Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] (2024)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of June 2024

ICZOOM GROUP INC.

(Exact name of registrant as specified in its charter)

Room 3801, Building A, Sunhope e·METRO,No. 7018 Cai Tian Road
Futian District, Shenzhen
Guangdong, China, 518000
Tel: 86 755 88603072

(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annualreports under cover of Form 20-F or Form 40-F.

Form 20-F☒Form40-F☐

EXPLANATORY NOTE

ICZOOM Group Inc., a Cayman Islands exempted company(the “Company”) is furnishing this Form 6-K to provide six-month interim financial statements.

Financial Statements and Exhibits.

Exhibits:

1

SIGNATURES

Pursuant to the requirementsof the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

2

Exhibit 99.1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ICZOOM GROUP INC.AND SUBSIDIARIES
For the Six Months Ended December 31, 2023

F-1

ICZOOM GROUP INC.AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part ofthese consolidated financial statements

F-2

ICZOOM GROUP INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS)/INCOME AND COMPREHENSIVE INCOME/(LOSS)

(UNAUDITED)

The accompanying notes are an integral part ofthese consolidated financial statements

F-3

ICZOOM GROUP INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND2022

(UNAUDITED)

The accompanying notes are an integral part ofthese consolidated financial statements

F-4

ICZOOM GROUP INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITTED)

F-5

ICZOOM GROUP INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

The following tables provide a reconciliation ofcash and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the consolidatedstatement of cash flows:

The accompanying notes are an integral part ofthese consolidated financial statements

F-6

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESS DESCRIPTION

Business

ICZOOM Group Inc. (“ICZOOM” or the “Company”),through its wholly-owned subsidiaries, is engaged in sales of electronic components to customers in the People’s Republic of China(“PRC”). Major electronic components purchased from suppliers and then sold to customers through the Company’s onlineplatform include: integrated circuit, discrete, passive components, optoelectronics, electromechanical, Maintenance, Repair and Operations(“MRO”), design tools, etc. These electronic components are primarily used by customers in the consumer electronic industry,automotive electronics, industry control segment with primary target customers being China-based small and medium-sized enterprises. Inaddition, the Company also provides customs clearance, temporary warehousing, logistic and shipping services to customers to earn servicecommission fees.

Organization

ICZOOM, formerly known as Horizon Business IntelligenceCo., Limited, was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on June18, 2015and changed to its current name on May3, 2018.

ICZOOM owns 100% of the equity interests of thefollowing four subsidiaries incorporated in accordance with the laws and regulations in HongKong: (1)Iczoom Electronics Limited(“ICZOOM HK”) was incorporated on May22, 2012; (2)Ehub Electronics Limited (“Ehub”) was incorporatedon September13, 2012; (3)Hjet Industrial Corporation Limited (“Hjet HK”) was incorporated on August6, 2013and (4)Components Zone International Limited (‘Components Zone HK”) was incorporated on May19, 2020. ICZOOM HK,Ehub and Hjet HK are primarily engaged in purchases and distribution of electronic components from overseas suppliers, and ComponentsZone HK is a holding company with no activities.

On September17, 2020, Components Zone (Shenzhen)Development Limited (“ICZOOM WFOE”) was incorporated pursuant to PRC laws as a wholly foreign owned enterprise of ComponentsZone HK.

ICZOOM, Components Zone HK and ICZOOM WFOE are currentlynot engaging in any active business operations and merely acting as holding companies.

Prior to the reorganization described below, thechairman of the Board of Directors, Mr.Lei Xia, who is also the Chief Executive Officer (“CEO”) of the Company, andthe Chief Operating Officer (“COO”) of the Company, Ms. Duanrong Liu, were the controlling shareholders of the following entities:(1)Hjet Shuntong (Shenzhen) Co., Ltd. (“Hjet Shuntong”), formed in Shenzhen City, China on November8, 2013; (2)ShenzhenHjet Supply Chain Co., Ltd. (“Hjet Supply Chain”), formed in Shenzhen City, China on July3, 2006; (3)ShanghaiHeng Nuo Chen International Freight Forwarding Co., Ltd. (“Heng Nuo Chen”), formed in Shanghai City, China on March25,2015; (4)Shenzhen Iczoom ElectronicsCo., Ltd. (“ICZOOM Shenzhen”), formed in Shenzhen City, China on July20,2015;(5)Shenzhen Hjet Yun Tong Logistics Co., Ltd. (“Hjet Logistics”), formed in Shenzhen City, China on May31,2013 and (6)Shenzhen Pai Ming Electronics Co., Ltd. (“Pai Ming Shenzhen”), formed in Shenzhen City, China on May9,2012. Hjet Shuntong is currently not engaging in any active business operations and merely acting as a holding company. ICZOOM Shenzhenoperates the Company’s e-commerce platform to facilitate the sales of electronic components. Hjet Supply Chain handles order fulfilmentfor e-commerce customers. Heng Nuo Chen and Hjet Logistics are engaged in logistic, shipping and delivery of products to customers. Inorder to comply with the PRC laws and regulations, Pai Ming Shenzhen holds Internet Content Provider (“ICP”) license to operatethe e-commerce platform.

Hjet Shuntong, ICZOOM Shenzhen, Hjet Supply Chain,Heng Nuo Chen and Hjet Logistics are collectively called “ICZOOM Operating Entities”.

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESSDESCRIPTION (cont.)

Reorganization

A reorganization of the Company’s legal structure(“Reorganization”) was completed on December14, 2020. The reorganization involved the incorporation of ICZOOM WFOE,the transfer of the 100% equity interest of ICZOOM operating entities to ICZOOM WFOE, and entering into certain contractual arrangementsbetween ICZOOM WFOE and the shareholders of Pai Ming Shenzhen. Consequently, ICZOOM became the ultimate holding company of all the entitiesmentioned above.

On December14, 2020, ICZOOM WFOE entered intoa series of contractual arrangements with the shareholder of Pai Ming Shenzhen. These agreements include Exclusive Purchase Agreement,Exclusive Business Cooperation Agreement, Share Pledge Agreement, Power of Attorney and Spousal Consent Letter (collectively the “VIEAgreements”). Pursuant to the VIE Agreements, ICZOOM WFOE has the exclusive right to provide Pai Ming Shenzhen with consulting servicesrelated to business operations including technical and management consulting services. As a result of our direct ownership in ICZOOM WFOEand the VIE Agreements, Pai Ming Shenzhen was treated as a Variable Interest Entity (“VIE”) under the Statement of FinancialAccounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 Consolidation, which allowedICZOOM to consolidate Pai Ming Shenzhen’ operations and financial results in ICZOOM’s consolidated financial statements inaccordance with U.S.GAAP.ICZOOM was treated as the primary beneficiary for accounting purposes under U.S.GAAP.

The Company, together with its wholly owned subsidiariesand its VIE, was effectively controlled by the same shareholders before and after the Reorganization and therefore the Reorganizationwas considered as a recapitalization of entities under common control. The consolidation of the Company, its subsidiaries, and the VIEhas been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of thebeginning of the first period presented in the accompanying consolidated financial statements.

The consolidated financial statements of the Companyinclude the following entities:

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESSDESCRIPTION (cont.)

In order to streamline the Company’s businessstructure, on August23, 2021, one of the Company’s subsidiaries, Heng Nuo Chen, completed the deregistration with China’sState Administration of Industry and Commerce. The deregistration of Heng Nuo Chen has no material impact on the Company’s businessbecause Heng Nuo Chen had limited business activities and operation since its inception. Total assets and total liabilities of Heng NuoChen as of June30, 2021amounted to approximately $5,879 and $325,497, accounted for 0.01% and 0.41% of the Company’sconsolidated total assets and liabilities, respectively. Heng Nuo Chen did not generated any revenue since its inception and the accumulateddeficit of Heng Nuo Chen as of June30, 2021 was $305,780, accounted for 3.27% of the Company’s consolidated accumulated deficit.Due to such immateriality, no discontinued operation was reported.

The VIE Agreements

A VIE is an entity which has a total equity investmentthat is insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristicsof a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligationto absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIEis deemed to be the primary beneficiary of, and must consolidate, the VIE.

Prior to December10, 2021, in order to complywith the PRC laws and regulations, the Company held its ICP license to operate the e-commerce platform, through Pai Ming Shenzhen. Pursuantto the VIE Agreements, neither the Company nor its subsidiaries owned any equity interest in Pai Ming Shenzhen. Instead, the Company controlledand received the economic benefits of the operation results of Pai Ming Shenzhen through the VIE Agreements. Under U.S.GAAP, foraccounting purposes, the Company was deemed to have a controlling financial interest in, and be the primary beneficiary of Pai Ming Shenzhen,because pursuant to the VIE Agreements, the operations of Pai Ming Shenzhen were solely for the benefit of ICZOOM WFOE and ultimately,the Company. The Company consolidated the operation and financial results of Pai Ming Shenzhen as primary beneficiary through VIE Agreementsin lieu of direct equity ownership by the Company. The Company terminated the VIE Agreements with Pai Ming Shenzhen on December10,2021 (see “Termination of the VIE Agreements” below for details).

Termination of the VIE Agreements

Due to PRC legal restrictions on direct foreigninvestment in internet-based businesses, such as provision of internet information services platform and other value-added telecommunicationservices, the Company originally carried out its business through a series of VIE Agreements with Pai Ming Shenzhen. On December10,2021 (the “VIE termination date”), the Company terminated the VIE Agreements under the VIE structure. There were no penaltiesor non-compete agreements derived from the termination of the VIE Agreements. After the termination of the VIE Agreement, the Companywill no longer consolidate the operation and financial results of Pai Ming Shenzhen going forward. The Company’s HongKongsubsidiary, ICZOOM HK, now operates a new B2B online platform, which does not require an ICP license under the PRC law. After the terminationof the VIE Agreements under the VIE structure, in consideration that it may take some time for customers to take actions to complete thetransfer and adapt to new platform, ICZOOM WFOE entered into a business cooperation agreement with Pai Ming Shenzhen on January18,2022 to assist such transition over a one-year period, pursuant to which Pai Ming Shenzhen has agreed to provide ICZOOM WFOE with networkservices including but not limited to business consultation, website information push, matching services of supply and demand information,online advertising, software customization, data analysis, website operation and other in-depth vertical services through online and offlinedata push, etc., and ICZOOM WFOE has agreed to pay Pai Ming Shenzhen with a base monthly fixed fee of RMB100,000 and additional servicefee based on the service performance of Pai Ming Shenzhen. After termination of the VIE Agreement, PaiMing Shenzhen was treatedas a related party to the Company because the COO’s brother was one of the shareholders of Pai Ming Shenzhen. On April19,2022, the COO’s brother transferred all of his ownership interest in Pai Ming Shenzhen to an unrelated individual, and Pai MingShenzhen was no longer treated as a related party to the Company after April19, 2022. Therefore, the consulting service fees paidto Pai Ming Shenzhen during the period from January18, 2022 to April19, 2022 were accounted for as related party transactions(see Note14).

F-9

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESSDESCRIPTION (cont.)

The termination of the VIE Agreements did not discontinuethe Company’s existing business, which is to sell electronic component products and provide related services to customers. Historically,the Company’s business was substantially conducted through its wholly owned subsidiaries established in China and HongKong.Prior to the termination of the VIE Agreements, operating revenue generated through Pai Ming Shenzhen amounted to $72,425 from July1,2021 to December10, 2021, accounted for only 0.03% of the Company’s consolidated total revenue for theyears ended June30,2022. Total assets and total liabilities of Pai Ming Shenzhen amounted to approximately $219,897 and $427,395 as of December10,2021, accounted for only 0.60% and 0.89% of the Company’s consolidated total assets and liabilities as of June30, 2022, respectively.The Company recorded a loss of $205,249 from the termination of the VIE Agreements for theyear ended June30, 2022. Therefore,the Company’s management believes that the termination of the VIE Agreements does not represent a strategic shift that has (or willhave) a major effect on the Company’s operations and financial results. The termination is not accounted as discontinued operationsin accordance with ASC205-20.

The following presents the unaudited balance sheetinformation of Pai Ming Shenzhen as of December10, 2021 and June30, 2021, and the unaudited result of operations and cashflows of Pai Ming Shenzhen for the period from July1, 2021 to December10, 2021 as compared to the year ended June30,2021, after elimination of intercompany transactions and balances.

F-10

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESSDESCRIPTION (cont.)

F-11

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The accompanying consolidated financial statementshave been prepared in accordance with accounting principles generally accepted in the UnitedStates of America (“U.S.GAAP”)and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidatedfinancial statements include the financial statements of the Company, its wholly owned subsidiaries, and entity which it consolidatedthe operation and financial results through VIE Agreements from the July1, 2021 to the termination date of VIE Agreements. All inter-companybalances and transactions are eliminated upon consolidation.

Uses of estimates

In preparing the consolidated financial statementsin conformity U.S.GAAP, the management makes estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenuesand expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements.Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable and advanceto suppliers, inventory valuations, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets,realization of deferred tax assets, and provision necessary for contingent liabilities. Actual results could differ from those estimates.

Risks and uncertainties

The main operations of the Company are located inthe PRC.Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political,economic, and legal environments in the PRC, as well as by the general state of the economy in the PRC.The Company’s resultsmay be adversely affected by changes in the political, regulatory and social conditions in the PRC.Although the Company has notexperienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organizationand structure disclosed in Note1, such experience may not be indicative of future results.

The Company’s business, financial conditionand results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemicsand other catastrophic incidents, which could significantly disrupt the Company’s operations. The Company’s operations maybe further affected by the ongoing outbreak of COVID-19 pandemic. A COVID-19 resurgence could negatively affect the execution of the Company’ssales contract and fulfilment of customer orders and the collection of the payments from customers on a timely manner. The Company willcontinue to monitor and modify the operating strategies in response to the COVID-19. The extent of the future impact of COVID-19 is stillhighly uncertain and cannot be predicted as of the date the Company’s financial statements are released.

Concentration of credit risks

Financial instruments that potentially subject theCompany to significant concentration of credit risk consist primarily of cash and accounts receivable. As of December 31, 2023, the aggregateamounts of cash of $6,677,841 was deposited at major financial institutions located in the PRC and HongKong. In the event of bankruptcyof one of these financial institutions, the Company may not be able to claim its cash and demand deposits back in full.Managementbelieves that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financialinstitutions.

Accounts receivable are typically unsecured andderived from revenue earned from customers in the PRC, which are exposed to credit risk. The risk is mitigated by credit evaluations.The Company maintains an allowance for doubtful accounts, and actual losses have generally been within management’s expectations.Refer to “Note15. Concentrations” for detail.

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

Interest rate risk

The Company’s exposure to interest rate riskprimarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. The Company’sexposure to interest rate risk also arises from borrowings that have a floating rate of interest. The costs of floating rate borrowingsmay be affected by the fluctuations in the interest rates. The Company have not been, and do not expect to be, exposed to material interestrate risks, and therefore have not used any derivative financial instruments to manage such interest risk exposure. The Company has notbeen exposed to material risks due to changes in market interest rates, and not used any derivative financial instruments to manage theinterest risk exposure during the six months ended December 31, 2023.

Cash

Cash includes currency on hand and deposits heldby banks that can be added or withdrawn without limitation. The Company maintains all of its bank accounts in the PRC.The Company’scash balances in these bank accounts in the PRC are not insured by the Federal Deposit Insurance Corporation or other programs.

Restricted cash

Restricted cash consists of cash deposited withthe PRC banks and used as collateral to secure the Company’s short-term bank loans. In November2016, the FASB issued ASU No.2016-18,Statement of Cash Flows (Topic230): Restricted Cash, which requires entities to present the aggregate changes in cash, cashequivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flowswill be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash andcash equivalents. The Company adopted the updated guidance retrospectively and presented restricted cash within the ending cash and restrictedcash balance on the Company’s consolidated statement of cash flows for theyears presented.

Accounts receivable

Accounts receivable are presented net of allowancefor doubtful accounts. The Company reduces accounts receivable by recording an allowance for doubtful accounts to account for the estimatedimpact of collection issues resulting from a client’s inability or unwillingness to pay valid obligations to the Company. The Companydetermines the adequacy of allowance for doubtful accounts based on individual account analysis, historical collection trend, and bestestimate of specific losses on individual exposures. The Company establishes a provision for doubtful receivable when there is objectiveevidence that the Company may not be able to collect amounts due. Actual amounts received may differ from management’s estimateof credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accountsafter the management has determined that the likelihood of collection is not probable. There was no allowance for uncollectable recordedas of December 31, 2023 and June30, 2023.

Inventories, net

Inventories are comprised of purchased electroniccomponents products to be sold to customers. Inventories are stated at the lower of cost or net realizable value, determined using primarilyan average weighted cost method. The Company reviews its inventories periodically to determine if any reserves are necessary for potentialshrinkage and obsolete or unusable inventory. Inventory allowance amounted to nil and $1,851 as of December 31, 2023 and June30,2023, respectively. For the six months ended December 31, 2023, $1,851 of inventory allowance was reversed.

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

Advances to suppliers, net

Advances to suppliers consists of balances paidto suppliers for purchase of electronic components that have not been provided or received. Advances to suppliers are short-term in natureand are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impairedif the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances.In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating allavailable information, and then records specific allowances for those advances based on the specific facts and circ*mstances. As of December31, 2023 and June30, 2023, there was no allowance recorded as the Company considers all of the advances to be fully realizable.

Short-term investments

The Company’s short-term investments consistof wealth management financial products purchased from PRC banks with maturities ranging from one month to twelvemonths. The banksinvest the Company’s fund in certain financial instruments including money market funds, bonds or mutual funds, with rates of returnon these investments ranging from 1.5% to 2.5% per annum. The carrying values of the Company’s short-term investments approximatefair value because of their short-term maturities. The interest earned is recognized in the consolidated statements of (loss)/income andcomprehensive income/(loss) over the contractual term of these investments (see Note6).

Leases

On July1, 2021, the Company adopted AccountingStandards Update (“ASU”)2016-02, Leases (as amended by ASU2018-01,2018-10,2018-11,2018-20, and2019-01,collectively “ASC842”) using the modified retrospective basis and did not restate comparative periods as permitted underASU2018-11. ASC842 requires that lessees recognize ROU assets and lease liabilities calculated based on the present valueof lease payments for all lease agreements with terms that are greater than twelvemonths. ASC842 distinguishes leases as eithera finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statementof cash flows.

For operating leases, the Company calculated ROUassets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption. The remaining balanceof lease liabilities are presented within current portion of lease liabilities and the non-current portion of lease liabilities on theconsolidated balance sheets (see Note10).

Property and equipment

Property and equipment are stated at cost less accumulateddepreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method overtheir expected useful lives, as follows:

Expenditures for maintenance and repairs, whichdo not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and bettermentswhich substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retiredor sold are removed from the respective accounts, and any gain or loss is recognized in consolidated statements of (loss)/income and comprehensiveincome/(loss).

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

Intangible assets, net

The Company’s intangible assets primarilyconsist of internal-use software development costs associated with the Company’s e-commerce platform. Intangible assets are carriedat cost less accumulated amortization and any recorded impairment. The Company amortizes its intangible assets over useful lives of 10year using a straight-line method, which reflects the estimated pattern in which the economic benefits of the internally developed softwareare to be consumed.

Impairment of long-lived Assets

Long-lived assets with finite lives, primarily propertyand equipment and intangible assets, are reviewed for impairment whenever events or changes in circ*mstances indicate that the carryingamount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscountedcash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the amountby which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. There were noimpairments of these assets as of December 31, 2023 and June30, 2023.

Borrowings

Borrowings comprise short-term borrowings. Borrowingsare recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any differencebetween the proceeds net of transaction costs and the redemption value is recognized in profit or loss over the period of the borrowingsusing the effective interest method.

Accounts payable

The Company’s accounts payable (“AP”)primarily include balance due to suppliers for purchase of electronic components products.

Deferred public offering costs

The Company complies with the requirement of theASC340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic5A—“Expenses of Offering”.Deferred offering costs consist of underwriting, legal, consulting and other expenses incurred through the balance sheet date that aredirectly related to the intended public offering.Deferred offering costs will be charged to shareholders’ equity upon thecompletion of the public offering.Should the public offering prove to be unsuccessful, these deferred costs, as well as additionalexpenses to be incurred, will be charged to operations. Deferred IPO costs as included in “prepaid expenses and other current assets”amounted to 312,527 and nil as of December 31 2023 and June30, 2023, respectively (see Note7).

Fair value of financial instruments

Fair value is defined as the price that would bereceived to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize theuse of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

Unless otherwise disclosed, the fair value of theCompany’s financial instruments, including cash, restricted cash, short-term investments, notes receivable, accounts receivable,advances to suppliers, inventories, prepaid expenses and other current assets, short-term bank loans, short-term borrowings—third-partyloans, notes payable, accounts payable, deferred revenue, taxes payable, due to related parties, accrued expenses lease liabilities-current,and other current liabilities approximate the fair value of the respective assets and liabilities as of December 31, 2023 and June30,2023 based upon the short-term nature of the assets and liabilities.

Foreign currency translation

The functional currency for ICZOOM, ICZOOM HK, Ehub,Hjet HK and Components Zone HK is the U.S Dollar (“US$”). The Company primarily operates its business through its PRC subsidiariesas of December 31, 2023. The functional currency of the Company’s PRC subsidiaries and the VIE is the Chinese Yuan (“RMB”).The Unaudited Company’s consolidated financial statements have been translated into US$. Assets and liabilities accounts are translatedusing the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accountsare translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under othercomprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected inthe results of operations.

The RMB is not freely convertible into foreign currencyand all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amountscould have been, or could be, converted into US$ at the rates used in translation.

The following table outlines the currency exchangerates that were used in creating the consolidated financial statements in this report:

Revenue recognition

ASC606 establishes principles for reportinginformation about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to providegoods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or servicesto customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or servicesrecognized as performance obligations are satisfied. This new guidance provides a five-step analysis in determining when and how revenueis recognized. Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognizedin an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition,the new guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts withcustomers.

The Company currently generates its revenue fromthe following main sources:

Revenue from sales of electronic components to customers

The Company operates a B2B online platform www.iczoomex.com,where the Company’s customers can register as members first, and then use the platform to post the quotes for electronic componentproducts (such as integrated circuit, discretes, passive components, optoelectronics, electromechanical, MRO and design tools, etc.).

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ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

Once purchase orders received from customers, the Company purchasesdesired products from suppliers, takes control of purchased products in its warehouses, and then organizes the shipping and delivery ofproducts to customers. New customers are typically required to make certain prepayment to the Company before the Company purchases productsfrom suppliers.

The Company accounts for revenue from sales of electroniccomponents on a gross basis as the Company is responsible for fulfilling the promise to provide the desired electronic component productsto customers, and is subject to inventory risk before the product ownership and risk are transferred and has the discretion in establishingprices. All of the Company’s contracts are fixed price contracts and have one single performance obligation as the promise is totransfer the individual goods to customers, and there is no separately identifiable other promises in the contracts. The Company’srevenue from sales of electronic components is recognized at a point in time when title and risk of loss passes and the customer acceptsthe goods, which generally occurs at delivery. Advance payment from customers is recorded as deferred revenue first and then recognizedas revenue when products are delivered to the customers and the Company’s performance obligations are satisfied. The Company doesnot routinely allow customers to return products and historically return allowance was immaterial. There is no separate rebate, discount,or volume incentive involved. Revenue is reported net of all value added taxes (“VAT”).

Service commission fees

The Company’s service commission fees primarilyconsist of (1)fees charged to customers for assisting them for customs clearance when they directly purchase electronic componentproducts from overseas suppliers; (2)fees charged to customers for providing temporary warehousing and organizing the product shippingand delivery to customer designated destinations after customs clearance. There is no separately identifiable other promises in the contracts.

The Company merely acts as an agent in this typeof transaction and earns a commission fee ranging from 0.15% to 2% based on the value of the merchandise that customers purchase fromsuppliers and such commission fee is not refundable. The Company does not have control of the goods in this type of transaction, has nodiscretion in establishing prices and does not have the ability to direct the use of the goods to obtain substantially all the benefits.Such revenue is recognized at the point when the Company’s customs clearance, warehousing, logistic and delivery services are performedand the customer receive the products. Revenues are recorded net of sales taxes and value added taxes.

Contract Assets and Liabilities

The Company did not have contract assets as of December31, 2023 and June30, 2023.

Contract liabilities are recognized for contractswhere payment has been received in advance of delivery. The Company’s contract liabilities, which are reflected in its consolidatedbalance sheets as contract liabilities of $1,964,671 and $1,671,353 as of December 31, 2023 and June30, 2023, respectively.

Disaggregation of revenue

The Company disaggregates its revenue from contractsby product and service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue andcash flows are affected by economic factors.

F-17

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

The summary of the Company’s total revenuesby product and service type for thesix months ended December 31, 2023 and 2022 was as follows:

Segment reporting

An operating segment is a component of the Companythat engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internalfinancial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocateresources and assess performance of the segment.

The Company purchases electronic component productsfrom third-party suppliers and then sells to customers. The Company’s products have similar economic characteristics with respectto vendors, marketing and promotions, customers and methods of distribution. The Company’s chief operating decision maker has beenidentified as the Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessingperformance of the Company, and concludes that the Company has only one reporting segment.

Shipping and handling costs

Shipping and handling costs are expensed as incurred.Inbound shipping and handling cost associated with bringing the purchased electronic component products from suppliers to the Company’swarehouse are included in cost of revenue. Outbound shipping and handling costs associated with shipping and delivery the products tocustomers are included in selling expenses. For thesix months ended December 31, 2023 and 2022, shipping and handling costs includedin cost of revenue amounted to $249,883 and $250,996 and shipping and handling costs included in selling expenses amounted to $201,503and $218,586, respectively.

Research and development

The Company’sresearch and development activities primarily relate to development and implementation of its e-commerce platform and software.Research and development costs are expensed as incurred unless such costs qualify for capitalization as software development costs.In order to qualify for capitalization, (i)the preliminary project should be completed, (ii)management has committed tofunding the project and it is probable that the project will be completed and the software will be used to perform the functionintended, and (iii)it will result in significant additional functionality in the Company’s e-commerce platform.Capitalized software development costs amounted to $61,217 and $25,985 for thesix months ended December 31, 2023 and 2022,respectively. Research and development expenses included in general and administrative expenses amounted to $196,919 and $250,454for thesix months ended December 31, 2023 and 2022 respectively, primarily comprising employee costs, and amortization anddepreciation to intangible assets and property and equipment used in the research and development activities.

F-18

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

Income taxes

The Company accounts for current income taxes inaccordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist betweenthe tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilitiesare measured using enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expectedto be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in theperiod including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amountexpected to be realized.

An uncertain tax position is recognized only ifit is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largestamount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “morelikely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classifiedas income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred for thesixmonths ended December 31, 2023 and 2022. The Company does not believe that there was any uncertain tax provision at December 31, 2023and June30, 2023. The Company’s subsidiaries in HongKong are subject to the profit taxes in HongKong. The Company’ssubsidiaries in China are subject to the income tax laws of the PRC.For thesix months ended December 31, 2023 and 2022, theCompany generated income before taxes of $245,489 and $660,138 through its HongKong subsidiaries.

As of December 31, 2023, all of the tax returnsof the Company’s subsidiaries remain available for statutory examination by HongKong and PRC tax authorities.

Value added tax (“VAT”)

The Company is a general taxpayer and is subjectto applicable VAT tax rate of 6% or 16%, and starting from April1, 2019, the Company is subject to applicable VAT tax rate of 6%or 13%. VAT is reported as a deduction to revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualifiedinput VAT tax paid to suppliers against their output VAT liabilities.

Debt issuance costs

Debt issuance costs related to a recognized debtliability are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the debt liability, consistentwith debt discounts. Amortization of debt origination costs is calculated using the effective interest method and is included as a componentof interest expense.

Earnings per Share

The Company computes earnings per share (“EPS”)in accordance with ASC260, “Earnings per Share” (“ASC260”). ASC260 requires companies with complexcapital structures to present basic and diluted EPS.Basic EPS is measured as net income divided by the weighted average common sharesoutstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities,options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential commonshares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from thecalculation of diluted EPS.

F-19

ICZOOM GROUP INC.AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 —SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont.)

The following table sets forth the computation ofbasic and diluted earnings per share for thesix months ended December 31, 2023 and 2022:

Employee benefit plan

The Company’s subsidiaries in the PRC participatein a government-mandated multi-employer defined contribution plan pursuant to which pension, work-related injury benefits, maternity insurance,medical insurance, unemployment benefit and housing fund are provided to eligible full-time employees. The relevant labor regulationsrequire the Company’s subsidiaries in the PRC to pay the local labor and social welfare authorities monthly contributions basedon the applicable benchmarks and rates stipulated by the local government. The contributions to the plan are expensed as incurred. Employeesocial security and welfare benefits included as expenses in the accompanying consolidated statements of (loss)/income and comprehensiveincome/(loss) amounted to $83,905 and $86,950 for thesix months ended December 31, 2023 and 2022, respectively.

Comprehensive income

Comprehensive income consists of two components,net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the consolidatedfinancial statements expressed in RMB to US$ is reported in other comprehensive income in the consolidated statements of (loss)/comprehensiveincome/(loss).

Statement of cash flows

In accordance with ASC230, “Statementof Cash Flows”, cash flows from the Company’s operations are formulated based upon the local currencies using the averageexchange rate in the period. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flowswill not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Government subsidies

Government subsidies are provided by the relevantPRC municipal government authorities to subsidize the cost of certain research and development projects. The Company recognizes governmentsubsidies as other operating income when they are received because they are not subject to any past or future conditions, there are noperformance conditions or conditions of use, and they are not subject to future refunds. Government subsidies received and recognizedas other operating income totaled $11,409 and $31,826 for thesix months ended December 31, 2023 and 2022, respectively.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE2 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Share-basedcompensation

TheCompany grants stock options to eligible employees for services and accounts for share-based compensation in accordance with ASC718,Compensation—Stock Compensation. Share-based compensation awards are measured at the grant date fair value of the awardsand recognized as expenses using the straight-line method over the vesting period.

Thefair value of share options was determined using the binomial option valuation model, which requires the input of highly subjective assumptions,including the expected volatility, the exercise multiple, the risk-free rate and the dividend yield. For expected volatility, the Companyhas made reference to historical volatility of several comparable companies in the same industry. The exercise multiple was estimatedas the average ratio of the stock price to the exercise price of when employees would decide to voluntarily exercise their vested shareoptions. The risk-free rate for periods within the contractual life of the share options is based on the market yield of U.S.TreasuryBonds in effect at the time of grant. The dividend yield is based on the expected dividend policy over the contractual life of the shareoptions.

Relatedparties and transactions

TheCompany identifies related parties, and accounts for, discloses related party transactions in accordance with ASC850, “RelatedParty Disclosures” and other relevant ASC standards.

Parties,which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to controlthe other party or exercise significant influence over the other party in making financial and operational decisions. Companies are alsoconsidered to be related if they are subject to common control or common significant influence.

Transactionsbetween related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactionsbetween related parties are also considered to be related party transactions even though they may not be given accounting recognition.While ASC does not provide accounting or measurement guidance for such transactions, it nonetheless requires their disclosure.

Recentaccounting pronouncements

TheCompany considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE2 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Recentlyissued accounting pronouncements not yet adopted

InOctober2021, the FASB issued ASU No.2021-08, Business Combinations (Topic805): Accounting for Contract Assets and ContractLiabilities from Contracts with Customers (ASU2021-08), which clarifies that an acquirer of a business should recognize and measurecontract assets and contract liabilities in a business combination in accordance with Topic606, Revenue from Contracts with Customers.The new amendments are effective for fiscalyears beginning after December15, 2022, including interim periods within thosefiscalyears. The amendments should be applied prospectively to business combinations occurring on or after the effective date ofthe amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on our consolidatedfinancial statements.

InMarch2022, the FASB issued ASU No.2022-02, Financial Instruments—Credit Losses (Topic326): TroubledDebt Restructurings and Vintage Disclosures, which eliminates the troubled debt restructurings (TDRs) accounting model for creditorsthat have already adopted Topic326, which is commonly referred to as the current expected credit loss (CECL) model. For entitiesthat have adopted Topic326, the amendments in this Update are effective for fiscalyears beginning after December15,2022, including interim periods within those fiscalyears. The FASB’s decision to eliminate the TDR accounting model is inresponse to feedback that the allowance under CECL already incorporates credit losses from loans modified as TDRs and, consequently,the related accounting and disclosures—which preparers often find onerous to apply—no longer providethe same level of benefit to users. The Company is currently evaluating the impact of the new guidance on our consolidated financialstatements.

InJune2022, the FASB issued ASU No.2022-03, Fair Value Measurement (Topic820) — Fair Value Measurement of EquitySecurities Subject to Contractual Sale Restrictions, which stipulates that a contractual restriction on the sale of an equity securityshould not be considered part of the equity security’s unit of account and, therefore, should not be considered in measuring itsfair value. For public business entities, the amendments in this Update are effective for fiscalyears beginning after December15,2023, and interim periods within those fiscalyears. The Company is currently evaluating the impact of the new guidance on our consolidatedfinancial statements.

NOTE3 —ACCOUNTS RECEIVABLE

Accountsreceivable consists of the following:

TheCompany’s accounts receivable (“AR”) primarily includes balance due from customers when the Company’s productsare sold and delivered to customers.

Allof the June30, 2023 accounts receivable balance has been collected. Approximately 91.9% of the December 31, 2023 accounts receivablebalance has been collected as of the date the Company’s unaudited interim consolidated financial statements for thesix monthsended December 31, 2023 were issued. The following table summarizes the Company’s outstanding accounts receivable and subsequentcollection by aging bucket:

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE3 —ACCOUNTS RECEIVABLE (cont.)

Allowancefor doubtful accounts movement is as follows:

NOTE4 —INVENTORIES, NET

Inventories,net, consist of the following:

NOTE5 —ADVANCES TO SUPPLIERS

Advancesto suppliers, net, consist of the following:

Advancesto suppliers represents balance paid to various suppliers for purchase of electronic components that have not been delivered. These advancesare interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying value has becomeimpaired. As of December 31, 2023 and June 30, 2023, there was no allowance recorded as the Company considers all of the advances tosuppliers balance fully realizable. The June30, 2023 advance to supplier balance was fully realized by December 31, 2023. Approximately87.0% or $1.6million of the December 31, 2023 advance to suppliers balance has been realized as of the date the Company’sunaudited consolidated financial statements for six months ended December31, 2023 were issued.

NOTE6 —SHORT-TERM INVSTMENT

TheCompany’s short-term investments consist of wealth management financial products purchased from PRC banks with maturities rangingfrom one month to twelvemonths. The banks invest the Company’s fund in certain financial instruments including money marketfunds, bonds or mutual funds, with rates of return on these investments ranging from 1.5% to 2.5% per annum.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE6 —SHORT-TERM INVSTMENT (cont.)

Short-terminvestment consisted of the following:

Interestincome generated from short-term investment amounted to $59,174 and $6,913 for thesix months ended December 31, 2023 and 2022,respectively.

NOTE7 —PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaidexpenses and other current assets consist of the following:

NOTE8 —PROPERTY AND EQUIPMENT, NET

Propertyand equipment, net, consists of the following:

Depreciationexpense was $37,614 and $29,596 for thesix months ended December 31, 2023 and 2022, respectively.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE9 —INTANGIBLE ASSETS, NET

Intangibleassets, net, mainly consist of the following:

Amortizationexpense was $83,974 and $59,532 for thesix months ended December 31, 2023 and 2022, respectively. Estimated future amortizationexpense for intangible assets is as follows:

NOTE10 —LEASES

TheCompany’s PRC subsidiaries and VIE entered into operating lease agreements with landlords to lease warehouse and office space.As of June30, 2023, the remaining lease term was 1.9years. The Company’s lease agreements do not provide a readilydeterminable implicit rate nor is it available to the Company from its lessors. Instead, the Company estimates its incremental discountrate based on the interest rate for three-year government bond as published by China’s central bank in order to discount leasepayments to present value. The discount rate of the Company’s operating leases was 3.35%. For thesix months ended December31, 2023 and 2022, there was no variable lease cost. For thesix months ended December 31, 2023 and 2022, total operating leaseexpense amounted to $2,994 and $218,399, respectively, and amortization of the operating lease right-of-use assets amounted to $297,672and 118,026, respectively. For thesix months ended December 31, 2023, the interest on lease liabilities amounted to $14,466.

Supplementalbalance sheet information related to operating leases was as follows:

Thetable below presents the operating lease related assets and liabilities recorded on the balance sheets.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE10 —LEASES (cont.)

Asof December 31, 2023, maturities of lease liabilities were as follows:

NOTE11 —DEBT

TheCompany borrowed from PRC banks, other financial institutions and third parties as working capital funds. As of December 31, 2023 andJune 30, 2023, the Company’s debt consisted of the following:

(a)Short-termloans:

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE11 —DEBT (cont.)

OnApril25, 2023, the Company borrowed RMB13.9million (approximately USD$2.0million) short-term loan from SPD bank asworking capital for sixmonths, with loan maturity date on October20, 2023 and effective interest rate of 2.85% per annum.The loan borrowed was guaranteed by the Company’s certain shareholders. The loan was fully repaid upon maturity.

OnOctober 24, 2023, the Company borrowed RMB16.0million (approximately USD$2.3million) short-term loan from SPD bank as working capitalfor sixmonths, with loan maturity date on April 19, 2024 and effective interest rate of 2.74% per annum. The loan borrowed wasguaranteed by the Company’s certain shareholders. The loan was fully repaid upon maturity.

OnOctober 27, 2023, the Company borrowed RMB14.0million (approximately USD$2.0million) short-term loan from SPD bank as working capitalfor sixmonths, with loan maturity date on April 24, 2024 and effective interest rate of 2.61% per annum. The loan borrowed wasguaranteed by the Company’s certain shareholders. The loan was fully repaid upon maturity.

Forthe above-mentioned loans from SPD bank, certain shareholders of the Company provided joint guarantees to these loans by pledging theirpersonal properties as collaterals.

(2)OnFebruary22, 2023, the Company borrowed $2.75 million on short-term loan from Agricultural Bank of China (“ABC bank”)as working capital for sixmonths, with loan maturity date on August18, 2023 and effective interest rate of 5.69% per annum.The loan was fully repaid upon maturity.

OnAugust25, 2023, the Company borrowed RMB20.5million (approximately USD$2.9 million) on short-term loan from ABC bank as workingcapital for sixmonths, with loan maturity date on February 18, 2024 and effective interest rate of 3.80% per annum. The loan wasfully repaid upon maturity.

Forthe above-mentioned loans from ABC bank, certain shareholders of the Company provided joint guarantees to these loans by pledging theirpersonal properties as collaterals.

(3)On May11, 2023, the Company borrowed $1.3million short-term loan from Industrial and Commercial Bank of China (“ICBC”)as working capital for threemonths, with loan maturity date on August8, 2023 and effective interest rate of 5.56% per annum.The loan borrowed from ICBC Bank was guaranteed by the Company’s certain shareholders. The loan was fully repaid upon maturity.

OnJune 9, 2023, the Company borrowed $1.1million short-term loan from ICBC as working capital for threemonths, with loan maturitydate on September5, 2023 and effective interest rate of 5.52% per annum. The loan borrowed from ICBC Bank was guaranteed by theCompany’s certain shareholders. The loan was fully repaid upon maturity.

OnAugust 10, 2023, the Company borrowed $1.3million short-term loan from ICBC as working capital for threemonths, with loanmaturity date on November 7, 2023 and effective interest rate of 5.90% per annum. The loan borrowed from ICBC Bank was guaranteed bythe Company’s certain shareholders. The loan was fully repaid upon maturity.

OnSeptember 7, 2023, the Company borrowed $1.1million short-term loan from ICBC as working capital for threemonths, with loanmaturity date on December 5, 2023 and effective interest rate of 5.99% per annum. The loan borrowed from ICBC Bank was guaranteed bythe Company’s certain shareholders. The loan was fully repaid upon maturity.

OnNovember 9, 2023, the Company borrowed RMB9.0 million (approximately USD$1.3 million) short-term loan from ICBC as working capital forthreemonths, with loan maturity date on February 7, 2024 and effective interest rate of 4.5% per annum. The loan borrowed fromICBC Bank was guaranteed by the Company’s certain shareholders. The loan was fully repaid on January 25, 2024.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE11 —DEBT (cont.)

OnDecember 11, the Company borrowed RMB8.0 million (approximately USD$1.1 million) short-term loan from ICBC as working capital for threemonths,with loan maturity date on March 8, 2024 and effective interest rate of 4.50% per annum. The loan borrowed from ICBC Bank was guaranteedby the Company’s certain shareholders. The loan was fully repaid upon maturity.

Forthe above-mentioned loans from ICBC bank, certain shareholders of the Company provided joint guarantees to these loans by pledging theirpersonal properties as collaterals.

(4)OnSeptember27, 2022, the Company borrowed GBP£0.92million (approximately $1.2million) short-term loan from Bankof China as working capital for twelvemonths, with loan maturity date on September27, 2023 and effective interest rate of4.51% per annum. The loan was pledged by a term deposit of JPY ¥144.7million (approximately $1.06million). The loan wasfully repaid upon maturity.

OnNovember21, 2022, the Company borrowed EUR€0.97million (approximately $1.0million) short-term loan from Bank ofChina as working capital for twelvemonths, with loan maturity date on November21, 2023 and effective interest rate of 2.58%per annum. The loan was pledged by a term deposit of GBP£0.84million (approximately $1.03million). The loan was fullyrepaid upon maturity.

OnMarch28, 2023, the Company borrowed HKD 11.8million (approximately $1.5million) short-term loan from Bank of Chinaas working capital for twelvemonths, with loan maturity date on March27, 2024 and effective interest rate of 3.02% per annum.The loan was pledged by a term deposit of JPY 196.8million (approximately $1.48million). The loan was fully repaid upon maturity.

OnJune28, 2023, the Company borrowed GBP£0.8million (approximately $1.0million) short-term loan from Bank of Chinaas working capital for twelvemonths, with loan maturity date on June27, 2024 and effective interest rate of 6.02% per annum.The loan was pledged by a term deposit of JPY 144.0million (approximately $1.0million).

OnAugust29, 2023, the Company borrowed HKD 7.9million (approximately $1.0million) short-term loan from Bank of China as workingcapital for twelvemonths, with loan maturity date on August28, 2024 and effective interest rate of 3.73% per annum. The loanwas pledged by a term deposit of JPY 146.6million (approximately $1.0million).

OnNovember 21, 2023, the Company borrowed HKD 7.8million (approximately $1.0million) short-term loan from Bank of China as workingcapital for twelvemonths, with loan maturity date on November 20, 2024 and effective interest rate of 5.24% per annum. The loanwas pledged by a term deposit of JPY 148.4million (approximately $1.0million).

(5)OnJuly 20, 2023, the Company borrowed RMB2.2million (approximately $0.3million) short-term loan from Construction Bank of Chinaas working capital for ninemonths, with loan maturity date on March13, 2024 and effective interest rate of 3.85% per annum.The loan was fully repaid upon maturity.

(6)Inorder to obtain the above-mentioned loans from PRC banks, as of December 31. 2023 and June30 2023, the Company incurred total of$385,490 and $292,998 loan origination fees to be paid to above mentioned related parties for providing loan guarantees and pledgingtheir personal assets as collaterals to safeguard the loans. The loan origination fees were recorded as deferred financing cost againstthe loan balances. For the six months ended December 31, 2023 and 2022, $92,491 and $110,219 deferred financing cost was amortized, respectively.

Forthe above-mentioned short-term loans from PRC banks and financial institutions, interest expense amounted to $321,697 and $215,589 forthe six months ended December 31, 2023 and 2022, respectively.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE11 —DEBT (cont.)

(b)Short-termborrowings- third-party loans

FromJune to December2023, the Company borrowed loans from an unrelated company as working capital, with loan maturity date rangingfrom August 2023 to December2023, and effective interest rate of 3.6% per annum. As of December 31, 2023, the outstanding balancewas $0.

Totalinterest expense on these third-party loans amounted to $1,611 and $6,092 for the six months ended December 31, 2023 and 2022, respectively.

(C)NotesPayable

TheCompany has various credit facilities with PRC banks that provide for working capital in the form of notes payable. On November 21, 2023,the Company obtained another line of credit from Huaxia Bank of RMB 11 million (equivalent to $1,553,200) as working capital in the formof banker’s acceptance note. This note was interest free and with a maturity date on June 12, 2024. The Company pledged restrictedcash of $0.16 million as collateral to secure this note. The notes payable was fully repaid on May 20 2024.

NOTE12 —ACCOUNTS PAYABLE

TheCompany’s accounts payable (“AP”) primarily include balance due to suppliers for purchase of electronic componentsproducts. The June30, 2023 accounts payable balance has been fully settled. Approximately 97.6.0% of the accounts payable balanceas of December 31, 2023 has been settled as of the date the Company’s unaudited interim financial statements for the six monthsended December 31, 2023 were issued.

Thefollowing table summarizes the Company’s outstanding accounts payable and subsequent settlement by aging bucket:

NOTE13 —TAXES

(a)CorporateIncome Taxes (“CIT”)

CaymanIslands

Underthe current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no CaymanIslands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

HongKong

ICZOOMHK, Ehub, Hjet HK and Components Zone HK are incorporated in HongKong and are subject to profit taxes at a rate of 16.5% for taxableincome earned in HongKong before April1, 2018. Starting from the financial year commencing on or after April1, 2018,the two-tiered profits tax rates regime took effect, under which the profits tax rate is 8.25% on assessable profits of the first HK$2millionand 16.5% on any assessable profits in excess of HK$2million. There is an anti-fragmentation measure where each group will haveto nominate only one company in the group to benefit from the progressive rates. As a result, Ehub is nominated by the Company and issubject to tax rate of 8.25% on the first HK$2million of assessable profits and a tax rate of 16.5% on the remaining profits andICZOOM HK, Hjet HK and Components Zone HK are subject to HongKong profit taxes at a rate of 16.5% for theyears ended December31, 2023 and 2022, respectively.

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE13 —TAXES (cont.)

PRC

ICZOOMWFOE, Hjet Shuntong, ICZOOM Shenzhen and Hjet Supply Chain,are incorporated in the PRC, and are subject to the PRC Enterprise IncomeTax Laws (“EIT Laws”) and are taxed at the statutory income tax rate of 25%.

EITgrants preferential tax treatment to High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment,HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every threeyears.ICZOOM Shenzhen, one of the Company’s ICZOOM Operating Entities in the PRC, was approved as HNTEs and is entitled to a reducedincome tax rate of 15% beginning December2023, which is valid for threeyears.

(i)The components of the income tax provision from Cayman Islands, HongKong, and China are as follows:

Reconciliationof the differences between the income tax provision computed based on PRC statutory income tax rate and the Company’s actual incometax provision for thesix months ended December31, 2023 and 2022, respectively are as follows:

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ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE13 —TAXES (cont.)

Deferredtax assets

TheCompany’s deferred tax assets are comprised of the following:

Movementof valuation allowance:

TheCompany periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferredtax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, bothpositive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulativeearnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevantfactors. The Company has four subsidiaries in HK, including ICZOOM HK, Components Zone HK, Hjet HK and Ehub, among which Components ZoneHK were reported recurring operating losses since 2015 to June2023. In addition, the Company also has five subsidiaries in thePRC, among which, ICZOOM Shenzhen were also reported recurring operating losses since 2015 to June2023.

Managementconcluded that the chances for the above-mentioned HK and PRC subsidiaries to be profitable in the foreseeable near future and to utilizetheir net operating loss carry forwards were uncertainty. Accordingly, the Company provided valuation allowance of $392,420and $576,432for the deferred tax assets of these subsidiaries for thesix months ended December 31, 2023 and 2022 respectively.

(b)Taxespayable

Taxespayable consist of the following:

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F-39

ICZOOMGROUP INC.AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE20—FINANCIALINFORMATIONOFTHEPARENTCOMPANY(cont.)

ICZOOMGROUP INC.
UNAUDITED PARENT COMPANY STATEMENTS OF CASH FLOWS

F-40

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The information in this report contains forward-lookingstatements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction withour condensed consolidated financial statements included elsewhere in this report. This discussion contains forward-looking statementsreflecting our current expectations that involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements”for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of eventscould differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forthelsewhere in this report.

Overview

We, ICZOOM Group Inc. (the“Company”), are an offshore holding company incorporated in Cayman Islands, conducting all of our operation in through ourwholly owned subsidiaries established in China and Hong Kong.

We are a technology-drivencompany running an ecommerce trading platform and are primarily engaged in sales of electronic component products to customers in thePRC.Major electronic component products we sold to customers through our online e-commerce platform fall into two broad productcategories: semiconductor products (such as integrated circuit, power/circuit protection, discretes, passive components, optoelectronics/electromechanical, etc.) and equipment, tools and other electronic component products (such as Maintenance, Repair and Operations (“MRO”),and various design tools, etc.). These products are primarily used by customers in the consumer electronic industry, Internet of Things(“IoT”), automotive electronics, industry control segment with primary target customers being China small and medium-sizedenterprises(“SMEs”). In addition to sales of electronic component products, we also provide services to customers to earn service commissionfees, such services include, but not limit to, order fulfilment, temporary warehousing, logistic and shipping, and customs clearance,etc.

Built upon our proprietaryindustry knowledge and coupled with our SaaS suite, we are committed to working with our clients to understand their needs and challengesand offering suitable products and services to help them meet their respective needs. Our mission is to transform the traditional electroniccomponent distribution business by offering SME customers integrated solutions and help them introduce innovative products, reduce theirtime to market, and enhance their overall competitiveness.

We primarily generate revenuefrom sales of electronic components products to customers. In addition, we have certain amount of revenue from service commission feefor services provided to our customers including, but not limit to, customs clearance, warehousing and product shipping and delivery services.

Our Organization

Ourrevenues decreased by $32,486,953, or 27.0%, from $120,207,506 for thesix months ended December 31, 2022 to $87,720,553 for the six months ended December 31, 2023. Revenues from sales of electronic componentproducts accounted for 98.4% and 98.4% of our total revenues for the six months ended December 31, 2023 and 2022, respectively. Revenuesfrom service commission fees accounted for 1.6% and 1.6% of our total revenues for the six months ended December 31, 2023 and 2022, respectively.

Key Factors That Affect Our Results of Operations

We believe the following key factors may affectour financial condition and results of operations:

Effectiveness of Risk Management

The success of our businessrelies heavily on our ability to effectively evaluate customers’ credit profiles and the likelihood of default. We have devisedand implemented a systematic credit assessment model and disciplined risk management approach to minimize customers’ default riskand mitigate the impact of default. Specifically, our assessment model and risk management capabilities enable us to select high-qualitySME customers whose financial conditions and background meet our selection criteria. There can be no assurance that our risk managementmeasures will allow us to identify or appropriately assess whether customer payments due will be collected when due. If our risk managementapproach is ineffective, or if we otherwise fail or are perceived to fail to manage the impact of default, our reputation and market sharecould be materially and adversely affected, which would severely impact our business and results of operations.

Our Ability to Attract Additional Customers and Increase theSpending Per Customer

Our major customers are China’sSMEs running their businesses in the consumer electronic industry, Internet of Things, automotive electronics, and industry control segment,etc. We currently sell our electronic component products to these customers in 19 provinces in China, with significant customers locatedin Guangdong Province, Jiangsu Province, Liaoning Province, Beijing City and Shanghai City in China. We plan to expand our business toextended geographic areas to cover 80% of the provinces in China within the next1-2years. For the six months ended December31, 2023 and 2022, we had total 634 and 653 customers, respectively. No single customer accounted for more than 10% of our total revenuein either period. For the six months ended December 31, 2023 and 2022, our top 10 customers in aggregate accounted for 26.4% and 28.0%of the total revenue, respectively. Our dependence on a small number of larger customers could expose us to the risk of substantial lossesif a single large customer stop purchasing our products, purchases fewer of our products or goes out of business and we cannot find substitutecustomers on equivalent terms. If any of our significant customers reduces the quantity of the products it purchases from us or stopspurchasing from us, our net revenues could be materially and adversely affected. Therefore, the success of our business in the futuredepends on our effective marketing efforts to expand our distribution network in the PRC in an effort to increase our geographic penetration.The success of expansion will depend upon many factors, including our ability to form relationships with, and manage an increasing numberof, customers and optimize our distribution network. If our marketing efforts fail to convince customers to accept our products, we mayfind it difficult to maintain the existing level of sales or to increase such sales. Should this happen, our net revenues would declineand our growth prospectus would be severely impaired.

Our Ability to Increase Awareness of Our Brand and Develop CustomerLoyalty

Our brand is integral toour sales and marketing efforts. We will promote our company brand to enhance customer recognition of our company brand; at the same time,we will increase our customers’ stickiness through our SaaS services. We believe that maintaining and enhancing our brand name recognitionin a cost-effective manner is critical to achieving widespread acceptance of our electronic component products and is an important elementin our effort to increase our customer base. Successful promotion of our brand name will depend largely on our marketing efforts and abilityto provide reliable and quality products at competitive prices. Brand promotion activities may not necessarily yield increased revenue,and even if they do, any increased revenue may not offset the expenses we will incur in marketing activities. If we fail to successfullypromote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we mayfail to attract new customers or retain our existing customers, in which case our business, operating results and financial condition,would be materially adversely affected.

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Our ability to establish and retain long-term strategic relationshipwith suppliers

We source our products fromvarious suppliers, mainly including some of the top brand-name suppliers in electronic component product categories. Maintaining goodrelationships with these suppliers and procuring products from suppliers on favorable terms are important to the growth of our business.With the growth of our e-commerce platform, we expect we will be able to continuously provide more demand information to our suppliers.However, there can be no assurance that our current suppliers will continue to sell electronic component products to us on terms acceptableto us, or that we will be able to establish new or extend current supplier relationships to ensure a steady supply of electronic componentproducts in a timely and cost-efficient manner. If we are unable to develop and maintain good relationships with suppliers, we may notbe able to offer products demanded by our customers, or to offer them in sufficient quantities and at prices acceptable to them. In addition,if our suppliers cease to provide us with favorable pricing or payment terms or exchange privileges, our working capital requirementsmay increase and our operations may be materially and adversely affected. Any deterioration in our relationship with major suppliers,or a failure to timely resolve disputes with or complaints from our major suppliers, could materially and adversely affect our business,prospects and results of operations.

Our Ability to Control Costs and Expenses and Improve Our OperatingEfficiency

Becauseorders from SMEs are often very complicated and the order amount is small, the cost of serving them for the existing traditional businessmodel is relatively high. We reduce our operating cost through our advanced e-commerce business model and effectively serve SMEs at aneffective low cost. Our business growth is dependent on our ability to attract and retain qualified and productive employees, identifybusiness opportunities, secure new contracts with customers and our ability to control costs and expenses to improve our operating efficiency.Our inventory costs (including third-party electronic component product purchase costs, tariffs, inbound freight and shipping costs, warehouselease and overhead costs and business taxes) have a direct impact on our profitability. The inventory purchase costs are subject to pricevolatility and other inflationary pressures, which may, in turn, result in an increase in the amount we pay for sourced products. Priceincreases may adversely impact our financial results. In addition, our staffing costs (including salary andemployee benefit expense) and administrative expenses also have a direct impact on our profitability. Our ability to drive the productivityof our staff and enhance our operating efficiency affects our profitability. To the extent that the costs we are required to pay to oursuppliers and our staffs exceed our estimates, our profit may be impaired. If we fail to implement initiatives to control costs and improveour operating efficiency over time, our profitability will be negatively impacted.

Our Ability to Compete Successfully

The electronic componentprocurement market in China is intensely competitive. We face competition from large information based B2B e-commerce companies, offlinedistributors, vendors, and traders of electronic components, many of which possess significant brand recognition, sales volume and customerbases, and some of which currently sell, or in the future may sell, products or services through their online service platforms. Someof our current and potential competitors have significantly greater financial, technical or marketing resources than we do. In addition,some of our competitors or new entrants may be acquired by, receive investment from or enter into strategic relationships with, well-establishedand well-financed companies or investors which would help enhance their competitive positions. Our failure to properly respond to increasedcompetition and the above challenges may reduce our operating margins, market share and brand recognition, or force us to incur losses,which will have a material adverse effect on our business, prospects, financial condition and results of operations.

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A Severe or Prolonged Slowdown in The Global or Chinese EconomyCould Materially and Adversely Affect Our Business and Our Financial Condition

The rapid growth of the Chineseeconomy has slowed down since 2012 and this slowdown may continue in the future. There is considerable uncertainty over trade conflictsbetween the UnitedStates and China and the long-term effects of the expansionary monetary and fiscal policies adopted by the centralbanks and financial authorities of some of the world’s leading economies, including the UnitedStates and China. The withdrawalof these expansionary monetary and fiscal policies could lead to a contraction. There continue to be concerns over unrest and terroristthreats in the Middle East, Europe, and Africa, which have resulted in volatility in oil and other markets. There are also concerns aboutthe relationships between China and other Asian countries, which may result in or intensify potential conflicts in relation to territorialdisputes. The eruption of armed conflict could adversely affect global or Chinese discretionary spending, either of which could have amaterial and adverse effect on our business, results of operation in financial condition. Economic conditions in China are sensitive toglobal economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economicgrowth rate in China. Any severe or prolonged slowdown in the global or Chinese economy would likely materially and adversely affect ourbusiness, results of operations and financial condition. In addition, continued turbulence in the international markets may adverselyaffect our ability to access capital markets to meet liquidity needs.

KeyFinancial Performance Indicators

In assessing our financial performance, we considera variety of financial performance measures, including growth in net revenue and gross profit, our ability to control costs and operatingexpenses to improve our operating efficiency and net income. Our review of these indicators facilitates timely evaluation of the performanceof our business and effective communication of results and key decisions, allowing our business to respond promptly to competitive marketconditions and different demands and preferences from our customers. The key measures that we use to evaluate the performance of our businessare set forth below and are discussed in greater details under “Results of Operations”.

Net Revenue

Our net revenue is driven by changes in the numberof customers, sales volume, selling price, and mix of products sold.

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Revenues from sales of electronic component productsaccounted and 98.4% and 98. 4% of our total revenues for the six months ended December 31, 2023 and 2022, respectively. Electronic componentproducts sold to customers by us fall into two categories: (i)semiconductor products and (ii)electronic equipment, tools andother products. Our semiconductor products primarily include various integrated circuit, power/circuit protection, discretes, passivecomponents, optoelectronics/electromechanical and our equipment, tools and other electronic component products primarily include variousMRO, and design tools.

TotalSKUs sold to customers decreased by 40.4% from 14,056 different products for the six months ended December 31, 2022 (including 12,457different variety of semiconductor products and 1,599 different variety of equipment and tools products) to 8,373 different products for the six months ended December 31, 2023 (including 6,955 differentvariety of semiconductor products and 1,418 different variety of equipment and tools products). The decrease in variety of product offeringsreflected the decreased demand from the end of customers as some of them had stocked up heavily in prior fiscal years and still carriedover comparatively high inventories. Thus, the number of customers for our electronic component products decreased by 2.9% from 653 customersfor the six months ended December 31, 2022 to 634 customers for the six months ended December 31, 2023. We also count the number of therepeat customers, measured by the number of the customers who made orders in the current period with transaction records with us in thelast five fiscalyears. And the number of the repeat customers for the six months ended December 31, 2023 was 523, and the repeatcustomers accounted for 82.5% of the total customers for the six months ended December 31, 2023 while the repeat customers accountedfor only 76.1% for the six months ended December 31, 2022. Our customers are mainly SMEs who rely on our e-commerce platform for one-stopprocurement, as well as the add-on services to lower the total cost of procurement conducted by themselves. Even though the electronicsindustry is subject to short product life cycles, fast changing product trends, constantly evolving technologies and customers with frequentpurchase needs, our relatively short inventory turnover period and the large number of the SKUs enable us to satisfy our customers’frequent, changing, and various demands and further to maintain a long-term business relationship with our customers. Therefore, theincreasing percentage of the repeat customers reflected the increasing high satisfactions and loyalty of our existing customers who madeorders on our platform, as one of the indicators of the performance of our services and business. Our management references to the numberof repeat customers to monitor our customers’ satisfaction levels and takes it into consideration for the future development ofthe business. These factors led to a 27.1% decrease in our total revenue from sales of electronic component products for the six monthsended December 31, 2022 to the six months ended December 31, 2023.

Service commission feerevenue from providing customs clearance, temporary warehousing, and logistic and shipping services to customers accounted for 1.6%and 1. 6% of our total revenues for the six months ended December 31, 2023 and 2022, respectively. We earn a commission fee rangingfrom 0.15% to 2.0% based on the value of the merchandise that customers purchase from suppliers and such commission fee is notrefundable. Number of customers for our services increased by 11.4% from 132 customers for the six months ended December 31, 2022 to147 for the six months ended December 31, 2023.

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Gross Profit

Gross profit is equal to net revenue minus costof goods sold. Cost of goods sold primarily includes inventory costs (third-party products purchase price, tariffs, inbound freight costs,warehouse lease and overhead costs and business taxes) and sales taxes. Cost of goods sold generally changes as affected by factors includingthe availability of the third-party products in the market, the purchase price of third-party products, sales volume and product mix changes.Our cost of revenues accounted for 97.5% and 97.4% of our total revenue for the six months ended December 31, 2023 and 2022, respectively.

Our gross margin was 2.5% for the six months endedDecember 31, 2023, a decrease by 0.1% from gross margin of 2.6% for the six months ended December 31, 2022 Our gross profit and grossmargin is affected by sales of different product mix during each reporting period. Our gross margin increases when more revenue comesfrom products with lower costs and higher margin, while our gross margin decreases when more revenue comes from products with higher costsand lower margin. For the six months ended December 31, 2023, we earned more revenue from products with higher costs and lower margin.These factors led to the decrease in our gross profit and in gross margin. See detailed discussion under “Results of Operation”.

Operating Expenses

Our operating expenses consist of selling expenses,and general and administrative expenses.

Our selling expenses primarily include salary andwelfare benefit expenses paid to our sales personnel, warehouse rental expense, shipping and delivery expenses, tariff expenses, expensesincurred for our business travel, meals and other sales promotion and marketing activities related expenses.

Our selling expensesaccounted for 0.9% and 0.8% of our total revenue for the six months ended December 31, 2023 and 2022, respectively. Our sellingexpenses in terms of our total revenue increased from 0.8% for the six months ended December 31, 2022 to 0.9% for the six monthsended December 31, 2023, however, due to decreased total revenue, in terms of dollar amount, our total selling expenses decreased by$197,895 or 20.3%for the six months ended December 31, 2023 compared to for the six months ended December 31, 2022, and the decreasewas largely due to the decrease of salary expense due to downsize of the sales team by 4 employees per month on average.

Our general andadministrative expenses primarily consist of employee salaries, welfare and insurance expenses, depreciation and amortization, baddebt reserve expenses, office supply and utility expenses, business travel and meals expenses, and professional service expenses.General and administrative expenses were 1.7% and 1.1% of our revenue for the six months ended December 31, 2023 and 2022,respectively. Our general and administrative expenses in terms of our total revenue increased from 1.1% in first half of fiscal year2023 to 1.7% in first half of fiscal year 2024, although the total revenue decreased by 27.0%, our total general and administrativeexpenses increased by $215,232 or 16.5% in terms of dollar amount, for the six months ended December 31, 2023 compared to for thesix months ended December 31, 2022, and the increase was largely due to the increase in salaries for senior management and theincrease of transportation, travel and meals expenses to maintaining investor relations incurred in promoting our brand and theincrease in professional fees as a result of legal services and services related to the maintenance of investor relations.

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Results of Operations

The following table summarizesour operating results as reflected in our statements of income and comprehensive income during the sixmonths ended December31,2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.