ICZOOM Group Inc. Released 2023 Interim Financial Results

-The company sustained positive net income for the six months ended December 31,2022 -

HONG KONG,July 20,2023 --ICZOOM Group Inc. (Nasdaq: IZM) (the "Company" or "ICZOOM"),a B2B electronic component products e-commerce platform,with its financial year ends on June 30 annually,has released its interim unaudited consolidated financial statements for the six months ended December 31,2022. A full version of the report is available at the Company's website at http://ir.iczoomex.com/index.htmlor the SEC's website at www.sec.gov.

Mr. Lei Xia,the CEO and the Chairman of the Board of Directors of ICZOOM,commented,"Despite a challenging environment,we've managed to sustain a stable position for the first half of the fiscal year 2023. Our total revenue reached $120.2 million for the six months ended December 31,2022,decreased by 14.6% from $140.5 million for the same period of last fiscal year,primarily due to the business operation disruption from time to time in PRC due to restrictive measures adopted by local governments to contain the outbreak of Omicron from June to December 2022. Though revenues dipped,we proudly maintained a positive net income. Our strategic initiatives aiming at enhancing efficiency will continue to ensure our business's longevity. We're dedicated to innovation and delivering superior products and services,enabling us to navigate market flux effectively. Ongoing investments in research and development,expansion of our product portfolio,and strengthening key partnerships remain our priority. Looking ahead,we're optimistic and committed to creating values to our shareholders."

First Half of the Fiscal Year 2023 Financial and Operational Highlights

Total revenues were $120.2 million,compared to $140.5 million for the same period of last fiscal year.

Net income was $0.9 million,compared to $1.1 million for the same period of last fiscal year.

Total customers were 653,compared to 770 for the same period of last fiscal year.

First Half of the Fiscal Year 2023 Financial Results

Revenues

Total revenue was $120.2 million for the six months ended December 31,decreased by 14.5% from $140.5 million for the same period of last fiscal year. The decrease was largely attributable to the business operation disruption from time to time in China due to restrictive measures adopted by local governments to control the outbreak of Omicron from June 2022 to December 2022. In addition,the total revenue was affected by the reduced demand from the customers as some of the customers stocked up heavily in last fiscal year and still carried over comparatively high inventories. The number of customers for electronic component products and services decreased by 117 or 15.2%,from 770 for the six months ended December 31,2021 to 653 for the six months ended December 31 2022.

Revenue from sales of electronic components was $118.3 million for the six months ended December 31,decreased by 14.6% from $138.5 million for the same period of last fiscal year. The decrease was primarily due to the decreased sales of integrated circuits("IC") as the ICs were stocked up heavily by some customers last fiscal year and the demand for them decreased during this period.

Service commission fee revenues were $1.86 million for the six months ended December 31,decreased by 6.8% from $2.0 million for the same period of last fiscal year. 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. The decrease was primarily due to the number of customers for our services decreased by 2.2% from 135 customers for the six months ended December 31,2021 to 132 for the six months ended December 31,which led to total merchandise value involved in the transactions decreased.

Cost of Revenues

Cost of revenues was $117.1 million for the six months ended December 31,decreased by 14.1% from $136.3 million for the same period of last year.

Gross Profit and Gross Margin

Gross profit was $3.1 million for the six months ended December 31,decreased by 26.7% from $4.2 million for the same period of last fiscal year. Gross margin was 2.6% for the six months ended December 31,compared to 3.1% for the same period of last fiscal year.

Operating Expenses

Total operating expenses were $2.3 million for the six months ended December 31,decreased by 5.3% from $2.4 million for the same period of last fiscal year.

Selling expenses were $0.9 million for the six months ended December 31,almost the same as selling expenses for the same period of last fiscal year.

General and administrative expenses were $1.4 million for the six months ended December 31,decreased by 7.0% from $1.5 million for the same period of last fiscal year. The decrease was mainly due to the decrease in our salary and employee benefit expense and stock-based compensation expenses as a result of the reduced headcount.

Other Income (Expenses)

Net other income was $0.1 million for the six months ended December 31,compared to net other expenses of $0.3 million for the same period of last fiscal year.

Net Income

Net income was $0.93 million for the six months ended December 31,compared to $1.1 million for the same period of last fiscal year.

Basic and Diluted Earnings per Share

Basic and diluted earnings per share were $0.10 and $0.10 for the six months ended December 31,respectively,compared to $0.13 and $0.11,for the same period of last fiscal year,respectively.

Balance Sheet

As of December 31,the Company had cash of $0.9 million and restricted cash of $4.0 million,compared to $1.1 million and $1.8 million as of June 30,respectively.

Cash Flow

Net cash used in operating activities was $1.9 million for the six months ended December 31,compared to net cash provided by operating activities of $16,154 for the same period of last fiscal year.

Net cash used in investing activities was $94,510 for the six months ended December 31,2022 compared to net cash provided by investing activities of $917,440 for the same period of last fiscal year.

Net cash provided by financing activities was $2.0 million for the six months ended December 31,compared to net cash used in financing activities of $5.0 million for the same period of last fiscal year.

Recent Development

On March 18,2023,the Company announced the closing of its initial public offering (the "Offering") of 1,500,000 Class A ordinary shares at a public offering price of US$4.00 per Class A ordinary share. The Class A ordinary shares began trading on the Nasdaq Capital Market on March 15,2023 under the ticker symbol "IZM."

About ICZOOM Group Inc.

ICZOOM Group Inc. is primarily engaged in sales of electronic component products to customers in Hong Kong and mainland China through its B2B e-commerce platform. These products are primarily used by China based small and medium-sized enterprises ("SMEs") in the consumer electronic industry,Internet of Things ("IoT"),automotive electronics and industry control segments. By utilizing latest technologies,the Company's platform collects,optimizes and presents product offering information from suppliers of all sizes,all transparent and available to its SME customers to compare and select. In addition to the sales of electronic component products,the Company also provides services to customers such as temporary warehousing,logistic and shipping,and customs clearance. For more information,please visit the Company's website: http://ir.iczoomex.com/index.html.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition,results of operations,business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "should," "will," "could" and similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances,or changes in its expectations,except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable,it cannot assure you that such expectations will turn out to be correct,and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the U.S. Securities and Exchange Commission.

For more information,please contact:

ICZOOM Group Inc.

Investor Relations

Email: investors@iczoom.com

ICZOOMGROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December31,

2022

(Unaudited)

June30,

2022

ASSETS

CURRENT ASSETS:

Cash

$

866,077

$

1,134,416

Restricted cash

3,950,020

1,817,607

Short-term investments

1,436

1,490

Notes receivable

-

18,000

Accounts receivable,net

83,124,017

76,020,296

Inventories,net

30,780

365,615

Advances to suppliers

1,358,170

6,613,280

Prepaid expenses and other current assets

1,738,870

2,432,913

TOTAL CURRENT ASSETS

91,069,370

88,403,617

Property and equipment,net

158,125

119,244

Right-of-use asset,net

549,444

692,571

Intangible assets,net

330,380

378,338

Other non-current assets

11,150

14,491

Deferred tax assets

134,171

24,751

TOTAL NON-CURRENT ASSETS

1,183,270

1,229,395

TOTAL ASSETS

$

92,252,640

$

89,633,012

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Short-term bank loans,net

$

12,646,565

$

11,760,387

Short-term borrowings- third-party loans

300,000

100,000

Accounts payable

59,767,305

59,558,743

Deferred revenue

2,807,848

3,651,700

Due to related parties

954,277

349,684

Taxes payable

3,023,859

2,675,002

Operating lease liability,current

250,106

232,221

Accrued expenses and other current liabilities

808,809

329,924

TOTAL CURRENT LIABILITIES

80,769

78,657,661

Operating lease liabilities,non-current

344,815

480,436

TOTAL NON-CURRENT LIABILITY

344,436

TOTAL LIABILITIES

80,903,584

79,138,097

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY

Ordinary shares,$0.16 par value,35,000,000 shares authorized,8,826,374 shares

issued and outstanding as of December 31,2022 and June 30,2022*:

Class A shares,30,4,996,874 shares issued and

outstanding

799,499

799,499

Class B shares,5,3,829,500 shares issued and

outstanding

612,720

612,720

Additional paid-in capital

14,557,811

14,499,213

Statutory reserve

624,097

624,097

Accumulated deficit

(6,158,753)

(7,085,470)

Accumulated other comprehensive income

913,682

1,044,856

TOTAL SHAREHOLDERS' EQUITY

11,349,056

10,494,915

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

92,012

* Retrospectively restated for effect of 1-for-4 reverse split on November 2020 and 1-for-2 reverse split on August

8,2022 of the ordinary shares,see Note16.

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

ICZOOMGROUP INC.AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

For thesix months ended

December31,

2022

2021

Revenue,net

Sales of electronic components,net of sales taxes and value added taxes

$

118,348,676

$

138,531,453

Service commission fees,net of sales taxes and value added taxes

1,858,830

1,993,615

Total revenue,net

120,207,506

140,525,068

Cost of revenue

117,108,678

136,299,375

Gross profit

3,098,828

4,225,693

OPERATING EXPENSES

Selling expenses

899,314

921,587

General and administrative expenses

1,382,358

1,487,099

Total operating expenses

2,281,672

2,408,686

INCOME FROM OPERATIONS

817,156

1,007

OTHER INCOME (EXPENSES)

Foreign exchange transaction gain (loss)

418,866

(14,213)

Interest expense

(234,738)

(236,444)

Short-term investment income

6,913

23,981

Subsidy income

31,826

181,086

Loss from termination of the VIE agreements

-

(205,250)

Other expenses,net

(112,254)

(86,716)

Total other income (expenses),net

110,613

(337,556)

INCOME BEFORE INCOME TAX PROVISION

927,769

1,479,451

PROVISION FOR INCOME TAXES

1,052

374,863

NET INCOME

926,717

1,104,588

Foreign currency translation adjustments

(131,174)

873,622

TOTAL COMPREHENSIVE INCOME

$

795,543

$

1,978,210

EARNINGS PER ORDINARY SHARE:

–BASIC

$

0.10

$

0.13

–DILUTED

$

0.10

$

0.11

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES*:

–BASIC

8,374

8,374

–DILUTED

9,547,346

9,748,141

* Retrospectively restated for effect of 1-for-4 reverse split on November 2020 and 1-for-2 reverse split on August

8,see Note 16.

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

ICZOOMGROUP INC.AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Forthe sixmonths ended

December 31,

2022

2021

Cash flows from operating activities:

Net income

$

926,717

$

1,588

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

89,128

88,572

Loss (gain) from disposal of equipment

1,146

—

Amortization of right-of-use assets

118,026

—

Provision for inventory impairment

1,851

—

Amortization of share-based compensation

58,598

161,096

Amortization of debt issuance costs

110,219

84,095

Deferred income tax provision

(109,627)

(7,760)

Unrealized exchange (loss) gain

(477,112)

166,912

Loss from termination of the VIE agreements

—

205,250

Changes in operating assets and liabilities:

Notes receivable

18,000

—

Accounts receivable

(8,401,208)

2,389,739

Inventories

336,052

1,328,520

Advances to suppliers

5,255,103

138,623

Prepaid expenses and other current assets

689,583

(457,815)

Other noncurrent assets

—

—

Accounts payable

130,523

(4,366,567)

Deferred revenue

(738,116)

(412,749)

Taxes payable

421,917

577,378

Operating Lease liabilities

(117,736)

—

Accrued expenses and other current liabilities

(218,230)

(983,728)

Net cash (used in) provided by operating activities

(1,905,166)

16,154

Cash flows from investing activities:

Purchase of property and equipment

(74,420)

(10,124)

Proceeds from disposal of PPE

3,096

—

Purchase of intangible assets

(23,186)

(1,485)

Purchase of short-term investments

(2,701,116)

(14,625,930)

Proceeds upon maturity of short-term investments

2,116

15,554,979

Net cash (used in) provided by investing activities

(94,510)

917,440

Cash flows from financing activities:

Proceeds from short-term bank loans

14,145,794

15,053,570

Repayments of short-term bank loans

(12,841,626)

(20,200,000)

Proceeds from loans payable to third-parties

360,000

700,000

Repayments from loans payable to third-parties

(160,000)

(370,000)

Proceeds from banker's acceptance notes payable

—

1,000

Repayment of banker's acceptance notes payable

—

(1,035)

Proceeds from borrowings from related parties

608,589

448,238

Payment for deferred IPO costs

(88,810)

—

Repayment of related party borrowings

—

(589,396)

Net cash provided by (used in) financing activities

2,947

(4,957,623)

Effect of exchange rate fluctuation on cash and restricted cash

1,839,803

342,622

Net increase (decrease) in cash and restricted cash

1,864,074

(3,681,407)

Cash and restricted cash at beginning of period

2,952,023

6,808,190

Cash and restricted cash at end of period

$

4,816,097

$

3,126,783

Supplemental cash flow information

Cash paid for income taxes

$

(61,473)

$

(56,593)

Cash paid for interest

$

(234,738)

$

(236,444)

Supplemental disclosure of non-cash investing and financing activities

Right-of-use assets obtained in exchange for operating lease obligations

$

—

$

—

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