technologies Inc.
• The company escrowed 4,704,098 shares of common stock that may be issued to the company's stockholders of record as of September 26, 2023, as part of a settlement offer.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the acquisition of Lyneer provides a substantial revenue base, the company faces significant debt and going concern risks, along with the need for additional financing. The negative aspects outweigh the positives, resulting in a low sentiment score.

Positives

• The acquisition of Lyneer Investments provides Atlantic International Corp. with a substantial revenue base and adjusted EBITDA.
• The company intends to pursue an application for listing on a National Securities Exchange.
• The company has a new management team with extensive experience.
• Lyneer is a 28-year-old company with a proven track record.

Negatives

• The company will not receive any proceeds from the sale of shares by the selling shareholders.
• The company's common stock is currently quoted on the OTC Pink, which is not an established public trading market.
• The company may not be able to realize the expected benefits of the merger.
• Lyneer has a significant amount of debt obligations and its failure to restructure or pay such obligations when due could have a material adverse impact on Lyneers financial condition and long-term viability.
• There is substantial doubt about Lyneers ability to continue as a going concern as a result of the above-described events of default under its principal credit facilities.

Risks

• Investing in the company's common stock involves significant risks, including those related to the merger, Lyneer's business, and the company's financial condition.
• The fairness opinion obtained by the board of directors may not reflect subsequent changes.
• The company may not realize the expected benefits of the merger.
• The company's principal stockholder owns a majority of the common stock, and its interests may conflict with those of other shareholders.
• The company's shares are subject to penny stock rules, which may make it more difficult to trade the shares.
• Lyneer operates in a competitive and rapidly changing business environment.
• Lyneer has a significant amount of debt obligations and its failure to restructure or pay such obligations when due could have a material adverse impact on Lyneers financial condition and long-term viability.
• There is substantial doubt about Lyneers ability to continue as a going concern as a result of the above-described events of default under its principal credit facilities.
• The company will be required to raise additional funds prior to the maturity date of the Merger Note to repay such note and our other outstanding indebtedness and to support our future capital needs.

Future Outlook

The company expects to build a global staffing organization through mergers and acquisitions, leveraging new technologies and business partnerships to create streamlined hiring processes.

Management Comments

• Management believes, based on their knowledge of the industry, that Lyneer is one of the prominent and leading staffing firms in the ever-evolving staffing industry.
• Management believes Lyneer has earned a reputation as one of the premier workforce solutions partners in the United States.

Industry Context

The staffing industry is large and fragmented, with increasing demand for skilled people and employers seeking more flexible working models. New online technology is improving staffing efficiency, and some Internet job-search companies and traditional employment agencies are now collaborating.

Comparison to Industry Standards

• The largest publicly owned companies specializing in recruitment services are The Adecco Group and Randstad.
• Lyneer also competes against a variety of regional or specialized companies such as Recruit Holdings, Allegis Group, Kelly Services, Manpower, Robert Half, Kforce, PageGroup, Korn/Ferry International and Alexander Mann.

Management Changes

Legal Proceedings

• Lyneer and certain of its subsidiaries are currently defendants in several actual or asserted class and representative action lawsuits brought by or on behalf of their current and former employees alleging violations of federal and state law with respect to certain wage and hour related matters, among other claims.
• While all of Lyneers existing material litigation are subject to pending settlement approvals by the applicable courts, there can be no assurance that such settlements will be approved by the courts.

Related Party Transactions

• Lyneer and IDC are co-borrowers and are jointly and severally liable for principal and interest payments under the Revolver, the Term Note, the Seller Notes and the Earnout Notes.
• Lyneer has recorded a liability payable to IDC for taxes payable by IDC, which represent taxes attributable to Lyneers operations included on consolidated state and local income tax returns filed by IDC.
• Lyneer advanced $400,000 to its Chief Executive Officer in 2022, repayable upon his receipt of funds from LMH under the Earnout Notes.

Stakeholder Impact

• Shareholders face risks related to the company's financial condition, debt obligations, and potential conflicts of interest.
• Employees may experience uncertainty about their roles within the company following the merger.
• Customers may be affected by the company's ability to maintain service levels and competitive pricing.
• Suppliers and vendors may be impacted by the company's financial stability and ability to meet its obligations.
• Creditors face risks related to the company's ability to repay its debt obligations.

Next Steps

• The company intends to pursue an application for listing on a National Securities Exchange.
• The company is required to seek at least $20 million future financing prior to July 15, 2024, and on or before September 30, 2024, to restructure the outstanding indebtedness that is the subject of such forbearance agreements.

Key Dates

Keywords

Atlantic International Corp, Lyneer Investments, Merger, Resale, Common Stock, Selling Shareholders, Debt, OTC Pink, Financial Results, Risk Factors, Workforce Solutions, Staffing