Karat Packaging Inc.

Previous report

Recent trade policy shifts, including increased import tariffs and the renegotiation of trade agreements, could have a material adverse impact on our business, financial condition or results of operations.

Previous report

Both global and domestic economic and geopolitical conditions greatly impact our business. The new federal administration's recent trade policy shifts, including increased import tariffs and the renegotiation of trade agreements, has increased the level of uncertainty in the global trading environment. These tariffs, affecting imports from countries such as China, could substantially increase the cost of our products, including raw materials needed for domestic manufacturing, and/or impact our ability to supply certain products to our customers. We are currently evaluating the potential impact of these tariffs on our business and financial condition, which will ultimately depend on their actual implementation details and any exclusions offered by the administration. Escalating trade tensions pose several risks, including increased manufacturing costs, global supply chain disruptions, limitations on domestic and international sales, and reduced sales volumes and margins, all of which could negatively impact our business. Additionally, the loss of our ability to pass those cost increases through to our customers could also have a materially adverse impact on our business, financial condition or results of operations. Even if we are able to pass increased costs on to customers, higher prices could reduce demand for our products, further negatively affecting our sales and profitability.

Previous report

In the past, we have identified a material weakness in our internal controls over financial reporting. If we experience additional material weaknesses or deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports and the price of our common stock may decline.

Previous report

As described in our 2024 Annual Report, we had identified a material weakness in our internal controls over financial reporting as of December 31, 2024. As further described in Part I, Item 4 "Controls and Procedures" of this Quarterly Report on Form 10-Q, the material weakness previously identified was fully remediated in the first quarter of 2025. If, in the future, we again have a material weakness in our internal controls over financial reporting, this could limit our ability to prevent or detect a misstatement of our accounts or disclosures and could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and the prices of our common stock may decline as a result.