Page 30 - Kavka Proposal Web

Part Five
Risk Factors

Prior to making an investment decision, prospective investors • The alcoholic beverages industry is highly regulated at both
should carefully consider all of the information set out in this international and national level and the production and
Brochure, and should consider whether an investment in the distribution require licences, permits and approvals. Delays
Company constitutes a suitable investment in the light of their and failures to obtain, or the withdrawal of, required licences
personal circumstances, tax position and the financial resources or permits could negatively affect the Company’s operations.
available to them. AN INVESTMENT IN EIS QUALIFYING Any change in the relevant legislation could also impose
SHARES INVOLVES A HIGH DEGREE OF RISK AND MAY NOT additional costs or restrictions on the Company, which could
BE SUITABLE FOR ALL INVESTORS. POTENTIAL INVESTORS adversely impact the products which the Company now
SHOULD THEREFORE SEEK ADVICE FROM A STOCKBROKER, produces or may produce in the future.
ACCOUNTANT, FUND MANAGER OR OTHER INDEPENDENT
FINANCIAL ADVISER BEFORE MAKING ANY DECISION TO • The availability and price of the raw agave used for
INVEST. POTENTIAL INVESTORS ARE ALSO RECOMMENDED producing tequila may be affected by crop failure and other
TO CONSULT A PROFESSIONAL ADVISER REGARDING THEIR factors outside of the Company’s control.
PERSONAL TAX POSITION AND THE CONSEQUENCES OF AN • The Company may face competition from other
EIS INVESTMENT. organisations, which may be larger or better funded
than themselves, either within or outside the premium
The Directors have ultimate responsibility for the management
of the Company. This section contains the material risk factors spirits sector, when seeking to retain and/or develop new
that the Directors believe to be associated with an investment distribution channels. The levels of sales and prices may
in the Company. If any of the following events or circumstances be adversely affected by competition from other vodka
arise, the Company’s business, financial condition and/or results producers. As a result, the Company could be adversely
of operations could be materially and adversely affected, as affected by the increased competitive pressures that result.
could the availability of tax reliefs to Investors. In such case, a • • Termination of any distribution agreements, variations in
Shareholder may lose all or part of their investment and/or a their terms or the failure of a key distributor to comply with
qualifying Investor may lose all or part of their tax relief. its obligations under these agreements (including if a key
distributor were to become insolvent) could have an adverse
Additional risks and uncertainties not presently known to the effect on the Company.
Directors, or that the Directors deem immaterial, may also have
an adverse effect on the Company’s business and the risks • The future success of the Company depends on its ability
below do not necessarily comprise all the risks associated with to maintain the image and reputation of its brand and of
an investment in the Company. its existing and future products. The image and reputation
of the Company’s products may be adversely affected by
1. Risks relating to the Qualifying Trade
various matters including litigation, or complaints from
• The value of EIS Qualifying Shares in the Company may go customers and/or regulatory bodies resulting from quality
down as well as up. Shareholders may, therefore, realise less failure, illness or other health concerns. Such concerns, even
than their original investment. when unsubstantiated, could be harmful to the Company’s
image and the reputation of its products. Deterioration in
• The Company’s future success is substantially dependent the Company’s brand equity (brand image, reputation and
on the continuing services and performance of the Directors product quality) could have a material adverse effect on its
and the Sales and Marketing team. The Directors cannot give operating results, financial condition and prospects.
assurances that they or members of the Sales and Marketing
team will remain with the Company, although the Directors • The Company will be transacting in USD. Any fluctuations
believe that their own investment in the Company and the in exchange rates could therefore have an adverse financial
shares they own align them with holders of the EIS Qualifying impact on the Company.
Shares.
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