FSM Holdings (01721)'s sales revenue from its manufacturing business in the first quarter decreased by approximately 52% to 59% year-on-year.

FSM HOLDINGS (01721) announces that in the first quarter of 2026, the sales of the group's manufacturing business decreased by approximately 52% to 59% compared to the same period in 2025 (unaudited). This decline is mainly due to sanctions imposed by the United States on the company's controlling shareholder, leading to a reduction in orders from major customers, coupled with a more cautious market sentiment under the current geopolitical tensions. To cope with the decrease in demand, the group has reduced its manufacturing operations in Singapore and Malaysia. The group has been in discussions with customers regarding new orders to support the gradual recovery of order volume and business performance. In the first quarter of 2026, the group's online business did not generate any revenue (unaudited), while it did generate revenue in the same period in 2025. The operating and development costs of the mobile game operations in the first quarter of 2026 were also lower than in the same period in 2025, mainly due to reduced employee costs from the group's mobile game development and decreased research and development activities. The decrease in revenue is attributed to the suspension of game operations. This decision was made based on multiple rounds of market testing conducted since the second half of 2023, which did not receive sufficient market response, indicating that operating costs would exceed expected player revenue. The group will implement further technological and design improvements before any future releases. The group will continue to seek new opportunities and optimize the development strategy and operations of the online business. The board of directors will continuously evaluate the development strategy and operational policies of the online business and take appropriate actions as necessary.