Company: LIDRW
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001437749-25-015868
Chunk: 20

Company: AEye, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 4
Chunk 20
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 a party.

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Our outsourced manufacturing business model for the Non-Automotive market may not be successful, which could harm our ability to deliver products and recognize revenue in the Non-Automotive market.

In the fourth quarter of 2023, we made the decision to wind down our legacy Non-Automotive product. We anticipate that our new Automotive product, Apollo, will be well-suited to address some of the Non-Automotive markets without significant additional modifications. Our manufacturing strategy for the Non-Automotive market had been focused on outsourcing volume manufacturing to contract manufacturers, or our Tier 1 manufacturing partners, while maintaining the design, engineering, prototyping, testing, and pilot manufacturing in-house at our facility in Pleasanton, California.

Reliance on third-party manufacturers reduces our control over the manufacturing process, including reduced control over quality, product costs, and product supply, and timing. We may experience delays in shipments or issues concerning product quality from our third-party manufacturers. If any of our third-party manufacturers experience interruptions, delays, or disruptions in supplying our products, including by (i) natural disasters, (ii) the lingering effects of the global COVID-19 pandemic, or if other epidemics or outbreaks of other contagions materialize, such as "bird-flu," (iii) increased military conflict, especially in Ukraine and the Middle East, (iv) increasing trade tensions around the globe, or (v) work stoppages or capacity constraints, our ability to ship products would be delayed. In addition, unfavorable economic conditions could result in financial distress among third-party manufacturers upon which we rely, thereby increasing the risk of disruption of supplies necessary to fulfill our production requirements and meet customer demands. Additionally, if any of our third-party manufacturers experience quality control problems in their manufacturing operations and our products do not meet customer or regulatory requirements, we could be required to cover the cost of repair or replacement of any defective products. These delays or product quality issues could have an immediate and material adverse effect on our ability to fulfill orders and could have a negative effect on our operating results. In addition, such delays or issues with product quality could adversely affect our reputation and our relationship with our channel partners. If our third-party manufacturers experience financial, operational, manufacturing capacity, or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture our products in required volumes or at all, our supply may be disrupted, we may be required to seek alternate manufacturers, and we may be