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2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm1/262F-1/A 1 ff12023a15_iczoom.htm AMENDMENT NO.15 TO FORM F-1As filed with the U.S.Securities and Exchange Commission on February 2,2023Registration No.333-259012UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_Amendment No.15toFORM F-1REGISTRATION STATEMENTUNDERTHE SECURITIES ACT OF 1933_ICZOOM GROUP INC.(Exact Name of Registrant as Specified in its Charter)_Cayman Islands 5065 Not applicable(State or OtherJurisdiction of Incorporation orOrganization)(Primary StandardIndustrialClassification CodeNumber)(I.R.S.Employer Identification Number)Room 3801,Building A,Sunhope eMETRO,No.7018 Cai Tian RoadFutian District,ShenzhenGuangdong,China,518000Tel:86 755 86036281(Address,including zip code,and telephone number,including area code,ofprincipal executive offices)_Puglisi&Associates850 Library Avenue,Suite 204Newark,Delaware 19711(Name,address,including zip code,and telephone number,including areacode,of agent for service)_Copies to:Arila Zhou,Esq.Anna Wang,Esq.Robinson&Cole LLPChrysler East Building666 Third Avenue,20th FloorNew York,NY 10017Tel:212-451-2908 Ralph V.De Martino,Esq.Cavas Pavri,Esq.ArentFox Schiff LLP1717 K Street NWWashington,DC 20006Tel:202-724-6848_Approximate date of commencement of proposed sale to the public:As soon aspracticable after this Registration Statement becomes effective.If any of the securities being registered on this Form are to be offered on a delayed orcontinuous basis pursuant to Rule 415 under the Securities Act of 1933,check the following box.If this Form is filed to register additional securities for an offering pursuant toRule 462(b)under the Securities Act,check the following box and list the Securities Actregistration statement number of the earlier effective registration statement for the sameoffering.If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the SecuritiesAct,check the following box and list the Securities Act registration statement number of theearlier effective registration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(d)under the SecuritiesAct,check the following box and list the Securities Act registration statement number of theearlier effective registration statement for the same offering.Indicate by check mark whether the registrant is an emerging growth company as defined inRule 405 of the Securities Act of 1933.Emerging growth company If an emerging growth company that prepares its financial statements in accordance withU.S.GAAP,indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant toSection 7(a)(2)(B)of the Securities Act.The registrant hereby amends this registration statement on such date or dates asmay be necessary to delay its effective date until the registrant shall file afurther amendment which specifically states that this registration statement shallthereafter become effective in accordance with Section 8(a)of the SecuritiesAct of 1933,as amended,or until the registration statement shall become effectiveon such date as the Commission,acting pursuant to such Section 8(a),may determine.2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm2/262Table of ContentsEXPLANATORY NOTEOn August 8,2022,we effected a reverse split at a ratio of 1-for-2 to decreaseour authorized capital shares from 60,000,000 Class A Ordinary Shares with a parvalue of$0.08 each and 10,000,000 Class B Ordinary Shares with a par value of$0.08each,to 30,000,000 Class A Ordinary Shares with a par value of$0.16 each and5,000,000 Class B Ordinary Shares with a par value of$0.16 each.(the“2022 ReverseSplit”).As a result of 2022 Reverse Split and as of the date hereof,we have4,996,874 Class A Ordinary Shares and 3,829,500 Class B Ordinary Shares issued andoutstanding.As of the date hereof,we have 4,996,874 Class A Ordinary Shares and 3,829,500Class B Ordinary Shares issued and outstanding.All share numbers,option numbers,warrant numbers,other derivative securitynumbers and exercise prices appearing in this registration statement will be adjustedto give effect to the 2022 Share Reverse Split,unless otherwise indicated or unlessthe context suggests otherwise.2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm3/262Table of ContentsThe information in this prospectus is not complete and may be changed.We may notsell these securities until the registration statement is filed with the Securitiesand Exchange Commission is effective.This prospectus is not an offer to sell thesesecurities and is not soliciting an offer to buy these securities in any state orother jurisdiction where the offer or sale is not permitted.SUBJECT TO COMPLETION,DATED FEBRUARY 2,2023ICZOOM GROUP INC.1,500,000 Class A Ordinary SharesThis is the initial public offering(the“Offering”)of our Class A ordinary shares,parvalue$0.16 per share(each,a“Class A Ordinary Share”,collectively,“Class A OrdinaryShares”).We expect that the initial public offering price will be between$4.00 and$5.00 pershare.Prior to this offering,there has been no public market for our Class A Ordinary Shares.Wewill apply for approval for quotation on the NASDAQ Capital Market under the symbol“IZM”for theClass A Ordinary Shares we are offering.This offering is contingent upon the final approval fromNasdaq for us listing on Nasdaq Capital Market.There is no guarantee or assurance that our Class AOrdinary Shares will be approved for listing on Nasdaq Capital Market.Further,there is noassurance that the offering will be closed and our Class A Ordinary Shares will be trading on NASDAQCapital Market.We will not proceed to consummate this offering if Nasdaq denies our listing.As the date hereof,our authorized share capital is$5,600,000 divided into 30,000,000 Class AOrdinary Shares and 5,000,000 Class B ordinary shares,par value$0.16 per share(each,a“Class BOrdinary Share”;collectively,“Class B Ordinary Shares”).As of the date hereof,we have4,996,874 Class A Ordinary Shares and 3,829,500 Class B Ordinary Shares,issued and outstanding,respectively.Holders of Class A Ordinary Shares and Class B Class A Ordinary Shares have the samerights 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 beentitled to ten votes.The Class A Ordinary Shares are not convertible into shares of any otherclass.The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time afterissuance at the option of the holder on a one to one basis.The Class B ordinary shares shallautomatically convert into fully paid and nonassessable Class A ordinary shares upon the occurrenceof certain events as described herein.See“Description of Share Capital Conversion”startingon page 169 of this prospectus.We are an“emerging growth company”as defined in the Jumpstart Our Business Act of 2012,asamended,and,as such,will be subject to reduced public company reporting requirements.We anticipate that following the completion of this Offering,our Chief Executive Officer,LeiXia and our Chief Operating Officer,Duanrong Liu,will beneficially own an aggregate 85.50%votingpower of the Company given the effect of 1 vote power of each Class A Ordinary Shares and 10 votesof each Class B Ordinary Share,which will allow Lei Xia and Duanrong Liu together to determine allmatters requiring approval by shareholders.We may be deemed to be a“controlled company”underNASDAQ Marketplace Rules 5615(c);however,we do not intend to avail ourselves of the corporategovernance exemptions afforded to a“controlled company”under the NASDAQ Marketplace Rules.We are not a Chinese operating company,but a holding company incorporated in theCayman Islands with all of our operations conducted by our wholly-owned subsidiariesestablished in the Peoples Republic of China(“PRC”or“China”)and Hong Kong.This structure involves unique risks to investors,in particular,that the PRCgovernment could disallow our holding company structure,which would likely result ina material change in our operations and/or a material change of the value of ourClass A Ordinary Shares that we are registering for sale,and the value of suchsecurities may significantly decline or become worthless See“Risk Factor RisksRelated to Doing Business in China”starting on page 52 of this prospectus and“RiskFactor Risks Related to Our Corporate Structure”starting on page 50 of thisprospectus.Historically we had a series of contractual arrangements with Shenzhen Pai MingElectronics Co.,Ltd.,a PRC company which functioned as a variable interest entityand is referred to as“the VIE”or“Pai Ming Shenzhen”in this prospectus.The VIEstructure provided contractual exposure to foreign investment in the VIE rather thanreplicating an investment and the main contribution of the VIE was to hold an ICPlicense as the PRC law prohibits direct foreign investment in internet-basedbusinesses,such as provision of internet information services platform and othervalue-added telecommunication services.We generated more than 96.5%of our revenuefrom operations of our wholly foreign owned entity(“WFOE”),Components Zone(Shenzhen)Development Limited(“ICZOOM WFOE”)and its subsidiaries and our HongKong subsidiaries for the last two fiscal years and the most recent fiscal semi year.In December 2021,we terminated the agreements under the VIE structure and our HongKong subsidiary Iczoom Electronics Limited,or ICZOOM HK,now operates our B2B onlineplatform,which does not require an ICP license under the PRC law.As a result,though we consolidated the financial results of the VIE for the last twofiscal years as a primary beneficial under the U.S.GAAP,we will no longerconsolidate the operation and financial results of Pai Ming Shenzhen.As of the dateof this prospectus,the agreements under the contractual arrangements have not beentested in any court of law.For a description of the historical VIE contractualarrangements,see“Corporate History and Structure Historical ContractualArrangements”starting on page 92 of this prospectus.For the summary of thecondensed consolidated schedule and the consolidated financial statements,see pages31-33 of this prospectus for“Summary Financial Data Selected Consolidated BalanceSheet Data”(which is a summary of pages 32 and F-3 of the consolidated financialstatements);“Selected Consolidated Statement of Operations Data”(which is asummary of pages 32 and F-4 of the consolidated financial statements);“SelectedConsolidated Statement of Cash Flows”(which is a summary of pages 33 and F-6 of theconsolidated financial statements);and“Roll-Forward of Investment”(which is asummary of pages 33 and F-38 of the financial statements of parent company).Whilethe current corporate structure does not contain any VIE and we have no intentionestablishing any VIEs in PRC in the future,if in the future the PRC laws andregulations change,and the PRC regulatory authorities disallow the VIE structure,including retroactively,it would likely result in a material adverse change in ouroperations,and the securities of ICZOOM Cayman may decline significantly in value orbecome worthless.2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm4/262This is an offering of the Class A ordinary shares of the offshore Cayman Islandsholding company,ICZOOM Group Inc.(“ICZOOM Cayman”),which wholly owns ouroperating subsidiaries in the PRC and Hong Kong.Investors in the Class A OrdinaryShares are not purchasing,and may never directly hold,equity securities of oursubsidiaries in the PRC and Hong Kong that have substantive business operations.Investing in our Class A Ordinary Shares is highly speculative,involves a highdegree of risk and should be considered only by persons who can afford the loss oftheir entire investment.Because all of our operations are conducted in Hong Kong and China through ourwholly-owned subsidiaries,we face risks and uncertainties associated with thecomplex and evolving PRC laws and regulations and as to whether and how the recentPRC government statements and regulatory developments,the Chinese government mayintervene or influence the operation of our Hong Kong and PRC operating entities andexercise significant oversight and discretion over the conduct of our business andmay intervene in or influence our operations at any time,or may exert more controlover offerings conducted overseas and/or foreign investment in China-based issuers,which could result in a material change in our operations and/or the value of ourClass A ordinary shares.Further,any actions by the Chinese government to exert moreoversight and control over offerings that are conducted overseas and/or foreigninvestment in China-based issuers,including disallowing our holding companystructure,could have a material change in our operation and/or significantly limitor completely hinder our ability to offer or continue to offer securities toinvestors and cause the value of such securities to significantly decline or beworthless.Recently,the PRC government initiated a series of regulatory actions andstatements to regulate business operations in China with little advance notice,including cracking down on illegal activities in the securities market,adopting newmeasures to extend the scope of cybersecurity reviews,and expanding the efforts inanti-monopoly enforcement.On December 24,2021,China Securities RegulatoryCommission(the“CSRC”)issued the Administrative Provisions of the State CouncilRegarding the Overseas Issuance and Listing of Securities by Domestic Enterprises(the“Draft Administrative Provisions”)and the Measures for the Overseas Issuanceof Securities and Listing Record-Filings by Domestic Enterprises(Draft for Comments)(the“Draft Filing Measures”),collectively,the Draft Rules Regarding OverseasListings,which are currently published for public comments only.According to theDraft Rules Regarding Overseas Listings,among other things,after making initialapplications with overseas stock markets for initial public offerings or listings,all China-based companies shall file with the CSRC within three working days.Therequired filing materials with the CSRC include(without limitation):(i)record-filing reports and related undertakings,(ii)compliance certificates,filing orapproval documents from the primary regulators of applicants businesses(ifapplicable),(iii)security assessment opinions issued by related departments(ifapplicable),(iv)PRC legal opinions,and(v)prospectus.In addition,overseasofferings and listings may be prohibited for such China-based companies when any ofthe following applies:(1)if the intended securities offerings and listings arespecifically prohibited by the laws,regulations or provision of the PRC;(2)if theintended securities offerings and listings may constitute a threat to,or endangernational security as reviewed and determined by competent authorities under the StateCouncil in accordance with laws;(3)if there are material ownership disputes overapplicants equity interests,major assets,core technologies,or the others;(4)if,in the past three years,applicants domestic enterprises,controllingshareholders or de facto controllers have committed corruption,bribery,embezzlement,misappropriation of property,or other criminal offenses disruptive tothe order of the socialist market economy,or are currently under judicialinvestigation for suspicion of criminal offenses,or are under investigation forsuspicion of major violations;(5)if,in the past three years,any directors,supervisors,or senior executives of applicants have been subject to administrativepunishments for severe violations,or are currently under judicial investigation forsuspicion of criminal offenses,or are under investigation for suspicion of majorviolations;(6)other circumstances as prescribed by the State Council.We do notbelieve any of the six prohibited situations aforementioned applies to us.The DraftAdministrative Provisions further stipulate that a fine between RMB 1 million and RMB10 million may be imposed if an applicant fails to fulfil the filing requirementswith the CSRC or conducts an overseas offering or listing in violation of the DraftRules Regarding Overseas Listings,and in cases of severe violations,a parallelorder to suspend relevant businesses or halt operations for rectification may beissued,and relevant business permits or operational license revoked.Although we donot believe that we are currently prohibited from conducting overseas offering andlistings,if the Draft Rules Regarding Overseas Listings is enacted,we may besubject to additional compliance requirements in the future.Since the Draft RulesRegarding Overseas Listings are newly promulgated,and the interpretation andimplementation are not very clear,we cannot assure you that we will be able toreceive clearance of such filing requirements in a timely manner,or at all,in thefuture.Any failure of us to fully comply with new regulatory requirements maysignificantly limit or completely hinder our ability to offer or continue to offerour Class A Ordinary Shares,cause significant disruption to our business operations,severely damage our reputation,materially and adversely affect our financialcondition and results of operations and cause our Class A Ordinary Shares tosignificantly decline in value or become worthless.See“Risk Factor Draft rulesfor China-based companies seeking for securities offerings in foreign stock marketswas released by the CSRC for public consultation.While such rules have not yet comeinto effect,the Chinese government may exert more oversight and control overoverseas public offerings conducted by China-based issuers,which could significantlylimit or completely hinder our ability to offer or continue to offer our Class AOrdinary Shares to investors and could cause the value of our Class A Ordinary Sharesto significantly decline or become worthless.”on page 56 of this prospectus.After the termination of the agreements under the VIE structure,in considerationthat it may take some time for customers to take actions to complete the transfer andadapt to the new platform from the old platform operated by Pai Ming Shenzhen,ICZOOMWFOE entered into a business cooperation agreement with Pai Ming Shenzhen on January18,2022,pursuant to which Pai Ming Shenzhen agreed to provide us with networkservices including but not limited to business consultation,website informationpush,matching services of supply and demand information,online advertising,software customization,data analysis,website operation and other in-depth verticalservices through online&offline data push through its platform.Uncertainties exist2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm5/262regarding whether Hong Kong companies are subject to the new Cybersecurity ReviewMeasures,and ICZOOM HK as the operator of our online platform may be subject to PRClaws relating to the use,sharing,retention,security and transfer of confidentialand private information,such as personal information and other data.According tothe Cybersecurity Review Measures,which was promulgated on December 28,2021 andbecame effective on February 15,2022 and replaced the Cybersecurity Review Measurespromulgated on April 13,2020,online platform operator holding more than one millionusers/users personal information shall be subject to cybersecurity review beforelisting abroad.Cybersecurity Review Measures is relatively new and does not providea definition of“online platform operator”,therefore,we cannot assure you thatICZOOM WFOE will not be deemed as an“online platform operator.”On November 14,2021,the Cyberspace Administration of China,or“CAC”,released the Regulations onthe Network Data Security Management(Draft for Comments),or the Data SecurityManagement Regulations Draft,to solicit public opinion and comments.Pursuant to theData Security Management Regulations Draft,data processor holding more than onemillion users/users individual information shall be subject to cybersecurity reviewbefore listing abroad.Data processing activities refers to activities such as thecollection,retention,use,processing,transmission,provision,disclosure,ordeletion of data.We may be deemed as a data processor under the Data SecurityManagement Regulations Draft.Notwithstanding the foregoing,even if we are deemed asan online platform operator under the Cybersecurity Review Measures or a dataprocessor under the Data Security Management Regulations Draft,we do not expect tobe subject to the cybersecurity review in connection with this offering beforelisting abroad because we currently hold aggregate less than ten thousand usersindividual information and it is very unlikely that we will reach 2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm6/262Table of Contentsthreshold of one million users individual information in the near future as we area B2B platform where our registered users are substantially small and medium-sizedenterprises.However,the Data Security Management Regulations Draft has not beenformally adopted.It is uncertain when the final regulation will be issued and takeeffect,how it will be enacted,interpreted or implemented,and whether it willaffect us.Since these statements and regulatory actions are new,it is highlyuncertain how soon legislative or administrative regulation making bodies willrespond and what existing or new laws or regulations or detailed implementations andinterpretations will be modified or promulgated,if any,and the potential impactsuch modified or new laws and regulations will have on our daily business operation,the ability to accept foreign investments and list on an U.S.exchange.See“Permission Required from the PRC Authorities for the Companys Operation and toIssue Our Class A Ordinary Shares to Foreign Investors”and“Risk Factor TheChinese government exerts substantial influence over the manner in which we mustconduct our business activities and may intervene or influence our operations at anytime,which could result in a material change in our operations and the value of ourClass A Ordinary Shares.”on page 53 of this prospectus.Hjet Supply Chain has maintained cash management policies which dictate thepurpose,amount and procedure of cash transfers between Hjet Supply Chain and othersubsidiaries.Hjet Supply Chain conducts regular review and management of itssubsidiaries cash transfers and reports to its board of directors.Other than HjetSupply Chain,neither ICZOOM Cayman or its other subsidiaries has cash managementpolicies dictating how funds are transfer,and each entity needs to comply withapplicable law or regulations with respect to transfer of funds,dividends anddistributions with other entities.As a holding company,we may rely on transfer offunds,dividends and other distributions on equity paid by our PRC and Hong Kongsubsidiaries for our cash and financing requirements.If any of our PRC or Hong Kongsubsidiaries incurs debt on its own behalf in the future,the instruments governingsuch debt may restrict their ability to pay dividends to us.As of the date of this prospectus,there has been no cash flows,includingdividends,transfers and distributions,between ICZOOM Cayman and its subsidiaries.Prior to the termination of the VIE arrangement in December 2021,funds werehistorically transferred between Hjet Supply Chain to Pai Ming Shenzhen pursuant tothe commercial agreements between them,in the aggregated amount of$59,478 for thesix months ended December 31,2021 and in the aggregated amount of$217,464 for thefiscal year ended June 30,2021.After the termination of the VIE arrangement untilJune 30,2022,Hjet Supply Chain transferred funds in the aggregated amount of$181,596 to Pai Ming Shenzhen pursuant to the business cooperation agreement datedJanuary 18,2022.See“Prospectus Summary Our Company”on page 5 of thisprospectus.Other than funds transferred to Pai Ming Shenzhen,funds are transferredamong our HK and PRC subsidiaries for working capital purpose.In the future,cashproceeds from overseas financing activities,including this offering,may betransferred by ICZOOM Cayman to its Hong Kong and PRC subsidiaries via capitalcontribution or shareholder loans,as the case may be.As of the date of this prospectus,none of our subsidiaries have made anydividends or distributions to ICZOOM Cayman.As of the date of this prospectus,nodividends or distributions have been made to any investors by ICZOOM Cayman or any ofits subsidiaries.We intend to keep any future earnings to re-invest in and financethe expansion of the business of our PRC and Hong Kong subsidiaries,and we do notanticipate that any cash dividends will be paid in the foreseeable future to the U.S.investors immediately following the consummation of this offering.Under CaymanIslands law,a Cayman Islands company may pay a dividend on its shares out of eitherprofit or share premium amount,provided that in no circumstances may a dividend bepaid if this would result in the company being unable to pay its debts due in theordinary course of business.Certain payments from us or the Hong Kong subsidiariesto the PRC operating entities are subject to PRC taxes,including business taxes andvalue added tax,or VAT.To the extent the funds or assets in the business is in thePRC or a PRC subsidiary,the funds or assets may not be available to fund operationsor for other use outside of the PRC,due to the controls imposed by PRC governmentswhich may limit our ability to transfer funds,pay dividends or make distribution toICZOOM Cayman.The PRC government imposes controls on the conversion of RMB intoforeign currencies and the remittance of currencies out of the PRC.In addition,thePRC Enterprise Income Tax Law and its implementation rules provide that a withholdingtax at a rate of 10%will be applicable to dividends payable by Chinese companies tonon-PRC-resident enterprises unless reduced under treaties or arrangements betweenthe PRC central government and the governments of other countries or regions wherethe non-PRC resident enterprises are tax resident.Based on the Hong Kong laws andregulations,as at the date of this prospectus,there is no restriction imposed bythe Hong Kong government on the transfer of capital within,into and out of Hong Kong(including funds from Hong Kong to the PRC),except transfer of funds involving moneylaundering and criminal activities.See“Dividend Distributions or Assets Transfer among the Holding Company and ItsSubsidiaries”on page 15 of this prospectus,and“Risk Factor The transfer offunds or assets between ICZOOM Cayman,its Hong Kong subsidiaries and the PRCoperating entities is subject to restriction.”from page 44 of this prospectus.Forthe summary of the condensed consolidated schedule and the consolidated financialstatements,see pages 31-33 of this prospectus for“Summary Financial Data Selected Consolidated Balance Sheet Data”(which is a summary of pages 32 and F-3 ofthe consolidated financial statements);“Selected Consolidated Statement ofOperations Data”(which is a summary of pages 32 and F-4 of the consolidatedfinancial statements);“Selected Consolidated Statement of Cash Flows”(which isa summary of pages 33 and F-6 of the consolidated financial statements);and“Roll-Forward of Investment”(which is a summary of pages 33 and F-38 of thefinancial statements of parent company);and“Risk Factor Chinas economic,political and social conditions,as well as changes in any government policies,lawsand regulations may be quick with little advance notice and,could have a materialadverse effect on our business and the value of our Class A Ordinary Shares.”onpage 53 of this prospectus;and“Risk Factor We must remit the offering proceedsto China before they may be used to benefit our business in China,the process ofwhich may be time-consuming,and we cannot assure that we can finish all necessarygovernmental registration processes in a timely manner.”on page 63 of thisprospectus;and“Risk Factor PRC regulation of loans and direct investment byoffshore holding companies to PRC entities may delay or prevent us from using the2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm7/262proceeds of this Offering to make loans or additional capital contributions to ourPRC subsidiary,which could materially and adversely affect our liquidity and ourability to fund and expand our business.”on page 65 of this prospectus;and“RiskFactor Governmental control of currency conversion may limit our ability to useour revenues effectively and the ability of our PRC subsidiaries to obtainfinancing.”on page 66 of this prospectus.Our Class A Ordinary Shares may be prohibited to trade on a national exchange or“over-the-counter”markets under the Holding Foreign Companies Accountable Act(the“HFCA Act”)if Public Company Accounting Oversight Board(“PCAOB”)is unable toinspect our auditors for three consecutive years beginning in 2021.Furthermore,onJune 22,2021,the U.S.Senate passed the Accelerating Holding Foreign CompaniesAccountable Act(“AHFCAA”),which,if signed into law,would amend the HFCA Act andrequire the SEC to prohibit an issuers securities from trading on any U.S.stockexchanges if its auditor is not subject to PCAOB inspections for two consecutiveyears instead of three consecutive years.Pursuant to the HFCA Act,the PCAOB issueda Determination Report on December 16,2021 which found that the PCAOB is unable toinspect or investigate completely registered public accounting firms headquarteredin:(1)mainland China of the PRC,and(2)Hong Kong.In addition,the PCAOBsreport identified the specific registered public accounting firms which are subjectto these determinations.Friedman LLP was our auditor for the financial statementsfor the fiscal years ended June 30,2022 and 2021.Effective as of September 1,2022,Friedman LLP combined with Marcum LLP(“Marcum”).Friedman LLP was headquartered inManhattan,New York,and had been inspected by the PCAOB on a regular basis with thelast inspection in October 2020.Friedman LLP was not headquartered in mainland Chinaor Hong Kong and was not identified in this report as a firm subject to the PCAOBsdetermination.On August 26,2022,the CSRC,the Ministry of Finance of the PRC,andPCAOB signed a Statement of Protocol,or the Protocol,governing inspections andinvestigations of audit firms based in China and Hong Kong.Pursuant to the Protocol,the PCAOB has independent discretion to select any issuer audits for inspection orinvestigation and has the unfettered ability to transfer information to the SEC.Under the PCAOBs rules,a reassessment of a determination under the HFCA Act mayresult in the PCAOB reaffirming,modifying or vacating the determination.On December15,2022,the PCAOB Board determined that the PCAOB was able to secure completeaccess to inspect and investigate registered public accounting firms headquartered inmainland China and Hong Kong and voted to vacate its previous determinations to thecontrary.However,whether the PCAOB will continue to be able to satisfactorilyconduct inspections of PCAOB-registered public accounting firms headquartered inmainland China and Hong Kong is subject to uncertainty and depends on a number offactors out of our,and our auditors,control.The PCAOB is continuing to demandcomplete access in mainland China and Hong Kong moving forward and is already makingplans to resume regular inspections in early 2023 and beyond,as well as to continuepursuing ongoing investigations and initiate new investigations as needed.The PCAOBhas indicated that it will act immediately to consider the need to issue newdeterminations with the HFCA Act if needed and does not have to wait another year toreassess its determinations.In the future,if there is any regulatory change or steptaken by PRC regulators that does not permit our auditor to provide auditdocumentations located in China or Hong Kong to the PCAOB for inspection orinvestigation,or the PCAOB expands the scope of the Determination so that we aresubject to the HFCA Act,as the same may be amended,you may be deprived of thebenefits of such inspection which could result in limitation or restriction to ouraccess to the U.S.capital markets and trading of our securities,including tradingon the national exchange and trading on“over-the-counter”markets,may beprohibited under the HFCA Act.On December 29,2022,a legislation entitled“Consolidated Appropriations Act,2023”(the“Consolidated Appropriations Act”),was signed into law by President Biden.The Consolidated Appropriations Actcontained,among other things,an identical provision to AHFCAA,which reduces thenumber of consecutive non-inspection years required for triggering the prohibitionsunder the Holding Foreign Companies Accountable Act from three years to two.See“Risk Factors Recent joint statement by the SEC and PCAOB,proposed rule changessubmitted by Nasdaq,and an act passed by the US Senate all call for additional andmore stringent criteria to be applied to emerging market companies upon assessing thequalification of their auditors,especially the non-U.S.auditors who are notinspected by the PCAOB.These developments could add uncertainties to our offering.”on page 77 of this prospectus for more information.We are a Cayman Islands company and conduct a significant portion of ouroperations in China,and the majority of our assets are located in China.Inaddition,all of our directors and officers(except one independent director nominee)are nationals or residents of countries other than the United States.A substantialportion of the assets of these persons is located outside the United States.As aresult,it may be difficult for you to effect service of process within the UnitedStates upon these persons.It may also be difficult for you to enforce the U.S.courts judgments obtained in U.S.courts including judgments based on the civilliability provisions of the U.S.federal securities laws against us and our officersand directors,none of whom(except one independent director nominee)are residentsin the United States,and whose significant assets are located outside the UnitedStates.See“Risk Factors Risks Related to Our Business and Industry You mayexperience difficulties in effecting service of legal process,enforcing foreignjudgments or bringing original actions in China against us or Hong Kong or otherforeign laws,and the ability of U.S.authorities to bring actions in China may alsobe limited.”on page 70 of this prospectus.Please see“Risk Factor”starting on page 34 of this prospectus for additionalinformation.This prospectus does not constitute,and there will not be,an offering of securities to thepublic in the Cayman Islands.Per Class AOrdinary Share TotalInitial public offering price$Underwriting discount and commissions(7.5%)for sales to investorsintroduced by the underwriter(1)$Underwriting discount and commissions(5.5%)for sales to investorsintroduced by us(1)$Assumed proceeds to us,before expenses2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm8/262$_(1)See“Underwriting”for a description of compensation payable to the underwriter.The underwriters are selling our Class A Ordinary Shares in this Offering on a firm commitmentbasis.In addition to the underwriting discounts listed above and the expense allowance described inthe footnote,we have agreed to issue upon the closing of this Offering,compensation warrants toThe Benchmark Company,LLC,as representative of the underwriters,entitling them to purchase up to6%of the total number of Class A Ordinary Shares being sold in this Offering.The compensationwarrants and underlying Class A Ordinary Shares are registered hereby.The exercise price of thecompensation warrants is equal to 125%of the Offering Price of the Class A Ordinary Shares offeredhereby.Assuming an exercise price of$5.625 per share,we would receive,in the aggregate,$506,250upon exercise of the compensation warrants(or up to$582,187 if the underwriters exercise theirover-allotment option in full),of which there can be no guarantee.The compensation warrants areexercisable commencing six months after the consummation of this offering and will terminatefive years after the date of effectiveness.We will pay the underwriters an underwriting discount orspread equal to 7.5%of the Offering Price for sales of any amount of Class A Ordinary Shares toinvestors introduced by the underwriters and 5.5%of the Offering Price for sales of any amount ofClass A Ordinary Shares to investors introduced by us.The Registration Statement of which thisprospectus is a part also covers the Class A Ordinary Shares issuable upon the exercise thereof.Foradditional information regarding our arrangement with the underwriters,please see“Underwriting”beginning on page 192.We have granted the underwriters an option for a period of 45 days from the date of thisprospectus to purchase up to 15%of the total number of our Class A Ordinary Shares to be offered byus pursuant to this offering(excluding shares subject to this option),solely for the purpose ofcovering over-allotments,at the initial public offering price less the underwriting discount.The underwriter expects to deliver the Class A Ordinary Shares to purchasers in the Offeringon or about.Neither the SEC nor any state securities commission has approved or disapprovedof these securities or determined if this prospectus is truthful or complete.Anyrepresentation to the contrary is a criminal offense.The Benchmark Company,LLCThe date of this prospectus is _,2023 2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm9/262Table of ContentsTABLE OF CONTENTS PageCommonly Used Defined Terms 1Forward-Looking Statements 4Prospectus Summary 5Risk Factors 34Use of Proceeds 84Dividend Policy 86Capitalization 87Dilution 88Post-Offering Ownership 89Corporate History and Structure 90Managements Discussion and Analysis of Financial Condition and Results ofOperations 95Our Business 120Regulation 140Management 158Executive Compensation 163Related Party Transactions 166Principal Shareholders 167Description of Share Capital 169Shares Eligible for Future Sale 180Taxation 182Enforceability of Civil Liabilities 190Underwriting 192Expenses of the Offering 197Legal Matters 198Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure 198Experts 198Interests of Named Experts and Counsel 198Disclosure of Commission Position on Indemnification 198Where You Can Find More Information 199Index to Consolidated Financial Statements F-1You should rely only on the information contained in this prospectus or in anyfree writing prospectus we may authorize to be delivered or made available to you.Neither we,nor the underwriters have authorized anyone to provide you with differentinformation.The information in this prospectus is accurate only as of the date ofthis prospectus,regardless of the time of delivery of this prospectus,or any freewriting prospectus,as the case may be,or any sale of shares in the Company.This prospectus is an offer to sell only the Class A Ordinary Shares offeredhereby,but only under circumstances and in jurisdictions where it is lawful to doso.We are not making an offer to sell these securities in any jurisdiction where theoffer or sale is not permitted or where the person making the offer or sale is notqualified to do so or to any person to whom it is not permitted to make such offer orsale.For the avoidance of doubt,no offer or invitation to subscribe for Class AOrdinary Shares is made to the public in the Cayman Islands.This prospectus includes statistical and other industry and market data that weobtained from industry publications and research,surveys and studies conducted bythird parties.Industry publications and third-party research,surveys and studiesgenerally indicate that their information has been obtained from sources believed tobe reliable,although they do not guarantee the accuracy or completeness of suchinformation.We did not commission any of such reports.While we believe theseindustry publications and third-party research,surveys and studies are reliable,youare cautioned not to give undue weight to this information.All references in this prospectus to“$,”“U.S.$,”“U.S.dollars,”“dollars”and“USD”mean U.S.dollars and all references to“RMB”mean Renminbi,unless otherwise noted.All references to“PRC”or“China”in this prospectusrefer to the Peoples Republic of China,excluding for the sake of this prospectusonly,Hong Kong,Macau and Taiwan.i2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm10/262Table of ContentsCOMMONLY USED DEFINED TERMS“AP”refers to accounts payable.“AR”refers to accounts receivable.“ASC”refers to Accounting Standards Codification.“ASU”refers to Accounting Standards Update.“AEO”refers to Authorized Economic Operator.“BOM”refers to Bill of Material.“Class A Ordinary Shares”refer to our Class A ordinary shares,$0.16 parvalue per share;“Class B Ordinary Shares”refer to our Class B ordinary shares,$0.16 parvalue per share;“Components Zone HK”refers to Components Zone International Limited,aHong Kong company.“CECO”refers to Control of Exemption Clauses Ordinance(Cap.71,Laws ofHong Kong).“CRM”refers to customer relationship management.“CSRC”refers to China Securities Regulatory Commission.“Competition Ordinance”refers to Competition Ordinance(Cap.619,Laws ofHong Kong).“China”or the“PRC”are to the Peoples Republic of China,excludingTaiwan and the special administrative regions of Hong Kong and Macau for thepurposes of this prospectus only;Depending on the context,the terms“we,”“us,”“our company,”“our”,“ICZOOM”and“ICZOOM Cayman”refer to ICZOOM Group Inc.,an exemptedcompany with limited liability incorporated under the laws of the CaymanIslands,and its subsidiaries and affiliated companies.“DTA”refers to the comprehensive double taxation agreements betweenHong Kong and other countries or territories,including the PRC.“EDI License”refers to a VATS License for online data processing andtransaction processing business.“EW Bank”refers to East West Bank.“Ehub”refers to Ehub Electronics Limited,a Hong Kong company.“ECO”refers to the Employees Compensation Ordinance(Cap.282,Laws ofHong Kong).“FIE”refers to a foreign-invested enterprise.“GACC”refers to General Administration of China Customs.“ICZOOM HK”refers to Iczoom Electronics Limited,a Hong Kong company.“ICZOOM Shenzhen”refers to Shenzhen Iczoom Electronics Co.,Ltd.,a PRCcompany.“ICZOOM WFOE”refers to Components Zone(Shenzhen)Development Limited,aPRC company.“HBI”refers to Horizon Business Intelligence Co.,Limited,the formername of ICZOOM Group Inc.“Hjet HK”refers to Hjet Industrial Corporation Limited,a Hong Kongcompany.“Hjet Shuntong”refers to Hjet Shuntong(Shenzhen)Co.,Ltd.,a PRCcompany.“Hjet Supply Chain”refers to Shenzhen Hjet Supply Chain Co.,Ltd.,a PRCcompany.“Hjet Logistics”refers to Shenzhen Hjet Yun Tong Logistics Co.,Ltd.,aPRC company.12023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm11/262Table of Contents“Heng Nuo Chen”refers to Shanghai Heng Nuo Chen International FreightForwarding Co.,Ltd.,a PRC company.“IMECM”refers to the Formulated Interim Measures for Enterprise CreditManagement(decree No.225 of GACC).“IoT”refers to Internet of Things.“IRO”refers to the Inland Revenue Ordinance(Cap.112,Laws ofHong Kong).“ICP License”refers to a VATS License with the business scope of Internetinformation service that commercial Internet information services operatorsare required to obtain.“IRD”refers to the Inland Revenue Department of Hong Kong.“MRO”refers to maintenance,repair,and operations.“M&A Rules”refers to the Regulations on Mergers and Acquisitions ofDomestic Enterprises by Foreign Investors of China.“MOFCOM”refers to the Ministry of Commerce of China.“MOHRSS”refers to Human Resources and Social Security of China.“MPF Scheme”refers to the Mandatory Provident Fund Scheme,a contributionretirement scheme managed by authorized independent trustees.“Negative List”refers the Special Administrative Measures for ForeignInvestment Access of China.“NDRC”refers the National Development and Reform Commission of China.“NPC”refers the National Peoples Congress of China.“ODM”refers to original design manufactures.“OEM”refers to original electronic manufactures.“OLO”refers to the Occupiers Liability Ordinance(Cap.314,Laws ofHong Kong).“OSHO”refers to the Occupational Safety and Health Ordinance(Cap.509,Laws of Hong Kong).“PBOC”refers to Peoples Bank of China.“PBOC Notice No.9”refers to Full-coverage Macro-prudent Management ofCross-border Financing.“Pai Ming Shenzhen”and/or“VIE”refer to Shenzhen Pai Ming ElectronicsCo.,Ltd.,a PRC company.“POA”refers to the shareholder of Pai Ming Shenzhens power of attorneydated December 14,2020.“QEF”refers to a qualified electing fund.“SaaS”refers to software-as-a-service.“SAFE”refers to Chinas State Administration of Foreign Exchange.“SAFE Circular 19”refers to the Notice of the State Administration ofForeign Exchange on Reforming the Administration of Foreign ExchangeSettlement of Capital of Foreign-invested Enterprises.“SAFE Circular 37”refers to the Circular on Relevant Issues ConcerningForeign Exchange Control on Domestic Residents Offshore Investment andFinancing and Roundtrip Investment Through Special Purpose Vehicles.22023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm12/262Table of Contents“SAFE Circular 82”refers to the Circular of the State Administration ofTaxation on Issues Concerning the Identification of Chinese-ControlledOverseas Registered Enterprises as Resident Enterprises in Accordance withthe Actual Standards of Organizational Management.“SAIC”refers to State Administration for Industry and Commerce in Chinaand currently known as State Administration for Market Regulation.“SAT”refers to PRC State Administration of Taxation.“SAMR”refers to the former State of Administration of Industry andCommerce of China,which has been merged into the State Administration forMarket Regulation.“SCNPC”refers to the Standing Committee of the National PeoplesCongress of China.“SKU”refers to stock keeping unit.“SME”refers to small and medium-sized enterprise.“SOGO”refers to the Sale of Goods Ordinance(Cap.26,Laws of Hong Kong).“SOSO”refers to the Supply of Services(Implied Terms)Ordinance(Cap.457,Laws of Hong Kong).“SPV”refers to special purpose vehicle.“Controlling Shareholders”refers to collectively Lei Xia and DuanrongLiu;“China”and“PRC”refer to the Peoples Republic of China,excluding,for the purposes of this prospectus only,Macau,Taiwan and Hong Kong;and“UED”refers to user experience design.“Urgent Notice”refers to the Urgent Notice of the General Office ofMOHRSS on Effectively Implementing the Spirit of the Standing Meeting of theState Council and Effectively Conducting the Collection of Social InsurancePremiums in a Stable Manner.“VAT”refers to value added taxes.“VATS License”refers to two types of telecom operating licenses foroperators in China,namely,licenses for basic telecommunications servicesand licenses for value-added telecommunications services.“WFOE”refers to a wholly foreign-owned enterprise.All references to“RMB,”“yuan”and“Renminbi”are to the legalcurrency of China,all references to“HKD”is to the legal currency ofHong Kong,and all references to“USD,”and“U.S.dollars”are to thelegal currency of the United States.32023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm13/262Table of ContentsFORWARD-LOOKING STATEMENTSWe have made statements in this prospectus,including under“ProspectusSummary,”“Risk Factors,”“Managements Discussion and Analysis of FinancialCondition and Results of Operations,”“Our Business”and elsewhere that constituteforward-looking statements.Forward-looking statements involve risks anduncertainties,such as statements about our plans,objectives,expectations,assumptions or future events.In some cases,you can identify forward-lookingstatements by terminology such as“anticipate,”“estimate,”“plan,”“project,”“continuing,”“ongoing,”“expect,”“we believe,”“we intend,”“may,”“should,”“will,”“could”and similar expressions denoting uncertainty or anaction that may,will or is expected to occur in the future.These statements involveestimates,assumptions,known and unknown risks,uncertainties and other factors thatcould cause actual results to differ materially from any future results,performancesor achievements expressed or implied by the forward-looking statements.Examples of forward-looking statements include:the timing of the development of future services;projections of revenue,earnings,capital structure and other financialitems;the development of future company-owned branches;statements regarding the capabilities of our business operations;statements of expected future economic performance;statements regarding competition in our market;and assumptions underlying statements regarding us or our business.The ultimate correctness of these forward-looking statements depends upon anumber of known and unknown risks and events.We discuss our known material risksunder the heading“Risk Factors”above.Many factors could cause our actual resultsto differ materially from those expressed or implied in our forward-lookingstatements.Consequently,you should not place undue reliance on these forward-looking statements.The forward-looking statements speak only as of the date on whichthey are made,and,except as required by law,we undertake no obligation to updateany forward-looking statement to reflect events or circumstances after the date onwhich the statement is made or to reflect the occurrence of unanticipated events.Inaddition,we cannot assess the impact of each factor on our business or the extent towhich any factor,or combination of factors,may cause actual results to differmaterially from those contained in any forward-looking statements.42023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm14/262Table of ContentsPROSPECTUS SUMMARYThis summary highlights information that we present more fully in the rest ofthis prospectus.This summary does not contain all of the information you shouldconsider before buying Class A Ordinary Shares in this offering.This summarycontains forward-looking statements that involve risks and uncertainties,such asstatements about our plans,objectives,expectations,assumptions or future events.In some cases,you can identify forward-looking statements by terminology such as“anticipate,”“estimate,”“plan,”“project,”“continuing,”“ongoing,”“expect,”“we believe,”“we intend,”“may,”“should,”“will,”“could,”and similar expressions denoting uncertainty or an action that may,will or isexpected to occur in the future.These statements involve estimates,assumptions,known and unknown risks,uncertainties and other factors that could cause actualresults to differ materially from any future results,performances or achievementsexpressed or implied by the forward-looking statements.You should read the entireprospectus carefully,including the“Risk Factors”section and the financialstatements and the notes to those statements.Unless otherwise stated,allreferences to“us,”“our,”“ICZOOM,”“we,”the“company”and similardesignations refer to ICZOOM Group Inc.,an exempted company with limited liabilityincorporated under the laws of the Cayman Islands,and its consolidatedsubsidiaries.See Note 1 to our consolidated financial statements as of and forthe years ended June 30,2022 and 2021 included elsewhere in this prospectus.Our CompanyWe are an offshore holding company incorporated in Cayman Islands,conductingour operation in Hong Kong and the Peoples Republic of China(“PRC”)through ourwholly-owned subsidiaries in Hong Kong and PRC.Prior to December 2021,our whollyforeign owned entity in PRC,Components Zone(Shenzhen)Development Limited(“ICZOOM WFOE”)had contractual arrangements,or VIE arrangements,with Pai MingShenzhen which held an Internet Content Provider(“ICP”)license,allowing us toprovide internet information services through our e-commerce platform in PRC.TheICP license is a VATS License with the business scope of Internet informationservice that commercial Internet information services operators are required toobtain and can only be held by PRC operators without any foreign ownership becausethe PRC law prohibits direct foreign investment in internet-based businesses.In December 2021,we terminated the VIE arrangements with Pai Ming Shenzhen,and our Hong Kong subsidiary,Iczoom Electronics Limited,or ICZOOM HK,nowoperates our B2B online platform,which does not require an ICPlicense under the PRC law.The reason for us to change the entity operating our B2Bonline platform was twofold.First,with the increased number of customers in HongKong and potential demands from other countries for electronic components in China,we were motivated to establish a B2B online platform in Hong Kong for our growth inthe Hong Kong market and potential expansion to other markets.Second,thesubstantially increased regulatory and operational risks of the VIE arrangementsaccelerated our termination of the VIE arrangements,which as a result terminatedour contractual right to access to the old platform held by Pai Ming Shenzhen.Ournew platform is not only operated and managed by ICZOOM HK but itsserver and data are located and stored in Singapore.As neither our online platformnor its operation is within the territory of China,ICZOOM HK is not required byPRC law to obtain an ICP license to maintain and operate,and weare able to provide internet information services through.Upon the termination of the VIE arrangements,we no longer consolidate theoperation and financial results of Pai Ming Shenzhen and conduct all of ouroperations through our wholly owned subsidiaries in China and Hong Kong.Nevertheless,we generated more than 96.5%of our revenue from operations of ourwholly foreign owned subsidiaries for the last three fiscal years before thetermination of the VIE arrangements and now generate all of our revenue fromoperations of our wholly owned subsidiaries after such termination.See“Prospectus Summary Historical Contractual Arrangements”for a summary of thesehistorical VIE agreements starting on page 10 of this prospectus.See“SummaryFinancial Data Selected Consolidated Balance Sheet Data”;“SelectedConsolidated Statement of Operations Data”;“Selected Consolidated Statement ofCash Flows”;and“Roll-Forward of Investment”on pages 31-33 of thisprospectus.While the current corporate structure does not contain any VIE and wehave no intention establishing any VIEs in PRC in the future,if in the future thePRC laws and regulations change,and the PRC regulatory authorities disallow theVIE structure,including retroactively,it would likely result in a materialadverse change in our operations,and the securities of ICZOOM Cayman may declinesignificantly in value or become worthless.52023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm15/262Table of ContentsFollowing the termination of the VIE arrangements in December 2021,we nolonger have access to the old platform or website in China,and we now operate anew B2B platform through.The new platform has substantially thesame features and functions as the old platform or website,which,among others,enables us to collect,optimize and present product offering information,matchorders for customers and fulfil orders through our SaaS suite services.For the fiscal years ended June 30,2022 and 2021,we made purchases from atotal of 1,012 and 966 suppliers,respectively.As the date hereof,we haveuploaded information of all products we purchased not only from those suppliers butfrom any new suppliers in 2022 on the new platform.For the fiscal years ended June 30,2022 and 2021,we generated revenue from atotal of 1,051 and 1,049 customers through the old platform,respectively.The newplatform,however,does not automatically integrate the information of registeredcustomers from the old platform.The customers are mainly small-medium electroniccomponent buyers in PRC,some of which are repeat customers who constantly placeorders on the platform and some are less active who place orders whenever they needto.For those repeat customers,we were able to contact them and worked with themeven prior to the termination of the VIE arrangement to register with the newplatform and continue working with them to transfer over to the new platform.Forother random customers,with the assistance from Pai Ming Shenzhen,we hadgradually transferred them over.See more details about the cooperation with PaiMing Shenzhen described in this prospectus.It took us approximately one year tocomplete the transfer of customers.During the period from January to June 2022,wehad 746 customers,among which 545 were transferred customers and 201 were newcustomers(including 44 new customers sourced by Pai Ming Shenzhen).During Januaryand June 2022,orders placed by 545 transferred customers attributed revenue ofapproximately$135.2 million(or 90.0%of the revenue)and orders placed by 201 newcustomers attributed revenue of$15.0 million(or 10.0%of the revenue);totallingrevenue of$150.2 million in the six months ended June 30,2022 and representing anincrease of 4.0%compared to the revenue of$144.5 million during the comparativesix months in 2021.In order to retain customers and reduce interruption of operations during thetransitional period,we entered into a business cooperation agreement with Pai MingShenzhen on January 18,2022.Pursuant to the business cooperation agreement,PaiMing Shenzhen utilized the old platform to provide us with network services,including but not limited to business consultation,website information push,matching services of supply and demand information,online advertising,softwarecustomization,data analysis,website operation and other in-depth verticalservices through online and offline data push and we agreed to pay Pai MingShenzhen for its monthly service with a base monthly fixed fee of RMB100,000 andadditional variable service fee based on its performance during the one-year-termof the agreement.Pai Ming Shenzhen also posted the offering prices of products forcustomers to review and request orders on the old platform,however the oldplatform no longer had the function to match and fulfil orders.When an order wasplaced on the old platform,the customer would receive an automatically generatedmessage that a representative would contact him,her or it shortly to confirm andfulfil the order.Pai Ming Shenzhen sent information of orders to us on a dailybasis so that we could contact customers directly to guide them to register withthe new platform to place orders so that the orders could be matched and fulfilledthrough the new platform.The services provided by Pai Ming Shenzhen to assist withthe transfer were paid out through its monthly fixed fee,for any new customer thathad not previously registered with the old platform but sourced by Pai MingShenzhen and had placed orders with us through the new platform,we agreed to payPai Ming Shenzhen a variable service fee.During the one-year term of the businesscooperation agreement,73 new customers sourced by Pai Ming Shenzhen placed orderson our new platform,and we have paid Pai Ming Shenzhen approximately RMB 73,000(approximately$0.01 million)of additional variable service fees for such newcustomers.This business cooperation agreement expired after the one-year term,andwe did not renew or enter into a new business cooperation agreement with Pai MingShenzhen.As an ICP license is no longer required for the new platform,the businesscooperation agreement is not necessary for us to operate the e-commerce platform inthe long term,but it is necessary for us to retain the customers who still use theold platform during the transitional period.In addition,from January to June2022,we also had 201 new customers,including 7 new customers located outside ofChina because the new platform in Hong Kong is easier for customers outside ofChina to access to as compared to the old platform.62023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm16/262Table of ContentsTaking all the factors and measures in consideration,we do not expect anymaterial negative impact caused by the termination of the VIE arrangement on ourbusiness or the results of operations except that(i)we will incur additionalexpenses under the business cooperation agreement with Pai Ming Shenzhen;(ii)wehave to designate a certain sales person and service team to assist with thetransfer which may be a slight distraction to our routine business;and(iii)itmay cause a certain level of inconvenience to customers to redo a new registrationand get familiar with the new platform.PRC laws and regulations governing our current business operations aresometimes vague and uncertain,and therefore,these risks may result in a materialchange in our operations,significant depreciation of the value of our Class Aordinary shares,or a complete hindrance of our ability to offer or continue tooffer our securities to investors and cause the value of such securities tosignificantly decline or be worthless.The Chinese government may intervene orinfluence the operations of our PRC operating entities at any time and may exertmore control over offerings conducted overseas and/or foreign investment in China-based issuers,which could result in a material change in the operations of our PRCoperating entities and/or the value of our Class A ordinary shares.Further,anyactions by the Chinese government to exert more oversight and control overofferings that are conducted overseas and/or foreign investment in China-basedissuers could significantly limit or completely hinder our ability to offer orcontinue to offer securities to investors and cause the value of such securities tosignificantly decline or be worthless.Recently,the PRC government initiated aseries of regulatory actions and statements to regulate business operations inChina with little advance notice,including cracking down on illegal activities inthe securities market,adopting new measures to extend the scope of cybersecurityreviews,and expanding the efforts in anti-monopoly enforcement.On December 24,2021,the China Securities Regulatory Commission(the“CSRC”)issued the DraftRules Regarding Overseas Listings.See“Prospectus Summary Permission Requiredfrom the PRC Authorities for the Companys Operation and to Issue Our Class AOrdinary Shares to Foreign Investors”starting on page 10 of this prospectus;“Risk Factor Draft rules for China-based companies seeking for securitiesofferings in foreign stock markets was released by the CSRC for publicconsultation.While such rules have not yet come into effect,the Chinesegovernment may exert more oversight and control over overseas public offeringsconducted by China-based issuers,which could significantly limit or completelyhinder our ability to offer or continue to offer our Class A Ordinary Shares toinvestors and could cause the value of our Class A Ordinary Shares to significantlydecline or become worthless.”starting on page 56 of this prospectus;“Risk Factor Our failure to obtain prior approval of the China Securities RegulatoryCommission(“CSRC”)for the listing and trading of our Class A Ordinary Shares ona foreign stock exchange could delay this offering or could have a material adverseeffect upon our business,operating results,reputation and trading price of ourClass A Ordinary Shares.”starting on page 51 of this prospectus;and“Regulation Regulation Related to M&A Regulations and Overseas Listings”starting on page151 of this prospectus.After the termination of the agreements under the VIE structure,inconsideration that it may take some time for customers to take actions to completethe transfer and adapt to the new platform from the old platform operated by PaiMing Shenzhen,ICZOOM WFOE entered into a business cooperation agreement with PaiMing Shenzhen on January 18,2022,under which Pai Ming Shenzhen agreed to provideus with network services including but not limited to business consultation,website information push,matching services of supply and demand information,online advertising,software customization,data analysis,website operation andother in-depth vertical services through online and offline data push through itsplatform.Uncertainties exist regarding whether Hong Kong companies are subject tothe new Cybersecurity Review Measures,and ICZOOM HK as the operator of our onlineplatform may be subject to PRC laws relating to the use,sharing,retention,security,and transfer of confidential and private information,such as personalinformation and other data.According to the Cybersecurity Review Measures,whichwas promulgated on December 28,2021 and became effective on February 15,2022 andreplaced the Cybersecurity Review Measures promulgated on April 13,2020,onlineplatform operator holding more than one million users/users individualinformation shall be subject to cybersecurity review before listing abroad.Cybersecurity Review Measures does not provide a definition of“online platformoperator”,therefore,we cannot assure you that ICZOOM WFOE will not be deemed asan“online platform operator.”On November 14,2021,the Cyberspace Administrationof China,or“CAC”,released the Regulations on the Network Data SecurityManagement(Draft for Comments),or the Data Security Management Regulations Draft,to solicit public opinion and comments.Pursuant to the Data Security ManagementRegulations Draft,data processor holding more than one million users/usersindividual information shall be subject to cybersecurity review before listingabroad.Data processing activities refer to activities such as the collection,retention,use,processing,transmission,provision,disclosure,or deletion ofdata.We may be deemed as a data processor under the Data Security ManagementRegulations Draft.Notwithstanding the foregoing,even if we are deemed as anonline platform operator under the72023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm17/262Table of ContentsCybersecurity Review Measures or a data processor under the Data SecurityManagement Regulations Draft,we do not expect to be subject to the cybersecurityreview in connection with this offering before listing abroad because we currentlyhold aggregate less than ten thousand users individual information and it is veryunlikely that we will reach threshold of one million users individual informationin the near future as we are a B2B platform where our registered users aresubstantially small and medium-sized enterprises(“SMEs”).Since these statementsand regulatory actions are new,it is highly uncertain how soon legislative oradministrative regulation making bodies will respond and what existing or new lawsor regulations or detailed implementations and interpretations will be modified orpromulgated,if any,and the potential impact such modified or new laws andregulations will have on our daily business operation,the ability to acceptforeign investments and list on an U.S.exchange.See“Risk Factor The Chinesegovernment exerts substantial influence over the manner in which we must conductour business activities and may intervene or influence our operations at any time,which could result in a material change in our operations and the value of ourClass A Ordinary Shares”starting on page 53 of this prospectus;“RiskFactor We must remit the offering proceeds to China before they may be used tobenefit our business in China,the process of which may be time-consuming,and wecannot assure that we can finish all necessary governmental registration processesin a timely manner”starting on page 63 of this prospectus;“Risk Factor Youmay experience difficulties in effecting service of legal process,enforcingforeign judgments or bringing original actions in China against us or ourmanagement named in the prospectus based on Hong Kong or other foreign laws,andthe ability of U.S.authorities to bring actions in China may also be limited”starting on page 70 of this prospectus;and“Risk Factor China SecuritiesRegulatory Commission and other Chinese government agencies may exert moreoversight and control over offerings that are conducted overseas and foreigninvestment in China-based issuers,especially those in the technology filed”starting on page 58 of this prospectus.Our Class A Ordinary Shares may be prohibited to trade on a national exchangeor“over-the-counter”markets under the Holding Foreign Companies Accountable Act(“HFCA Act”)if the PCAOB is unable to inspect our auditors for three consecutiveyears beginning in 2021.Furthermore,on June 22,2021,the U.S.Senate passed theAccelerating Holding Foreign Companies Accountable Act(“AHFCAA”),which,ifsigned into law,would amend the HFCA Act and require the SEC to prohibit anissuers securities from trading on any U.S.stock exchanges if its auditor is notsubject to PCAOB inspections for two consecutive years instead of three consecutiveyears.On December 16,2021,the PCAOB issued a Determination Report which foundthat the PCAOB is unable to inspect or investigate completely registered publicaccounting firms headquartered in:(1)mainland China,and(2)Hong Kong.FriedmanLLP was our auditor for the financial statements for the fiscal years ended June30,2022 and 2021.Effective as of September 1,2022,Friedman LLP combined withMarcum LLP(“Marcum”).Friedman LLP was headquartered in Manhattan,NY and hadbeen inspected by the PCAOB on a regular basis with the last inspection in October2020 until its combination with Marcum.The PCAOB currently has access to inspectthe working papers of our auditor.On August 26,2022,the CSRC,the Ministry ofFinance of the PRC,and PCAOB signed a Statement of Protocol,or the Protocol,governing inspections and investigations of audit firms based in China and HongKong.Pursuant to the Protocol,the PCAOB has independent discretion to select anyissuer audits for inspection or investigation and has the unfettered ability totransfer information to the SEC.The PCAOB was required to reassess thesedeterminations by the end of 2022.Under the PCAOBs rules,a reassessment of adetermination under the HFCA Act may result in the PCAOB reaffirming,modifying orvacating the determination.On December 15,2022,the PCAOB Board determined thatthe PCAOB was able to secure complete access to inspect and investigate registeredpublic accounting firms headquartered in mainland China and Hong Kong and voted tovacate its previous determinations to the contrary.However,whether the PCAOB willcontinue to be able to satisfactorily conduct inspections of PCAOB-registeredpublic accounting firms headquartered in mainland China and Hong Kong is subject touncertainty and depends on a number of factors out of our,and our auditors,control.The PCAOB is continuing to demand complete access in mainland China andHong Kong moving forward and is already making plans to resume regular inspectionsin early 2023 and beyond,as well as to continue pursuing ongoing investigationsand initiate new investigations as needed.The PCAOB has indicated that it will actimmediately to consider the need to issue new determinations with the HFCA Act ifneeded and does not have to wait another year to reassess its determinations.Inthe future,if there is any regulatory change or step taken by PRC regulators thatdoes not permit our auditor to provide audit documentations located in China orHong Kong to the PCAOB for inspection or investigation,or the PCAOB expands thescope of the Determination so that we are subject to the HFCA Act,as the same maybe amended you may be deprived of the benefits of such inspection which couldresult in limitation or restriction to our access to the U.S.capital markets andtrading of our securities,including trading on the national exchange and tradingon“over-the-counter”markets,may be prohibited under the HFCA Act.On December29,2022,a legislation entitled“Consolidated Appropriations Act,2023”(the“Consolidated Appropriations Act”),was signed into law by President Biden.TheConsolidated Appropriations Act contained,among other things,an identicalprovision to AHFCAA,which reduces the number of consecutive non-inspection yearsrequired for triggering the prohibitions under the HFCA Act from three years totwo.See“Risk Factors Recent joint statement by the SEC and PCAOB,proposedrule2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm18/26282023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm19/262Table of Contentschanges submitted by Nasdaq,and an act passed by the US Senate all call foradditional and more stringent criteria to be applied to emerging market companiesupon assessing the qualification of their auditors,especially the non-U.S.auditors who are not inspected by the PCAOB.These developments could adduncertainties to our offering”starting on page 77 of this prospectus for moreinformation.We,supported by our e-commerce trading platform,are primarily engaged insales of electronic component products to customers in Hong Kong and the PRC.Theseproducts 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 segment.In addition to the sales ofelectronic component products,we also provide services to customers such astemporary warehousing,logistic and shipping,and customs clearance and charge themadditional service commission fees.We primarily generate revenue from sales of electronic components products tocustomers.In addition,we have certain amount of revenue from service commissionfee for services provided to our customers.Our Corporate StructureThe following charts summarize our corporate legal structure and identify oursubsidiaries as of the date of this prospectus.For more detail on our corporatehistory please refer to“Corporate History and Structure”appearing onpage 90 of this prospectus._Note:(1)Hjet Shuntong(Shenzhen)Co.,Ltd.(“Hjet Shuntong”)previously owned 100%of the equityinterest of Shanghai Heng Nuo Chen International Freight Forwarding Co.,Ltd.(“Heng NuoChen”)which was incorporated on March 25,2015.With limited business activities andoperations since inception,in order to streamline the Companys business structure,onAugust 23,2021,Heng Nuo Chen completed its deregistration in accordance with PRC laws.(2)In December 2021,ICZOOM WFOE terminated the contractual arrangements with Pai MingShenzhen and the shareholder of Pai Ming Shenzhen.As a result,we unwound the VIE structureand no longer consolidate the operation and financial results of Pai Ming Shenzhen.For details of each shareholders ownership,please refer to the beneficialownership table in the section captioned“Principal Shareholders.”92023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm20/262Table of ContentsHistorical Contractual ArrangementsHistorically,due to legal restrictions on foreign ownership and investment in,among other areas,the development and operation of electronic component exchangein China,including Shenzhen and Shanghai,we operated our previous online platformthrough the ICP license held by Pai Ming Shenzhen,a PRC company with no foreignownership.Pai Ming Shenzhen was directed through contractual arrangements in lieuof direct equity ownership by us or any of our subsidiaries,and the maincontribution of Pai Ming Shenzhen was to hold the ICP license.Such contractualarrangements consist of a series of three agreements,along with shareholderspowers of attorney(“POA”)and irrevocable commitment letters(collectively,the“Contractual Arrangements”),which were signed on December 14,2020.However,weterminated the VIE arrangement with Pai Ming Shenzhen,completed the relevantregulatory procedures,and unwound the VIE structure in December 2021.Our HongKong subsidiary,ICZOOM HK,now operates our B2B online platform,which does not require an ICP license under the PRC law.The reason for us tochange the entity operating our B2B online platform was twofold.First,with theincreased number of customers in Hong Kong and potential demands from othercountries for electronic components in China,we were motivated to establish a B2Bonline platform in Hong Kong for our growth in the Hong Kong market and potentialexpansion to other markets.Second,the substantially increased regulatory andoperational risks of the VIE arrangements accelerated our termination of the VIEarrangement,which as a result terminated our contractual right to access to theold platform held by Pai Ming Shenzhen.Our new platform is notonly operated and managed by ICZOOM HK but its server and data are located andstored in Singapore.As neither our online platform nor its operator is withinterritory of China,ICZOOM HK is not required by PRC law to obtain an ICP licenseto maintain and operate,and we are able to provide internetinformation services through.As a result,we no longerconsolidate the operation and financial results of Pai Ming Shenzhen and conductall of our operations through our wholly owned subsidiaries in China and Hong Kong.The Contractual Arrangements were designed to allow ICZOOM Cayman toconsolidate Pai Ming Shenzhens operations and financial results in ICZOOMCaymans financial statement.For details of our corporate history and historical VIE arrangement,please see“Corporate History and Structure”starting on page 90 of this prospectus.Permission Required from the PRC Authorities for the Companys Operation and toIssue Our Class A Ordinary Shares to Foreign InvestorsOur operations in China are governed by PRC laws and regulations.Our PRC legalcounsel,Han Kun Law Offices,has advised us that,as of the date of thisprospectus,based on their understanding of the current PRC laws,regulations andrules,we and our subsidiaries have received all requisite permissions andapprovals from the PRC government authorities for our business operations currentlyconducted in China.Neither have we nor our subsidiaries received any denial ofpermissions for our business operations currently conducted in China.Thesepermissions and approvals include(without limitation)Business License,RecordRegistration Form for Foreign Trade Business Operators,and Filing Form for CustomsDeclaration Entity.Our PRC legal counsel,Han Kun Law Offices,has advised us that,as of the dateof this prospectus,based on their understanding of the current PRC laws,regulations and rules,we and our subsidiaries are currently not required to obtainpermission from any of the PRC authorities to issue our Class A Ordinary Shares toforeign investors.However,we are subject to the risks of uncertainty of any future actions ofthe PRC government in this regard including the risk that we inadvertently concludethat the permissions or approvals discussed here are not required,that applicablelaws,regulations or interpretations change such that we are required to obtainapprovals in the future,or that the PRC government could disallow our holdingcompany structure,which would likely result in a material change in ouroperations,including our ability to continue our existing holding companystructure,carry on our current business,accept foreign investments,and offer orcontinue to offer securities to our investors.These adverse actions could causethe value of our Ordinary Shares to significantly decline or become worthless.Wemay also be subject to penalties and sanctions imposed by the PRC regulatoryagencies,including the CSRC,if we fail to comply with such rules and regulations,which would likely adversely affect the ability of our securities to be listed on aU.S.exchange,which would likely cause the value of our securities tosignificantly decline or become worthless.On August 8,2006,six Chinese regulatory agencies,including the Ministry ofCommerce of China(“MOFCOM”),jointly issued the Regulations on Mergers andAcquisitions of Domestic Enterprises by Foreign Investors(the“M&A Rules”),whichbecame effective on September 8,2006 and amended on June 22,2009.The102023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm21/262Table of ContentsM&A Rules contains provisions that require that an offshore special purpose vehicle(“SPV”)formed for listing purposes and controlled directly or indirectly byChinese companies or individuals shall obtain the approval of the CSRC prior to thelisting and trading of such SPVs securities on an overseas stock exchange.OnSeptember 21,2006,the CSRC published procedures specifying documents andmaterials required to be submitted to it by an SPV seeking CSRC approval ofoverseas listings.However,the application of the M&A Rule remains unclear with noconsensus currently existing among leading Chinese law firms regarding the scopeand applicability of the CSRC approval requirement.We have not chosen tovoluntarily request approval under the M&A Rules.Based on the understanding of thecurrent PRC law,rules and regulations,given that ICZOOM WFOE was not establishedby a merger with or an acquisition of any PRC domestic companies as defined underthe M&A Rules,we believe that,as of the date of this prospectus,the CSRCsapproval under the M&A Rules are not be required for the listing and trading of ourordinary shares on Nasdaq in the context of this offering.Notwithstanding the foregoing,on December 24,2021,the CSRC issued theAdministrative Provisions of the State Council Regarding the Overseas Issuance andListing of Securities by Domestic Enterprises(the“Draft AdministrativeProvisions”)and the Measures for the Overseas Issuance of Securities and ListingRecord-Filings by Domestic Enterprises(Draft for Comments)(the“Draft FilingMeasures”),collectively,the Draft Rules Regarding Overseas Listings,which arecurrently published for public comments only.According to the Draft RulesRegarding Overseas Listings,among other things,after making initial applicationswith overseas stock markets for initial public offerings or listings,all China-based companies shall file with the CSRC within three working days.The requiredfiling materials with the CSRC include(without limitation):(i)record-filingreports and related undertakings,(ii)compliance certificates,filing or approvaldocuments from the primary regulator of the applicants businesses(ifapplicable),(iii)security assessment opinions issued by related departments(ifapplicable),(iv)PRC legal opinions,and(v)prospectus.In addition,overseasofferings and listings may be prohibited for such China-based companies when any ofthe following applies:(1)if the intended securities offerings and listings arespecifically prohibited by the laws,regulations or provision of the PRC;(2)ifthe intended securities offerings and listings may constitute a threat to,orendanger national security as reviewed and determined by competent authoritiesunder the State Council in accordance with laws;(3)if there are materialownership disputes over applicants equity interests,major assets,coretechnologies,or the others;(4)if,in the past three years,applicants domesticenterprises or controlling shareholders,de facto controllers have committedcorruption,bribery,embezzlement,misappropriation of property,or other criminaloffenses disruptive to the order of the socialist market economy,or are currentlyunder judicial investigation for suspicion of criminal offenses,or are underinvestigation for suspicion of major violations;(5)if,in the past three years,any directors,supervisors,or senior executives of applicants have been subject toadministrative punishments for severe violations,or are currently under judicialinvestigation for suspicion of criminal offenses,or are under investigation forsuspicion of major violations;(6)other circumstances as prescribed by the StateCouncil.We do not believe any of the six prohibited situations aforementionedapplies to us.The Draft Administrative Provisions further stipulate that a finebetween RMB 1 million and RMB 10 million may be imposed if an applicant fails tofulfil the filing requirements with the CSRC or conducts an overseas offering orlisting in violation of the Draft Rules Regarding Overseas Listings,and in casesof severe violations,a parallel order to suspend relevant businesses or haltoperations for rectification may be issued,and relevant business permits oroperational license revoked.Although we do not believe that we are currently prohibited from overseasoffering and listings,if the Draft Rules Regarding Overseas Listings is enacted,we may be subject to additional compliance requirements in the future.Since theDraft Rules Regarding Overseas Listings are newly promulgated,and theinterpretation and implementation are not very clear,we cannot assure you that wewill be able to receive clearance of such filing requirements in a timely manner,or at all,in the future.If the CSRC requires that we obtain its approval prior tothe completion of this offering,the offering will be delayed until we haveobtained CSRC approval,which may take several months.There is also thepossibility that we may not be able to obtain or maintain such approval or that weinadvertently concluded that such approval was not required.If prior CSRC approvalwas required while we inadvertently concluded that such approval was not requiredor if applicable laws and regulations or the interpretation of such were modifiedto require us to obtain the CSRC approval in the future,we may face regulatoryactions or other sanctions from the CSRC or other Chinese regulatory authorities.These authorities may impose fines and penalties upon our operations in China,limit our operating privileges in China,delay or restrict the repatriation of theproceeds from this offering into China,or take other actions that could have amaterial adverse effect upon our business,financial condition,results ofoperations,reputation and prospects,as well as the trading price of our Class AOrdinary Shares.The CSRC or other Chinese regulatory agencies may also takeactions requiring us,or making it advisable for us,to terminate this offeringprior to closing.Any failure of us to fully comply with new regulatoryrequirements may significantly limit or completely hinder our ability to offer orcontinue to offer the Class A Ordinary Shares,causing significant disruption toour business operations,severely damage our reputation,112023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm22/262Table of Contentsmaterially and adversely affect our financial condition and results of operationsand cause the Class A Ordinary Shares to significantly decline in value or becomeworthless.See“Risk Factor Draft rules for China-based companies seeking forsecurities offerings in foreign stock markets was released by the CSRC for publicconsultation.While such rules have not yet come into effect,the Chinesegovernment may exert more oversight and control over overseas public offeringsconducted by China-based issuers,which could significantly limit or completelyhinder our ability to offer or continue to offer our Class A Ordinary Shares toinvestors and could cause the value of our Class A Ordinary Shares to significantlydecline or become worthless”on page 56 of this prospectus;“Risk Factor Ourfailure to obtain prior approval of the China Securities Regulatory Commission(“CSRC”)for the listing and trading of our Class A Ordinary Shares on a foreignstock exchange could delay this offering or could have a material adverse effectupon our business,operating results,reputation and trading price of our Class AOrdinary Shares”on page 51 of this prospectus;and“Regulation RegulationRelated to M&A Regulations and Overseas Listings”starting on page 151 of thisprospectus.After the termination of the agreements under the VIE structure,inconsideration that it may take some time for customers to take actions to completethe transfer and adapt to the new platform from the old platform operated by PaiMing Shenzhen,ICZOOM WFOE entered into a business cooperation agreement with PaiMing Shenzhen on January 18,2022,under which Pai Ming Shenzhen agreed to provideus with network services including but not limited to business consultation,website information push,matching services of supply and demand information,online advertising,software customization,data analysis,website operation andother in-depth vertical services through online and offline data push through itsplatform.Uncertainties exist regarding whether Hong Kong companies are subject tothe new Cybersecurity Review Measures,and ICZOOM HK as the operator of our onlineplatform may be subject to PRC laws relating to the use,sharing,retention,security,and transfer of confidential and private information,such as personalinformation and other data.According to the latest amended Cybersecurity ReviewMeasures,which was promulgated on December 28,2021 and became effective onFebruary 15,2022,and replaced the Cybersecurity Review Measures promulgated onApril 13,2020,online platform operator holding more than one millionusers/users individual information shall be subject to cybersecurity reviewbefore listing abroad.Cybersecurity Review Measures does not provide a definitionof“online platform operator”,therefore,we cannot assure you that ICZOOM WFOEwill not be deemed as an“online platform operator.”On November 14,2021,the CACreleased the Regulations on the Network Data Security Management(Draft forComments),or the Data Security Management Regulations Draft,to solicit publicopinion and comments.Pursuant to the Data Security Management Regulations Draft,data processor holding more than one million users/users individual informationshall be subject to cybersecurity review before listing abroad.Data processingactivities refers to activities such as the collection,retention,use,processing,transmission,provision,disclosure,or deletion of data.We may be deemed as adata processor under the Data Security Management Regulations Draft.Notwithstanding the foregoing,even if we are deemed as an online platform operatorunder the Cybersecurity Review Measures or a data processor under the Data SecurityManagement Regulations Draft,we do not expect to be subject to the cybersecurityreview in connection with this offering before listing abroad because we currentlyhold aggregate less than ten thousand users individual information and it is veryunlikely that we will reach threshold of one million users individual informationin the near future as we are a B2B platform where our registered users aresubstantially SMEs.The Cybersecurity Review Measures also provide that if a critical informationinfrastructure operator,or a CIIO,purchases internet products and services thataffect or may affect national security,it should be subject to cybersecurityreview by the CAC.We do not expect to be a CIIO,since(i)we do not hold a largeamount of individual information,and(ii)data processed in our business is lesslikely to have a bearing on national security,thus it may not be classified ascore or important data by the authorities.However,due to the lack of furtherinterpretations,the exact scope of what constitutes a“CIIO”remains unclear.Asof the date of this prospectus,we have not received any notice from anyauthorities identifying us as a CIIO or requiring us to undertake a cybersecurityreview by the CAC.Further,as of the date of this prospectus,we have not beensubject to any penalties,fines,suspensions,or investigations from any competentauthorities for violation of the regulations or policies that have been issued bythe CAC.Our Hong Kong subsidiary ICZOOM HK currently operate a B2B online tradingplatform,primarily engaged in sales of electronic component products to customersin China,where our customers can register as members first,and then use theplatform to search for or post quotes for their desired electronic componentproducts.By utilizing latest technologies,our platform collects,optimizes andpresents product offering information from suppliers of all sizes,all transparentand available to our SME customers to compare and select.According to the PersonalInformation Protection Law issued by Standing Committee of the National PeoplesCongress of the PRC on August 20,2021,where the purpose of the activity is toprovide a product or service to that natural person located within China,suchactivity shall comply with the Personal Information Protection Law.Further,theData Security Law provides that where any data handling activity carried outoutside of the territory of China harms the national security,public interests,orthe legitimate rights and2023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm23/262122023/2/9https:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htmhttps:/www.sec.gov/Archives/edgar/data/1854572/000121390023007708/ff12023a15_iczoom.htm24/262Table of Contentsinterests of citizens or organizations of China,legal liability shall beinvestigated in accordance with such law.However,the Personal InformationProtection Law and the Data Security Law are relatively new,there remainsuncertainty as to how the laws will be interpreted or implemented and whether thePRC regulatory agencies,including the CAC,may adopt new laws,regulations,rules,or detailed implementation and interpretation related to such two laws.It isuncertain whether our Hong Kong subsidiary ICZOOM HK shall comply with theaforesaid laws.As of the date hereof,we are of the view that ICZOOM HK is incompliance with the applicable PRC laws and regulations governing the data privacyand personal information in all material respects,including the data privacy andpersonal information requirements of the Cyberspace Administration of China,and wehave not received any complaints from any third party,or been investigated orpunished by any PRC competent authority in relation to data privacy and personalinformation protection.In reaching this conclusion,we have adopted correspondinginternal control measures to ensure the security of our information system andconfidentiality of our customers personal information,including,but not limitedto the followings:We have established information security management systems whichstipulate the standardized procedures for the management of informationsystem.Through the information security management systems,we classifyour staff based on their positions and responsibilities and grant themdifferent access rights and adopt password control to identify systemusers.We adjust,shut down or deregister the access rights in a timelymanner when such staff change their positions or take long vacations orterminate their employment agreements with us.Moreover,we conductinformation system security inspections and periodically check the accesslogs of the information system so that we could identify abnormal accessesand deregister such abnormal accessed accounts.We provide training to our employees to ensure that they are aware of ourinternal policies in relation to data protection.We have specific network administrator responsible for installing thenetwork firewall,remoting backup storage of important databases,businessdata,and documents,and promoting information security awareness amongour employees.For the data and personal information collected from our customers,we set outour data privacy policy and obtain the prior consent of the customers as requiredby the applicable laws and regulations before collecting their data and personalinformation.We collect personal information in accordance with the principle oflegality,propriety and necessity,and do not collect personal informationirrelevant to the service we provide to the customers.We have not shared,transferred or publicly disclosed user data without prior consent or authorizationfrom the customers,unless otherwise permitted by relevant laws and regulations.Wemay be required to comply with laws and regulations in the PRC relating to dataprivacy and personal information,and failure to comply with such laws andregulations may potentially lead to regulatory or civil liability.On July 7,2022,the CAC promulgated the Outbound Data Transfer SecurityAssessment Measures,which became effective on September 1,2022.According to theOutbound Data Transfer Security Assessment Measures,to provide data abroad underany of the following circumstances,a data processor shall declare securityassessment for its outbound data transfer to the CAC through the local cyberspaceadministration at the provincial level:(i)where the data processor will provideimportant data abroad;(ii)where CIIO or the data processor processing thepersonal information of more than one million individuals will provide personalinformation abroad;(iii)where the data processor who has provided personalinformation of 100,000 individuals or sensitive personal information of 10,000individuals in total abroad since January 1 of the previous year,will providepersonal information abroad;and(iv)other circumstances where the securityassessment is required as prescribed by the CAC.Prior to declaring securityassessment for outbound data transfer,the data processor shall conduct self-assessment on the risks of the outbound data transfer.For outbound data transfersthat have been carried out before the effectiveness of the Outbound Data TransferSecurity Assessment Measures,if it is not in compliance with these measures,rectification shall be comp