# EDGAR Filing Document

**Accession Number:** 0001854572
**File Stem:** 0001213900-25-055637
**Filing Date:** 2025-6
**Character Count:** 175264
**Document Hash:** ec3b67e73db14310ec26c25c2c61f6ed
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-055637.hdr.sgml**: 20250618

**ACCESSION NUMBER**: 0001213900-25-055637

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 3

**CONFORMED PERIOD OF REPORT**: 20250618

**FILED AS OF DATE**: 20250618

**DATE AS OF CHANGE**: 20250618

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ICZOOM Group Inc.
- **CENTRAL INDEX KEY:** 0001854572
- **STANDARD INDUSTRIAL CLASSIFICATION:** RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41645
- **FILM NUMBER:** 251056742

**BUSINESS ADDRESS:**
- **STREET 1:** ROOM 3801, BUILDING A, SUNHOPE E-METRO,
- **STREET 2:** NO. 7018 CAI TIAN ROAD, FUTIAN DISTRICT,
- **CITY:** SHENZHEN, GUANGDONG
- **STATE:** F4
- **ZIP:** 518000
- **BUSINESS PHONE:** 86 755 88603072

**MAIL ADDRESS:**
- **STREET 1:** ROOM 3801, BUILDING A, SUNHOPE E-METRO,
- **STREET 2:** NO. 7018 CAI TIAN ROAD, FUTIAN DISTRICT,
- **CITY:** SHENZHEN, GUANGDONG
- **STATE:** F4
- **ZIP:** 518000

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

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

**For the month of June 2025**

**Commission file number: 001-41645**

**ICZOOM GROUP INC.**

(Exact name of registrant as specified in its charter)

**Room 3801, Building A, Sunhope e·METRO, No. 7018 Cai Tian Road<br> Futian District, Shenzhen<br> Guangdong, China, 518000<br> Tel: 86 755 86036281**

(Address of Principal Executive Office)

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

Form 20-F ☒ Form 40-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.

**INCORPORATION BY REFERENCE**

This report on Form 6-K is hereby incorporated by reference in the registration statements of the Company on Form F-3 (No. [333-284959](http://www.sec.gov/Archives/edgar/data/1854572/000121390025014235/ea0230301-f3_iczoom.htm)) and Form S-8 (No. [333-280810](http://www.sec.gov/Archives/edgar/data/1854572/000121390024061339/ea0209195-s8_iczoom.htm)), to the extent not superseded by documents or reports subsequently filed or furnished.

**Financial Statements and Exhibits.**

<u>Exhibits</u>:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Unaudited Interim Consolidated Financial Statements as of December 31, 2024 and for the Six Months Ended December 31, 2024 and 2023.](ea024597701ex99-1_iczoom.htm) |
| 99.2 | [Operating and Financial Review and Prospects in Connection with the Unaudited Interim Consolidated Financial Statements for the Six Months Ended December 31, 2024 and 2023.](ea024597701ex99-2_iczoom.htm) |

---

**SIGNATURES**

Pursuant to the requirements of 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.

---

| | | |
|:---|:---|:---|
|  | **ICZOOM Group Inc.** | **ICZOOM Group Inc.** |
| Date: June 18, 2025 | By: | /s/ Lei Xia |
|  |  | Lei Xia |
|  |  | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**ICZOOM GROUP INC.**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
| **CONTENTS** | **Page(s)** |
| [Unaudited condensed consolidated balance sheets as of December 31, 2024 and audited consolidated balance sheets as of June 30, 2024](#a_001) | F-2 |
| [Unaudited condensed consolidated statements of operations and comprehensive income/(loss) for the six months ended December 31, 2024 and 2023](#a_002) | F-3 |
| [Unaudited condensed consolidated statements of changes in shareholders' equity for the six months ended December 31, 2024 and 202<u>3</u>](#a_003) | F-4 |
| [Unaudited condensed consolidated statements of cash flows for the six months ended December 31, 2024 and 202<u>3</u>](#a_004) | F-5 |
| [Notes to unaudited condensed consolidated financial statements](#a_005) | F-7 – F-37 |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES<br> CONSOLIDATED BALANCE SHEETS**

---

| | | | |
|:---|:---|:---|:---|
|  | **Note** | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| **ASSETS** | | | |
| **CURRENT ASSETS:** | | | |
| Cash |  | $1143940 | $2453728 |
| Restricted cash |  | 4531918 | 3031232 |
| Notes receivable |  | 6595 | 3071 |
| Accounts receivable | 3 | 33649619 | 28297491 |
| Inventories, net | 4 | 1093582 | 339286 |
| Advances to suppliers | 5 | 982134 | 4022696 |
| Prepaid expenses and other current assets | 7 | 3186205 | 984563 |
| **TOTAL CURRENT ASSETS** |  | **44593993** | **39132067** |
| Property and equipment, net | 8 | 76357 | 123295 |
| Right-of-use assets, net | 10 | 77523 | 379101 |
| Intangible assets, net | 9 | 146473 | 204033 |
| Other non-current assets |  | 7097 | 1448 |
| Deferred tax assets | 13 | 37802 | 135098 |
| **TOTAL NON-CURRENT ASSETS** |  | **345252** | **842975** |
| **TOTAL ASSETS** |  | $**44939245** | $**39975042** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |  |
| **CURRENT LIABILITIES:** |  |  |  |
| Short-term bank loans, net | 11 | $10681158 | $10211264 |
| Notes payable | 11 |  | 1543465 |
| Accounts payable | 12 | 10627849 | 5263945 |
| Contract liabilities |  | 2700821 | 3037609 |
| Due to related parties | 14 | 1662294 | 474544 |
| Taxes payable | 13 | 3147148 | 3251484 |
| Lease liabilities | 10 | 96690 | 408001 |
| Accrued expenses and other current liabilities |  | 510823 | 404016 |
| **TOTAL CURRENT LIABILITIES** |  | 29426783 | **24594328** |
| **TOTAL LIABILITIES** |  | **29426783** | **24594328** |
| **COMMITMENTS AND CONTINGENCIES** | 18 |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |  |
| Class A shares, 30,000,000 shares authorized US$0.16 par value, 7,902,495 shares issued and outstanding and 7,171,858 shares issued and outstanding as of December 31, 2024 and June 30, 2024, respectively; | 16 | 1264399 | 1147497 |
| Class B shares, 5,000,000 shares authorized US$0.16 par value, 3,829,500 shares issued and outstanding as of December 31, 2024 and June 30, 2024 | 16 | 612720 | 612720 |
| Additional paid-in capital |  | 19956956 | 19956956 |
| Statutory reserve | 16 | 624097 | 624097 |
| Accumulated deficit |  | (6825655) | (7606597) |
| Accumulated other comprehensive (loss)/ income |  | (120055) | 646041 |
| **TOTAL SHAREHOLDERS' EQUITY** |  | 15512462 | **15380714** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** |  | $**44939245** | $**39975042** |

---

The accompanying notes are an integral part of these consolidated financial statements

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES<br> CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)**

**(UNAUDITED)**

---

| | | | |
|:---|:---|:---|:---|
|  | | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  |<br>**Note** | **2024** | **2023** |
| **Revenue, net** |  |  |  |
| &nbsp;&nbsp;&nbsp;Sales of electronic components |  | $89068580 | $86329512 |
| &nbsp;&nbsp;&nbsp;Service commission fees |  | 1272060 | 1391041 |
| &nbsp;&nbsp;&nbsp;Total revenue, net |  | **90340640** | **87720553** |
| Cost of revenue |  | 87381979 | 85533907 |
| Gross profit |  | 2958661 | 2186646 |
| **OPERATING EXPENSES** |  |  |  |
| Selling expenses |  | 799330 | 776007 |
| General and administrative expenses |  | 1634197 | 1523002 |
| Total operating expenses |  | **2433527** | **2299009** |
| **INCOME/(LOSS) FROM OPERATIONS** |  | **525134** | **(112363)** |
| **OTHER INCOME (EXPENSES)** |  |  |  |
| Foreign exchange transaction gain/(loss) |  | 480084 | (559655) |
| Interest expense |  | (210574) | (351806) |
| Short-term investment income |  | 7062 | 59174 |
| Subsidy income |  | 36346 | 11409 |
| Other expenses, net |  | (90027) | (93481) |
| Total other income/(expenses), net |  | 222891 | (934359) |
| **INCOME/(LOSS) BEFORE INCOME TAX PROVISION** |  | **748025** | **(1046722)** |
| **INCOME TAX BENEFIT** | 13 | **32917** | **324977** |
| **NET INCOME/(LOSS)** |  | **780942** | **(721745)** |
| Foreign currency translation adjustments |  | (766096) | 836583 |
| **TOTAL COMPREHENSIVE INCOME** |  | $**14846** | $**114838** |
| **EARNINGS/(LOSS) PER ORDINARY SHARE:** |  |  |  |
| **– BASIC** |  | $0.07 | $(0.07) |
| **– DILUTED** |  | $0.07 | $(0.07) |
| **WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES\*:** |  |  |  |
| **– BASIC** |  | **10828967** | **10362861** |
| **– DILUTED** |  | **10828967** | **11094229** |

---

The accompanying notes are an integral part of these consolidated financial statements

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES<br> CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY<br> FOR THE SIX MONTHS ENDED DECEMBER 31, 2024 AND 2023**

**(UNAUDITED)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares, $0.16 par\*** | **Ordinary Shares, $0.16 par\*** | **Ordinary Shares, $0.16 par\*** | **Ordinary Shares, $0.16 par\*** | | | | | |
|  | **Class A<br> Shares** | **Amount** | **Class B<br> Shares** | **Amount** | **Additional**<br>**Paid-in<br> Capital** |<br>**Statutory<br> Reserve** |<br>**Accumulated<br> Deficit** | **Accumulated Other**<br>**Comprehensive<br> Income/ (Loss)** | **Total**<br>**Shareholders'<br> Equity** |
| **Balance, June 30, 2023** | **6496874** | $**1039499** | **3829500** | $**612720** | $**18795548** | $**624097** | $**(5334300)** | $**(193368)** | $**15544196** |
| Share issuance | 43784 | 7005 |  |  |  |  |  |  | 7005 |
| Net income for the period |  |  |  |  |  |  | (721745) |  | (721745) |
| Foreign currency translation adjustment |  |  |  |  |  |  |  | 836583 | 836583 |
| **Balance, December 31, 2023** | **6540658** | $**1046504** | **3829500** | $**612720** | $**18795548** | $**624097** | $**(6056045)** | $**643215** | $**15666039** |
| **Balance, June 30, 2024** | **7171858** | $**1147497** | **3829500** | $**612720** | $**19956956** | $**624097** | $**(7606597)** | $**646041** | $**15380714** |
| Share issuance | 730637 | 116902 |  |  |  |  |  |  | 116902 |
| Net loss for the period |  |  |  |  |  |  | 780942 |  | 780942 |
| Foreign currency translation adjustment |  |  |  |  |  |  |  | (766096) | (766096) |
| **Balance, December 31, 2024** | **7902495** | $**1264399** | **3829500** | $**612720** | $**19956956** | $**624097** | $**(6825655)** | $**(120055)** | $**15512462** |

---

The accompanying notes are an integral part of these consolidated financial statements

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES<br> CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITTED)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2023** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;**Net income /(loss)** | $780942 | $(721745) |
| &nbsp;&nbsp;&nbsp;**Adjustments to reconcile net income to net cash provided by operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 119175 | 121588 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment written off |  | 1220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use assets | 299809 | 297672 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reversal of provision for inventory impairment |  | (1851) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | 90288 | 92491 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax provision | 96989 | (345389) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized exchange loss | 265606 | 560321 |
| &nbsp;&nbsp;&nbsp;**Changes in operating assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes receivable | (3581) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (5641073) | 28931833 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (764667) | 393526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances to suppliers | 3040273 | (279267) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (2234932) | 220639 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 5374423 | (27737233) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | (318381) | 264015 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes payable | (81442) | 297112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | 302913 | (186791) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 137798 | (2934362) |
| &nbsp;&nbsp;&nbsp;**Net cash provided by (used in) operating activities** | **1464140** | **(1026221)** |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment | (16371) | (70490) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangible assets | (5908) | (57398) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of short-term investments |  | (1129600) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds upon maturity of short-term investments | - | 1129600 |
| **Net cash used in investing activities** | **(22279)** | **(127888)** |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from short-term bank loans | 9961479 | 14666970 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of short-term bank loans | (9399183) | (14638095) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from loans payable to third-parties |  | 746000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments from loans payable to third-parties |  | (746000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from banker's acceptance notes payable |  | 2965200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of banker's acceptance notes payable | (1543465) | (1425200) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings from related parties | 3176805 | 6299295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of related party borrowings | (1978854) | (4568244) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment for deferred IPO costs |  | (312527) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of common stock | 116902 | - |
| **Net cash provided by financing activities** | **333684** | **2987399** |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES<br> CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2023** |
| **Effect of exchange rate fluctuation on cash and restricted cash** | **(1584647)** | **(1568816)** |
| **Net increase in cash and restricted cash** | **190898** | **264474** |
| **Cash and restricted cash at beginning of period** | **5484960** | **6413367** |
| **Cash and restricted cash at end of period** | $**5675858** | $**6677841** |
| **Supplemental cash flow information** |  |  |
| **Cash paid for income taxes** | $**(5006)** | $**(98451)** |
| **Cash paid for interest** | $**(696908)** | $**(351806)** |
| **Supplemental disclosure of non-cash information** |  |  |
| Right-of-use assets obtained in exchange for operating lease obligations | $**-** | $**105613** |

---

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

The accompanying notes are an integral part of these consolidated financial statements

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION**

 ****

***<u>Business</u>***

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 online platform 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. In addition, the Company also provides SaaS (Software as a Services), customs clearance, temporary warehousing, logistic and shipping services to customers to earn service commission fees.

***<u>Organization</u>***

ICZOOM, formerly known as Horizon Business Intelligence Co., Limited, was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on June 18, 2015 and changed to its current name on May 3, 2018.

ICZOOM owns 100% of the equity interests of the following four subsidiaries incorporated in accordance with the laws and regulations in Hong Kong: (1) Iczoom Electronics Limited ("ICZOOM HK") was incorporated on May 22, 2012; (2) Ehub Electronics Limited ("Ehub") was incorporated on September 13, 2012; (3) Hjet Industrial Corporation Limited ("Hjet HK") was incorporated on August 6, 2013 and (4) Components Zone International Limited ('Components Zone HK") was incorporated on May 19, 2020. ICZOOM HK, Ehub and Hjet HK are primarily engaged in purchases and distribution of electronic components from overseas suppliers, and Components Zone HK is a holding company with no activities.

On September 17, 2020, Components Zone (Shenzhen) Development Limited ("ICZOOM WFOE") was incorporated pursuant to PRC laws as a wholly foreign owned enterprise of Components Zone HK.

ICZOOM, Components Zone HK and ICZOOM WFOE are currently not engaging in any active business operations and merely acting as holding companies.

Prior to the reorganization described below, the chairman of the Board of Directors, Mr. Lei Xia, who is also the Chief Executive Officer ("CEO") of the Company, and the 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 November 8, 2013; (2) Shenzhen Hjet Supply Chain Co., Ltd. ("Hjet Supply Chain"), formed in Shenzhen City, China on July 3, 2006; (3) Shanghai Heng Nuo Chen International Freight Forwarding Co., Ltd. ("Heng Nuo Chen"), formed in Shanghai City, China on March 25, 2015,and deregistered in August 2021; (4) Shenzhen Iczoom Electronics Co., Ltd. ("ICZOOM Shenzhen"), formed in Shenzhen City, China on July 20, 2015.; (5) Shenzhen Hjet Yun Tong Logistics Co., Ltd. ("Hjet Logistics"), formed in Shenzhen City, China on May 31, 2013 and (6) Shenzhen Pai Ming Electronics Co., Ltd. ("Pai Ming Shenzhen"), formed in Shenzhen City, China on May 9, 2012. On December 10 2021, the VIE Agreements (as defined below) were terminated. Hjet Shuntong is currently not engaging in any active business operations and merely acting as a holding company. ICZOOM Shenzhen operates the Company's e-commerce platform to facilitate the sales of electronic components. Hjet Supply Chain handles order fulfilment for e-commerce customers. Hjet Logistics is engaged in logistic, shipping and delivery of products to customers. In order to comply with the PRC laws and regulations, ICZOOM Shenzhen holds Electronic Data Interchange ("EDI") license to operate the e-commerce platform

Hjet Shuntong, ICZOOM Shenzhen, Hjet Supply Chain and Hjet Logistics are collectively called "ICZOOM Operating Entities".

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION** (cont.)

***<u>Reorganization</u>***

A reorganization of the Company's legal structure ("Reorganization") was completed on December 14, 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 arrangements between ICZOOM WFOE and the shareholders of Pai Ming Shenzhen. Consequently, ICZOOM became the ultimate holding company of all the entities mentioned above.

On December 14, 2020, ICZOOM WFOE entered into a 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 "VIE Agreements"). Pursuant to the VIE Agreements, ICZOOM WFOE has the exclusive right to provide Pai Ming Shenzhen with consulting services related to business operations including technical and management consulting services. As a result of our direct ownership in ICZOOM WFOE and the VIE Agreements, Pai Ming Shenzhen was treated as a Variable Interest Entity ("VIE") under the Statement of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 Consolidation, which allowed ICZOOM to consolidate Pai Ming Shenzhen' operations and financial results in ICZOOM's consolidated financial statements in accordance with U.S. GAAP. ICZOOM was treated as the primary beneficiary for accounting purposes under U.S. GAAP. On December 10, 2021, the VIE Agreements had been terminated.

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

The consolidated financial statements of the Company include the following entities:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Entity** | **Date of<br> Formation** | **Place of<br> Incorporation** | **% of<br> Ownership** | **Principal<br> Activities** |
| ICZOOM | June 18, 2015 | Cayman Islands | Parent, 100% | Investment holding |
| ICZOOM HK | May 22, 2012 | Hong Kong | 100% | Purchase of electronic components from overseas suppliers |
| Ehub | September 13, 2012 | Hong Kong | 100% | Purchase of electronic components from overseas suppliers |
| Hjet HK | August 6, 2013 | Hong Kong | 100% | Purchase of electronic components from overseas suppliers |
| Components Zone HK | May 19, 2020 | Hong Kong | 100% | Investment holding |
| ICZOOM WFOE | September 17, 2020 | PRC | 100% | WFOE, Consultancy |
| Hjet Shuntong | November 8, 2013 | PRC | 100% | Investment holding |
| Hjet Supply Chain | July 3, 2006 | PRC | 100% | Order fulfilment |
| ICZOOM Shenzhen | July 20, 2015 | PRC | 100% | Sales of electronic components through B2B e-commerce platform |
| Hjet Logistics | May 31, 2013 | PRC | 100% | Logistics and product shipping |
| Heng Nuo Chen | May 25, 2015 | PRC | 100% | Logistics and product shipping. Deregistered in August 2021. |
| Pai Ming Shenzhen | May 9, 2012 | PRC | 0%, Former | VIE Holds an EDI license and an ICP License. The VIE agreements has been terminated in December 2021 |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION** (cont.)

In order to streamline the Company's business structure, on August 23, 2021, one of the Company's subsidiaries, Heng Nuo Chen, completed the deregistration with China's State Administration of Industry and Commerce. The deregistration of Heng Nuo Chen has no material impact on the Company's business because Heng Nuo Chen had limited business activities and operation since its inception. Total assets and total liabilities of Heng Nuo Chen as of June 30, 2021 amounted to approximately $5,879 and $325,497, accounted for 0.01% and 0.41% of the Company's consolidated total assets and liabilities, respectively. Heng Nuo Chen did not generated any revenue since its inception and the accumulated deficit of Heng Nuo Chen as of June 30, 2021 was $305,780, accounted for 3.27% of the Company's consolidated accumulated deficit. Due to such immateriality, no discontinued operation was reported.

<u>The VIE Agreements</u>

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

Prior to December 10, 2021, in order to comply with the PRC laws and regulations, the Company held its ICP license to operate the e-commerce platform, through Pai Ming Shenzhen. Pursuant to the VIE Agreements, neither the Company nor its subsidiaries owned any equity interest in Pai Ming Shenzhen. Instead, the Company controlled and received the economic benefits of the operation results of Pai Ming Shenzhen through the VIE Agreements. Under U.S. GAAP, for accounting 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 Agreements in lieu of direct equity ownership by the Company. The Company terminated the VIE Agreements with Pai Ming Shenzhen on December 10, 2021 (see "Termination of the VIE Agreements" below for details).

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***Termination of the VIE Agreements***

Due to PRC legal restrictions on direct foreign investment in internet-based businesses, such as provision of internet information services platform and other value-added telecommunication services, the Company originally carried out its business through a series of VIE Agreements with Pai Ming Shenzhen. On December 10, 2021 (the "VIE termination date"), the Company terminated the VIE Agreements under the VIE structure. There were no penalties or non-compete agreements derived from the termination of the VIE Agreements. After the termination of the VIE Agreement, the Company no longer consolidated the operation and financial results of Pai Ming Shenzhen going forward. The Company's Hong Kong subsidiary, ICZOOM HK, operates a new B2B online platform, which does not require an ICP license under the PRC law. Currently, the Company operates through two B2B online platforms, *www.iczoom.com* and *www.iczoomex.com.* Two platforms have substantially the same features and functions, provide the same information and services and are both accessible by customers from any countries and regions, while the latter one, with the server and data located and stored in Singapore, is primarily serving overseas. ICZOOM Shenzhen maintains and operate *www.iczoom.com* with an Electronic Data Interchange ("EDI") license.

.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

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***Basis of presentation and principles of consolidation***

The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the Hong Kong-registered entities and PRC-registered entities directly or indirectly owned by the Company. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. The results of subsidiaries acquired or disposed of are recorded in the consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.

A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.

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***Uses of estimates***

In preparing the consolidated financial statements in conformity U.S. GAAP, the management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and 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 advance to 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.

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***Risks and uncertainties***

The main operations of the Company are located in the 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 results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

The Company's business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company's operations. The Company's operations may be further affected after the outbreak of COVID-19 pandemic. The execution of the Company's sales contract and fulfilment of customer orders and the collection of the payments from customers on a timely manner are still being negatively affected after COVID-19. The extent of the negative influence of post-pandemic is still highly uncertain and cannot be predicted as of the date the Company's financial statements are released. The Company will continue to monitor and modify the operating strategies in response to reduce the gloomy impact of post-pandemic.

 

*Concentration of credit risks*

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and accounts receivable. As of December 31, 2024, the aggregate amounts of cash of $5,675,858 was deposited at major financial institutions located in the PRC and Hong Kong. In the event of bankruptcy of one of these financial institutions, the Company may not be able to claim its cash and demand deposits back in full. Management believes that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions.

Accounts receivable are typically unsecured and derived 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 "Note 15. Concentrations" for detail.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

*Interest rate risk*

The Company's exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. The Company's exposure to interest rate risk also arises from borrowings that have a floating rate of interest. The costs of floating rate borrowings may be affected by the fluctuations in the interest rates. The Company have not been, and do not expect to be, exposed to material interest rate risks, and therefore have not used any derivative financial instruments to manage such interest risk exposure. The Company has not been exposed to material risks due to changes in market interest rates, and not used any derivative financial instruments to manage the interest risk exposure during the six months ended December 31, 2024.

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***Cash***

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

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***Restricted cash***

Restricted cash consists of cash deposited with the PRC banks and used as collateral to secure the Company's short-term bank loans. In November 2016, the FASB issued ASU No. 2016-18, *Statement of Cash Flows (Topic 230): Restricted Cash*, which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows will be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. The Company adopted the updated guidance retrospectively and presented restricted cash within the ending cash and restricted cash balance on the Company's consolidated statement of cash flows for the years presented.

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***Notes receivable***

Notes receivable represent banks' acceptances that have been arranged with third-party financial institutions by certain customers to settle their purchases from us. These notes receivable are non-interest bearing and are collectible within six to twelve months. As of December 31, 2024 and June 30, 2024, the Company had $6,595 and $3,071 of notes receivable balance, respectively.

***Accounts receivable***

Accounts receivable are presented net of allowance for credit losses. The Company reduces accounts receivable by recording an allowance for doubtful accounts to account for the estimated impact of collection issues resulting from a client's inability or unwillingness to pay valid obligations to the Company. The Company determines the adequacy of allowance for doubtful accounts based on individual account analysis, historical collection trend, and best estimate of specific losses on individual exposures. The Company establishes a provision for doubtful receivable when there is objective evidence that the Company may not be able to collect amounts due. Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after the management has determined that the likelihood of collection is not probable. As of December 31, 2024 and 2023, there was no expected credit loss. ****

***Inventories, net***

Inventories are comprised of purchased electronic components products to be sold to customers. Inventories are stated at the lower of cost or net realizable value, determined using primarily an average weighted cost method. The Company reviews its inventories periodically to determine if any reserves are necessary for potential shrinkage and obsolete or unusable inventory. Inventory allowance amounted to both nil as of December 31, 2024 and June 30, 2024, respectively.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Advances to suppliers, net***

Advances to suppliers consists of balances paid to suppliers for purchase of electronic components that have not been provided or received. Advances to suppliers are short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if 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 all available information, and then records specific allowances for those advances based on the specific facts and circumstances. As of December 31, 2024 and June 30, 2024, there was no allowance recorded as the Company considers all of the advances to be fully realizable.

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***Short-term investments***

The Company's short-term investments consist of wealth management financial products purchased from PRC banks with maturities ranging from one month to twelve months. The banks invest the Company's fund in certain financial instruments including money market funds, bonds or mutual funds, with rates of return on these investments ranging from 1.5% to 2.5% per annum. The carrying values of the Company's short-term investments approximate fair value because of their short-term maturities. The interest earned is recognized in the consolidated statements of income/(loss) and comprehensive income/(loss) over the contractual term of these investments (see Note 6).

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***Leases***

On July 1, 2021, the Company adopted Accounting Standards Update ("ASU") 2016-02, Leases (as amended by ASU 2018-01, 2018-10, 2018-11, 2018-20, and 2019-01, collectively "ASC 842") using the modified retrospective basis and did not restate comparative periods as permitted under ASU 2018-11. ASC 842 requires that lessees recognize ROU assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows.

For operating leases, the Company calculated ROU assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption. The remaining balance of lease liabilities are presented within current portion of lease liabilities and the non-current portion of lease liabilities on the consolidated balance sheets (see Note 10).

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***Property and equipment***

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

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| | |
|:---|:---|
|  | **Useful life** |
| Office equipment and furniture | 3 years |
| Automobiles | 5 years |
| Leasehold improvement | Lesser of useful life and lease term |

---

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

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Intangible assets, net***

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

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***Impairment of long-lived Assets***

Long-lived assets with finite lives, primarily property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. There were no impairments of these assets as of December 31, 2024 and June 30, 2024.

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***Borrowings***

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

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***Accounts payable***

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

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***Fair value of financial instruments***

Fair value is defined as the price that would be received 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 the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company'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-party loans, 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, 2024 and June 30, 2024 based upon the short-term nature of the assets and liabilities.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

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***Foreign currency translation***

The functional currency for ICZOOM, ICZOOM HK, Ehub, Hjet HK and Components Zone HK is the U.S Dollar ("US$"). The Company primarily operates its business through its PRC subsidiaries as of December 31, 2024. The functional currency of the Company's PRC subsidiaries is the Chinese Yuan ("RMB"). The Unaudited Company's consolidated financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.

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

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

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br> 2024** | **June 30,<br> 2024** | **December 31,<br> 2023** |
| Period-end spot rate | US$1=RMB 7.1884 | US$1=RMB 7.1268 | US$1=RMB 7.0822 |
| Average rate | US$1=RMB 7.1254 | US$1=RMB 7.1245 | US$1=RMB 7.1429 |

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***Revenue recognition***

ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. This new guidance provides a five-step analysis in determining when and how revenue is recognized. Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognized in 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 with customers.

The Company currently generates its revenue from the following main sources:

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***Revenue from sales of electronic components to customers***

The Company operates two B2B online platforms *www.iczoom.com* and *www.iczoomex.com*, where the Company's customers can register as members first, and then use the platform to post the quotes for electronic component products (such as integrated circuit, discrete devices passive components, optoelectronics, electromechanical, MRO and design tools, etc.). Once purchase orders received from customers, the Company purchases desired products from suppliers, takes control of purchased products in its warehouses, and then organizes the shipping and delivery of products to customers. New customers are typically required to make certain prepayment to the Company before the Company purchases products from suppliers.

The Company accounts for revenue from sales of electronic components on a gross basis as the Company is responsible for fulfilling the promise to provide the desired electronic component products to customers, and is subject to inventory risk before the product ownership and risk are transferred and has the discretion in establishing prices. All of the Company's contracts are fixed price contracts and have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no separately identifiable other promises in the contracts. The Company's revenue from sales of electronic components is recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. Advance payment from customers is recorded as deferred revenue first and then recognized as revenue when products are delivered to the customers and the Company's performance obligations are satisfied. The Company does not 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").

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***Service commission fees***

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

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

 

The Company merely acts as an agent in this type of transaction and earns a commission fee ranging from 0.15% to 2% based on the value of the merchandise that customers purchase from suppliers and such commission fee is not refundable. The Company does not have control of the goods in this type of transaction, has no discretion 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 performed and 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 December 31, 2024 and June 30, 2024.

Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The Company's contract liabilities, which are reflected in its consolidated balance sheets as contract liabilities of $2,700,821 and $3,037,609 as of December 31, 2024 and June 30, 2024, respectively.

 

*Disaggregation of revenue*

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

The summary of the Company's total revenues by product and service type for the six months ended December 31, 2024 and 2023 was as follows:

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| | | |
|:---|:---|:---|
|  | **For the six months ended** <br> **December 31,** | **For the six months ended** <br> **December 31,** |
|  | **2024**<br> **(Unaudited)** | **2023**<br> **(Unaudited)** |
| **Sales of electronic components products:** | | |
| &nbsp;&nbsp;&nbsp;Semiconductor: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Integrated Circuits | $50230439 | $30881697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Power/Circuit Protection | 7295982 | 7381913 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discrete | 4899369 | 7274989 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Passive Components | 4419834 | 22672366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Optoelectronics/Electromechanical | 6801995 | 3240380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other semiconductor products | 9316030 | 4837497 |
| &nbsp;&nbsp;&nbsp;Equipment, tools and others: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equipment | 2192 | 4531976 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tools and others | 6102739 | 5508694 |
| **Total sales of electronic components products** | **89068580** | **86329512** |
| **Service commission fees** | **1272060** | **1391041** |
| **Total revenue** | $**90340640** | $**87720553** |

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***Segment reporting***

 **

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

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

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***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's warehouse are included in cost of revenue. Outbound shipping and handling costs associated with shipping and delivery the products to customers are included in selling expenses. For the six months ended December 31, 2024 and 2023, shipping and handling costs included in cost of revenue amounted to $171,112 and $249,883 and shipping and handling costs included in selling expenses amounted to $177,918 and $201,503, respectively.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

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***Research and development***

The Company's research 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 to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended, and (iii) it will result in significant additional functionality in the Company's e-commerce platform. Capitalized software development costs amounted to $5,908 and $61,217 for the six months ended December 31, 2024 and 2023, respectively. Research and development expenses included in general and administrative expenses amounted to $221,840 and $196,919 for the six months ended December 31, 2024 and 2023 respectively, primarily comprising employee costs, and amortization and depreciation to intangible assets and property and equipment used in the research and development activities.

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***Income taxes***

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

An uncertain tax position is recognized only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred for the six months ended December 31, 2024 and 2023. The Company does not believe that there was any uncertain tax provision at December 31, 2024 and June 30, 2024. The Company's subsidiaries in Hong Kong are subject to the profit taxes in Hong Kong. The Company's subsidiaries in China are subject to the income tax laws of the PRC. For the six months ended December 31, 2024 and 2023, the Company generated income before taxes of $176,656 and $245,489 through its Hong Kong subsidiaries.

As of December 31, 2024, all of the tax returns of the Company's subsidiaries remain available for statutory examination by Hong Kong and PRC tax authorities.

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***Value added tax ("VAT")***

The Company is a general taxpayer and is subject to applicable VAT tax rate of 6% or 16%, and starting from April 1, 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 qualified input VAT tax paid to suppliers against their output VAT liabilities.

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***Debt issuance costs***

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

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***Earnings per Share***

The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding 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 common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

The following table sets forth the computation of basic and diluted earnings per share for the six months ended December 31, 2024 and 2023:

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| | | |
|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024<br> (Unaudited)** | **2023<br> (Unaudited)** |
| ***Numerator:*** | | |
| Net (loss)/income attributable to ordinary shareholders | $<u>780, 942</u> | $(721745) |
| ***Denominator:*** |  |  |
| Weighted-average number of ordinary shares outstanding – basic | 10828967 | 10362861 |
| Outstanding options | - | 742762 |
| Potentially dilutive shares from outstanding options | - | 731368 |
| Weighted-average number of ordinary shares outstanding – diluted | 10828967 | 11094229 |
| **(Loss)/Earnings per share – basic** | $**0.07** | $**(0.07)** |
| **(Loss)/Earnings per share – diluted** | $**0.07** | $**(0.07)** |

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***Employee benefit plan***

The Company's subsidiaries in the PRC participate in 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 regulations require the Company's subsidiaries in the PRC to pay the local labor and social welfare authorities monthly contributions based on the applicable benchmarks and rates stipulated by the local government. The contributions to the plan are expensed as incurred. Employee social security and welfare benefits included as expenses in the accompanying consolidated statements of (loss)/income and comprehensive income/(loss) amounted to $89,848 and $83,905 for the six months ended December 31, 2024 and 2023, respectively.

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***Comprehensive income/(loss)***

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

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***Statement of cash flows***

In accordance with ASC 230, "Statement of Cash Flows", cash flows from the Company's operations are formulated based upon the local currencies using the average exchange rate in the period. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

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***Government subsidies***

Government subsidies are provided by the relevant PRC municipal government authorities to subsidize the cost of certain research and development projects. The Company recognizes government subsidies as other operating income when they are received because they are not subject to any past or future conditions, there are no performance conditions or conditions of use, and they are not subject to future refunds. Government subsidies received and recognized as other operating income totaled $36,346 and $11,409 for the six months ended December 31, 2024 and 2023, respectively.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Share-based compensation***

The Company grants stock options to eligible employees for services and accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation. Share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses using the straight-line method over the vesting period.

The fair 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 Company has made reference to historical volatility of several comparable companies in the same industry. The exercise multiple was estimated as the average ratio of the stock price to the exercise price of when employees would decide to voluntarily exercise their vested share options. The risk-free rate for periods within the contractual life of the share options is based on the market yield of U.S. Treasury Bonds in effect at the time of grant. The dividend yield is based on the expected dividend policy over the contractual life of the share options.

 ****

***Related parties and transactions***

The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, "Related Party 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 control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between 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.

 ****

***Recent accounting pronouncements***

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

***Recently issued accounting pronouncements not yet adopted***

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning January 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

In August 2023, the FASB issued ASU 2023-08, Intangibles Goodwill and Other-Crypto Assets (Topic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period.it must adopt them as of the beginning of the fiscal year that includes that interim period. The amendments in this Update require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company is currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.

In January 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and similar Awards. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods, Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period. The Company is currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU 2024-03 "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)". The amendments in this update intend to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses, and research and development). ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Group is currently evaluating the impact from the adoption of this ASU on its consolidated financial statements.

**NOTE 3 — ACCOUNTS RECEIVABLE**

Accounts receivable consists of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Accounts receivable | $33649619 | $28297491 |
| Less: allowance for credit losses |  |  |
| Accounts receivable | $33649619 | $28297491 |

---

The Company's accounts receivable primarily includes balance due from customers when the Company's products are sold and delivered to customers.

All of the June 30, 2024 accounts receivable balance has been collected. As of April 30, 2025, approximately 94.5% of the balance accounts receivable as of December 31, 2024 has been collected. The following table summarizes the Company's outstanding accounts receivable and subsequent collection by aging bucket:

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance as of<br> December 31,<br> 2024**<br> **(Unaudited)** | **Subsequent<br> collection** | **% of<br> collection** |
| Accounts Receivable aged less than 6 months | $33649619 | 31797525 | 94.5% |
| Accounts Receivable | $33649619 | 31797525 | 94.5% |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 — ACCOUNTS RECEIVABLE** (cont.)

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance as of<br> June 30,<br> 2024**<br> **(Audited)** | **Subsequent<br> collection** | **% of<br> collection** |
| Accounts Receivable aged less than 6 months | $28297491 | $28297491 | 100.0% |
| Accounts Receivable | $28297491 | $28297491 | 100.0% |

---

Allowance for credit losses movement is as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Beginning balance | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— |
| Reversal |  |  |
| Foreign currency translation adjustments |  |  |
| Ending balance | $— | $— |

---

**NOTE 4 — INVENTORIES, NET**

Inventories, net, consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Semiconductors | $1087303 | $325428 |
| Equipment, tools and others | 6279 | 13858 |
| Total inventory, net | $1093582 | $339286 |

---

**NOTE 5 — ADVANCES TO SUPPLIERS**

Advances to suppliers, net, consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Advances to suppliers | $982134 | $4022696 |

---

Advances to suppliers represents balance paid to various suppliers for purchase of electronic components that have not been delivered. These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. As of December 31, 2024 and June 30, 2024, there was no allowance recorded as the Company considers all of the advances to suppliers balance fully realizable. The June 30, 2024 advance to supplier balance was fully realized by December 31, 2024. As of April 30, 2025, approximately 99.6% or $1.0 million of the December 31, 2024 advance to suppliers balance has been realized.

**NOTE 6 — SHORT-TERM INVESTMENT**

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

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 6 — SHORT-TERM INVESTMENT** (cont.)

Short-term investment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Beginning balance | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $— |
| Add: purchase additional wealth management financial products |  | 1122520 |
| Less: proceeds received upon maturity of short-term investment |  | (1122520) |
| Foreign currency translation adjustments |  |  |
| Ending balance of short-term investment | $— | $— |

---

Interest income generated from short-term investment amounted to nil and $59,174 for the six months ended December 31, 2024 and 2023, respectively.

**NOTE 7 — PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepaid expenses and other current assets consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Other receivables, net<sup>(1)</sup> | $3147762 | $918761 |
| Prepaid expenses<sup>(2)</sup> | 38443 | 65802 |
| Prepaid expenses and other current assets | $3186205 | $984563 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Other receivable primarily includes prepaid VAT input tax in connection with the Company's purchase of electronic component products from third-party suppliers when VAT invoices have not been received as of the balance sheet date. Other receivable also includes, advances to employees for business development and security deposits for operating leases. As of December 31, 2024, the balance of other receivable mainly consists of $2,709,340 of prepaid VAT input tax, $438,422 of security deposits and others. All the June 30, 2024 other receivable balance and approximately 89.3% of the December 31, 2024 other receivable balance has been collected or settled.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Prepaid expenses include mainly prepayment for rental expense and equipment maintenance, etc.

**NOTE 8 — PROPERTY AND EQUIPMENT, NET**

Property and equipment, net, consists of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Office equipment and furniture | $184733 | $180007 |
| Automobiles | 60537 | 61042 |
| Leasehold improvement | 191613 | 183526 |
| Subtotal | 436883 | 424575 |
| Less: accumulated depreciation | (360526) | (301280) |
| Property and equipment, net | $76357 | $123295 |

---

Depreciation expense was $62,673 and $37,614 for the six months ended December 31, 2024 and 2023, respectively.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 9 — INTANGIBLE ASSETS, NET**

Intangible assets, net, mainly consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Capitalized internal-use software development costs | $979212 | $987476 |
| Less: accumulated amortization | (832739) | (783443) |
| Intangible assets, net | $146473 | $204033 |

---

Amortization expense was $56,502 and $83,974 for the six months ended December 31, 2024 and 2023, respectively. Estimated future amortization expense for intangible assets is as follows:

---

| | |
|:---|:---|
| **Twelve months ending December 31** | **Amortization <br> expense** |
| 2025 | 90774 |
| 2026 | 32679 |
| 2027 | 15760 |
| 2028 | 6150 |
| Thereafter | 1110 |
|  | $146473 |

---

**NOTE 10 — LEASES**

The Company's PRC subsidiaries entered into operating lease agreements with landlords to lease office space and warehouse. As of December 31, 2024, the remaining lease terms for office space and warehouse were 0.4 years and nil years respectively. The Company's lease agreements do not provide a readily determinable implicit rate nor is it available to the Company from its lessors. Instead, the Company estimates its incremental discount rate based on the interest rate for three-year government bond as published by China's central bank in order to discount lease payments to present value. The discount rate of the Company's operating leases for office space and warehouse were 3.35% and 2.85% respectively. For the six months ended December 31, 2024 and 2023, total operating lease expense amounted to $3,001 and $2,994, respectively, and amortization of the operating lease right-of-use assets amounted to $299,809 and $297,672, respectively. For the six months ended December 31, 2024, the interest on lease liabilities amounted to $4,530.

Supplemental balance sheet information related to operating leases was as follows:

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

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Operating lease right-of-use assets | $697540 | 1389734 |
| Operating lease right-of-use assets – accumulated amortization | (620017) | (1010633) |
| Operating lease right-of-use assets – net | $77523 | 379101 |
| Lease liabilities, current | 96690 | 408001 |
| Total Lease liabilities, | $96690 | 408001 |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 10 — LEASES** (cont.)

As of December 31, 2024, maturities of lease liabilities were as follows:

---

| | |
|:---|:---|
| **Twelve months ending December 31,** | **December 31, <br> 2024** |
| 2025 | 97651 |
| Total future minimum lease payments | 97651 |
| Less: Imputed interest | (961) |
| Total | $96690 |

---

**NOTE 11 — DEBT**

The Company borrowed from PRC banks, other financial institutions and third parties as working capital funds. As of December 31, 2024 and June 30, 2024, the Company's debt consisted of the following:

**(a) Short-term loans:**

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Shanghai Pudong Development Bank | (1) | $3616938 | $4209450 |
| Agricultural Bank of China | (2) | 2851817 | 2876458 |
| Bank Of China | (3) | 1010293 | 3012146 |
| Webank | (4) |  | 140315 |
| HSBC Bank (China) Company Limited | (5) | 3214498 | - |
| Less: Debt issuance cost | (6) | (12388) | (27105) |
| Total short-term loans, net |  | $10681158 | $10211264 |

---

(1) On
April 23, 2024, the Company borrowed RMB16.0 million (approximately USD$2.2 million) short-term loan from Shanghai Pudong
Development Bank ("SPD Bank") as working capital for six months, with loan maturity date on October 18, 2024 and
effective interest rate of 2.06% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was
fully repaid on September 24, 2024.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 — DEBT** (cont.)

On April 26, 2024, the Company borrowed RMB14.0 million (approximately USD$2.0 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on October 23, 2024 and effective interest rate of 2.05% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid on September 24, 2024.

On September 26, 2024, the Company borrowed RMB11 million (approximately $1.5 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on March 25, 2025 and effective interest rate of 2.02% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

On September 26, 2024, the Company borrowed RMB6 million (approximately $0.8 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on March 26, 2025 and effective interest rate of 3.8% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

On October 22, 2024, the Company borrowed RMB11 million (approximately $1.5 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on April 18, 2025 and effective interest rate of 2.0% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

For the above-mentioned loans from SPD Bank, certain shareholders of the Company provided joint guarantees to these loans by pledging their personal properties as collaterals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) On February 21, 2024, the Company borrowed RMB20.5 million (approximately $2.9 million) short-term loan from ABC as working capital for six months, with loan maturity date on August 18, 2024 and effective interest rate of 3.8% per annum. The loan was fully repaid upon maturity.

On August 20, 2024, the Company borrowed RMB10.0 million (approximately $1.4 million) short-term loan from Agricultural Bank of China ("ABC") as working capital for six months, with loan maturity date on February 14, 2025 and effective interest rate of 3.7% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

On September 19, 2024, the Company borrowed RMB10.5 million (approximately $1.5 million) short-term loan from ABC as working capital for six months, with loan maturity date on March 17, 2025 and effective interest rate of 3.7% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) On August 29, 2023, the Company borrowed HKD 7.9 million (approximately $1.0million) short-term loan from Bank of China as working capital for twelve months, with loan maturity date on August 28, 2024 and effective interest rate of 3.73% per annum. The loan was pledged by a term deposit of JPY 146.6 million (approximately $1.0 million). The loan was fully repaid upon maturity.

On November 21, 2023, the Company borrowed HKD 7.8 million (approximately $1.0million) short-term loan from Bank of China as working capital for twelve months, with loan maturity date on November 20, 2024 and effective interest rate of 5.24% per annum. The loan was pledged by a term deposit of JPY 148.4 million (approximately $1.0 million). The loan was fully repaid upon maturity.

On January 23, 2024, the Company borrowed HKD7.8 million (approximately $1.0million) short-term loan from Bank of China as working capital for twelve months, with loan maturity date on January 22, 2025 and effective interest rate of 4.7% per annum. The loan was pledged by a term deposit of GBP 0.8 million (approximately $1.0 million). The loan was fully repaid upon maturity.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 — DEBT** (cont.)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) On April 8, 2024, the Company borrowed RMB1.0 million (approximately $0.1 million) short-term loans from Webank as working capital for two years, with loan maturity date on April 17, 2026 and effective interest rate of 7.2% per annum. The loan was fully repaid on July 8, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) On November 22, 2024, the Company borrowed RMB7.3 million (approximately $1.0 million) short-term loan from HSBC Bank (China) Company Limited ("HSBC") as working capital for three months, with loan maturity date on February 20, 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD1.2 million. The loan was fully repaid upon maturity.

On December 18, 2024, the Company borrowed RMB14.8 million (approximately $2.1 million) short-term loan from HSBC as working capital for three months, with loan maturity date on March 17, 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD2.1 million. The loan was fully repaid upon maturity.

On December 27, 2024, the Company borrowed RMB1.1 million (approximately $0.2 million) short-term loan from HSBC as working capital for three months, with loan maturity date on March 26, 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD0.2 million. The loan was fully repaid upon maturity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) In order to obtain the above-mentioned loans from PRC banks, as of December 31. 2024 and June 30 2024, the Company incurred total of $84,410 and $36,291 loan origination fees to be paid to above mentioned related parties for providing loan guarantees and pledging their personal assets as collaterals to safeguard the loans. The loan origination fees were recorded as deferred financing cost against the loan balances. For the six months ended December 31, 2024 and 2023, $90,288 and $92,491 deferred financing cost was amortized, respectively.

For the above-mentioned short-term loans from PRC banks and financial institutions, interest expense amounted to $196,587 and $321,697 for the six months ended December 31, 2024 and 2023, respectively.

**(b) Notes Payable**

The Company has various credit facilities with PRC banks that provide for working capital in the form of notes payable. On May 21, 2024, the Company obtained another line of credit from Huaxia Bank of RMB 11 million (approximately $1.5 million) as working capital in the form of banker's acceptance note. This note was interest free and with a maturity date on November 17, 2024. The Company pledged restricted cash of $0.16 million as collateral to secure this note. The notes payable was fully repaid on November 18, 2024.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 12 — ACCOUNTS PAYABLE**

The Company's accounts payable primarily include balance due to suppliers for purchase of electronic components products. The June 30, 2024 accounts payable balance has been fully settled. As of April 30, 2025, approximately 100.0% of the accounts payable balance as of December 31, 2024 has been settled.

The following table summarizes the Company's outstanding accounts payable and subsequent settlement by aging bucket:

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance as of**<br> **December 31,<br> 2024**<br> **(Unaudited)** | **Subsequent<br> settlement** | **% of<br> collection** |
| Accounts payable aged less than 6 months | $10627849 | $10625576 | 100.0% |
| Total accounts payable | $10627849 | $10625576 | 100.0% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance as of<br> June 30,<br> 2024**<br> **(Audited)** | **Subsequent<br> settlement** | **% of<br> collection** |
| Accounts payable aged less than 6 months | $5263945 | $5263945 | 100.0% |
| Total accounts payable | $5263945 | $5263945 | 100.0% |

---

**NOTE 13 — TAXES**

**(a) Corporate Income Taxes ("CIT")**

 

*<u>Cayman Islands</u>*

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

<u>Hong Kong</u>

ICZOOM HK, Ehub, Hjet HK and Components Zone HK are incorporated in Hong Kong and are subject to profit taxes at a rate of 16.5% for taxable income earned in Hong Kong before April 1, 2018. Starting from the financial year commencing on or after April 1, 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$2 million and 16.5% on any assessable profits in excess of HK$2 million. There is an anti-fragmentation measure where each group will have to nominate only one company in the group to benefit from the progressive rates. As a result, Ehub is nominated by the Company and is subject to tax rate of 8.25% on the first HK$2 million of assessable profits and a tax rate of 16.5% on the remaining profits and ICZOOM HK, Hjet HK and Components Zone HK are subject to Hong Kong profit taxes at a rate of 16.5% for the years ended December 31, 2024 and 2023, respectively.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 13 — TAXES** (cont.)

<u>PRC</u>

ICZOOM WFOE, Hjet Shuntong, ICZOOM Shenzhen and Hjet Supply Chain,are incorporated in the PRC, and are subject to the PRC Enterprise Income Tax Laws ("EIT Laws") and are taxed at the statutory income tax rate of 25%.

EIT grants 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 three years. ICZOOM Shenzhen, one of the Company's ICZOOM Operating Entities in the PRC, was approved as HNTEs and is entitled to a reduced income tax rate of 15% beginning December 2023, which is valid for three years.

 

&nbsp;&nbsp;&nbsp;&nbsp;*(i)* *The components of the income tax provision from Cayman Islands, Hong Kong, and China are as follows:* 

 

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** <br> **December 31,** | **For the Six Months Ended** <br> **December 31,** |
|  | **2024**<br> **(Unaudited)** | **2023**<br> **(Unaudited)** |
| Current tax provision |  |  |
| Cayman Islands | $— | $— |
| Hong Kong | 5219 | 20075 |
| China | - | 337 |
| Total | 5219 | 20412 |
| Deferred tax provision benefit |  |  |
| Cayman Islands |  |  |
| Hong Kong |  | (305) |
| China | 38136 | 345694 |
| Total | 38136 | 345389 |
| Income tax benefit | $32917 | $324977 |

---

Reconciliation of the differences between the income tax provision computed based on PRC statutory income tax rate and the Company's actual income tax provision for the six months ended December 31, 2024 and 2023, respectively are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** <br> **December 31,** | **For the Six Months Ended** <br> **December 31,** |
|  | **2024**<br> **(Unaudited)** | **2023**<br> **(Unaudited)** |
| Income tax expense computed based on PRC statutory rate | $(2041) | $(261681) |
| Effect of rate differential for Hong Kong entities | 1967 | (43935) |
| Non-deductible expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation\* |  |  |
| &nbsp;&nbsp;&nbsp;Meals and entertainment | 1995 |  |
| &nbsp;&nbsp;&nbsp;Less: Deductible expense | (9027) |  |
| Change in valuation allowance | (25811) | (19361) |
| Actual income tax benefit | $(32917) | $(324977) |

---

\* The Company's stock-based compensation expenses were recorded under the Cayman parent company level. Pursuant to the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. As a result, stock-based compensation expenses are non-deductible expenses for income tax purposes.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 13 — TAXES** (cont.)

<u>Deferred tax assets</u>

The Company's deferred tax assets are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Deferred tax assets derived from net operating loss ("NOL") carry forwards | $408699 | $533757 |
| Less: valuation allowance | (370897) | (398659) |
| Deferred tax assets | $37802 | $135098 |

---

Movement of valuation allowance:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Balance at beginning of the period | $398659 | $406760 |
| Current period addition/(reversal) | (27762) | (8101) |
| Balance at end of the period | $370897 | $398659 |

---

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company's future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company has four subsidiaries in HK, including ICZOOM HK, Components Zone HK, Hjet HK and Ehub, among which Components Zone HK were reported recurring operating losses since 2015 to June 2024. In addition, the Company also has five subsidiaries in the PRC, among which, Hjet Shuntong were also reported recurring operating losses since 2015 to June 2024.

Management concluded that the chances for the above-mentioned HK and PRC subsidiaries to be profitable in the foreseeable near future and to utilize their net operating loss carry forwards were uncertainty. Accordingly, the Company provided valuation allowance of $370,897 and $392,420 for the deferred tax assets of these subsidiaries for the six months ended December 31, 2024 and 2023 respectively.

**(b) Taxes payable**

Taxes payable consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31**<br> **2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Income tax payable | $2169214 | $2308231 |
| Value added tax payable | 977934 | 943253 |
| Total taxes payable | $3147148 | $3251484 |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 14 — RELATED PARTY TRANSACTIONS**

**a. *Due to related parties***

Due to related parties consists of the following:

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Related party relationship** | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| Mrs. Duanrong Liu | Shareholder, Director and Chief Operating Officer | $1602563 | $455454 |
| Mr. Lei Xia | Shareholder, Chairman and Chief Executive Officer | 30221 | 4316 |
| Other shareholders | Shareholders of the Company | 29510 | 14774 |
| **Total due to related parties** |  | $1662294 | $474544 |

---

As of December 31, 2024 and June 30, 2024, the balance due to related parties was loan advance from the Company's shareholders and was used as working capital during the Company's normal course of business. Such advance was non-interest bearing and due on demand.

 ****

***b. Loan guarantee provided by related parties***

In connection with the Company's short-term borrowings from the PRC banks, the Company's controlling shareholder and Chief Executive Officer and several other shareholders jointly signed guarantee agreements by pledging their personal properties with the banks to secure the bank loans. The Company also incurred loan origination fees of $84,410 and $36,291 as of December 31 and June 30, 2024, respectively, to be paid to these related parties for providing such loan guarantees (see Note 11).

**NOTE 15 — CONCENTRATIONS**

A majority of the Company's revenue and expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People's Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance. For the six months ended December 31, 2024 and 2024, the Company's substantial assets were located in the PRC and the Company's substantial revenues excluding the intercompany transaction were derived from its subsidiaries located in the PRC.

As of December 31, 2024 and June 30, 2024, $1,610,052 and $4,318,682 of the Company's cash and restricted cash was on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of December 31, 2024 and June 30, 2024, the Company's substantial assets were located in the PRC and the Company's substantial revenues excluding the intercompany transaction were derived from its subsidiaries in the PRC.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 15 — CONCENTRATIONS** (cont.)

For the six months ended December 31, 2024 and 2023, no single customer accounted for more than 10% of the Company's total revenue. The Company's top 10 customers aggregately accounted for 27.8% and 26.4% of the total revenue for the six months ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and June 30, 2024, 1 and nil customer accounted for more than 10% of the total accounts receivable balance.

As of December 31, 2024 and June 30, 2024, 3 and nil suppliers accounted for more than 10% of the total advance to suppliers balance.

As of December 31, 2023 and June 30, 2023, 1 and nil supplier accounted for more than 10% of the total accounts payable balance.

For the six months ended December 31, 2024 and 2023, no single supplier accounted for more than 10% of the Company's total purchases.

**NOTE 16 — SHAREHOLDERS' EQUITY**

 ****

***Ordinary shares***

The Company was incorporated under the laws of the Cayman Islands on June 23, 2015. The original authorized number of ordinary shares was 100 million shares with par value of US$0.02 per share (including 60,000,000 shares of Class A shares and 40,000,000 shares of Class B shares). Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A ordinary share will be entitled to one vote and each Class B ordinary share will be entitled to ten votes. The Class A ordinary shares are not convertible into shares of any other class. The Class B ordinary shares are convertible into Class A ordinary shares at any time after issuance at the option of the holder on a one-to-one basis.

On October 26, 2020, the Company amended its Memorandum of Association to reverse split the authorized number of shares at a ratio of 1-for-4 share to 25 million shares with par value of US$0.08 per share, and reverse split the issued shares from 70,610,963 shares at par value of US$0.02 per share to 17,652,743 ordinary shares with par value of $0.08 per share. The reverse split is considered part of the Reorganization of the Company, which was retroactively applied as if the transaction occurred at the beginning of the period presented.

As a result of this revere split, the authorized number of Class A ordinary shares have been changed from 60,000,000 shares to 15,000,000 shares, and authorized number of Class B ordinary shares have been changed from 40,000,000 shares to 10,000,000 shares.

On August 25, 2021, the Company amended its Memorandum of Association to increase the authorized shares of Class A ordinary shares from 15,000,000 shares to 60,000,000 shares with par value of $0.08 per share. As a result of this amendment, the total authorized ordinary shares have been changed from 25,000,000 shares (including 15,000,000 Class A ordinary shares and 10,000,000 Class B ordinary shares) to 70,000,000 shares (including 60,000,000 Class A ordinary shares and 10,000,000 Class B ordinary shares).

On August 8, 2022, the Company amended its Memorandum of Association to reverse split the authorized number of shares at a ratio of 1-for-2 share to 35 million shares with par value of US$0.16 per share, and reverse split the issued shares from 17,652,743 shares at par value of US$0.08 per share to 8,826,374 ordinary shares with par value of $0.16 per share. The reverse split is considered part of the Reorganization of the Company, which was retroactively applied as if the transaction occurred at the beginning of the period presented (see Note1).

As a result of this revere split, the authorized number of Class A ordinary shares have been changed from 60,000,000 shares to 30,000,000 shares, and authorized number of Class B ordinary shares have been changed from 10,000,000 shares to 5,000,000 shares. As of June 30, 2022, the Company had 8,826,374 ordinary shares issued and outstanding (including 4,996,874 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares).

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 16 — SHAREHOLDERS' EQUITY** (cont.)

On March 15, 2023, the Company completed the initial public offering in Nasdaq Capital market and issued 1,500,000 Class A ordinary shares. As of June 30, 2023, the Company had 10,326,374 ordinary shares issued and outstanding (including 6,496,874 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares).

 ****

On September 14, 2023, the Company issued 43,784 Class A ordinary shares to The Benchmark Company LLC pursuant to the Warrant Certificate dated March 17, 2023 between the Company and The Benchmark Company LLC. As of September 14, 2023, the Company had 10,370,158 ordinary shares issued and outstanding (including 6,540,658 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares).

On June 25, 2024, the Company issued 631,200 Class A ordinary shares upon the exercise of the options to its employees issued pursuant to the Plan (as defined below). As of June 25, 2024, the Company had 11,001,358 ordinary shares issued and outstanding (including 7,171,858 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares.)

On August 23, 2024, the Company issued 52,000 Class A ordinary shares upon the exercise of the options to its employees issued pursuant to the Plan. As of August 23, 2024, the Company had 11,053,358 ordinary shares issued and outstanding (including 7,223,858 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares.)

On September 5, 2024, the Company issued 508,750 Class A ordinary shares upon the exercise of the options to its employees issued pursuant to the Plan. As of September 5, 2024, the Company had 11,562,108 ordinary shares issued and outstanding (including 7,732,608 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares.)

On September 14, 2024, the Company issued 169,887 Class A ordinary shares upon the exercise of the options to its employees issued pursuant to the Plan. As of September 14, 2024, the Company had 11,731,995 ordinary shares issued and outstanding (including 7,902,495 shares of Class A ordinary shares and 3,829,500 shares of Class B ordinary shares.)

***Statutory reserve and restricted net assets***

Relevant PRC laws and regulations restrict the Company's PRC subsidiaries from transferring a portion of their net assets, equivalent to their statutory reserves and their share capital, to the Company in the form of loans, advances or cash dividends. Only PRC entities' accumulated profits may be distributed as dividends to the Company without the consent of a third party.

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends.

The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S GAAP differ from those in the statutory financial statements of the WFOE and its subsidiaries. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

In light of the foregoing restrictions, the Company's PRC subsidiaries are restricted in their ability to transfer their net assets to the Company. Foreign exchange and other regulations in the PRC may further restrict the WFOE and the Company's PRC subsidiaries from transferring funds to the Company in the form of dividends, loans and advances.

As of December 31, 2024 and June 30, 2024, the restricted amounts as determined pursuant to PRC statutory laws totaled $624,097 and $624,097, respectively. As of December 31, 2024 and June 30, 2024, the Company's total restricted net assets amounted to $22,458,172 and $22,341,270, respectively.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 17 — SHARE-BASED COMPENSATION**

On October 5, 2015, the Company's Board of Directors approved the 2015 Equity Incentive Plan (the "Plan") for the purpose of providing incentive and rewards to employees and executives. According to the Plan, 50,000,000 of the Company's Class A ordinary shares was reserved for issuance to qualified employees, directors and officers. Given the reverse split on November 13, 2020 and August 8, 2022 (see Note 16), number of ordinary shares reserved for issuance changed to 6,250,000 shares.

Under the Plan, the following stock-based compensations have been granted to the Company's employees, directors and officers (number of option shares and exercise price reflected the effect of the1-for-4 share reverse split on November 13, 2020 and the effect of the1-for-2 share reverse split on August 8, 2022):

&nbsp;&nbsp;&nbsp;&nbsp;(1) On October 5, 2015, options to purchase 795,644 shares of the Company's Class A ordinary shares have been granted at an exercise price of $0.16 per share. These share options will vest equally over a service period of four years and expire on October 5, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;(2) On December 26, 2016, options to purchase 64,250 shares of the Company's Class A ordinary shares has been granted at an exercise price of $0.16 per share. These share options will vest equally over a service period of four years and expire on December 26, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;(3) On December 22, 2017, options to purchase 213,125 of the Company's Class A ordinary shares have been granted at an exercise price of $0.16. These option shares will vest equally over a service period of four years, and expire on December 22, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;(4) On December 21, 2018, options to purchase 44,250 of the Company's Class A ordinary shares have been granted at an exercise price of $0.16 per share. These option shares will vest equally over a service period of four years, and expire on December 21, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(5) On January 15, 2020, options to purchase 33,788 shares of the Company's Class A ordinary shares have been granted at an exercise price of $2.40 per share. These option shares vest equally over a service period of four years, and expire on January 15, 2028.

The following table summarizes the Company's stock option activities:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br> options** | **Weighted<br> Average<br> Exercise<br> Price** | **Weighted<br> Average<br> Remaining<br> Contractual<br> term** | **Fair Value** |
| Outstanding, June 30, 2023**(Audited)** | 742762 | 0.18 | 0.05 | $829686 |
| Exercisable, June 30, 2023**(Audited)** | 742762 | 0.18 | 0.05 | $829686 |
| &nbsp;&nbsp;&nbsp;Granted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised |  |  |  |  |
| Outstanding, December 31, 2023(Unaudited) | 742762 | 0.18 | 0.05 | $829686 |
| Exercisable, December 31, 2023(Unaudited) | 742762 | 0.18 | 0.05 | $829686 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br> options** | **Weighted<br> Average<br> Exercise<br> Price** | **Weighted<br> Average<br> Remaining<br> Contractual<br> term** | **Fair Value** |
| Outstanding, June 30, 2024**(Audited)** | 730637 | 0.18 |  | $757437 |
| Exercisable, June 30, 2024**(Audited)** | 730637 | 0.18 |  | $757437 |
| &nbsp;&nbsp;&nbsp;Granted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised | (730637) | 0.18 |  | (757437) |
| Outstanding, December 31, 2024(Unaudited) |  |  |  | $— |
| Exercisable, December 31, 2024(Unaudited) |  |  |  | $— |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 17 — SHARE-BASED COMPENSATION** (cont.)

The fair value of share options was determined using the binomial option valuation model. The binomial model requires the input of highly subjective assumptions, including the expected share price volatility and the suboptimal early exercise factor. The risk-free rate for periods within the contractual life of the options is based on the market yield of U.S. Treasury Bonds in effect at the time of grant. For expected volatilities, the Company has made reference to historical volatilities of several comparable companies. The suboptimal early exercise factor was estimated based on the Company's expectation of exercise behavior of the grantees. The Company's management is ultimately responsible for the determination of the estimated fair value of its ordinary shares.

There were no options granted under the Plan for the six months ended December 31, 2024.

On March 19, 2021, pursuant to the Plan, the Company's Board of Directors approved to grant 68 employees the options to purchase 579,100 shares of the Company's ordinary shares at an exercise price of $2.40 per share. These option shares will vest equally over a service period of four years, and expire on March 19, 2029. However, on June 10, 2021, the Company Board of Directors approved to delay the issuance of the abovementioned share options to these employees.

The total fair values of share options vested during the six months ended December 31, 2024 and 2023 were both nil. The Company recorded share-based compensation expense of both nil for the six months ended December 31, 2024 and 2023.

As of December 31, 2024 and June 30, 2024, there were both nil of unrecognized share-based compensation expenses related to share options granted by the Company.

**NOTE 18 — COMMITMENTS AND CONTINGENCIES**

 ****

***Operating lease commitment***

The operating lease commitments presented above mainly consist of the short-term lease commitments and leases that have not yet commenced but that create significant rights and obligations for the Company, which are not included in operating lease right-of — use assets and lease liabilities. For the six months ended December 31, 2024 and 2023, total operating lease expense amounted to $3,001 and $2,994, respectively. As of December 31, 2024, future minimum lease payments under non-cancelable operating lease agreement are as follows:

---

| | |
|:---|:---|
| **Twelve Months ended December 31,** | **Lease <br> expense** |
| 2025 | 23716 |
| Total | 23716 |

---

 ****

***Contingencies***

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company's management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate to have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 19 — SUBSEQUENT EVENTS**

From January 2025 to May 2025, the Company repaid an aggregate of $11.7million outstanding short-term bank loans to various financial institutions upon maturity (see Note 11).

From January 2025 to May 2025 the Company borrowed additional $9.5 million loans from various PRC banks, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;(1) On January 23, 2024, the Company borrowed HKD7.8 million (approximately $1.0million) short-term loan from Bank of China as working capital for twelve months, with loan maturity date on January 22, 2025 and effective interest rate of 4.7% per annum. The loan was pledged by a term deposit of GBP 0.8 million (approximately $1.0 million). The loan was fully repaid upon maturity.

(2) On August 20, 2024, the Company borrowed RMB10.0 million (approximately $1.4 million) short-term loan from ABC as working capital for six months, with loan maturity date on February 14, 2025 and effective interest rate of 3.7% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

(3) On September 19, 2024, the Company borrowed RMB10.5 million (approximately $1.5 million) short-term loan from ABC as working capital for six months, with loan maturity date on March 17, 2025 and effective interest rate of 3.7% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

(4) On September 26, 2024, the Company borrowed RMB11 million (approximately $1.5 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on March 25, 2025 and effective interest rate of 2.0% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

(5) On September 26, 2024, the Company borrowed RMB6 million (approximately $0.8 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on March 26, 2025 and effective interest rate of 3.8% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

(6) On October 22, 2024, the Company borrowed RMB11 million (approximately $1.5 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on April 18, 2025 and effective interest rate of 2.0% per annum. The loan borrowed was guaranteed by the Company's certain shareholders. The loan was fully repaid upon maturity.

(7) On November 22, 2024, the Company borrowed RMB7.3 million (approximately $1.0 million) short-term loan from HSBC as working capital for three months, with loan maturity date on February 20, 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD1.2 million. The loan was fully repaid upon maturity.

(8) On December 18, 2024, the Company borrowed RMB14.8 million (approximately $2.1 million) short-term loan from HSBC as working capital for three months, with loan maturity date on March 17, 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD2.1 million. The loan was fully repaid upon maturity.

(9) On December 27, 2024, the Company borrowed RMB1.1 million
 (approximately $0.2 million) short-term loan from HSBC as working capital for three months, with loan maturity date on March 26,
 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD0.2 million. The loan was fully
 repaid upon maturity.

(10) On February 21, 2025, the Company borrowed RMB7.3 million
 (approximately $1.0 million) short-term loan from HSBC as working capital for three months, with loan maturity date on May 20,
 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD1.0 million. The loan was fully
 repaid upon maturity.

(11) On March 18, 2025, the Company borrowed RMB14.6 million (approximately $2.0 million) short-term loan from HSBC as working capital for three months, with loan maturity date on June 17, 2025 and effective interest rate of 3.1% per annum. The loan was pledged by a term deposit of USD2.0 million.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 19 — SUBSEQUENT EVENTS** (cont.)

&nbsp;&nbsp;&nbsp;&nbsp;(12) On March 26, 2025, the Company borrowed RMB11.0 million
 (approximately $1.5 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on September 22,
 2025 and effective interest rate of 3.1% per annum. The loan borrowed was guaranteed by the Company's certain shareholders.

(13) On March 20, 2025, the Company borrowed RMB7.0 million
 (approximately $1.0 million) short-term loan from ABC as working capital for six months, with loan maturity date on September 12,
 2025 and effective interest rate of 2.9% per annum. The loan borrowed was guaranteed by the Company's certain shareholders.

(14) On April 23, 2025, the Company borrowed RMB11.0 million (approximately $1.5 million) short-term loan from SPD Bank as working capital for six months, with loan maturity date on October 20, 2025 and effective interest rate of 3.1% per annum. The loan borrowed was guaranteed by the Company's certain shareholders.

(15) On February 27, 2025, the Company borrowed RMB10.0 million (approximately $1.4 million) short-term loan from Huaxia bank as working capital for twelve months, with loan maturity date on February 26, 2026 and effective interest rate of 3.6% per annum. The loan borrowed was guaranteed by the Company's certain shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;(16) On
May 21, 2025, the Company borrowed RMB7.3 million (approximately $1.0 million) short-term loan from HSBC as working capital
for three months, with loan maturity date on August 20, 2025 and effective interest rate of 3.1% per annum. The loan was pledged
by a term deposit of USD1.0 million.

As a result of the above repayment and new borrowings, the Company had outstanding short-term bank loan balances of $8.5 million as of the date the Unaudited Company's consolidated financial statements are released.

The Company evaluated the subsequent event through the date of the consolidated financial statements are available to release and through the date of this prospectus, and concluded that there are no additional reportable subsequent events except those disclosed.

**NOTE 20 — FINANCIAL INFORMATION OF THE PARENT COMPANY**

Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X require the financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirement and concluded that it was applicable to the Company as the restricted net assets of the Company's PRC subsidiaries exceeded 25% of the consolidated net assets of the Company, therefore, the condensed financial statements for the parent company are included herein.

For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party.

The interim financial information of the parent company has been prepared using the same accounting policies as set out in the Unaudited Company's consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries. Such investment is presented on the condensed balance sheets as "Investment in subsidiaries" and the respective profit or loss as "Equity in earnings of subsidiaries" on the condensed statements of comprehensive income.

The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the unaudited consolidated interim financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S GAAP have been condensed or omitted.

The Company did not pay any dividend for the periods presented. As of December 31, 2024 and June 30, 2024, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any.

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 20 — FINANCIAL INFORMATION OF THE PARENT COMPANY** (cont.)

**ICZOOM GROUP INC.<br> PARENT COMPANY BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2024**<br> **(Unaudited)** | **June 30,<br> 2024**<br> **(Audited)** |
| ASSETS |  |  |
| **Non-current asset** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment in subsidiaries | $15512462 | $15380714 |
| &nbsp;&nbsp;&nbsp;Total assets | $15512462 | $15380714 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| LIABILITIES | $— | $— |
| COMMITMENTS AND CONTINGENCIES |  |  |
| SHAREHOLDERS' EQUITY |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class A shares, 30,000,000 shares authorized US$0.16 par value, 7,902,495 and 7,171,858 shares issued and outstanding | 1264399 | 1147497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B shares, 5,000,000 shares authorized US$0.16 par value, 3,829,500 shares issued and outstanding | 612720 | 612720 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 19956956 | 19956956 |
| &nbsp;&nbsp;&nbsp;Statutory reserve | 624097 | 624097 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (6825655) | (7606597) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) /income | (120055) | 646041 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 15512462 | 15380714 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $15512462 | $15380714 |

---

**ICZOOM GROUP INC.<br> UNAUDITED PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)**

---

| | | |
|:---|:---|:---|
|  | **For Six Months Ended**<br> **December 31,** | **For Six Months Ended**<br> **December 31,** |
|  | **2024** | **2023** |
| EQUITY IN EARNINGS OF SUBSIDIARIES | $780942 | $(721745) |
| NET INCOME/(LOSS) | 780942 | (721745) |
| FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | (766096) | 836583 |
| COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $14846 | $114838 |

---

**ICZOOM GROUP INC. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 20 — FINANCIAL INFORMATION OF THE PARENT COMPANY** (cont.)

**ICZOOM GROUP INC.<br> UNAUDITED PARENT COMPANY STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For Six Months Ended**<br> **December 31,** | **For Six Months Ended**<br> **December 31,** |
|  | **2024** | **2023** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Net income/(loss) | $780942 | $(721745) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity in earnings/(deficit) of subsidiaries | (780942) | 721745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities |  |  |
| CHANGES IN CASH AND RESTRICTED CASH |  |  |
| CASH AND RESTRICTED CASH, beginning of period |  |  |
| CASH AND RESTRICTED CASH, end of period | $— | $— |

---

## Exhibit 99.2

**Exhibit 99.2**

**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

 

*The information in this report contains forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements reflecting 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 events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth elsewhere 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 our wholly owned subsidiaries established in China and Hong Kong.

We are a technology-driven company running an ecommerce trading platform and are primarily engaged in sales of electronic component products to customers in the PRC. Major electronic component products we sold to customers through our online e-commerce platform fall into two broad product categories: 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-sized enterprises ("SMEs"). In addition to sales of electronic component products, we also provide services to customers to earn service commission fees, such services include, but not limit to, order fulfilment, temporary warehousing, logistic and shipping, and customs clearance, etc.

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

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

 ****

 ****

**Our Organization**

Our revenues increased by $2,620,087 or 3.0%, from $87,720,553 for the six months ended December 31, 2023 to $90,340,640 for the six months ended December 31, 2024. Revenues from sales of electronic component products accounted for 98.6% and 98.4% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. Revenues from service commission fees accounted for 1.4% and 1.6% of our total revenues for the six months ended December 31, 2024 and 2023, respectively.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024<br> (Unaudited)** | **2024<br> (Unaudited)** | **2023<br> (Unaudited)** | **2023<br> (Unaudited)** | **Variances** | **Variances** |
|  | **Amount** | **% of total<br> revenue** | **Amount** | **% of total<br> revenue** | **Amount** | **%** |
| **Revenues** | | | | | | |
| Sales of electronic components | $89068580 | 98.6% | $86329512 | 98.4% | $2739068 | 3.2% |
| Service commission fee | 1272060 | 1.4% | 1391041 | 1.6% | (118981) | (8.6)% |
| Total revenue | $90340640 | 100.0% | $87720553 | 100.0% | $2620087 | 3.0% |

---

**Key Factors That Affect Our Results of Operations**

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

 ****

***Effectiveness of Risk Management***

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

 ****

***Our Ability to Attract Additional Customers and Increase the Spending Per Customer***

Our major customers are China's SMEs 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 18 provinces in China, with significant customers located in Guangdong Province, Jiangsu Province, Liaoning Province, Sichuan Province Beijing City and Shanghai City in China. We plan to expand our business to extended geographic areas to cover 80% of the provinces in China within the next 1-2 years. For the six months ended December 31, 2024 and 2023, we had total 574 and 634 customers, respectively. No single customer accounted for more than 10% of our total revenue in either period. For the six months ended December 31, 2024 and 2023, our top 10 customers in aggregate accounted for 27.8% and 26.4% of the total revenue, respectively. Our dependence on a small number of larger customers could expose us to the risk of substantial losses if a single large customer stop purchasing our products, purchases fewer of our products or goes out of business and we cannot find substitute customers on equivalent terms. If any of our significant customers reduces the quantity of the products it purchases from us or stops purchasing from us, our net revenues could be materially and adversely affected. Therefore, the success of our business in the future depends 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 number of, customers and optimize our distribution network. If our marketing efforts fail to convince customers to accept our products, we may find it difficult to maintain the existing level of sales or to increase such sales. Should this happen, our net revenues would decline and our growth prospectus would be severely impaired.

 ****

***Our Ability to Increase Awareness of Our Brand and Develop Customer Loyalty***

Our brand is integral to our 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 recognition in a cost-effective manner is critical to achieving widespread acceptance of our electronic component products and is an important element in our effort to increase our customer base. Successful promotion of our brand name will depend largely on our marketing efforts and ability to 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 successfully promote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract new customers or retain our existing customers, in which case our business, operating results and financial condition, would be materially adversely affected.

 ****

 ****

***Our ability to establish and retain long-term strategic relationship with suppliers***

We source our products from various suppliers, mainly including some of the top brand-name suppliers in electronic component product categories. Maintaining good relationships 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 acceptable to us, or that we will be able to establish new or extend current supplier relationships to ensure a steady supply of electronic component products in a timely and cost-efficient manner. If we are unable to develop and maintain good relationships with suppliers, we may not be 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 requirements may 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 Operating Efficiency***

Because orders from SMEs are often very complicated and the order amount is small, the cost of serving them for the existing traditional business model is relatively high. We reduce our operating cost through our advanced e-commerce business model and effectively serve SMEs at an effective low cost. Our business growth is dependent on our ability to attract and retain qualified and productive employees, identify business 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, warehouse lease and overhead costs and business taxes) have a direct impact on our profitability. The inventory purchase costs are subject to price volatility and other inflationary pressures, which may, in turn, result in an increase in the amount we pay for sourced products. Price increases may adversely impact our financial results. In addition, our staffing costs (including salary and employee benefit expense) and administrative expenses also have a direct impact on our profitability. Our ability to drive the productivity of our staff and enhance our operating efficiency affects our profitability. To the extent that the costs we are required to pay to our suppliers and our staffs exceed our estimates, our profit may be impaired. If we fail to implement initiatives to control costs and improve our operating efficiency over time, our profitability will be negatively impacted.

 ****

***Our Ability to Compete Successfully***

The electronic component procurement market in China is intensely competitive. We face competition from large information based B2B e-commerce companies, offline distributors, vendors, and traders of electronic components, many of which possess significant brand recognition, sales volume and customer bases, and some of which currently sell, or in the future may sell, products or services through their online service platforms. Some of 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-established and well-financed companies or investors which would help enhance their competitive positions. Our failure to properly respond to increased competition 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.

 ****

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

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

**Key Financial Performance Indicators**

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

 ****

***Net Revenue***

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024<br> (Unaudited)** | **2023<br> (Unaudited)** | **Variances** | **%** |
| **Sales of electronic components:** | | | | |
| &nbsp;&nbsp;&nbsp;Sales of semiconductor products | 91.8% | 87.0% |  |  |
| &nbsp;&nbsp;&nbsp;Sales of equipment, tools and others | 6.8% | 11.4% |  |  |
| Total sales of electronic component products | 98.6% | 98.4% |  |  |
| **Service commission fee** | 1.4% | 1.6% |  |  |
| **Total revenue** | 100.00% | 100.00% |  |  |
| Number of customers for electronic component products | 484 | 487 | (3) | (0.6)% |
| Number of customers for services | 90 | 147 | (57) | (38.8)% |
| Total number of customers | 574 | 634 | (60) | (9.5)% |
| Stock-keeping unit (SKU) available for sale-Semiconductor | 7801 | 6955 | 846 | 12.2% |
| Stock-keeping unit (SKU) available for sale-Equipment and tools | 1185 | 1418 | (233) | (16.4)% |
| Total SKUs | 8986 | 8373 | 613 | 7.3% |
| Sales volume for semiconductor (Unit) | 608493703 | 552511982 | 55981721 | 10.1% |
| Sales volume for equipment, tools and others (Unit) | 1290864 | 4626382 | (3335518) | (72.1)% |
| Total sales volume of electronic component products | 609784567 | 557138364 | 52646203 | 9.4% |
| Average selling price of semiconductor | $0.14 | $0.14 | $- | -% |
| Average selling price of equipment, tools and others | $4.73 | $2.17 | $2.56 | 117.9% |

---

Revenues from sales of electronic component products accounted and 98.6% and 98.4% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. Electronic component products sold to customers by us fall into two categories: (i) semiconductor products and (ii) electronic equipment, tools and other products. Our semiconductor products primarily include various integrated circuit, power/circuit protection, discretes, passive components, optoelectronics/electromechanical and our equipment, tools and other electronic component products primarily include various MRO, and design tools.

Total SKUs sold to customers increased by 7.3% from 8,373 different products for the six months ended December 31, 2023 (including 6,955 different variety of semiconductor products and 1,418 different variety of equipment and tools products) to 8,986 different products for the six months ended December 31, 2024 (including 7,801 different variety of semiconductor products and 1,185 different variety of equipment and tools products). The increase in variety of product offerings enabled us to target more customers to meet their needs and increase our sales volume by 9.4% or 52.6 million units. We also count the number of the repeat customers, measured by the number of the customers who made orders in the current period with transaction records with us in the last six months. And the number of the repeat customers for the six months ended December 31, 2024 was 450, and the repeat customers accounted for 78.4% of the total customers for the six months ended December 31, 2024 while the repeat customers accounted for 82.5% for the six months ended December 31, 2023. Our customers are mainly SMEs who rely on our e-commerce platform for one-stop procurement, as well as the add-on services to lower the total cost of procurement conducted by themselves. Even though the electronics industry is subject to short product life cycles, fast changing product trends, constantly evolving technologies and customers with frequent purchase 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, the increasing percentage of the repeat customers reflected the increasing high satisfactions and loyalty of our existing customers who made orders on our platform, as one of the indicators of the performance of our services and business. Our management references to the number of repeat customers to monitor our customers' satisfaction levels and takes it into consideration for the future development of the business. These factors have led to a 3.2% increase in our total revenue from sales of electronic component products for the six months ended December 31, 2023 to the six months ended December 31, 2024.

Service commission fee revenue from providing customs clearance, temporary warehousing, and logistic and shipping services to customers accounted for 1.4% and 1.6% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. We earn a commission fee ranging from 0.15% to 2.0% based on the value of the merchandise that customers purchase from suppliers and such commission fee is not refundable. Number of customers for our services decreased by 38.8% from 147 customers for the six months ended December 31, 2023 to 90 for the six months ended December 31, 2024. 

 ****

***Gross Profit***

Gross profit is equal to net revenue minus cost of 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 including the 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 96.7% and 97.5% of our total revenue for the six months ended December 31, 2024 and 2023, respectively.

Our gross margin was 3.3% for the six months ended December 31, 2024, an increase by 0.8% from gross margin of 2.5% for the six months ended December 31, 2023. Our gross profit and gross margin is affected by sales of different product mix during each reporting period. Our gross margin increases when more revenue comes from products with lower costs and higher margin, while our gross margin decreases when more revenue comes from products with higher costs and lower margin. For the six months ended December 31, 2024, we earned more revenue from products with lower costs and higher margin. These factors led to the increase 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 and welfare benefit expenses paid to our sales personnel, warehouse rental expense, shipping and delivery expenses, tariff expenses, expenses incurred for our business travel, meals and other sales promotion and marketing activities related expenses.

Our selling expenses accounted for both 0.9% of our total revenue for the six months ended December 31, 2024 and 2023. Our total selling expenses increased by $23,323 or 3.0% for the six months ended December 31, 2024 compared to the six months ended December 31, 2023, and the increase was due to the increase in exhibition fees and the increased depreciation of renovation costs.

Our general and administrative expenses primarily consist of employee salaries, welfare and insurance expenses, depreciation and amortization, bad debt reserve expenses, office supply and utility expenses, business travel and meals expenses, and professional service expenses. General and administrative expenses were 1.8% and 1.7% of our revenue for the six months ended December 31, 2024 and 2023, respectively. Our general and administrative expenses in terms of our total revenue increased from 1.7% in the first half of fiscal year 2024 to 1.8% in the first half of fiscal year 2025. Our total general and administrative expenses increased by $111,195 or 7.3% in terms of dollar amount, for the six months ended December 31, 2024 compared to the six months ended December 31, 2023, and the increase was largely due to the increased expenses in the professional services in connection with registration and financings after the IPO and the financial software. We expect our general and administrative expenses, including, but not limited to, salaries and business consulting expenses, to continue to increase in the foreseeable future, as we plan to hire additional personnel and incur additional expenses in connection with the expansion of our business operations.

**<u>Results of Operations</u>**

The following table summarizes our operating results as reflected in our statements of income and comprehensive income during the six months ended December 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024<br> (Unaudited)** | **2024<br> (Unaudited)** | **2023 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **Variances** | **Variances** |
|  | **Amount** | **% of total<br> revenue** | **Amount** | **% of total<br> revenue** | **Amount** | **%** |
| **Revenues** | | | | | | |
| Sales of electronic components | $89068580 | 98.6% | $86329512 | 98.4% | $2739068 | 3.2% |
| Service commission fee | 1272060 | 1.4% | 1391041 | 1.6% | (118981) | (8.6)% |
| **Total revenue** | 90340640 | 100.0% | 87720553 | 100.0% | 2620087 | 3.0% |
| **Cost of revenues** | 87381979 | 96.7% | 85533907 | 97.5% | 1848072 | 2.2% |
| **Gross profit** | 2958661 | 3.3% | 2186646 | 2.5% | 772015 | 35.3% |
| **Operating expenses** |  |  |  |  |  |  |
| Selling expenses | 799330 | 0.9% | 776007 | 0.9% | 23323 | 3.0% |
| General and administrative expenses | 1634197 | 1.8% | 1523002 | 1.7% | 111195 | 7.3% |
| **Total operating expenses** | 2433527 | 2.7% | 2299009 | 2.6% | 134518 | 5.9% |
| **Income/(Loss) from operations** | 525134 | 0.6% | (112363) | (0.1)% | 637497 | (567.4)% |
| **Other income (expenses)** |  |  |  |  |  |  |
| Interest expenses | (210574) | (0.2)% | (351806) | (0.4)% | 141232 | (40.1)% |
| Income from short-term investment | 7062 | 0.0% | 59174 | 0.1% | (52112) | (88.1)% |
| Foreign exchange transaction gain/ (loss) | 480084 | 0.5% | (559655) | (0.6)% | 1039739 | (185.8)% |
| Subsidy income | 36346 | 0.0% | 11409 | 0.0% | 24937 | 218.6% |
| Other expenses | (90027) | (0.1)% | (93481) | (0.1)% | 3454 | (3.7)% |
| &nbsp;&nbsp;&nbsp;**Total other income /(expenses), net** | 222891 | 0.2% | (934359) | (1.1)% | 1157250 | (123.9)% |
| **Income/ (Loss) before income tax** | 748025 | 0.8% | (1046722) | (1.2)% | 1794747 | (171.5)% |
| **INCOME TAX BENEFIT** | 32917 | 0.0% | 324977 | 0.4% | (292060) | (89.9)% |
| **Net income/ (loss)** | $780942 | 0.9% | $(721745) | (0.8)% | $1502687 | (208.2)% |

---

***Revenue***

We generated revenue from the sales of electronic components and the service commission fees. Our total revenue increased by $2.6 million or 3.0%, to $90.3 million for the six months ended December 31 2024 from $87.7 million for the six months ended December 31, 2023. The increase was largely due to that the number of new customers rose by 16 or 15.1% from 106 as of December 31, 2023 to 122 as of December 31, 2024.

 ****

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024 <br> (Unaudited)** | **2024 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **Variances** | **Variances** |
|  | **Amount** | **% of total<br> revenue** | **Amount** | **% of total<br> revenue** | **Amount** | **%** |
| **Revenues** | | | | | | |
| **Sales of electronic components** | | | | | | |
| Revenue from sales of semiconductor | $82963649 | 91.8% | $76288843 | 87.0% | $6674806 | 8.7% |
| Revenue from sales of equipment, tools and others | 6104931 | 6.8% | 10040669 | 11.4% | (3935738) | (39.2)% |
| Subtotal of sales of electronic component products | 89068580 | 98.6% | 86329512 | 98.4% | 2739068 | 3.2% |
| **Service commission fee** | 1272060 | 1.4% | 1391041 | 1.6% | (118981) | (8.6)% |
| **Total revenue** | $90340640 | 100.0% | $87720553 | 100.0% | $2620087 | 3.0% |

---

 ****

***(1) Revenue from sales of electronic component products***

Revenue from sales of electronic components increased by $2.7 million or 3.2%, to $89.1 million for the six months ended December 31, 2024 from $86.3 million for the six months ended December 31, 2023.

Our electronic component products sold to customers fall into two categories: semiconductor products and electronic equipment, tools and other products.

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2023** |
|  | **(Unaudited)** | **(Unaudited)** |
| **Sales of electronic components products:** |  |  |
| &nbsp;&nbsp;&nbsp;Semiconductor: |  |  |
| &nbsp;&nbsp;&nbsp;Integrated Circuits | $50230439 | $30881697 |
| &nbsp;&nbsp;&nbsp;Power/Circuit Protection | 7295982 | 7381913 |
| &nbsp;&nbsp;&nbsp;Discrete | 4899369 | 7274989 |
| &nbsp;&nbsp;&nbsp;Passive Components | 4419834 | 22672366 |
| &nbsp;&nbsp;&nbsp;Optoelectronics/Electromechanical | 6801995 | 3240380 |
| &nbsp;&nbsp;&nbsp;Other semiconductor products | 9316030 | 4837497 |
| &nbsp;&nbsp;&nbsp;Equipment, tools and others: |  |  |
| &nbsp;&nbsp;&nbsp;Equipment | 2192 | 4531976 |
| &nbsp;&nbsp;&nbsp;Tools and others | 6102739 | 5508694 |
| **Total sales of electronic components products** | $**89068580** | $**86329512** |
| **Service commission fees** | **1272060** | **1391041** |
| **Total revenue** | $**90340640** | $**87720553** |

---

Our semiconductor products primarily include various integrated circuits, power/circuit protection, discrete, passive components, optoelectronics/electromechanical, etc. Revenue from sales of electronic components increased primarily because of the increased sales of integrated circuits. Our total SKU of semiconductor sold increased by 613 or 7.3% from 8,373 for the six months ended December 31, 2023 to 8,986 for the six months ended December 31, 2024. The increase in product offerings enabled us to target more customers to meet their needs.

 ****

***(2) Service commission fees***

Service commission fees decreased by $0.1 million or 8.6%, to $1.3 million for the six months ended December 31, 2024 from $1.4 million for the six months ended December 31, 2023. We provide customs clearance when customers purchase electronic component products directly from overseas suppliers, as well as temporary warehousing, and logistic and shipping services after the customs clearance. Number of customers for our services decreased by 38.8% from 147 customers for the six months ended December 31, 2023 to 90 for the six months ended December 31, 2024.

 **

***Cost of Revenues***

 **

Our cost of revenues primarily consists of third-party products purchase price, tariffs associated with import products from overseas suppliers, inbound freight costs, warehousing and overhead costs and business taxes.

The following table sets forth the breakdown of our cost of revenues for the six months ended December 31, 2024 and 2023:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024 <br> (Unaudited)** | **2024 <br> (Unaudited)** | **2023<br> (Unaudited)** | **2023<br> (Unaudited)** | | |
|  | **Amount** | **% of<br> total cost** | **Amount** | **% of<br> total cost** |<br>**Variances** |<br>**%** |
| Third-party products purchase costs | $86314321 | 98.8% | $84428127 | 98.7% | $1886194 | 2.2% |
| Tariffs | 637348 | 0.7% | 577332 | 0.7% | 60016 | 10.4% |
| Inbound shipping and delivery costs | 171112 | 0.2% | 249883 | 0.3% | (78771) | (31.5)% |
| Warehouse lease and overhead costs | 232147 | 0.3% | 229777 | 0.3% | 2370 | 1.0% |
| Business taxes | 27051 | 0.0% | 48788 | 0.0% | (21737) | (44.6)% |
| **Total cost of revenues** | $87381979 | 100.0% | $85533907 | 100.0% | $1848072 | 2.2% |

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Total cost of revenue increased by $1.8 million, or 2.2%, from $85.5 million for the six months ended December 31, 2023 to $87.4 million for the six months ended December 31, 2024. The increase in our cost of revenue was largely attributable to increased third-party product purchase costs which were in line with the increase of the sales of electronic component products. The third-party product purchase costs increased by $1.9 million or 2.2% from $84.4 million for the six months ended December 31, 2023 to $86.3 million for the six months ended December 31, 2024. On the other hand, tariffs increased by $60,016 or 10.4% from $0.58 million for the six months ended December 31, 2023 to $0.64 million for the six months ended December 31, 2024. The increase was due to increased purchases of high-tariff electronic components from the overseas suppliers as the product mix changed. the combined factors led to the increase of the total cost of revenues.

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***Gross profit***

Our gross profit increased by $0.77 million or 35.3%, from $2.2 million for the six months ended December 31, 2023 to $3.0 million for the six months ended December 31, 2024. Our gross margin increased by 0.8%, from 2.5% for the six months ended December 31, 2023 to 3.3% for the six months ended December 31, 2024. Our gross profit and gross margin are affected by sales of different product mix during each reporting period. For the six months ended December 31, 2024, we earned more revenue from products with lower costs and higher margin, which led to the increase in both our gross profit and our gross margin.

 **

***Total operating expenses***

 **

The following table sets forth the breakdown of our operating expenses for the six months ended December 31, 2024 and 2023:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024 <br> (Unaudited)** | **2024 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **Variances** | **Variances** |
|  | **Amount** | **% of total<br> revenue** | **Amount** | **% of total<br> revenue** | **Amount** | **%** |
| **Total revenues:** | $90340640 | 100.0% | $87720553 | 100.0% | $2620087 | 3.0% |
| Operating expenses: |  |  |  |  |  |  |
| Selling expenses | 799330 | 0.9% | 776007 | 0.9% | 23323 | 3.0% |
| General and administrative expenses | 1634197 | 1.8% | 1523002 | 1.7% | 111195 | 7.3% |
| **Total operating expenses** | $2433527 | 2.7% | $2299009 | 2.6% | $134518 | 5.9% |

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***Selling expenses***

Our selling expenses primarily include salary and welfare benefit expenses paid to our sales personnel, office rental expense, shipping and delivery expenses, customs clearance, expenses incurred for our business travel, meals and other sales promotion and marketing activities related expenses.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024 <br> (Unaudited)** | **2024 <br> (Unaudited)** | **2023<br> (Unaudited)** | **2023<br> (Unaudited)** | **Variances** | **Variances** |
|  | **Amount** | % | **Amount** | % | **Amount** | % |
| Salary and employee benefit expenses | $384715 | 48.1% | $381872 | 49.2% | $2844 | 0.7% |
| Lease expense | 72991 | 9.1% | 74332 | 9.6% | (1341) | (1.8)% |
| Shipping and delivery expenses | 177918 | 22.3% | 201503 | 26.0% | (23585) | (11.7)% |
| Sales promotion | 52706 | 6.6% | 43103 | 5.6% | 9603 | 22.3% |
| Business travel and meals expenses | 18897 | 2.4% | 21336 | 2.7% | (2438) | (11.4)% |
| Tariffs | 10570 | 1.3% | 10705 | 1.4% | (135) | (1.3)% |
| Utility and office expenses | 64638 | 8.1% | 38466 | 5.0% | 26172 | 68.0% |
| Other sales promotion related expenses | 16895 | 2.1% | 4690 | 0.6% | 12204 | 260.2% |
| **Total selling expenses** | $799330 | 100.0% | $776007 | 100.0% | $23323 | 3.0% |

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Our selling expenses increased by $23,323 or 3.0%, from $776,007 for the six months ended December 31, 2023 to $799,330 for the six months ended December 31, 2024, primarily attributable to that (i) salary and employee benefit expenses increased by $2,844 or 0.7% from $381,872 for the six months ended December 31, 2023 to $384,715 for the six months ended December 31, 2024 because of the increased bonus to the sales team as our total revenue increased; (ii)sales promotion and utility and office expenses together increased by $35,775, due to increased expenses in exhibition and depreciation of fixed assets ; (iii) shipping and delivery expenses decreased by $23,585, due to a decrease in the average number of logistics warehousing personnel by 3 per month;

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***General and Administrative Expenses***

Our general and administrative expenses primarily consist of employee salaries, welfare and insurance expenses, depreciation and amortization, office supply and utility expenses, business travel and meals expenses, and professional service expenses.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024 <br> (Unaudited)** | **2024 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **2023 <br> (Unaudited)** | **Variances** | **Variances** |
|  | **Amount** | **%** | **Amount** | **%** | **Amount** | **%** |
| Salary and employee benefit expenses | $456658 | 27.9% | $567637 | 37.3% | $(110979) | (19.6)% |
| Lease expense | 48390 | 3.0% | 48686 | 3.2% | (296) | (0.6)% |
| Transportation, travel and meals expenses | 162991 | 10.0% | 128959 | 8.5% | 34032 | 26.4% |
| Utility and office expenses | 117079 | 7.2% | 100458 | 6.6% | 16621 | 16.5% |
| Professional service fee | 558683 | 34.2% | 381343 | 25.0% | 177340 | 46.5% |
| Bank charges | 38156 | 2.3% | 59725 | 3.9% | (21569) | (36.1)% |
| Insurance | 25721 | 1.6% | 4272 | 0.3% | 21449 | 502.1% |
| Research and development expenses | 190519 | 11.7% | 196919 | 12.9% | (6400) | (3.3)% |
| Others | 36000 | 2.2% | 35003 | 2.3% | 997 | 2.8% |
| **Total general and administrative expenses** | $1634197 | 100.0% | $1523002 | 100.0% | $111195 | 7.3% |

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Our general and administrative expenses increased by $111,195 or 7.3% from $1,523,002 for the six months ended December 31, 2023 to $1,634,197 for the six months ended December 31, 2024, primarily attributable to professional service fee and utility and office expenses together increased by $193,961 or 40.3% due to the increased expenses in the professional service in connection with registration and financings after the IPO and the financial software. The increase was offset by that the salary and the employee benefit expenses decreased by $110,979 or 19.6% due to the decreased salaries to the senior management.

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***Other income (expenses)***

Other income (expenses) primarily included interest income, interest expenses, foreign exchange gain or loss, government subsidiary income, gain or loss from disposal of fixed assets, other non-operating income or expenses. Other expense increased by $1.2 million from other expenses of $934,359 for the six months ended December 31, 2023 to other income of $222,891 for the six months ended December 31, 2024 , which is mainly due to foreign exchange gain increased by $1,039,739 from foreign exchange loss of $559,655 for the six months ended December 31, 2023 to foreign exchange gain of $480,084 for the six months ended December 31, 2024, due to more exchange income derived from the favourable USD and other currency exchange rates against RMB on our foreign currency denominated account receivables.

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**Income tax benefit**

Our income tax benefit was $32,917 for the six months ended December 31, 2024, a decrease of $0.3 million or 89.9% from income tax benefit $324,977 for the six months ended December 31, 2023.

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***Net Income/(loss)***

As a result of the foregoing, we reported the net income of $0.78 million for the six months ended December 31, 2024, representing a $1.5 million increased from the net loss of $0.72 million for the six months ended December 31, 2023.

**Liquidity and Capital Resources**

As of December 31, 2024, we had $5.7 million in cash and restricted cash on hand as compared to $5.5 million as of June 30, 2024. We also had $33.6 million in accounts receivable. Our accounts receivable primarily include balance due from customers for our electronic component products sold and delivered to customers. We believe that our customers are unlikely to default because of our long-term business relationships with them and our belief that the collectability risk is low based on our historical experience and collection history with them and the remaining balance is expected to be collected by June 30, 2025.

Current foreign exchange and other regulations in the PRC may restrict the PRC operating entities in their ability to transfer their net assets to the Company and its subsidiaries in Hong Kong. However, these restrictions have no impact on the ability of these PRC operating entities to transfer funds to us as we have no present plans to declare dividend which we plan to retain our retained earnings to continue to grow our business. In addition, these restrictions have no impact on the ability for us to meet our cash obligations as all of our current cash obligations are due within the PRC.

As of December 31, 2024, we had advances to suppliers of $1.0 million representing our prepayment to various suppliers to lock the purchase of electronic component products at favorable prices. 99.6% or $1.0 million of the advance to suppliers balance as of December 31, 2024 has been realized by April 30, 2025.

As of December 31, 2024, we had outstanding accounts payable ("AP") of $10.6 million, representing balance due to suppliers for purchase of electronic components products. 100.0% or $10.6 million of the AP balance as of December 31, 2024 has been realized by April 30, 2025.

As of December 31, 2024, we had contract liabilities of $2.7 million, recognized for contracts where payment has been received in advance of delivery. 84.0% or $2.3 million of the contract liabilities balance as of December 31, 2024 has been realized by April 30, 2025.

As of December 31, 2024, we had outstanding bank loans of approximately $10.7 million. We expect that we will be able to renew all of our existing bank loans upon their maturity based on past experience and our good credit history.

As of December 31, 2024, our working capital amounted to approximately $15.2 million. We intend to finance our future working capital requirements from cash generated from operating activities, the proceed form public offering, bank borrowings and financial support from related parties. However, we may seek additional financings, to the extent required, and there can be no assurances that such financing will be available on favorable terms or at all.

Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for us to meet our future liquidity and capital requirement for at least 12 months from the date of this filling.

The following table sets forth summary of our cash flows for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** |
|  | **2024** | **2023** |
|  | **(Unaudited)** | **(Unaudited)** |
| Net cash provided by (used in) operating activities | $1464140 | $(1026221) |
| Net cash used in investing activities | (22279) | (127888) |
| Net cash provided by financing activities | 333684 | 2987399 |
| Effect of exchange rate fluctuation on cash and restricted cash | (1584647) | (1568816) |
| Net increase in cash and restricted cash | 190898 | 264474 |
| Cash and restricted cash at beginning of period | 5484960 | 6413367 |
| Cash and restricted cash at end of period | $5675858 | $6677841 |

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 **

***Operating Activities***

 **

Net cash provided by operating activities was $1,464,140 for the six months ended December 31, 2024, which primarily consisted of the following:

● Net income of $780,942 for the six months ended December 31, 2024.

● An increase in accounts receivable of $5,641,073. The increase was because the increased revenue and decreased collection from the customers.

● A decrease in advance to suppliers of $3,040,273 as some electronic components purchased from suppliers had account periods.

● A decrease in contract liabilities of $318,381. Our customers are typically required to make certain prepayment to us before we purchase products from suppliers. We record such prepayment as contract liabilities because our performance obligation associated with delivery of products to customers had not been satisfied as of the balance sheet date.

● An increase in accounts payable of $5.4 million. Due to our increased sales for the six months ended December 31, 2024, we increased the purchase of electronic component products from various suppliers with payment terms ranging from one to three months.

Net cash used in operating activities was $1,026,221 for the six months ended December 31, 2023, which primarily consisted of the following:

● Net loss of $721,745 for the six months ended December 31, 2023.

● A decrease in accounts receivable of $28,931,833. The decrease was because the reduced revenue and increased collection from the customers.

● An increase in advance to suppliers of $279,267 as some electronic components purchased from suppliers required more upfront repayments.

● An increase in deferred revenue of $264,015. Our customers are typically required to make certain prepayment to us before we purchase products from suppliers. We record such prepayment as deferred revenue because our performance obligation associated with delivery of products to customers had not been satisfied as of the balance sheet date.

● A decrease in accounts payable of $27.7 million as some electronic components purchased from suppliers required more upfront repayments. The decrease was due to the reduced purchased goods from the third parties.

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***Investing Activities***

Net cash used in investing activities amounted to $22,279 for the six months ended December 31, 2024, primarily consisting of purchase of property and equipment of $16,371, purchase of intangible assets of $5,908.

Net cash used in investing activities amounted to $127,888 for the six months ended December 31, 2023, primarily consisting of purchase of property and equipment of $70,490, purchase of intangible assets of $57,398, an increase in short-term investment $1,129,600 to purchase interest-bearing wealth management financial products from PRC banks to earn interest income, offset by a collection of $1,129,600 short-term investments proceeds upon maturity.

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***Financing Activities***

Net cash provided by financing activities amounted to $333,684 for the six months ended December 31, 2024, primarily consisting of proceeds from short-term bank loans of $9,961,479, proceeds from borrowings from related parties as working capital of $3,176,805 and the proceeds from option exercise of $116,902, offset by a repayment of short-term bank loans of $9,399,183, a repayment of notes payable of $1,543,465 and a repayment of borrowings from related parties as working capital of $1,978,854.

Net cash provided by financing activities amounted to $2,987,399 for the six months ended December 31, 2023, primarily consisting of proceeds from short-term bank loans of $14,666,970, proceeds from notes payable of $2,965,200, proceeds from borrowings from related parties as working capital of $6,299,295 and proceeds from borrowing from third-parties working capital of $746,000, offset by a repayment of short-term bank loans of $14,638,095, a repayment of notes payable of $1,425,200, a repayment of borrowings from related parties as working capital of $4,568,244, and a repayment of third parties borrowings of $746,000.

**Trend Information**

We are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

**Off-Balance Sheet Arrangements**

We do not have any off-balance sheet arrangements as of December 31, 2024 and June 30, 2024.

**Inflation**

Inflation does not materially affect our business or the results of our operations.

**Seasonality**

Seasonality does not materially affect our business or the results of our operations.