Zapata Quantum, Inc.

On August 13, 2024, Zapata Computing Holdings Inc. entered into a purchase agreement (the “2024 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) pursuant to which Lincoln Park has agreed to purchase from the Company, at the option the Company, up to $10,000,000 of shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock” and such shares to be purchased under the 2024 Purchase Agreement, the “Purchase Shares”) from time to time over a 24-month period upon the satisfaction of certain conditions (the date on which all requisite conditions have been satisfied, the “Commencement Date”) and subject to certain limitations set forth in the 2024 Purchase Agreement. The 2024 Purchase Agreement is subject to, among other items, the filing and effectiveness of the registration statement covering shares of Common Stock that are issuable to Lincoln Park under the 2024 Purchase Agreement (the “Lincoln Park Registration Statement”). Pursuant to the 2024 Purchase Agreement, the Company has issued 500,000 shares of Common Stock to Lincoln Park as a commitment fee (the “Commitment Shares”). Beginning on and after the Commencement Date, the 2024 Purchase Agreement provides the Company with the right, but not the obligation, to direct Lincoln Park to purchase shares, in each case on business days during which the last closing sale price per share of the Common Stock is between $0.10 and $0.50 (the “Ceiling Price”) per share, notwithstanding any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction, as reported by the Nasdaq Global Market (“Nasdaq”);provided that the Ceiling Price shall not apply during such time that no shares remain available for sale pursuant to an effective registration statement in accordance with prior Company registration obligations to Lincoln Park under the Company’s existing Purchase Agreement entered into in December 2023. The Company’s existing Purchase Agreement remains in full force and effect.

On and after the Commencement Date, the Company has the right, but not the obligation, on any business day selected by the Company (the “Purchase Date”), to direct Lincoln Park to purchase up to 300,000 shares of Common Stock (the “Regular Purchase Amount”) at the Purchase Price (as defined below and each such purchase, a “Regular Purchase”), provided that the Company has not failed to deliver in full the Purchase Shares for its most recent prior Regular Purchase. The purchase price for Regular Purchases (the “Purchase Price”) shall be equal to 95% of the lower of: (i) the lowest sale price of Common Stock on the Purchase Date, or (ii) the average of the three lowest closing sale prices of the Common Stock during the ten business days prior to the Purchase Date.

In addition to Regular Purchases and provided that the Company has properly directed a Regular Purchase for the maximum amount allowed for such Regular Purchase, the Company in its sole discretion may direct Lincoln Park on each Purchase Date to purchase on the following business day (“Accelerated Purchase Date”) up to the lesser of (i) 300% of the number of shares purchased pursuant to a Regular Purchase or (ii) 30% of the trading volume on the Accelerated Purchase Date (the “Accelerated Purchase”) at a purchase price equal to 95% of the lower of (x) the closing sale price on the Accelerated Purchase Date, or (y) the Accelerated Purchase Date’s volume weighted average price (the “Accelerated Purchase Price”). The Company shall have the right in its sole discretion to set a minimum price threshold for each Accelerated Purchase in the notice provided with respect to such Accelerated Purchase and the Company may direct multiple Accelerated Purchases in a day provided that delivery of Purchase Shares has been completed with respect to any prior Regular and Accelerated Purchases that Lincoln Park has purchased.

The Company may also direct Lincoln Park, on any business day on which an Accelerated Purchase has been completed and all of the Purchase Shares to be purchased thereunder have been properly delivered to Lincoln Park in accordance with the 2024 Purchase Agreement, to make additional purchases upon the same terms as an Accelerated Purchase (an “Additional Accelerated Purchase”).

The 2024 Purchase Agreement further provides that the Company may not issue any securities pursuant to the 2024 Purchase Agreement if such issuance would reasonably be expected to result in a breach of the rules and regulations of Nasdaq (the principal market on which the Common Stock is traded). The aggregate number of shares that the Company can sell to Lincoln Park under the 2024 Purchase Agreement may in no case exceed 7,726,165 shares (including the Commitment Shares) of the Common Stock (which is equal to 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of the 2024 Purchase Agreement) (the “Exchange Cap”), unless (i) stockholder approval is obtained to issue Purchase Shares above the Exchange Cap, or (ii) at the time the Company has issued shares of Common Stock equal to the Exchange Cap and at all times thereafter, the average price per share of Common Stock for all shares of Common Stock sold by the Company to Lincoln Park under the 2024 Purchase Agreement equals or exceeds $0.4687 per share (which represents the lower of (A) the official closing price of our Common Stock on Nasdaq on the trading day immediately preceding the date of the 2024 Purchase Agreement and (B) the average official closing price of our Common Stock on Nasdaq for the five consecutive trading days ending on the trading day immediately preceding the date of the 2024 Purchase Agreement), as adjusted under applicable Nasdaq rules to take into account the issuance of the Commitment Shares so that the Exchange Cap limitation would not apply to issuances and sales of Common Stock under the 2024 Purchase Agreement pursuant to the rules and regulations of Nasdaq.

There are no limitations on the use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s ability to enter into a similar type of agreement or equity line of credit from the Commencement Date and for a period of 24 months thereafter, excluding an at-the-market transaction with a registered broker-dealer), rights of first refusal, participation rights, penalties or liquidated damages in the 2024 Purchase Agreement. The Company may deliver purchase notices under the 2024 Purchase Agreement, subject to market conditions, and in light of its capital needs, from time to time, subject to the limitations contained in the 2024 Purchase Agreement. Any proceeds that the Company receives under the 2024 Purchase Agreement are expected to be used for working capital and general corporate purposes.

In connection with the 2024 Purchase Agreement, on August 13, 2024, the Company also entered into a Registration Rights Agreement (the “2024 Registration Rights Agreement”) with Lincoln Park, pursuant to which the Company has agreed to file the Lincoln Park Registration Statement with the Securities and Exchange Commission (the “SEC”) within fifteen business days of the date that the 2024 Registration Rights Agreement was executed.

The foregoing description of the 2024 Purchase Agreement and 2024 Registration Rights Agreement is a summary only, does not purport to be complete and is qualified in its entirety by the full text of the 2024 Purchase Agreement and the 2024 Registration Rights Agreement, which are attached as Exhibit 10.32 and Exhibit 10.33, respectively, to this Quarterly Report on Form 10-Q and are incorporated herein by reference.

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02.

In the 2024 Purchase Agreement, Lincoln Park represented to the Company, among other things, that it is an “accredited investor” (as such term is defined in Rule 501(a)(3) of Regulation D under the Securities Act. The Commitment Shares were issued and the Purchase Shares will be issued and sold by the Company to Lincoln Park in reliance upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D thereunder.