Karat Packaging Inc

Item 1A. Risk Factors.

In addition to other information set forth in this report, readers should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors" of our 2024 Annual Report on Form 10-K,  for the year ended December 31, 2024, as updated and supplemented below. Any of the risk factors disclosed iin our reports could maQuarterially affect our business, financial condition or future results. Tly Report on Form 10-Q for the risks described here and in our quarter ended March 31, 20245. Annual Report on Form 10-K are not ty of the only risks we  face. Additional risks and uncertainties not currently known to us or that we currently deem to be immtors disclosed in our reports could material also may materially and adversely aly affect our business, financial condition and/or operatingfuture results. The discussion of the risk factor below updates the corresponding disclosure under the same heading in the s described in our 2024 Annual Report on Form 10-K and may contain material changes to the corresponding risk factor discussion, as updated and supplemented in our 2024 AnnualQuarterly Report on Form 10-K.

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

Both global and domestic economic and geopolitical conditions greatquarter ended March 31, 2025, are not the only 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 risks we face. Additional risks and 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 ultimatelies not currently known to us or that we currently 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 internationem to be immaterial sales, and reduced sales volumes and margins, all of which could negatively impact our business. Additionalso may materially, the loss of our ability to pass those cost increases through to our customers coul and 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 negativelly affecting our sales and profitability.

In the past, we have identified a material weakness in our internal controls over business, financial reporting. If we experience addconditional material weaknesses or deficiencies in the future  and/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 declineperating results.

As described in our 2024 Annual Report, we had identified a material weakness in our internal controls over financial repExcept as set forting as of December 31, 2024. As further described in Part I, Item 4 "Controls and Procedures" of this h in our Quarterly Report on Form 10-Q, the material weakness previously identified was fully remediated in  for 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.

Except for the above, there have ended March 31, 2025, there have been no other material changes to the Risk Factors previously disclosed in the 2024 Form 10-K, which isare incorporated herein by reference.