Company X must have received a license or have confirmation that a license was obtained by the manufacturer of the foreign produced component(s) subject to the EAR under footnote 1. The EAR imposes a license requirement for the export from abroad, reexport, or transfer (in-country) of a foreign-produced direct product (i.e., the component) when there is “knowledge” that it (the foreign-produced direct product) will be incorporated or used in the “production” or “development” of any “part,” “component,” or “equipment” produced, purchased, or ordered by a footnote 1 designated entity or where a footnote 1 entity is a party to the transaction. This response is consistent with previous guidance from BIS, in particular Supply Chain FAQ # 1, describing licensing requirements in the context of a supply chain. Failure by Company X to either: (1) confirm that the component supplier has obtained a license for the export from abroad, reexport, or transfer of the component subject to the EAR under footnote 1 being incorporated by Company X or a third party at Company X’s direction into an item destined to a footnote 1 designated entity; or (2) obtain a license for the export from abroad, reexport, or transfer (in-country) of the component subject to the EAR under footnote 1 from the component supplier to Company X implicates General Prohibition 10. General Prohibition 10 prohibits proceeding with transactions with knowledge that a violation has occurred or is about to occur. See 15 C.F.R. §§ 736.2(b)(10) and 764.2(e). Specifically, absent an applicable license, Company X or its subcontractors “may not sell, transfer, export, reexport, finance, order, buy, remove, conceal, store, use, loan, dispose of, transport, forward, or otherwise service, in whole or in part” the components for incorporation into or use in the “production” or “development” of any “part,” “component,” or “equipment” produced, purchased, or ordered by a footnote 1 entity or where a footnote 1 entity is a party to the transaction without authorization. See §§ 736.2(b)(10) and 764.2(e) of the EAR.