Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statements

The following discussion and analysis of the results of operations and financial condition of ALL IN FUTURETECH ALLIANCE, INC. (the "Company") as of June 30,2026 and for the three and six months ended June 30, 2026 and 2025 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis should be read in conjunction with the Company's audited financial statements and related disclosures as of December 31, 2025, which are included in the Form 10-K (the "Annual Report") filed with the Securities and Exchange Commission ("SEC") on May 22, 2026. References in this Management's Discussion and Analysis of Financial Condition and Results of Operations to "us", "we", "our" and similar terms refer to the Company and its subsidiaries. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," or "continue," and similar expressions or variations. Actual results could differ materially because of the factors discussed in "Risk Factors" in our Annual Report, and other factors that we may not know. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements above, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

The Company

All In FutureTech Alliance, Inc. (formerly known as Allied Gaming & Entertainment Inc.), together with its subsidiaries ("AIFA" or the "Company"), currently operates an experiential entertainment business and a casual mobile gaming business. The Company's existing operations and revenue sources continue to be derived primarily from in-person esports and entertainment activities, including events conducted at HyperX Arena Las Vegas and through mobile arena operations, and from casual mobile games that generate advertising and related platform revenue.

During 2026, the Company changed its name to All In FutureTech Alliance, Inc. and began pursuing a strategic transformation toward a future-technology platform built around two principal areas: an AI infrastructure network supported by optical communications and digital infrastructure, and an AI application-services matrix. The Company has announced initiatives involving cross-border fiber-optic networks, submarine-cable capacity, silicon-photonics-enabled computing and data infrastructure, AI education, AI-enabled content and creator-economy applications.

As part of this strategy, the Company has entered into agreements and initiated additional arrangements relating to a proposed controlling investment in HyalRoute Communication Group Limited and has announced planning activities for AI compute and digital-infrastructure projects in Hainan. The Company has also announced proposed integrations involving Aivolution Venture, Co-Intelligence Academy and LittleVault Traffic Holdings Ltd., including AI training, knowledge-content distribution, creator-economy and AI-enabled course initiatives. These transactions and initiatives are at various stages of negotiation, approval, implementation or integration and remain subject to applicable conditions and risks.

Notwithstanding these strategic initiatives, as of June 30, 2026 and through the date of this report, the Company's existing consolidated operating businesses and principal sources of revenue had not materially changed from its experiential entertainment and casual mobile gaming operations. The announced technology, infrastructure, education and content initiatives have not yet resulted in a material change to the Company's consolidated revenue sources. The Company intends to continue operating its existing businesses while evaluating and implementing its strategic transformation in a disciplined manner.

Results of Operations

Our operations consist of our esports gaming operations, casual mobile games and live entertainment events organizing. Our esports gaming operations take place at global competitive esports properties designed to connect players and fans via a network of connected arenas. Through our subsidiaries, we offer esports fans state-of-the-art facilities to compete against other players in esports competitions, host live events with esports superstars that potentially stream to millions of viewers worldwide and produce and distribute esports content at our on-site production facilities and studios. At our flagship arena in Las Vegas, Nevada, we provide an attractive facility for hosting a diverse range of events, including corporate events, tournaments, game launches, and brand activation. Furthermore, we boast a mobile esports arena, an 18-wheel semi-trailer, which seamlessly transforms into a top-tier esports arena and competition stage or a dynamic live show arena complete with full content production capabilities and an interactive talent studio.

Results of Operations for the Three Months Ended June 30, 2026 and 2025

		For the Three Months Ended
		June 30,								Favorable
(in thousands)		2026				2025				(Unfavorable)
Revenues:
In-person		$	813			$	1,161			$	(348	)
Multiplatform content			-				-				-
Casual mobile gaming			435				758				(324	)
Total Revenues			1,248				1,919				(672	)
Costs and Expenses:
In-person (exclusive of depreciation and amortization)			450				618				167
Casual mobile gaming (exclusive of depreciation and amortization)			339				736				397
Research and development expenses			38				167				129
Selling and marketing expenses			9				82				72
General and administrative expense			3,636				6,019				2,383
Gain on lease modification			(3,446	)			-				3,446
Depreciation and amortization			214				390				176
Impairment of goodwill			920				-				(920	)
Impairment of long-lived assets			1,358				-				(1,358	)
Total Costs and Expenses			3,519				8,011				4,492
Loss From Operations			(2,271	)			(6,092	)			3,821
Other Income (Expense):
Other (expense) income, net			(19	)			(56	)			37
Realized gain on investment in money market fund			-				20				(20	)
Gain (loss) on investment in marketable securities, derivatives, and short-term investments			(627	)			788				(1,415	)
Gain (loss) on foreign currency transactions, net			(224	)			(536	)			312
Change in fair value of digital assets			9				28				(19	)
Interest income, net			1,190				1,015				175
Total Other Income (Expense)			329				1,258				(929	)
Pre-Tax Loss			(1,942	)			(4,834	)			2,892
Income tax benefit			-				-				-
Net Loss		$	(1,942	)		$	(4,834	)		$	2,892

Revenues

In-person experience revenues decreased by approximately $0.3 million to approximately $0.8 million for the three months ended June 30, 2026 from approximately $1.2 million for the three months ended June 30, 2025. The decrease in event revenue is primarily attributable to the number of events held during 2026 versus the quantity of such events in the prior year.

Casual mobile gaming revenue was $0.4 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively. The decrease in casual mobile games revenue was primarily due to contraction of the online card game market as well as increasing competition from new mobile game developers.

Costs and expenses

In-person costs (exclusive of depreciation and amortization) decreased by approximately $0.2 million to approximately $0.5 million for the three months ended June 30 2026 from approximately $0.6 million for the three months ended June 30, 2025. The decrease is the result of the costs associated with third party events held at the arena during 2026 compared to 2025.

Casual mobile gaming costs (exclusive of depreciation and amortization) were $0.3 million for the three months ended June 30, 2026 and $0.7 million for the three months ended June 30, 2025, respectively, resulting from a decrease in user incentive, user acquisition and other costs directly associated with the decline in revenues.

Research and development expenses were $38 thousand and $167 thousand for the three months ended June 30, 2026 and 2025, respectively. Research and development expenses consist principally of costs related to the development of new casual mobile games for Z-Tech.

Selling and marketing expenses decreased by approximately $72 thousand to approximately $9 thousand for the three months ended June 30, 2026 from approximately $82 thousand for the three months ended June 30, 2025.

General and administrative expenses decreased by approximately $2.4 million, or 40%, to approximately $3.6 million for the three months ended June 30, 2026, from approximately $6.0 million for the three months ended June 30, 2025. The decrease in general and administrative expenses resulted primarily from a $2.9 million decrease in legal and professional fees principally incurred in connection with a complaint filed by a dissident stockholder along with a proxy contest between the Company and such stockholder, a $0.3 million decrease in decrease in audit, tax and financial reporting fees, a $0.2 million decrease in directors' and officers' insurance costs, as well as a $0.2 million decrease in salaries and related costs. These decreases were partially offset by a $0.6 million CECL allowance on the Company's loans receivable, a $0.2 million payment under a strategic cooperation agreement, which represented a significant first step in the Company's planned development into a leading global fiber optic communication, computing power, and AI-enabled services provider, and a $0.5 million charge to operations for various M&A related consulting and advisory services.

Gain on lease modification was approximately $3.4 million for the three months ended June 30, 2026, compared to $0.0 million for the three months ended June 30, 2025. The gain relates an amendment to one of the Company's operating lease agreements under which its fixed minimum rental payments were entirely replaced with variable lease payments equal to a specified percentage of gross sales, as defined.

Depreciation and amortization decreased by approximately $176 thousand to approximately $214 thousand for the three months ended June 30, 2026, from approximately $390 thousand for the three months ended June 30, 2025.

Impairment of goodwill was approximately $0.9 million for the three months ended June 30, 2026, compared to $0.0 million for the three months ended June 30, 2025. The impairment resulted from management's determination that the fair value of one of its reporting units was less than its carrying amount.

Impairment of long-lived assets was approximately $1.4 million for the three months ended June 30, 2026, compared to $0.0 million for the three months ended June 30, 2025. The impairment resulted from management's determination that the fair value of these assets was less than their carrying amounts.

Loss on investment in marketable securities and derivatives

The Company recognized a loss of $0.6 million on its investments in marketable securities and certain derivative instruments during the three months ended June 30, 2026, due to the change in the fair value of these investments during the period. During the three months ended June 30, 2025, the Company recognized a gain of $0.8 million on its investments in marketable securities. There were no investments in derivative instruments during the three months ended June 30, 2025.

Loss on foreign currency transactions, net

The gain (loss) on foreign currency transactions was approximately ($0.2) million and ($0.5) million for the three months ended June 30, 2026 and 2025, respectively These gains and losses result from changes in the exchange rate of the Japanese Yen to United States Dollar between the dates certain loans payable were borrowed, the dates certain loans receivable were issued, and the dates certain equity linked notes, bond linked notes, ETF linked notes, and foreign securities were purchased and their remeasurements on June 30, 2026 and 2025.

Interest income, net

Interest income, net, was approximately $1.2 million for the three months ended June 30, 2026, compared to approximately $1.0 million for the three months ended June 30, 2025. The increase is a result of the interest earned on fixed term deposits and equity, bond, and ETF linked notes, as well as interest earned on loans receivable during the periods.

Results of Operations for the Six Months Ended June 30, 2026 and 2025

		For the Six-Months Ended
		June 30,								Favorable
(in thousands)		2026				2025				(Unfavorable)
Revenues:
In-person		$	1,865			$	2,818			$	(952	)
Multiplatform content			-				-				-
Casual mobile gaming			936				1,377				(441	)
Total Revenues			2,801				4,195				(1,394	)
Costs and Expenses:
In-person (exclusive of depreciation and amortization)			780				1,478				698
Casual mobile gaming (exclusive of depreciation and amortization)			827				1,319				492
Research and development expenses			246				348				102
Selling and marketing expenses			20				122				101
General and administrative expense			7,423				11,500				4,077
Gain on lease modification			(3,446	)			-				3,446
Depreciation and amortization			462				772				310
Impairment of goodwill			920				-				(920	)
Impairment of long-lived assets			1,358				-				(1,358	)
Total Costs and Expenses			8,592				15,538				6,947
Loss From Operations			(5,791	)			(11,344	)			5,553
Other Income (Expense):
Other (expense) income, net			(19	)			(32	)			13
Realized gain on investment in money market fund			-				386				(386	)
Gain (loss) on investment in marketable securities, derivatives, and short-term investments			(2,261	)			513				(2,774	)
(Loss) on foreign currency transactions, net			(1,179	)			(1,101	)			(78	)
Change in fair value of digital assets			(55	)			(35	)			(20	)
Interest income, net			2,127				1,879				248
Total Other Income (Expense)			(1,387	)			1,610				(2,997	)
Pre-Tax Loss			(7,177	)			(9,734	)			2,557
Income tax benefit			-				-				-
Net Loss		$	(7,177	)		$	(9,734	)		$	2,557

In-person experience revenues decreased by approximately $0.9 million, or 34%, to approximately $1.9 million for the six months ended June 30, 2026, from approximately $2.8 million for the six months ended June 30, 2025. The decrease in event revenue is primarily attributable to the number of events held during 2026 versus the quantity of such events in the prior year.

Casual mobile gaming revenue was $0.9 million for the six months ended June 30, 2026 and $1.4 million for the six months ended June 30, 2025, respectively. The decrease in casual mobile games revenue was primarily due to the contraction of the online card game market as well as increasing competition from new mobile game developers.

Costs and expenses

In-person costs (exclusive of depreciation and amortization) decreased by approximately $0.7 million, or 47%, to approximately $0.8 million for the six months ended June 30, 2026 from approximately $1.5 million for the six months ended June 30, 2025. The decrease is the result of the costs associated with third party events held at the arena during the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Casual mobile gaming costs (exclusive of depreciation and amortization) were $0.8 million for the six months ended June 30, 2026 and $1.3 million for the six months ended June 30, 2025, respectively, resulting from a decrease in user incentive, user acquisition and other associated with the decline in revenues.

Research and development expenses were $246 thousand and $348 thousand for the six months ended June 30, 2026 and 2025, respectively. Research and development expenses consist principally of costs related to the development of new casual mobile games for Z-Tech.

Selling and marketing expenses decreased by approximately $101 thousand to approximately $20 thousand for the six months ended June 30, 2026 from approximately $122 thousand for the six months ended June 30, 2025.

General and administrative expenses decreased by approximately $4.1 million, or 36%, to approximately $7.4 million for the six months ended June 30, 2026, from approximately $11.5 million for the six months ended June 30, 2025. The decrease in general and administrative expenses resulted primarily from a $5.1 million decrease in legal and other professional fees principally incurred in connection with a complaint filed by a dissident stockholder along with a proxy contest between the Company and such stockholder, a $0.2 million decrease in share-based compensation, a $0.3 million decrease in audit, tax and financial reporting fees, a $0.6 million decrease increase in salaries and related costs, a $0.1 million decrease in rent expense, as well as a $0.3 million decrease in directors' and officers' insurance costs. These decreases were partially offset by a $1.3 million CECL allowance on the Company's loans receivable, $0.9 million in payments made under a strategic cooperation agreement, which represented a significant first step in the Company's planned development into a leading global fiber optic communication, computing power, and AI-enabled services provider, and a $0.5 million charge to operations for various M&A related consulting and advisory services.

Gain on lease modification was approximately $3.4 million for the six months ended June 30, 2026, compared to $0.0 million for the six months ended June 30, 2025. The gain relates an amendment to one of the Company's operating lease agreements under which its fixed minimum rental payments were entirely replaced with variable lease payments equal to a specified percentage of gross sales, as defined.

Depreciation and amortization decreased by approximately $0.3 million to approximately $0.5 million for the six months ended June 30, 2026, from approximately $0.8 million for the six months ended June 30, 2025. The decrease was mainly due to the impairment of certain property and equipment at December 31, 2025.

Impairment of goodwill was approximately $0.9 million for the six months ended June 30, 2026, compared to $0.0 million for the six months ended June 30, 2025. The impairment resulted from management's determination that the fair value of one of its reporting units was less than its carrying amount.

Impairment of long-lived assets was approximately $1.4 million for the six months ended June 30, 2026, compared to $0.0 million for the six months ended June 30, 2025. The impairment resulted from management's determination that the fair value of these assets was less than their carrying amounts.

Other (expense) income, net

We recognized other non-operating expense, net of approximately $19 thousand during the six months ended June 30, 2026, compared to $32 thousand of other non-operating expense, net, recorded for the six months ended June 30, 2025, representing a decrease in other expense, net of $13 thousand.

Loss on investment in marketable securities and derivatives

The Company recognized a loss of $2.3 million on its investments in marketable securities and certain derivative instruments during the six months ended June 30, 2026, due to the change in the fair value of these investments during the period. During the six months ended June 30, 2025, the Company recognized a gain of $513 thousand on its investments in marketable securities. There were no investments in derivative instruments during the six months ended June 30, 2025.

(Loss) gain on foreign currency transactions, net

The loss on foreign currency transactions was approximately $1.2 million for the six months ended June 30, 2026, compared to $1.1 million loss for the six months ended June 30, 2025. The increase in loss is a result of changes in the exchange rate of the Japanese Yen to United States Dollar between the dates certain loans payable were borrowed, the dates certain loans receivable were issued, and the dates certain equity linked notes, bond linked notes, ETF linked notes and foreign securities were purchased and the June 30, 2026 and 2025 remeasurement date.

Interest income, net

Interest income, net, was approximately $2.1 million and $1.9 million for the six months ended June 30, 2026 and 2025, respectively. Interest income is a result of the interest earned on fixed term deposits and equity, bond, and ETF linked notes, as well as interest earned on loans receivable during the period.

Liquidity and Capital Resources

The following table summarizes our total current assets, current liabilities and working capital at June 30, 2026 and December 31, 2025, respectively:

		June 30,				December 31,
(in thousands)		2026				2025
Current Assets		$	52,073			$	76,776
Current Liabilities		$	30,886			$	49,589
Working Capital Surplus		$	21,187			$	27,187

Our primary sources of liquidity and capital resources have been cash and short-term investments on the balance sheet, including the funds received through the sale of World Poker Tour.

As of June 30, 2026, we had cash and cash equivalents of approximately $10.4 million (not including $18.7 million of short-term investments and $0.4 million of marketable securities) and working capital of approximately $21.2 million.

Cash requirements for our current liabilities include approximately $14.0 million for loans payable, approximately $13.6 million in the aggregate for accounts payable and accrued expenses, and approximately $0.1 million for the current portion of an operating lease liability. Cash requirements for non-current liabilities include approximately $0.1 million for the non-current portion of an operating lease liability. The Company intends to meet these cash requirements from its current cash, investments and loan receivable balances.

Cash Flows from Operating, Investing and Financing Activities

The table below summarizes cash flows for the six months ended June 30, 2026 and 2025:

		For the Six Months Ended
		June 30,
(in thousands)		2026				2025
Net cash provided by (used in):
Operating activities		$	(3,017	)		$	(3,074	)
Investing activities		$	20,015			$	(34,087	)
Financing activities		$	(18,400	)		$	956

Net Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2026 was approximately $3.0 million and net cash used in operating activities for the six months ended June 30, 2025 was approximately $3.1 million, representing a decreased usage of $0.1 million.

During the six months ended June 30, 2026 and 2025, the net cash used in operating activities, respectively, was primarily attributable to the net loss of approximately $7.2 million and $9.7 million, respectively, adjusted for approximately $3.0 million and $2.8 million, respectively, of net non-cash expenses, and approximately $1.2 million and $3.9 million, respectively, of cash generated by changes in the levels of operating assets and liabilities.

Net Cash Provided By (Used In) Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2026 was approximately $20.0 million, which consisted of $54.3 million in proceeds from the maturity of short-term investments, $3.1 million in proceeds from the sale of marketable securities, $57.6 million in proceeds from the early withdrawal of short-term investments, and $0.2 in proceeds from the sale of digital assets, partially offset by $93.2 million used for the purchase of short-term investments and $2.0 million used for the purchase of marketable securities.

Net cash used in investing activities for the six months ended June 30, 2025 was approximately $34.1 million, which consisted of $127.5 million used for the purchase of short-term investments, $10.6 million used for loans receivable, $1.7 million used for the purchase of land use rights, and $2.5 million used for the investment in a unconsolidated affiliate, partially offset by $102.4 million in proceeds from the maturing of short-term investments, $4.5 million from proceeds from the repayment of short-term loans, and $1.2 million from proceeds from the sale of marketable securities.

Net Cash Provided By Financing Activities

Net cash used in financing activities during the six months ended June 30, 2026, was approximately $18.4. million, consisting entirely of the repayment of short-term loans.

Net cash provided by financing activities during the six months ended June 30, 2025 was approximately $1.0 million, which consisted of $30.2 million in proceeds from short-term loans, which is partially offset by a repayment of short-term loans of 22.7 million and payment upon cancellation of common stock previously issued of $6.6 million.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Estimates

We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. We consider accounting for income taxes, impairment of long-lived assets, impairment of goodwill and current expected credit loss on loans receivable to be critical accounting estimates. There are other items within our financial statements that require estimation but are not deemed critical, as defined above.