FSM HOLDINGS (01721) announced that for the first quarter of 2026, the Group's manufacturing business sales saw an unaudited estimated decrease of approximately 52% to 59% compared to the same period in 2025. This decline is primarily attributed to sanctions imposed by the United States on a controlling shareholder of the Company, which led to a reduction in orders from key customers. Additionally, market sentiment has become more cautious amid ongoing geopolitical tensions. In response to the drop in demand, the Group has scaled back its manufacturing operations in Singapore and Malaysia. The Group is actively engaged in discussions with customers regarding new orders to support a gradual recovery in order volume and business performance.

For the first quarter of 2026, the Group's online business recorded no revenue (unaudited), whereas revenue was recognized in the comparable period of 2025. Operating and development costs for the online business's mobile games were also lower in Q1 2026 compared to Q1 2025. This was mainly due to reduced employee costs associated with the Group's mobile game development and a decrease in research and development activities. The absence of revenue was a result of the suspension of game operations. This decision was based on multiple rounds of market testing conducted since the second half of 2023, which failed to generate sufficient market response amidst evolving market trends, leading to an expectation that operational costs would exceed anticipated player revenue. The Group will implement further technical and design enhancements before any future launches. It will continue to seek new opportunities and optimize the development strategy and operations of its online business. The Board of Directors will persistently evaluate the development strategy and operational approach for the online business and will take appropriate actions as necessary.