ZPTA 10-K & 10-Q changes, risk factors and insider trading

Through OctoberDecember 31, 2025, we have funded our operations primarily with proceeds from sales of preferred stock, promissory notes and warrants. Our continuation as a going concern is dependent upon our ability to effect or continue to identify future debt or equity financing and generate profitable operations from our operations. Management estimates needingit needs to raise at least an additional $5 million to establish and continue operations over the next 12 months under under our current business plan. There can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to us. Further, the Company has not generated any revenue since September 2024,2024 and does not expect to generate any revenue unless and until it can re-commence materialscale operations which will be dependent on our ability to raise sufficient capital. These factors raise substantial doubt doubt about our ability to continue as a going concern.

We may in the future obtain additional financing through public or private equity or debt financings (subject to the limitations under our outstanding agreements and debt instruments) that may result in dilution to stockholders, the issuance of securities with priority as to liquidation and/or dividend and other rights more favorable than the Common Stock, or the imposition of debt covenants and repayment obligations or other restrictions that may adversely affect our business. For example, as of OctoberDecember 31, 2025, we have outstanding an aggregate principal amount of $4$1.2 million in secured promissory notes (collectively, the “Secured Notes”). Included in the Secured Notes is a senior secured promissory note (in the aggregate principal amount of $1 million the “Senior Secured Note”). This Senior Secured Note, among other things, converts at the option of the holder at $8.50 per share of Common Stock and prohibits Legacy Zapata from issuing additional indebtedness and undertaking certain other actions, subject to limited exceptions, which may prevent or limit us from raising further capital or engaging in strategic transactions in the future. In addition, the other Secured Notes (the “2025 Notes”) have a total outstanding principal amount of $3 million, mature on June 12, 2026 (subject to acceleration upon the occurrence of certain customary events of default or a change of control), and bear bear 10% per annum interest. These 2025 Notes are convertible into shares of Common Stock at the option of the holder based on a conversion conversion price of $0.04 per share, subject to certain adjustments. These 2025 Notes convert automatically upon the Company’s completion of a securities offering resulting in gross proceeds of at least $5 million. The Company also issued warrants to purchase a total of 37,500,000 shares of Common Stock to the investors of the 2025 Notes.

We have incurred significant operating losses since our inception. We incurred netoperating losses of $38.2$3.4 million and $29.8$23.0 million during the years ended December 31, 20242025 and 2023,2024, respectively, and we have a cumulative deficit since the formation of Legacy Zapata in November 2017 through December 31, 20242025 of approximately $127.7$118.3 million. Since 2024,2025, we have continued to incur net losses. We believe that we will continue to incur operating and net losses each quarter at least for the foreseeable future. The size of future losses will depend on several factors, including the degree to which we seek to establish and expand our scientific, product, software engineering, sales and other teams, and the revenue that we can generate from sales of our quantum computing application development solutions. Our operating expenses have increased as a result of becoming a public company and we expect that our expenses will continue to increase as we grow our business, including hiring and re-hiring personnel as we seek to re-establish materialrevenue-generating operations as part of our ongoing restructuring efforts in which began 2025.

We were founded in 2017 to develop and provide software software with related services and proprietary IP to utilize quantum math on classical and future quantum hardware. In late 2024, due to financial difficulties we temporarily suspended our operations. In June 2025, following restructuring efforts and conversion of certain outstanding outstanding indebtedness into equity, we shifted our business focus from artificial intelligence (AI) to quantum computing software and solutions. solutions. Our ability to re-establish materialrevenue-generating operations and generate revenue will be dependent upon our ability to access sufficient capital for such purpose. The market focus for our quantum computing application development solutions and the use of quantum math and algorithms are nascent fields with uncertainty on future market uptake and in technological progress in the field.

There can be no assurance that we can or will meet the challenges commonly faced by early stage companies, including the need to scale operations and to achieve and manage rapid growth. A number of factors could cause our efforts to be adversely impacted, including any inability to raise the necessary capital needed to re-establish materialrevenue-generating operations and pursue our business objectives, increased competition, lesser-than-expected growth or contraction of our overall market, our inability to accurately forecast demand for our customer offerings, our inability to establish sales or other partnerships with service firms, an inability to develop repeatable solutions, an inability to grow our team, or our failure, for any reason, to capitalize on growth opportunities. We have encountered and will encounter risks and uncertainties frequently experienced by early stage companies in rapidly changing industries, such as the risks and uncertainties described herein. We cannot provide assurance that we can meet the challenges faced by all companies, including established companies, in rapidly changing or nascent industries. The failure to address these challenges successfully or promptly could have a material adverse effect on our future operating results and financial condition.

In order to establish and grow our business, we will will need to re-establish and scale material operations in every area from our existing start-up capacity. These challenges will require that we:

When we re-commence material operations, weWe expect to derive substantially all of our revenue from our quantum computing application development software and related services.services if our marketing initiatives are successful. Accordingly, the market acceptance of quantum computing in general - and our quantum computing solutions in particular - is critical to our continued success.

As a quantum computing application development company, our solutions must provide our customers with the ability to use products of third parties, such as quantum processors and classical computing resources, which we do not manufacture. The cost or availability of these dependencies could be adversely affected by a variety of factors, including the transition to a clean energy economy, local and regional environmental regulations, and geopolitical disruptions. Our quantum computing application development solutions must integrate with a variety of hardware and software platforms, and we need to continuously modify and enhance our quantum and classical software libraries to adapt to changes in hardware and software technologies. In particular, we have developed our quantum development frameworks to be able to easily integrate with key third-party applications, including the applications of software providers that compete with us as well as our partners. In general, we are and will be subject to standard terms and conditions of such providers and open source licenses, which govern the distribution, operation, and fees of such software systems, and which are subject to change by such providers from time to time. Our business will be harmed if any provider of such software systems:

As part of our growth plans, we expect to expand, sell to, with, and through partners, including developing repeatable solutions built with services firms, and developing partnerships with hardware providers, system integrators and consulting services firms. However, our relationships with these partners may not result in additional business. If we are unable to enter into beneficial and contractual strategic partnerships, or further its relationship with existing partners, or isare unable to do so on favorable terms, then itsour growth could be limited or delayed.

We are and will be highly dependent on our key employees.employees and personnel.

Our ability to achieve our goals will depend heavily on our Chief Executive Officer and key employees. In late 2024 and early 2025, most of our key personnel left the Company due to our financial difficulties and suspension of operations. We have since re-hired threemultiple such individuals, and will need to re-hire and/or find suitable replacement or supplemental personnel in order to commence materialscale operations and execute on our business plan. The procurement and retention of of these key employees and consultants, together with additional key hires, is critical to the long-term success of the Company. All of our our personnel, including thepersonnel are “at will” employees who could leave the Company to accept alternative employment at any time. The more success we achieve serves to increase the risk that competitors, including large, well-established companies with far greater resources, will seek to hire our employees, including key employees. The loss of any key employee, especially to a competitor, could have a material adverse effect on our business, including by delaying the roll-out of products or diminishing the quantity or quality of our scientific output. Further, our industry and operations are highly specialized, and the loss of key personnel would therefore impose substantial challenges challenges on us, and we may be unable to locate and hire suitable replacements on favorable terms or at all, and could lose competitive advantages, advantages, market share, and the ability to operate as planned as a result of the loss of certain key personnel.

Our core business model is to develop and sell software capable of delivering quantum computing application development solutions to enterprise customers at scale and services in connection with such software. This requires a science team to develop algorithms, capable of addressing valuable problems using quantum techniques and other mathematics. ThisIt also requires a product development team that can describe software that not only is able to use the quantum techniques techniques developed by its team, but also is able to handle enterprise production issues at scale. ItWe also requiresrequire a software engineering team team that can implement the product design through products that comply with the myriad legal and enterprise information technology (“IT”)requirements requirements and are robust enough to function in an enterprise production environment. Finally, these teams must have the capacity to complete their respective tasks in time to be of value to the market.

The ability to hire the personnel required to execute our business plan depends, in part, on the availability of qualified applicants, something which is beyond our control. Quantum information processing is a relatively new field and are inherently difficult.field. Although the pool of qualified quantum scientists and software engineers is growing, it is limited and competition for that talent is global and aggressive, pitting us against large, well-established companies with larger financial resources than we have, as well as programs sponsored by foreign countries. In addition, limitations in or changes to immigration and work permit laws and regulations or the administration or interpretation of those laws could impair our ability to attract and retain highly qualified employees.

Our business depends on our ability to attract newcustomers customersand and on oursuch existingfuture customers purchasing additional subscriptions from us and/or renewing their existing subscriptions.

ToA establishkey materialgoal revenueis followingto theattract suspension of our operationscustomers and tocreate increase our revenue, we must attract new customers. revenue. As an early stage company, we have limited experience with sales and, in particular, sales to our target large enterprise customers. Our success will depend to a substantial extent on the level of adoption of our quantum computing application development solutions. Quantum computing is a new and evolving industry, so the level of adoption is uncertain. Numerous factors may impede our ability to add new customers, including but not limited to, our failure to compete effectively against alternative products or services, to attract and effectively train new sales and marketing personnel, to develop relationships with partners, to successfully innovate and deploy new applications and other solutions, to provide a quality customer experience and customer services, including increasing our employee headcount to provide for additional service providers, or to ensure the effectiveness of our marketing programs. If we are not able to attract customers, it will have a material adverse effect on our business, financial condition and results of operations.

Our ability to engage, retain, and increase our base ofobtain customers and to establish and increase ourgenerate revenue will depend on our ability to successfully market our existing quantum computing application development solutions, as well as create new applications, features, and functionality. We may introduce significant changes to our existing quantum computing application development solutions or develop and introduce new applications, including technologies with which we have little or no prior development or operating experience. These new applications and updates, as well as our existing solutions that we have marketed but not yet sold, may fail to engage, retain, and increase our base of customers or may suffer from lag in adoption. New applications may initially suffer from performance and quality issues that may negatively impact our ability to market and sell such applications to new and existing customers. The short- and long-term impact of any major change to our quantum computing application development solutions, or the introduction of new applications or initial sales of our applications to enterprise customers, is particularly difficult to predict. If new or enhanced applications failare not towidely engage,accepted retain, and increase our base ofby customers, we may fail to generate sufficient revenue, operating margin,margins, or other value to justify our investments in such applications, any of which may harm our business.

It is difficult to predict customer adoption rates and demand for our quantum computing application development solutions, the entry of competitive software, platforms and services. A substantialWe majority of our revenue in past periods came from, and we expect future revenue will come from, sales of our subscription-based software and related services, which we expect to continue for the foreseeable future if and when we re-commence sales of our products and services which will depend on our ability to raise sufficient capital. We cannot be sure that the quantum computing market will continue to grow or, even if it does grow, that businesses will adopt our quantum computing application development solutions. Our future success will depend in large part on our ability to create a market for quantum computing application development solutions. Our ability to create such a market depends on a number of factors, including the cost, performance, and perceived value associated with our quantum computing application development solutions. Potential customers may have made significant investments in classical computing systems and may be unwilling to invest in new platforms and applications, and may prefer to work with larger, more established companies that have entered the broader quantum computing market. If the quantum computing market fails to develop or grows more slowly than we currently expect, our business, operating results, and financial condition could be adversely affected.

Once our quantum computing application development solutions are deployed, customers will depend on our services teams to resolve technical and operational issues relating to our quantum computing application development solutions. Our ability to provide effective support will largely be dependent on our ability to attract, train, and retain qualified personnel with experience in interfacing with customers. If in the future the number of our customers grows, this will put additional pressure on our customer services teams. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support. We also may be unable to modify the future, scope, and delivery of our support to compete with changes in the services provided by our competitors. Increased customer demand for support services, without corresponding revenue, could increase increase costs and negatively affect our operating results. In addition, if we experience increased customer demand for support, we may face increased costs that may harm our results of operations. If our customer base expands, we will need to hire additional support staff to deliver and support our quantum computing application development solutions, and our business may be harmed. Our ability to attract and retain customers is highly dependent on our business reputation and on our ability to deliver value to customers. Any failure to deliver value, or a perception that we do not deliver value for our customers, would harm our business.business and materially adversely affect our operating results and financial condition.

We selectivelyintend to pursue U.S. government contracts as as a complementary revenue source. We may also target highly regulated organizations. Sales to such entities are subject to a number of challenges and risks. Selling to such entities can be highly competitive, expensive, and time consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government contracting requirements may change and in doing so restrict our ability to sell into the government sector. Government demand and payment for our quantum computing application development development solutions may be affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our quantum computing application development solutions.

Governmental and highly regulated entities may have statutory, contractual, or other legal rights to terminate contracts with us or our partners for convenience or for other reasons. Any such termination may adversely affect our ability to contract with other government customers as well as our reputation, business, financial condition, and results of operations. All these factors can add further risk to business conducted with these customers. If sales expected from aany government entity or highly regulated organization for a particular quarter are not realized in that quarter or at all, our business, financial condition, results of operations, and growth prospects could be materially and adversely affected.

Our business plan is based on the belief that the value value of our quantum computing application development solutions will be enhanced by delivering, in a single unified software platform, the the ability to: allow deployment in any desired environment; permit the development or implementation of applications and services that are are capable of data handling tasks, including processing data in a manner calculated to maximize the performance of quantum and hybrid computing computing solutions, and leveraging AI to accelerate quantum application development. While we believe our approach is differentiated, other companies are actively developing quantum software, benchmarking, and workflow tools that may overlap with or compete against ours. Further, a prolonged delay in re-launchingre-starting materialrevenue-generating operations and commencing sales will give our competitors a timing advantage to enter and pursue market opportunities which we may have otherwise have had an opportunity to pursue, which delay and resulting disadvantage will continue until we can raise sufficient capital and hire the necessary personnel to pursuant our business plan.

The quantum computing industry is highly competitive and we may not be successful in establishing ourselfourselves as a viable competitor without regard to the value of our quantum computing application development solutions.

Our business plan depends, in part, on access to public clouds computing through major cloud providers and there is no guarantee that access will be available on reasonable terms.

We, either directly or through our future customers, collaborators collaborators or end-users of our products, are or may become subject to a variety of laws and regulations regarding privacy, data protection, and data security. This includes the European Union’s (“EU”) General Data Protection Regulation (the “EU GDPR”) and. the United Kingdom’s General Data Protection Regulations (the “UK GDPR”). Other countries where we may seek to do business also may have data privacy laws we will be required to comply with. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. The application of these laws and regulations can arise from our e-commercetechnology and platform,applications, website, social media activities, drone technology and applications, relationships with third parties and their operations, or from other activities we undertake now or that we may undertake in the future. Data privacy and protection regulations are frequently broad in terms of scope of the information protected, activities affected, and geographic reach.

In particular, there are numerous United States federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. For example, the GDPR includes operational requirements for companies that receive or process personal data of residents of the EU that are broader and more stringent than those previously in place in the EU and in most other jurisdictions around the world. The GDPR includes significant penalties for non-compliance, including fines of up to €20 million or 4% of total worldwide revenue. Additionally, in June 2018, California enacted the California Consumer Privacy Act (the “CCPA”). The CCPA requires covered companies to provide California consumers with new disclosures and will expand the rights afforded consumers regarding their data. Fines for noncompliance may be up to $7,500 per violation. In September 2025, California amended the CCPA to (i) regulate technologies that replace or substantially replace human decisions, (ii) require comprehensive risk assessment reports that address specific processing activities that present a significant risk to a consumer’s privacy, and (iii) clarify when a cyber security audit must be conducted. The costs of compliance with, and other burdens imposed by, the GDPR, CCPA, and similar laws may limit the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business.

Since the CCPA was enacted, the United States currently has at least 20 21 states – California, Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, UtahUtah, Virginia, Indiana, and Virginia,Arkansas that have comprehensive data privacy laws in place, place, or enacted comprehensive data privacy laws set to soon take effect. An additional seven states have enacted narrower privacy laws – – Florida, Maine, Michigan, Nevada, New York, Vermont, Washington and Wisconsin. DuringAs theof 2025March legislative cycle, comprehensive federal privacy reform was not prevalent in state legislatures, but2026, at least eightnine states with existing privacy statutes expanded the scope of their privacy frameworks, including Colorado, Connecticut, Virginia, Utah, Texas, Oregon, Montana, and Kentucky. However, this patchwork approach to privacy legislation could pose compliance and liability risks for companies that have multistate operations. Proposed and enacted bills in various states have similar rights in preexisting privacy legislation but differ in implementation and enforcement. In June 2024, the American Privacy Rights Act of 2024 was introduced in the United States House of Representatives and was subsequently referred to the House Committee on Energy and Commerce has and is not yet adopted. As of November 2025, the House Energy & Commerce Committee has convened a Privacy Working Group to solicit comments from stakeholders on the legislation. As introduced, this proposed legislation would establish requirements for how companies handle personal data by, among other things, limiting the collection, processing, and transfer of personal data, prohibiting companies from transferring individuals’ personal data without their affirmative express consent, establishing a right to access, correct, and delete personal data, requiring companies to provide individuals with a means to “opt out” of the transfer of non-sensitive covered data and the right to opt out of the user of their personal information for targeted advertising, requiring companies to implement security practices aimed at protecting personal data, and imposing enforcement actions and the possibility of civil proceedings for violations. Proposed federal legislation, will likely continue to be debated and, at some point, may be enacted in some form.

We are subject to various anti-corruption and anti-bribery laws in the U.S., including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the U.S. domestic bribery laws, the U.K. Bribery Act, and other anti-corruption and anti-money laundering laws in theany countries in which we conduct activities. Such laws prohibit companies, their employees, and their third-party agents and representatives from authorizing, promising, offering, soliciting, or accepting, directly or indirectly, improper payments or benefits to or form any person whether in the public or private sector. Awareness of and compliance with these laws is of particular concern to us, because we are and intend in the future to be doing business with both U.S. and foreign entities, some of which are affiliates of the U.S. or foreign governments. In addition, our business is likely to require us to seek governmental approvals approvals from time to time. Detecting, investigating, and resolving any actual or alleged violations of these laws can be expensive and time-consuming.

Our Orquestra platform is built to be accessed through third-party public cloud providers such as Amazon AWS and Micrsoft Azure. These providers may also experience breaches and attacks to their products which may impact our systems. Data security breaches may also result from non-technical means, such as actions by an employee with access to our systems. While we and our third-party cloud providers have implemented security measures designed to protect against security breaches, these measures could fail or may be insufficient, resulting in the unauthorized disclosure, modification, misuse, destruction, or loss of sensitive or confidential information.

We may not have adequate insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees and other impacts that arise out of incidents or breaches. Depending on the facts and circumstances of such an incident, the damages, penalties and costs could be significant and may not be covered by insurance or could exceed our applicable insurance coverage limits. If the impacts of a security incident or breach, or the successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), it could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss. Our risks are likely to increase asif we growcommercialize our customer base,business, and we store, transmit, and otherwise process increasingly increasingly large amounts of proprietary and sensitive data. There can be no assurance that we can successfully prevent such occurrences, which could damage our reputation and/or result in the theft our important IP, either of which could damage our business prospects and future profitability.

The U.S. economy and the global economy as a whole isare susceptible to conditions unrelated to us or the computing industry, including the possibility of an economic recessionrecession, or depression,international international trade wars, the imposition of tariffs on our products or third parties’ products on which we rely, political unrest, natural catastrophes, climate change, and terrorism, wars between nation states, or other matters that could have a general widespread negative impact impact on global commerce. In recent times, centralthe bankprobability interest rates,of a recession and/or market downturn in the near term has increased in recent times due to wars and geopolitical conflicts including those in the Middle East, Ukraine and Latin America, the impact of tariffs and related litigation, potential inflation, reductions in consumer sentiment, uncertainty and volatility in the capital markets and the possibility of deteriorating labor market, tariffs and trade tensions and geopolitical hostilities and elevated stock price valuations, have contributed to a growing rhetoric that a recession in the U.S. or abroad could be imminent.market. Any such condition or development could affect our business in one or more of a variety of ways, including reducing reducing or eliminating the availability of capital at a time when we require such capital, denying us the ability to sell our quantum computing computing application development solutions in certain countries around the world, restricting our ability to hire qualified employees needed to effectuate our business plan, diminishing our ability to obtain customers, causing customers to reduce or eliminate their expenditures on quantum techniques enhanced software or generative AI computing, and/or preventing customers from paying amounts owed to us.

Further, many market analysts and other stakeholders have voiced growing concerns that the technology sector, including AI and quantum-focused businesses, are currentlypotentially overvalued and could be in a stock market “bubble” characterized by extreme valuations and unsustainable stock price growth over the past few years. If these views prove to be correct, or if the public begins to perceive such concerns as valid, it could result in a severe market correction or downturn, which could materially adversely affect us, including by limiting or preventing us from raising capital and by diminishing our customer base and market for our products and services.

Damage to the U.S. or global economyeconomies could materially harm harm our business and if we are unable to persevere through such adverse conditions could cause us to fail.

There are 162,580,506172,293,506 shares of our Common Stock issued and outstanding as of the date of filingMarch of23, this Report.2026. We will be obligated to issue all or very many of the following shares of common stockCommon Stock which will dilute our current stockholders: (1) 75,000,00078,316,074 shares of Common Stock issuable upon conversionexercise of outstanding convertible promissory notes, (2) 63,749,982 67,299,982 shares of Common Stock issuable upon exercise of outstanding warrants, (4) 25,983,00026,983,000 shares of Common Stock issuable upon conversion of our Series A Convertible Preferred Stock and Series C Convertible Preferred Stock, and (5) 38,503,451 39,003,451 shares of Common Stock issuable upon exercise of outstanding stock options. In addition, we expect to issue additional securities in the near future in order to raise capital and to hire and retain personnel.personnel, and also may issue additional securities including potentially in the short term to raise capital or engage in strategic transactions. Of the securities described above, 67,507,667 shares of Common Stock are subject certain Universal Resale and Registration Provisions (the “Resale 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 commonCommon stockStock held by or issuable to such recipients for a period ending 12 months following the date of a resale registration statement with respect to the commonCommon stock Stock comprising or underlying such securities is declared effective by the Securities and Exchange Commission (“SEC”) (such period, the “Lock-Up Period”). The Resale Provisions provide that up to 10% of each holder’s shares may be sold or transferred during the first 90 days following such effective date, and up to 25% of such holder’s shares may be sold or transferred in each subsequent 90 day period thereafter for the remainder of the Lock-Up Period; and that during each of the third and fourth ninety 90 day periods referred to above, each holder may sell or transfer up to an additional 10% of its shares, but only to the extent such amount represents shares that were eligible for sale or transfer in prior periods but were not sold or transferred by such holder. The Resale Provisions also contains certain additional limitations and exceptions with respect to such lock-up provisions, including a volume limitation on the holders’ sales of shares pursuant to which the holders collectively may not sell more than 10% of the shares in a given trading day, and the cessation of the Lock-Up Period and termination of such lock-up provisions if certain events do not occur within a specified time and as more particularly set forth therein. Pursuant to the Resale Provisions the Company also agreed to provide the holders with registration rights pursuant to which, if the Company closes a securities offering resulting in gross proceeds of at least $5 million, the holders shall have “piggy back” registration rights for the inclusion for resale of their shares to be registered on any subsequent registration statement filed with the SEC in connection with such offering. The Company also agreed to file a registration statement for the holders’ sales of shares withinby 180June days8, after the Company makes the requisite filings under the Securities Exchange Act of 1934, and prepares the requisite audited and unaudited financial statements, as applicable, to become eligible to file a resale registration statement,2026, and to cause such registration statement to be declared effective within 90 90 days thereafter. The Company also agreed to provide the holders with certain indemnification rights in connection with such registration rights.

BecauseOur we are delinquent in our SEC reports, our Common Stock is currently quoted on the OTC ExpertOTCID Basic Market under the symbol “ZPTA.” QuotationBecause of our quotation on the ExpertOTCID MarketBasic meansMarket, our Commonthere Stockhas is not eligible for proprietary broker-dealer quotations, all quotes in this stock reflect unsolicited customer orders,been and Unsolicited-Only stocks have a higher risk of wider spreads, increased volatility, and price dislocations. Investors may therefore have difficulty selling this stock. An initial review by a broker-dealer under SEC Rule15c2-11 is required for brokers to publish competing quotes and provide continuous market making. While we expect the filing of past-due periodic reports including this Reportthat there will enable uscontinue to become instead quoted on the OTC Basic Market in the near future, even when that occurs there will be a limited trading market in our Common Stock,Stock with sporadic and wevolatile changes in the volume and prices of trades, rendering trading in our Common Stock at any given time speculative and risky. We cannot assure you that a consistent, active trading market or price or volume stability will develop.develop or be maintained. Trading on the OTCOTCID Basic Market is less liquid than the leading national securities exchanges and higher tier OTC markets.quotation systems. The lack of an active market and other aspects of trading in our Common Stock as described above may impair your ability to sell your shares at the time you wish to sell them or at a price or quantity that enables you to realize a profit on your investment or that you otherwise consider reasonable.

We willare incurincurring significant increased costs as a result of being a public company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that Legacy Zapata did not incur as a private company. These expenses may increase even more after we are no longer an “emerging growth company.” Our management and other personnel will need to devote a substantial amount of time and incur significant expense in connection with compliance initiatives. For example, we will need to implement additional internal controls, both generally and to address the material weaknesses discussed in “Risksthis Related to Zapata’s Financial Condition and Status as an Early Stage Company,”Report, and disclosure controls and procedures, retain a transfer agent and adopt an insider trading policy. As a public company, we bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under the securities laws.

We have no current plans to pay any cash dividends on our Common Stock. The declaration, amount and payment of any future dividends on shares of our Common Stock will be at the sole discretion of our Board.Board as well as restrictions imposed by the DGCL. We currently anticipate that we will retain future earnings for the development, operation and expansion of its business and do not anticipate declaring or paying any cash dividends from future earnings for the foreseeable future. In addition, our ability to pay dividends may be limited by covenants under indebtedness that we or our subsidiaries may incur in the future, as well as other limitations and restrictions imposed by law. As a result, you may not receive any return on an investment in our Common Stock unless you sell our Common Stock at a greater price than that which you paid for it.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Annual Report on Form 10-K, which describe factors or events that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For periods prior to the closing of the Merger (as defined below), the use of “our,” “we”, the “Company” and words of similar import in this Item 7 refer to Zapata Quantum, Inc. (“Zapata”, or “Legacy Zapata”) or Andretti Acquisition Corp. (“AAC”), as the context requires.

Zapata Quantum, Inc., formerly known as Zapata Computing Holdings Inc., is a leading pure-play hardware-agnostic quantum software company. Following a strategic realignment in 2025, the Company will deliveroffers subscription-based solutions to efficiently deploy and accelerate the development of quantum and hybrid quantum-classical computing applications. Founded in 2017 by researchers from a Harvard University Quantum Computing Lab, Zapata has built one of the industry’s most robust intellectual property portfolios in quantum and hybrid quantum-classical computing and algorithmic methods, with over 60 patents, granted and pending, developed over eight years.

On March 25, 2024, we entered into a Confirmation of an OTC Equity Prepaidthe Forward Transaction (the “Forward Purchase Agreement”) with Sandia Investment Management LP, acting on behalf of certain fundsLP (collectively, “Sandia” or the “Seller”), pursuant to which Sandia purchased, prior to the closing of the Merger, 1,000,000 shares of AAC’s Class A Ordinary Shares from third parties through a broker in the open market (the “Recycled Shares”) and, concurrently with the closing of the Merger, 500,000 shares of our commonCommon stockStock at a purchase price of $10.99 per share (the “Additional Shares”).

On October 8, 2024, we received notice from Sandia accelerating the Valuationvaluation Datedate to October 8, 2024. As a result, we became obligated to pay Sandia $2.4 million in cash or shares. In June 2025, we settledsatisfied our obligations under the Forward Purchase Agreement through the issuance of 6,591,000 shares of commonCommon stock toStock Sandia. For additional information, refer to Note 7 in the consolidated financial statements included elsewhere in this Annual Report.Sandia.

One of AAC’s affiliates, Andretti Autosport Holding Company, LLC (f/k/a Andretti Autosport Holding Company, Inc.) (“Andretti Global”) has preexisting contractual relationships with the Company. In February 2022, we entered into i) an enterprise solution subscription agreement and ii) a sponsorship agreement with Andretti Global, both of which expire expired on December 31, 2024. During the years ended December 31, 2024 and 2023, we recorded $1.3 million and $1.7 million in revenue, respectively, related to the enterprise solution subscription agreement. We also entered into a managed service agreement with Andretti Global in October 2022, which expired on January 3, 2024. For the years ended December 31, 2024 and 2023, we recorded $0 and $0.2 million, respectively, in revenue related to the managed service agreement. For the years ended December 31, 2024 and 2023, we recorded $2.8 million and $2.8 million in sales and marketing expense related to the sponsorship agreement. The remaining committed future payments under the sponsorship agreement at December 31, 2024 include $5.5 million in accounts payable at December 31, 2024. We considered that these agreements were executed prior to the Businessbusiness Combination Agreementcombination and were not executed in contemplation of the business combination. Accordingly, Andretti Global was not considered a related party prior to the consummation of the Merger with AAC.Merger.

On March 28, 2024, we entered into a sponsorship agreement agreement with Andretti Autosport 1, LLC, an affiliate of Andretti Global. The agreement expired on December 31, 2024. WeOur arecommitted responsible forfuture payments under the sponsorship agreement totalingtotal $1.0 million.

On December 19, 2023, we entered into a purchase agreement (the “2023 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Lincoln Park agreed to purchase from us, at our option, an aggregate of up to $75.0 million of our commonCommon stockStock from time to time over a 36-month period following the Commencement Date, subject to certain limitations contained in the Purchase Agreement including, but not limited to, the filing and effectiveness of a registration statement (the “Lincoln Park Registration Statement”). In accordance with the2023 Purchase Agreement, we were required to pay Lincoln Park a commitment fee of $1.7 million (the “Commitment Fee”) as follows: (i) on the business day prior to the filing of the Lincoln Park Registration Statement, $0.6 million in shares of our common stock and (ii) we could elect to pay the remaining $1.1 million amount of the Commitment Fee in either cash or shares of our common stock, with any shares issuable on the business day prior to the filing of the Lincoln Park Registration Statement and any cash due within 90 days of the closing of the Merger. Shares issued as payment for the Commitment Fee are referred to herein as the “Commitment Shares.”Agreement.

On October 25, 2024, trading of our commonCommon stockStock and warrants was suspendeddelisted and removed from the listing and registration onby Nasdaq.

Prior to the Operational Cessation, we 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.subscription-based. Our approach utilized mathematical techniques from the quantum physics community to make computation more efficient and to create models that have other advantages over conventional methods. Our primary target customers were enterprise organizations, which generally consist of large businesses that have high revenue, the size and resources to dominate a specific market and a significant number of employees.

As noted above, since the Operational Cessation, we we have had minimal day-to-day operations. Management has since concentrated its efforts on restructuring activities aimed at restarting certain aspects of its core business, including capital-raising activities to improve our capital structure and to support the anticipated recommencement of business operations. For additional information regarding these restructuring activities, refer to Note 20 in the consolidated financial statements included elsewhere in this Annual Report.

Since our inception through December 31, 2024, 2025, we have financed our operations primarily through sales of our convertibleConvertible preferred stock, par value $0.0001 per share (the “Convertible Preferred Stock”) and commonCommon stock Stock and with issuances of Senior Notes andNotes, Senior Secured Notes (eachand as defined below and, collectively, the “Convertible Notes”).Notes. For the year ended December 31, 20242025, we have incurredgenerated net losses income of $38.1$9.3 million. As of December 31, 20242025 and 2023,2024, we had an accumulated deficit of $127.7$118.3 million and $89.5$127.7 million, respectively.

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

In 2025, we raised an aggregate of $3.0 million through the issuance of Convertible Notes and $1.5 million through the sale of Series A Convertible Preferred Stock. The proceeds from the Convertible Notes were used to repay one of our outstanding Senior Secured Notes. In addition, in 2025, we entered into conversion agreements with certain creditors to settle approximately $9.2$15.4 million of liabilities through the issuance of shares of our commonCommon stock.Stock. We also settled our obligation of $2.4 million under the Forward Purchase Agreement through the issuance of shares of the Company’s common stock. These activities were undertaken as part of our ongoing efforts to improve the Company’s capital structure and provide the liquidity necessary to support restarting certain aspects of our core business.

Our revenue ishistorically was generated primarily from sales of subscriptions to our software platform and related services. Subscriptions to our software platform are offered as stand-ready access access to our cloud environment on an annual or multi-year basis. We may also offer consulting services in the form of stand-ready scientific and software engineering services, which are typically only offered in conjunction with our software platform. We evaluate our contracts at inception to determine if the terms represent a single, combined performance obligation or multiple performance obligations. We generated no revenue in 2025.

Other expense, net consists primarily of fair value value adjustments related to our Senior Secured Notes and derivative contract in connection with our Forward Purchase Agreement, loss associated with amendments to capital markets advisory agreements, interest income, interest expense and foreign exchange gains and losses from our international operations.

For the years ended December 31, 20242025 and 2023,2024, we recorded an income tax benefit and provision of $20 thousand$0 and $20 thousand,$20,000, respectively. These are related to income taxes from our foreign operations with pre-tax income generated from intercompany activities. We recorded a full valuation allowance of our net deferred tax asset position as of December 31, 20242025 as we believe it was more likely than not that we would not be able to utilize our deferred tax assets.

Our revenue historically was generated primarily from sales of subscriptions to our software platform and related services. Subscriptions to our software platform are offered as stand-ready access to our cloud environment on an annual or multi-year basis. We may also offer consulting services in the form of stand-ready scientific and software engineering services, which are typically only offered in conjunction with our software platform. We evaluate our contracts at inception to determine if the terms represent a single, combined performance obligation or multiple performance obligations. We generated no revenue in each of the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

Comparison of the Three months Ended March 31,June 30, 2026 and 2025

The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025:

Sales and marketing expense was $173$285 thousand for the three months ended MarchJune 31,30, 2026, as compared to $0 for the three months ended MarchJune 31,30, 2025. The increase reflects an increase inhigher employee compensation costs, marketing expenses, and stock-based compensation expense.

Research and development expense was $235$383 thousand for the three months ended MarchJune 31,30, 2026, as compared to $0 for the three months ended MarchJune 31,30, 2025. The increase reflects an increase inhigher employee compensation costs, advisor fees, and stock-based compensation expense.

General and administrative expenses were $789 thousand for the three months ended March 31, 2026, compared to $680$959 thousand for the three months ended MarchJune 31,30, 2026, compared to $584 thousand for the three months ended June 30, 2025. The increase of $109$375 thousand reflects an increase in stock-based compensation expenses.expenses and employee compensation. Current-quarter expenses mainly consisted of insurance, software costs, salaries and benefits, and legal and professional fees, including $126$142 thousand of legal expenses related to our intellectual property.

There was no provision for income taxes during eachComparison of the threeSix monthsMonths endedEnded March 31,June 30, 2026 and March 31, 2025.2025

Since our inception, we have financed our operations primarily with proceeds from sales of Convertible Preferred Stock and Common Stock and the issuance of Convertible Notes. For the three six months ended MarchJune 31,30, 2026, we recorded a net loss of $1,310,$3,145, used cash in operations of $999$2,688 and had a stockholders’ deficit equity of $9,357 $3,062 as of that date. As of MarchJune 31,30, 2026, we had a cash balance of $642.$12,771. Cash used in operations was primarily from the Company’s Company’s operating losses, working capital, and investment in strategic growth initiatives. We have incurred significant losses and negative cash flows from operations since inception and expectsexpect to continue to incur losses and negative cash flows for the foreseeable future as we expand our penetration of the quantum computing application development market.

In April April 2026, we sold and issued to accredited investors a total of 15,000 shares of Series D (which are convertible into 34,160,784 shares of of Common Stock, subject to adjustment) and Warrants to purchase up to 17,080,392 shares of Common Stock (representing 50% warrant coverage on an as-converted basis) for total gross proceeds of $15 million. We received net proceeds of $13.8 million after deducting commissions and fees. We intend to use the net proceeds for working capital and general corporate purposes.

As of August 4, 2026, we have cash and cash equivalents of $12.1 million. We expect our existing cash will be sufficient to fund our current operating plan for at least twelve months from the date of issuance of these financial statements.

The Senior Secured Notes bear interest at the compound rate of 15% per annum and are convertible at the option of each noteholder in connection with the Merger at a conversion price of (i) $4.50 per share at the closing of the Merger or (ii) $8.50 per share at any time after the closing of the Merger. The outstanding principal amount of the Senior Secured Notes and all accrued but unpaid interest will be due and payable at the maturity date, December 15, 2026, unless otherwise converted. Upon the closing of the Merger, a portion of the aggregate outstanding Senior Secured Notes with an aggregate principal amount of $14.2 million and associated accrued interest of $0.5 million were converted into shares of our Common Stock. While any Senior Secured Notes are outstanding, we cannot incur additional indebtedness for borrowed funds, except additional Senior Secured Notes, substantially similar notes or other debt instruments that are pari passu with or subordinate to the Senior Secured Notes. As of MarchJune 31,30, 2026, the aggregate principal and accrued interest outstanding under the Senior Secured Notes totaled $1.3$1.4 million.

In June 2025, we entered into a securities purchase agreement with accredited investors pursuant to which we sold and issued secured Convertible Promissory Notes and warrants to purchase 37,500,000 shares of Common Stock (“Warrants”) for total gross proceeds of $3 million. The Convertible Promissory Notes bear simple interest at a rate of 10.00% per annum andand, as extended, mature in June 2026,2027, unless earlier converted or repaid in accordance with its terms. Interest accrues daily based on a 360-day year and will not be paid in cash prior to maturity unless the Convertible Promissory Notes are repaid before conversion. As of June 30, 2026, the aggregate principal and accrued interest outstanding under the Convertible Promissory Notes totaled $3.1 million, net of the unamortized debt discount of $211 recognized in connection with arethe repaidamendment beforeand conversion.the remaining unamortized debt issuance costs.