Company: KARO
Filing Date: 2025-06-09
Form Type: 20-F
Source: 0001213900-25-052372
Chunk: 42

Company: Karooooo Ltd.
Filing Date: 2025-06-09
Form: 20-F
Item: Item 3
Chunk 42
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our business, financial condition and results of operations.

We are exposed to product liability
and product warranty claims in the normal course of business, in the event that our solutions actually or allegedly fail to perform as
expected, or the use of our solutions results, or is alleged to result, in non-compliance with applicable regulations, bodily injury and/or
property damage. Our safety and security services may be disabled or prove to be ineffective as a result of techniques employed by car
thieves or the discovery of technological weaknesses by such persons. We could experience material product warranty or product liability
costs in the future.

Effective January 24, 2025, our
third-party recovery service provider offers a service recovery warranty on certain contracts to our clients, payable in the event that
they fail to recover a stolen vehicle and provided the client has met a list of contractual obligations. If the recovery rate for stolen
vehicles decreases, our service provider may be subject to an increased number of claims. We may incur considerable costs in relation
to future litigation should the service provider fail to honor the service recovery warranty.

If there were a systematic failure
of any of our solutions, we could suffer significant damage to our reputation and any product liability insurance we maintain might not
be sufficient to prevent us from suffering a material economic loss. While we carry insurance and maintain reserves for product liability
claims, we have not established a liability reserve under these warranties. Our insurance coverage may be inadequate if such claims do
arise, and any defense costs and liability not covered by insurance could have a material adverse impact on our financial condition, results
of operations or cash flow. A future claim could involve the imposition of punitive damages, the award of which, pursuant to local laws,
may not be covered by insurance. In addition, warranty and certain other claims are not typically covered by insurance. Any product liability
or warranty issues may adversely impact our reputation as a manufacturer of high-quality, effective and safe solutions and could have
a material adverse effect on our business, results of operations and financial condition.

Furthermore, we have in the past
and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought
by our clients or vendors in connection with commercial disputes or employment claims made by our current or former employees. Internal
fraud, which may include the stealing and dissemination of customers’ personally identifiable information, may also create significant
customer distrust and result in litigation against us. Actions taken by third-party security