Zapata Quantum, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except per share and share amounts)

Zapata Quantum, Inc., formerly known as Zapata Computing Holdings Inc. and, prior to that as, as Andretti Acquisition Corp. (“AAC”) was incorporated as a Cayman Islands exempted company on January 20, 2021. Effective August 21, 2025, Zapata Computing Holdings, Inc. changed its name to Zapata Quantum, Inc. On March 28, 2024, AAC filed an application for deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which AAC was domesticated and continues as a Delaware corporation and changed its name to Zapata Computing Holdings Inc. AAC was formed for the purpose of effecting a merger, consolidation share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. On March 28, 2024 (the “Closing Date” or “Closing”), AAC consummated a business combination with Zapata Computing, Inc. (“Legacy Zapata”) pursuant to the Business Combination Agreement by and among AAC, Tigre Merger Sub, Inc. and Legacy Zapata entered into on September 6, 2023 (the “Business Combination Agreement”).

Zapata Quantum, Inc. is a holding company whose principal asset is its ownership interest in Legacy Zapata and operates and controls all of the businesses and operations of Legacy Zapata and its subsidiaries. Zapata Quantum, Inc. and its predecessor, AAC, are collectively referred to herein as “Zapata” or the “Company”. On the Closing Date, AAC and Legacy Zapata, consummated a business combination (the “Merger”) (Note 3) pursuant to the Business Combination Agreement. In connection with the Closing of the Merger, AAC changed its name to Zapata Computing Holdings Inc. The Company’s common stock and warrants commenced trading on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, under the new trading symbols “ZPTA” and “ZPTAW”, respectively, on April 1, 2024. The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, AAC, which was the legal acquirer, was treated as the “acquired” company for financial reporting purposes and Legacy Zapata, a direct wholly owned subsidiary of AAC, was treated as the accounting acquirer.

The Company’s equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock, par value $0.0001, issued to Legacy Zapata’s stockholders in connection with the recapitalization transaction. As such, the Company’s common stock and the corresponding capital amounts and earnings per share related to Legacy Zapata’s common stock prior to the Merger have been retrospectively restated as shares reflecting the conversion upon the closing of the Merger calculated in accordance with the Business Combination Agreement by multiplying each share of Convertible Preferred Stock (as defined below) by 0.9141 (the “Exchange Ratio”).

On October 7, 2024, the Board of Directors of the Company approved the cessation of its operations (the “Operational Cessation”) due to insufficient financial resources to continue funding ongoing operations and meet existing obligations. In connection with the Operational Cessation, the Company terminated all employees, except for a limited number of personnel retained for a short transitional period to assist with the wind-down of business activities. Following the Operational Cessation, the Company maintained minimal day-to-day operations.

In 2025, the Company undertook restructuring activities aimed at restarting certain aspects of its core business (Note 19).

As of October 31, 2025, following a strategic realignment to refocus on its core quantum mission, the Company will deliver subscription-based solutions to efficiently deploy and accelerate the development of quantum and hybrid quantum-classical computing applications. These solutions include software and software tools supported by services. Its software platform is based on patented technology and supports a wide range of use cases in cryptography, pharmaceuticals, manufacturing, materials discovery and defense. These planned operations are subject to the Company raising sufficient capital. The Company has worked with Fortune 500 enterprises and government agencies to unlock the potential of quantum computing. Prior to October 31, 2025, the Company also offered specialized generative AI solutions which used techniques inspired by quantum physics and were tailored to solving complex industrial problems. These solutions combined software and related services and were subscription-based.

Going Concern

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. The Company has incurred significant losses and negative cash flows from operations since the inception of Legacy Zapata in November 2017 and expects to continue to incur losses and negative cash flows for the foreseeable future as the Company expands its penetration of the quantum computing application development market.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

The Company is subject to risks and uncertainties similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, risks associated with changes in information technology, and the ability to raise additional capital to fund operations. The Company’s long-term success is dependent upon its ability to successfully market, deliver, and scale its quantum computing application development solutions, increase revenue, meet its obligations, obtain additional capital when needed and, ultimately, achieve profitable operations.

Since inception through March 31, 2025, the Company has financed its operations primarily through sales of its Convertible Preferred Stock, as defined below, and common stock and with issuances of Senior Notes and Senior Secured Notes, as defined below. The Company has incurred a net loss of $770 for the three months ended March 31, 2025. As of March 31, 2025 and December 31, 2024, the Company had an accumulated deficit of $128,439 and $127,669, respectively.

The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise capital through future equity or debt financing and generate profits from its operations. The Company is pursuing all available options for funding, which include seeking public or private investments and funding through the sale of equity or debt securities.

Subsequent to March 31, 2025, the Company raised an aggregate of $3,000 through the issuance of Convertible Notes and $1,500 through the sale of Series A Convertible Preferred Stock. The proceeds from the Convertible Notes were used to repay one of the Company’s outstanding Senior Secured Notes. In addition, in 2025, the Company entered into conversion agreements with certain creditors to settle approximately $9,222 of accounts payable, accrued expenses, and notes payable to related parties. The Company also settled its obligation of $2,436 under the Forward Purchase Agreement through the issuance of shares of the Company’s common stock. These activities were undertaken as part of the Company’s ongoing efforts to improve the Company’s capital structure and provide the liquidity necessary to support restarting certain aspects of its core business (Note 19).

Although Management believes that it will be able to continue to raise funds by sale of its securities to provide the additional cash needed to meet the Company’s obligations, the restructuring activities aimed at restarting certain aspects of its core business require substantial funds to implement and there is no assurance that the Company will be able to continue raising the additional capital necessary to continue operations and execute on the Company’s business plan.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2024 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. The Company has incurred significant losses and negative cash flows from operations since the inception of Legacy Zapata in November 2017 and expects to continue to incur losses and negative cash flows for the foreseeable future as the Company expands its penetration of the quantum computing application development solutions market.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are detailed in “Note 2. Summary of Significant Accounting Policies” of the Company’s Annual Report. The Company uses the same accounting policies in preparing its quarterly and annual consolidated financial statements. There have been no material changes to significant accounting policies during the three months ended March 31, 2025.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected within these condensed consolidated financial statements include, but are not limited to, revenue recognition, the Forward Purchase Agreement derivative liability, the valuation of the Company’s common stock, and the fair value of stock-based awards. The Company’s estimates are based on historical information available as of the date of the unaudited condensed consolidated financial statements and various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ materially from those estimates or assumptions.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

In March 2024, the FASB issued ASU 2024-02,Codification Improvements—Amendments to Remove References to the Concepts Statements, which amends the Codification to remove references to various concepts statements and impacts various topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. The guidance in this update is effective for fiscal years beginning after December 15, 2024. The Company is currently in the process of evaluating the effects of this pronouncement on its related disclosures.

In November 2024, the FASB issued ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):Disaggregation of Income Statement Expenses. This ASU requires more detailed disclosures, on an annual and interim basis, about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This ASU may be applied either prospectively or retrospectively. The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

**3. Merger **

On March 28, 2024, the Company completed its planned Merger with Legacy Zapata, pursuant to which Legacy Zapata became a wholly owned subsidiary of the Company.

In connection with the Merger, AAC filed an application for deregistration with the Cayman Islands Registrar of Companies and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the state of Delaware, under which AAC was domesticated and continues as a Delaware corporation (the “Domestication”), changing its name to Zapata Computing Holdings Inc. At the effective time of the Domestication, existing holders of ordinary shares of AAC received 7,596,206 shares of the Company’s common stock in exchange for their Class A and Class B ordinary shares held immediately prior to the consummation of the Merger.

With the Closing of the Merger, holders of shares of Legacy Zapata common stock and Legacy Zapata Convertible Preferred Stock received an aggregate of 17,696,425 shares of the Company’s common stock, and holders of Legacy Zapata Options received options to purchase an aggregate of 3,016,409 shares of the Company’s common stock, determined by giving effect of the Exchange Ratio of 0.9141.

For accounting purposes, the Merger was accounted for as a reverse recapitalization whereby Legacy Zapata was treated as the accounting acquirer and AAC was treated as the acquired company. This determination was primarily based on the following factors: (i) Legacy Zapata’s existing stockholders had the majority of the voting interest in the combined entity with an approximate 63% voting interest; (ii) the combined company’s board of directors consisted of seven board members with one board member designated by AAC, and each of the remaining six board members were members of the board of directors of Legacy Zapata and one additional independent board member; (iii) Legacy Zapata’s senior management comprised all the senior management of the combined company; and (iv) Legacy Zapata’s existing operations comprised the ongoing operations of the combined company. In accordance with guidance applicable to these circumstances, the Merger was treated as the equivalent of Legacy Zapata issuing stock for the net assets of AAC, accompanied by a recapitalization. The net assets of AAC were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger were those of Legacy Zapata.

On April 1, 2024, in connection with the consummation of the Merger, the Company’s common stock was listed on the Nasdaq Global Market, and the Public Warrants and the Private Placement Warrants were listed on the Nasdaq Capital Market, under the new trading symbols “ZPTA” and “ZPTAW,” respectively. Costs paid by the Company directly attributable to the Merger were $7,058 and were treated as issuance costs and netted against additional paid-in-capital in the condensed consolidated balance sheet of the Company. Additionally, upon the consummation of the Merger, the holders of certain outstanding Senior Secured Notes elected to convert the principal of their notes and accrued interest thereon in an aggregate amount of $14,660 into 3,257,876 shares of the Company’s common stock (856,202 shares to related parties) in accordance with their terms, at a conversion price of $4.50 per share. Aggregate principal and accrued interest of $2,313 on the Senior Secured Notes remains outstanding as of March 31, 2025.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Merger Consideration

The following table reconciles the elements of the Merger to the condensed consolidated statement of cash flows and the condensed consolidated statement of convertible preferred stock and stockholders’ deficit. Upon the Closing of the Merger, the Company assumed liabilities of $8,159 from AAC, which was comprised of $223 of accounts payable, $1,987 of accrued expenses and other current liabilities, $2,619 of note payable – related party, and $3,330 of deferred legal fees.

The number of shares of the Company’s common stock outstanding immediately following the consummation of the Merger was as follows:

4. Revenue From Contracts With Customers

All revenue from contracts with customers was generated in the U.S. during the three months ended March 31, 2024. No revenue was recognized for the three months ended March 31, 2025 due to the Operational Cessation (Note 1) in the fourth quarter of 2024.

Revenue from contracts with customers recognized for the three months ended March 31, 2025 and 2023 consists of the following:

The Company’s balances resulting from contracts with customers include the following:

**Contract Acquisition Costs—**As of March 31, 2025 and December 31, 2024, The Company hadno capitalized contract acquisition costs. There was $0 and $10 of amortization of contract acquisition costs recognized in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, respectively.

Accounts Receivable— As of March 31, 2025 and December 31, 2024, there were accounts receivable due from related parties amounting to $1,567 and $1,567, respectively. As of March 31, 2025 and December 31, 2024, the Company had zero allowance for credit losses.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

**Deferred Revenue—**Balances from contracts with customers for the three months ended March 31, 2025, consist of the following:

Balances from contracts with customers for the year ended December 31, 2024, consist of the following:

The following table summarizes customers who represent greater than 10% of the Company’s total revenue during the three and three months ended March 31, 2025, as well as customers who represent greater than 10% of the Company’s total accounts receivable as of March 31, 2025 and December 31, 2024:

*Related party

**Less than 10% of total revenue or accounts receivable

5. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

For the three months ended March 31, 2025 and 2023, there were no transfers between Level 1, Level 2 and Level 3.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

**Refund Payable—**The third party purchased a one-year subscription to the Company’s Orquestra Enterprise Solution on June 27, 2024, and prepaid $1,000 fee. Following the Company’s Operational Cessation (Note 1) and early termination of the subscription, the third party is entitled to a prorated refund of $750 for services it will no longer receive.

**Accrued contract obligations—**On February 12, 2024, the Company entered into Leap Cloud Subscription Agreement. As of March 31, 2025, the Company accrued $216 related to the agreement. (Note 16).

7. Forward Purchase Agreement

On March 25, 2024, the Company entered into a forward purchase agreement with Sandia. The Forward Purchase Agreement contains (i) an Optional Early Termination provision, which is considered an in-substance put option (the “Optional Early Termination”) and (ii) a Variable Maturity Consideration which is the amount of the Settlement Amount Adjustment in excess of the Settlement Amount (the “Variable Maturity Consideration”). The Optional Early Termination and the Variable Maturity Consideration, as combined, are considered a freestanding financial instrument as the Optional Early Termination and the Variable Maturity Consideration cannot be legally detachable and separately exercisable from each other and together, meet the definition of a derivative instrument. Pursuant to the Forward Purchase Agreement, the Seller has the option to early terminate the arrangement in whole or in part by providing written notice to the Company, and the Seller will pay the Company an amount equal to the product of the number of shares that are early terminated and the reset price then in effect. If the Seller exercises an Optional Early Termination, then the Settlement Amount and the Settlement Amount Adjustment to be paid at the Valuation Date will be reduced in proportion to the number of shares subject to the Optional Early Termination. Additionally, the Company may be obligated to pay consideration to the Seller in cash or, under certain circumstances, in shares of the Company’s common stock, if the Settlement Amount Adjustment exceeds the Settlement Amount.

The Company recorded the derivative instrument as a liability on its condensed consolidated balance sheets and measured it at fair value with the initial value of the derivative instrument recorded as a loss on issuance of forward purchase agreement derivative liability in the condensed consolidated statements of operations and comprehensive loss. The forward purchase agreement derivative liability was subsequently remeasured to fair value at each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss.

Upon the occurrence of the VWAP Trigger Event, which was met when the Company’s common stock traded below $1.00 per share for 20 trading days within any 30 consecutive trading-day period, Sandia exercised its right to accelerate the Valuation Date to October 8, 2024. The Company received notice from Sandia accelerating the Valuation Date to October 8, 2024. As a result, the forward purchase agreement was settled and the Company became obligated to pay Sandia $2,436 in cash or shares as of March 31, 2025 and December 31, 2024.

In June 2025, the Company settled its obligation under the Forward Purchase Agreement by issuing 6,591,000 shares of the Company’s common stock to Sandia as described in Note 19, Subsequent Events.

**8. Debt **

The aggregate principal amount of debt outstanding as of March 31, 2025 and December 31, 2023 consisted of the following:

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Current and non-current debt obligations reflected in the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2023 consisted of the following:

Senior Secured Notes

As of December 31, 2023, Legacy Zapata had an outstanding balance of Senior Secured Notes of $8,900, which was netted with $158 of unamortized debt issuance costs. From January 2024 through March 2024, Legacy Zapata issued $7,150 in additional aggregate principal amount of Senior Secured Notes, which includes certain Senior Secured Notes with an aggregate principal amount of $1,150 that were issued to third party advisors in lieu of cash payment for services rendered to Legacy Zapata related to the Merger (Note 3). The Senior Secured Notes issued from January 2024 to March 2024 totaling $6,150 were issued at a substantial premium. Accordingly, the Company accounted for the issuance of these Senior Secured Notes under the amortized cost model, which is the principal plus accrued interest. The remaining Senior Secured Note issued to a third-party advisor totaling $1,000 is carried at redemption value, which is the principal plus accrued interest. The Company issued a Senior Secured Note to a third party for capital market advisory services that vested contingently with the Merger. Upon the satisfaction of the performance condition as described in the agreement, the Company accounted for the Senior Secured Note as a stock-based award granted to a non-employee and measured the award based on the fair value on the Merger date, with the liability portion of the award recorded as Senior Secured Notes at the redemption value, and the excess fair value recorded as a loss on issuance of convertible note within total other expense, net in the condensed consolidated statements of operations and comprehensive loss.

Upon the Closing of the Merger, a portion of the aggregate outstanding the Senior Secured Notes converted into 3,257,876 shares of the Company’s common stock (856,202 shares to related parties). Upon the conversion of the Senior Secured Notes, the principal balance of the debt of $14,207 and associated accrued interest of $453 were converted, resulting in an increase in common stock and additional paid-in capital of $14,660. Certain holders of the Senior Secured Notes, holding $2,000 in aggregate principal, did not convert their Senior Secured Notes into shares of the Company’s common stock.

The Company recognizes the remaining Senior Secured Notes at amortized cost. As of March 31, 2025, the $2,313 of aggregate principal and accrued interest on the outstanding Senior Secured Notes did not include any associated costs that are being recorded as a debt discount and amortized over the remaining term of the outstanding Senior Secured Notes. The $2,313 of aggregate principal and accrued interest on the outstanding Senior Secured Notes mature on December 15, 2026.

In January 2025, one of the Senior Secured Notes of $1,000 and related accrued and unpaid interest of $158 was assigned from its original note holder to a third-party. The transfer did not modify the terms of the note or its accounting treatment.

Notes Payable - Related Parties

To finance transaction costs related to the Merger, the Sponsor and certain AAC officers and directors provided working capital loans (the “Notes Payable – Related Party”) prior to Closing. These notes were repayable at the Merger Closing without interest or, at AAC’s discretion, up to $1,500 could be converted into Private Placement Warrants at $1.00 per warrant (Note 11).

On March 28, 2024, the Notes Payable – Related Party were amended to defer repayment of the outstanding principal and accrued interest of $2,619. The amended terms require repayment in monthly installments, beginning thirty days after the Lincoln Park Registration Statement became effective on April 18, 2024 (Notes 3 and 10). No note holders elected to convert their loans into warrants at Closing. The notes bear interest at 4.5% per annum and are accounted for at amortized cost. As of March 31, 2025, the outstanding balance was $1,930, with no unamortized debt discount.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

As of March 31, 2025, future minimum payments required on the Senior Secured Notes and the Notes Payable – Related Party are as follows:

9. Convertible Preferred Stock

In connection with the Merger on March 28, 2024, each holder of the Convertible Preferred Stock was converted into the right to receive 0.9141 shares of the Company’s common stock. The Company determined that the Merger constituted a deemed liquidation under its charter and, as such, the holders of the Convertible Preferred Stock were entitled to receive an amount per share equal to the greater of i) the applicable original issue price of the applicable series of the Convertible Preferred Stock, plus any dividends declared but unpaid thereon (the “Preference”), or ii) such amount per share as would have been payable had all shares of the Convertible Preferred Stock been converted into common stock immediately prior to the Merger (the “As Converted Amount”). Upon the Closing of the Merger, the Company determined that the As Converted Amount was greater than the Preference and converted 14,222,580 shares of Convertible Preferred Stock into 13,001,114 shares of the Company’s common stock. The Company’s capital amounts prior to the Merger have been retrospectively restated as shares reflecting the conversion ratio of 0.9141 established in the Merger. Following the Closing, the Company has no shares of Convertible Preferred Stock outstanding.

10. Common Stock

As of March 31, 2025 and December 31, 2024, the Company had authorized 600,000,000 shares of $0.0001 par value common stock. Each share of common stock entitles the holder to one vote on all matters submitted to the stockholders for a vote. The holders of common stock are entitled to receive dividends, if any, as declared by the Company’s Board of Directors.

Under the terms of the Company’s certificate of incorporation, the Company’s Board of Directors is authorized to direct the Company, without any action or vote by its stockholders (except as may be provided by the terms of any class or series of Company preferred stock then outstanding), to issue shares of preferred stock in one or more series without the approval of the Company’s stockholders. The Company’s Board of Directors has the discretion to determine the rights, powers, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

Unvested Shares

In connection with the Closing on March 28, 2024,1,129,630 shares of Sponsor Shares became unvested and are subject to the forfeiture pursuant to the closing available cash provisions as described in the sponsor support agreement in contemplation of the Merger. All of the Unvested Shares will become vested if, within three years of the Closing, the volume-weighted average price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period, or if there is a change of control of the Company. If neither of these events occur within three years of the Closing, then the Unvested Shares will be forfeited and shall be transferred by the sponsor and the sponsor co-investor to the Company, without any consideration for such transfer. The Unvested Shares are indexed to the Company’s own stock and are therefore classified as equity in the Company’s condensed consolidated financial statements. No Unvested Shares vested during the three months ended March 31, 2025.

Lincoln Park Purchase Agreement

The Company entered into two equity purchase agreements with Lincoln Park Capital Fund, LLC (“Lincoln Park”) on December 19, 2023 (the “2023 Purchase Agreement”) and August 13, 2024 (the “2024 Purchase Agreement”). Under the 2023 Purchase Agreement, Lincoln Park committed to purchase up to $75,000 of the Company’s common stock over a 36-month period following the Merger Closing. The Company issued 712,025 shares as a $1,688 Commitment Fee on April 11, 2024. A related registration statement covering the shares issuable under the agreement was filed on April 12, 2024 and declared effective on April 18, 2024. As of March 31, 2025, the Company had issued 10,378,780 shares for total proceeds of $7,700 (excluding Commitment Shares).

Under the 2024 Purchase Agreement, Lincoln Park committed to purchase up to $10,000 of common stock over a 24-month period. The Company issued 500,000 Commitment Shares upon execution. The related registration statement was filed on September 3, 2024 and declared effective on September 9, 2024. As of March 31, 2025, the Company had issued 2,700,000 shares for total proceeds of $862 (excluding Commitment Shares).

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Restricted Stock Units

A total of 25,000 RSUs vested during the three months ended March 31, 2025, and the corresponding shares were issued upon vesting (Note 12).

**11. Warrants **

Public Warrants and Private Placement Warrants

As part of AAC’s IPO, AAC issued Public Warrants to third-party investors where each whole warrant entitles the holder to purchase one share of AAC’s common stock at an exercise price of $11.50 per share. Simultaneously with the closing of the IPO, AAC completed the private sale of Private Placement Warrants to the sponsor, where each warrant allows the holder to purchase one share of AAC’s common stock at $11.50 per share. Additionally, pursuant to AACs’ sponsor working capital loan agreement, the sponsor may convert up to $1,500 of the outstanding Notes Payable – Related Party into up to an additional 1,500,000 Private Placement Warrants at the price of $1.00 per warrant upon the Closing Date (Note 8). Upon the Closing Date, the option to convert up to $1,500 of the outstanding Notes Payable – Related Party amount into and up to an additional 1,500,000 Private Placement Warrants was not exercised. As of March 31, 2025,11,499,982 Public Warrants and 13,550,000 Private Placement Warrants remained outstanding.

The Warrants expire on the fifth anniversary of the Merger or earlier upon redemption or liquidation and are exercisable commencing 30 days after the Merger, provided that the Company has an effective registration statement under the Securities Act covering the shares of the Company’s common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available or a valid exemption is available.

Public Warrants and Private Placement Warrants are exercisable to purchase one share of the Company’s common stock at $11.50 per share. Public Warrants may be redeemed, in whole and not in part, at $0.01 per warrant with 30 days’ notice if the Company’s common stock trades at or above $18.00 for 20 out of 30 trading days. The Company may require holders to exercise Public Warrants on a cashless basis if the warrants are called for redemption. Private Placement Warrants are substantially identical to the Public Warrants except that (i) they cannot be redeemed by the Company, (ii) they are permanently exercisable on a cashless basis, and (iii) they are not transferable, assignable, or salable until 30 days after the Closing Date, except to permitted transferees. Private Placement Warrants also provide for an alternative issuance in the event of a tender offer or other change-of-control transaction, consistent with the warrant agreement.

As of March 31, 2025 and December 31, 2024, there were 11,499,982 and 11,500,000 Public Warrants outstanding, respectively. As of March 31, 2025 and December 31, 2024, there were 13,550,000 and 13,550,000 Private Placement Warrants outstanding, respectively. The Public Warrants and Private Placement Warrants qualify for equity classification in accordance with ASC 815-40,Derivatives and Hedging. Accordingly, the Warrants were initially measured at fair value and recorded within equity with no subsequent measures of changes in fair value.

12. Compensation Plans

In March 2024, the Company adopted the 2024 Equity and Incentive Plan (the “2024 Plan”) and there were no material changes to the plan during the six months ended June 30, 2025. Under the 2024 Plan, the initial maximum number of shares of common stock reserved and available for issuance is 3,491,146 shares, subject to an annual increase on January 1 of each year, beginning January 1, 2025, equal to up to 5% of the total number of shares of common stock outstanding as of the immediately preceding December 31. Pursuant to the plan’s annual evergreen provision, the share pool was automatically increased by 5% of the Company’s outstanding common stock as of December 31, 2024, resulting in an additional 2,178,225 shares reserved effective January 1, 2025. As of March 31, 2025, a total of 5,669,371 shares were reserved for issuance under the 2024 Plan, of which 200,000 shares were issued and outstanding,25,000 shares were issuable upon the vesting of restricted awards, and 5,444,371 shares remained available for future grants and for issuance upon the vesting of restricted awards.

Stock Options

The Company uses the Black-Scholes option-pricing model to value stock option awards; No stock options or RSUs were granted during the three months ended March 31, 2025 and 2024.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Stock option activity during the three months ended March 31, 2025 is as follows:

As of March 31, 2025, there was $376 of total unrecognized compensation cost related to unvested stock options. The Company expects to recognize the unrecognized compensation amount over a remaining weighted-average period of 3.1 years. The fair value of stock options that vested during the three months ended March 31, 2025 and 2024 was $185 and $0, respectively.

Restricted Stock Units (“RSU”)

Nonvested RSU activity during the three months ended March 31, 2025, is as follows:

As of March 31, 2025, the total unrecognized compensation cost related to unvested restricted common stock was $14. The Company expects to recognize the unrecognized compensation amount over a remaining weighted-average period of 0.75 years. The fair value of RSU that vested during the three months ended March 31, 2025 was $14.

2024 Employee Stock Purchase Plan (“2024 ESPP”)

The Company adopted the 2024 ESPP in March 2024, and there were no material changes to the plan during the three months ended March 31, 2025.

Stock-Based Compensation

The following table below summarizes the classification of the Company’s stock-based compensation expense related to stock options and restricted common stock in the condensed consolidated statements of operations and comprehensive loss:

**13. Leases **

Operating leases

As a lessee, the Company leases certain office spaces under non-cancelable operating leases located in the United States and Canada. All of the Company’s long-term lease agreements expired prior to and as of December 31, 2024. On May 7, 2024, the Company entered into a month-to-month lease in Canada that commenced on June 1, 2024, which was terminated in connection with the Operational Cessation (Note 1).

On July 19, 2024, the Company entered into a six-month office lease for office space in the United States that qualifies as a short-term lease. Operating lease payments are expensed using the straight-line method as an operating expense over the lease term. Lease expense for the three months ended March 31, 2025 was $1.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

14. Segment Information

The Company operates and manages its business activities on a consolidated basis and operates in a single reportable and operating segment. The Company’s Chief Executive Officer, serving as the Chief Operating Decision Maker (“CODM”), oversees operations on an aggregated basis to allocate resources effectively. In assessing the Company’s financial performance, the CODM regularly reviews consolidated net income (loss). Significant expense categories are not presented, as the expense information regularly provided to the CODM is presented on the same basis as the condensed consolidated statements of operations and comprehensive loss. The CODM relies on consolidated net loss as a comprehensive measure of the Company, considering all revenues and expenses, including cost of revenue, research and development expenses, general and administrative expenses and sales and marketing expenses, to assess the Company’s overall performance and inform strategic decisions on cost control, pricing and investments. Additionally, the CODM also reviews total assets to assess the Company's financial position and resource allocation. The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets. The Company’s long-lived assets consist primarily of property and equipment, net. As of March 31, 2025 the Company doesnot have material long-term assets outside the U.S.

15. Income Taxes

For the three months ended March 31, 2025 and 2024, the Company recorded an income tax benefit and provision of $0 and $6, respectively, related to foreign income tax provisions. The Company’s annual estimated effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the U.S. valuation allowance and the foreign rate differential related to the United Kingdom, Canada, Japan, and Spain.

16. Commitments and Contingencies

Andretti Agreements – Related Party

On February 10, 2022, the Company entered into a sponsorship agreement for marketing services to be provided by Andretti Autosport Holding Company, LLC (f/k/a Andretti Autosport Holding Company, Inc., “Andretti Global”). The total commitment under the sponsorship agreement is $8,000 and is due and payable over the period of February 2022 through December 2024. Through March 31, 2025, the Company has paid $3,500 under the agreement and for the three months ended March 31, 2025 and 2024, the Company recorded $0 and $696 in sales and marketing expense related to the sponsorship agreement. There was $4,500 included in accounts payable as of March 31, 2025 related to the sponsorship agreement.

On March 28, 2024, the Company entered into a sponsorship agreement with Andretti Autosport 1, LLC, an affiliate of Andretti Global. The agreement expires on December 31, 2024. Subject to the agreement, the Company is responsible for payments under the sponsorship agreement in an amount totaling $1,000.

Advisory and Other Agreements

In connection with the Merger, on September 13, 2023, the Company entered into an agreement with a third party for advisory services. In March 2024, the payment terms were amended to provide for a fee of $1,250, to be paid by the issuance of a Senior Secured Note with a principal amount of $1,000 and the remaining $250 in six monthly installments in cash of $42 per month commencing on May 15, 2024. From May 2024 through September 2024 the Company paid $209 to the third party. The Company ceased making payments in the fourth quarter of 2024 due to the Operational Cessation (Note 1), and the remaining balance was subsequently converted into the Company’s common stock in the second quarter of 2025.

On February 9, 2024, the Company entered into an engagement letter with an additional third party, as amended on February 27, 2024. The Company agreed to pay the third party a non-refundable cash fee of $1,800, payable by the Company in monthly payments of $113 over the Term (as defined in Note 3) with $300 of such payment waivable if the Company voluntarily prepays $1,500 to the third party prior to December 31, 2024. Upon the Closing of the Merger, the Company recognized $1,800 as transaction costs, which recorded as a reduction in additional paid-in capital. From May 2024 through September 2024 the Company paid $563 to the third party. The Company ceased making payments in the fourth quarter of 2024 due to the Operational Cessation (Note 1), and the remaining balance was subsequently converted into the Company’s common stock in the second quarter of 2025.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

The following table reflects the Company’s obligations in connection with the aforementioned advisory and other agreements recorded in accounts payable, accrued expenses and other current liabilities, and non-current liabilities within the condensed consolidated balance sheet as of March 31, 2025.

In the fourth quarter of 2024, due to the Operational Cessation (Note 1), the Company ceased making payments on the advisory and other agreements described above and the remaining balance was subsequently converted into the Company’s common stock in the second and fourth quarters of 2025.

Collaborative Research Agreement* *

On February 12, 2024, the Company entered into a collaborative research agreement with a third party, pursuant to which the Company and the third party partnered to develop a quantum generative AI application and a hybrid solver over a three-month term. The Company led the development of the application. The third party also contributed $1,000 to the project in the form of a Senior Secured Note, which it did not elect to convert into the Company’s common stock upon the Closing of the Merger and remains outstanding.

The collaborative research agreement effectively terminated in October 2024 in connection with the Company’s Operational Cessation (Note 1).

Quantum Cloud Service Agreement

On February 12, 2024, the Company entered into an agreement with a third party under which the third party will host the Company’s quantum generative AI application on its cloud service and will provide support services for a period of 24 months. The Company has agreed to make payments in an aggregate amount equal to $2,063 to the third party over the agreement term as consideration for services rendered pursuant to the agreement, which will be due and payable from April 2024 to February 2027. On June 27, 2024, the agreement was amended to extend the services through November 2028, and the aggregate fees payable from the Company increased to $4,063 over the extended term. As of March 31, 2025, the Company recorded $216 in accrued expenses for the services. The outstanding purchase commitment for cloud services was $3,617 as of March 31, 2025.

The cloud service agreement was effectively terminated in October 2024 in connection with the Company’s Operational Cessation (Note 1).

17. Net Loss per Share

The following table sets forth the computation of basic and diluted net loss per common share attributable to stockholders:

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated:

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

18. Related Party Transactions

A former member of the Board of Directors of Legacy Zapata that left the Board of Directors in March 2024 also provided consulting services to Legacy Zapata. For the three months ended March 31, 2025 and 2024,the Company remitted fees of $0 and $15 to the member of its Board of Directors for these services.

One of AAC’s affiliates, Andretti Global, has preexisting contractual relationships with Legacy Zapata. In February 2022, Andretti Global entered into i) an enterprise solution subscription agreement and ii) a sponsorship agreement with Legacy Zapata (Note 16), both of which expire on December 31, 2024. During the three months ended March 31, 2025 and 2024, the Company recorded $0 and $433 in revenue related to the enterprise solution subscription agreement.

For the three months ended March 31, 2025 and 2024, the Company recorded $0 and $696 in sales and marketing expense related to the sponsorship agreement. The Company recognizes expense for the agreement over the period of service. The remaining committed future payments under the sponsorship agreement at March 31, 2025 include $4,500 in accounts payable at March 31, 2025. There was $1,567 and $1,567 due from related parties as of March 31, 2025 and December 31, 2024 and $5,504 and $5,504 of payables due to related parties in connection with these agreements as of March 31, 2025 and December 31, 2024, respectively.

On March 28, 2024, Legacy Zapata entered into a sponsorship agreement with Andretti Autosport 1, LLC, an affiliate of Andretti Global, which expires on December 31, 2024. Legacy Zapata is responsible for payments under the sponsorship agreement total $1,000.

On March 28, 2024, Legacy Zapata entered into an Order Form under the February 2022 enterprise solution subscription agreement with Andretti Global. Pursuant to the agreement, Andretti Global agreed to pay Legacy Zapata a total of $1,000, subject to Legacy Zapata’s payment of the sponsorship fee to Andretti Autosport 1, LLC. Following the Operational Cessation (Note 1), the agreement was terminated and no payments were made.

In January 2025, a Senior Secured Note with $1,157 of principal and accrued interest was assigned to Sandia with no change to its terms.

19. Subsequent Events

The Company has evaluated all events subsequent to March 31, 2025 and through December 9, 2025, which represents the date these unaudited condensed consolidated financial statements were available to be issued.

In June 2025, the Company satisfied its obligations of $2,436 under the Forward Purchase Agreement through the issuance of 6,591,000 shares of the Company’s common stock to Sandia.

Convertible Promissory Notes and Warrants

In June 2025 the Company entered into a securities purchase agreements (the “Purchase Agreements”) with accredited investors pursuant to which the Company sold and issued secured convertible promissory notes (“Convertible Promissory Notes”) and warrants to purchase 37,500,000 shares of Common Stock (“Warrants”) for total gross proceeds of $3,000.

The Convertible Promissory Notes have a principal amount equal to the loan amount, mature on the one-year anniversary of the issuance date (subject to acceleration upon the occurrence of certain customary events of default or a change of control), and bear 10% per annum interest. The Convertible Promissory Notes are convertible into 75,000,000 shares of the Company’s common stock at the option of the holder based on a conversion price of $0.04 per share, subject to certain adjustments. The Convertible Promissory Notes convert automatically upon the Company’s completion of a securities offering resulting in gross proceeds of at least $5,000.

The Warrants have a term of five years. The Warrants have an exercise price of $0.04 per share, subject to certain adjustments. At any time when a registration statement registering the resale of shares issuable upon exercise of the Warrants is not effective, the Warrants can be exercised on a cashless basis by the holders.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Consent and Security Agreement and Intercreditor Agreement

On June 12, 2025, the Company entered into a consent agreement (the “Consent”) with one of its two Secured Senior Notes lenders (the “Existing Lender”). Under the Consent, the Existing Lender agreed to waive certain rights under its outstanding Senior Secured Note Agreement. The waiver covered any default or event of default under the Senior Secured Note Agreement arising from, or in connection with, the transactions contemplated by the Purchase Agreement described above, as well as any defaults existing as of the date of the Consent. In consideration for the waiver, the Company issued 34,000,000 shares of common stock to the Existing Lender.

In addition, the Company entered into an Intercreditor Agreement with the collateral agent and the Existing Lender providing for the relative rights with respect to the secured obligations of the Company.

Conversion Agreements and Universal Resale and Registration Provisions

In 2025, the Company entered into a series of conversion agreements (the “Conversion Agreements”) with certain of its creditors. Pursuant to the Conversion Agreements: (i) certain creditors agreed to exchange an aggregate of approximately $5,380 of accounts payable and accrued expenses, including the settlement obligation under the Forward Purchase Agreement, for the issuance of 14,559,000 shares of the Company’s common stock; (ii) Notes Payable – Related Parties with an aggregate principal amount of $1,998 were converted into 5,407,000 shares of the Company’s common stock; and (iii) the Company issued 11,983 shares of its Series C Convertible Preferred Stock (convertible into up to 11,983,000 shares of common stock) to two creditors in settlement of an aggregate of $4,429 of accounts payable and accrued expenses.

Universal Resale and Registration Provisions

In connection with the Conversion Agreements, the Company and counterparties who received common stock or preferred stock entered into certain Universal Resale and Registration Provisions pursuant to which such recipients agreed to certain lock-up provisions restricting and limiting their sale, transfer, pledge, or disposal of any shares of common stock held by or issuable to such recipients.

Termination of a Material Definitive Agreement

In June 2025 the Company used approximately $1,343 of the proceeds from the Convertible Promissory Note described above to repay one of the Senior Secured Notes in the original principal amount of $1,000 and accrued interest of $343 issued to the Company on February 8, 2024. The Senior Secured Note is no longer outstanding.

Compensatory Arrangements of Certain Officers

On June 13, 2025, the Board of Directors approved and the Company granted to each of Sumit Kapur, the Company’s Chief Executive Officer and Clark Golestani, the Company’s sole director, a grant of 32,500,000 shares of restricted common stock. The restricted common stock vest in equal monthly installments for a two-year period beginning on the grant date, provided that if the Mr. Kapur is terminated by the Company other than for cause or Mr. Golestani is not re-elected by the shareholders, such vesting will accelerate and all unvested restricted common stock shall become fully vested.

Series C Convertible Preferred Stock

On July 18, 2025, the Company filed the Certificate of Designations of Preferences, Rights and Limitations of the Series C Convertible Preferred Stock of the Company with the Delaware Secretary of State designating and authorizing the issuance of up to 13,000 shares of Series C Convertible Preferred Stock. Subsequently, on November 4, 2025, the Company filed a Certificate of Amendment to the Certificate of Designations (the “Certificate of Amendment”) to increase the number of authorized and designated shares of Series C Convertible Preferred Stock to 23,000 shares.

Each share of Series C Convertible Preferred Stock is convertible into 1,000 shares of common stock of the Company at the election of the holder, subject to certain adjustments and to beneficial ownership limitations. Each share of Series C Convertible Preferred Stock shall be entitled to vote with the Company’s common stock on an as-converted basis, subject to beneficial ownership limitations. The holders of Series C Convertible Preferred Stock shall rank pari passu with the holders of common stock with respect to any liquidation, dissolution or winding up of the Company.

Stock Options Issued to Certain Advisors

On August 18, 2025, the Company granted 8,000,000 options each to two advisors with an exercise price of $0.002 per share. On August 27 and August 30, 2025, the Company granted an additional 8,500,000 options to two other advisors with an exercise price of $0.01 per share. The options vest as follows: (i) one-fourth of the options shall vest on the one-year anniversary of the grant date, and (ii) the remaining options shall vest monthly in equal monthly increments over the three-year period following the one-year anniversary of the grant date, provided that each vesting shall be subject to the recipient continuing to provide services to the Company as of the applicable vesting date. The options are also subject to accelerated vesting upon the occurrence of certain change of control events.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

Change of the Company’s Name

On August 21, 2025, the Company changed its name to “Zapata Quantum, Inc.”.

August 2025 Warrants

In August 2025 the Company entered into a warrant purchase agreement (the “Warrant Purchase Agreement”) with accredited investor pursuant to which the Company sold and issued the warrants to purchase up to 1,200,000 shares of Common Stock (“August 2025 Warrants”). The August 2025 Warrants vests in equal monthly installments of 50,000 shares over a 24-month period beginning on the Commencement Date and subject to continued service to the Company on each vesting date. The August 2025 Warrants have an exercise price of $0.04 per share, subject to certain adjustments. The August 2025 Warrants cannot be settled in cash. The August 2025 Warrants may not be exercised to the extent that such exercise would cause the holder or its affiliates to beneficially own more than 4.99% of the Company’s outstanding common stock immediately following the exercise.

Appointment of Certain Officers and Compensatory Agreements of Certain Officers

On October 8, 2025, the Company appointed Mr. William Klitgaard to the Board of Directors and named him as the sole member of the Audit Committee. In connection with his appointment, the Company granted Mr. Klitgaard the following compensation: (i) a grant of 1,000,000 five-year stock options, vesting in equal monthly increments over a two-year period, subject to continued services to the Company as of each applicable vesting date, with an exercise price of $0.08, (ii) cash compensation of $100 per year for services as director, and (iii) additional cash compensation of $25 per year for services as a chair of the Audit Committee of the Company, with both cash grants subject to Mr. Klitgaard’s continued service to the Company as of each applicable payment date.

On October 9, 2025, the Company appointed Mr. Clark Golestani, a director, to serve as Chairman of the Board of Directors. In connection with his appointment, the Company granted Mr. Golestani 1,000,000 five-year stock options with an exercise price of $0.08, vesting in equal monthly increments over a two-year period, subject to Mr. Golestani’s continued service to the Company as of each applicable vesting date.

On October 9, 2025, the Company appointed Mr. Sumit Kapur, Chief Executive Officer of the Company, to the Board of Directors. In connection with his appointment, the Company granted Mr. Kapur 1,000,000 five-year stock options with an exercise price of $0.08, vesting in equal monthly increments over a two-year period, subject to Mr. Kapur’s continued service to the Company as of each applicable vesting date. On October 9, 2025, in connection with Mr. Kapur’s services as Chief Executive Officer, the Company also granted Mr. Kapur 5,000,000 five-year stock options with an exercise price of $0.08, vesting in equal monthly installments over four years, subject to his continued services to the Company as of each applicable vesting date.

Series A Convertible Preferred Stock

In October and November 2025, the Company entered into securities purchase Agreements with accredited investors, pursuant to which the Company offered and sold 15,000 shares of the Company’s Series A Convertible Preferred Stock at a purchase price of $100 per share for total gross proceeds of $1,500.

On October 23, 2025, the Company filed the Certificate of Designations of Preferences, Rights and Limitations (the “Certificate of Designations”) of the Series A with the Delaware Secretary of State designating and authorizing the issuance of up to 15,000 shares of Series A Convertible Preferred Stock.

Each share of Series A is convertible into 1,000 shares of common stock of the Company at the election of the holder, subject to certain adjustments and to beneficial ownership limitations. Each share of Series A shall be entitled to vote with the Company’s common stock on an as-converted basis, subject to beneficial ownership limitations. All shares of capital stock of the Company, both common stock and any other series of preferred stock, shall be junior in rank to all shares of Series A with respect to payments upon the liquidation, dissolution, and winding up of the Company.

Forbearance Agreement

On October 22, 2025, the Company entered into a forbearance agreement (the “Forbearance Agreement”) with a third-party creditor related to outstanding invoices totaling approximately $3,168 (the “Overdue Amount”). Pursuant to the Forbearance Agreement, 50% of the Overdue Amount (approximately $1,584) was extinguished and replaced with contingent obligations (the “Contingent Obligations”). The Company agreed to pay up to two contingent payments, each equal to 25% of the Overdue Amount (approximately $792), upon the completion of capital-raising transactions generating at least $45 million and $55 million, respectively, in aggregate proceeds. If the specified financing thresholds are not achieved, the corresponding contingent payments will not become due, and the related obligations will be permanently extinguished.

ZAPATA QUANTUM, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(Dollar amounts in thousands, except per share and share amounts)

The remaining 50% of the Overdue Amount (approximately $1,584) (the “Remaining Overdue Amount,” and together with the Contingent Obligations, the “Obligations”) will continue to be owed, and the creditor has agreed to temporarily forbear from enforcing collection during the forbearance period.

Beginning May 1, 2025, any unpaid portion of the Obligations will accrue a late charge at a rate equal to the lesser of 0.8% per month or the maximum rate permitted by law. The forbearance period will terminate—and the Remaining Overdue Amount, together with any accrued late charges, will become immediately due and payable—upon the occurrence of certain “Forbearance Termination Events,” including specified capital-raising or asset-sale transactions, defaults, or insolvency events.