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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

 For the fiscal year ended December 31, 2024

 Or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

 For the transition period from ___________ to ___________

 Commission file number: 000-41218

 Zapata Quantum, Inc.

 (Exact name of registrant as specified in charter)

 Delaware

 98-1578373

 (State or other jurisdiction of

incorporation or organization)

 (I.R.S. Employer

Identification No.)

 6 Liberty Square, #2488

 Boston, MA

 02109

 (Address of principal executive offices)

 (Zip Code)

 ( 857) 367-9002

 (Registrant's telephone number, including area code)

 Securities registered pursuant to Section 12(b)
of the Act: None

 Securities registered pursuant to Section 12(g)
of the Act: Common stock, par value $0.0001 per share

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

 Indicate by checkmark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

 The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant, as of December 29, 2024, the last business day of the registrant's most
recently completed second fiscal quarter, was approximately $ 6,696,894 based upon the last sales price of the common stock as of such
date. Solely for purposes of this disclosure, shares of common stock held by executive officers, directors and beneficial holders of 10%
or more of the outstanding common stock of the registrant as of such date have been excluded because such persons may be deemed to be
affiliates.

 As of November 30, 2025, the registrant had 162,580,506
shares of its common stock, $0.0001 par value per share, outstanding.

 Audit Firm Id

 Auditor Name:

 Auditor Location:

 Weinberg & Company, P.A.

 Los Angeles, CA

 PAGE

 Item 1

 Business

 Item 1A

 Risk Factors

 Item 1B

 Unresolved Staff Comments

 Item 1C

 Cybersecurity

 Item 2

 Properties

 Item 3

 Legal Proceedings

 Item 4

 Mine Safety Disclosures

 Item 5

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6

 [Reserved]

 Item 7

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8

 Financial Statements and Supplementary Data

 Item 9

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A

 Controls and Procedures

 Item 9B

 Other Information

 Item 9C

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10

 Directors, Executive Officers and Corporate Governance

 Item 11

 Executive Compensation

 Item 12

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13

 Certain Relationships and Related Transactions, and Director Independence

 Item 14

 Principal Accounting Fees and Services

 Item 15

 Exhibits, Financial Statement Schedules

 Item 16

 Form 10-K Summary

 i

 Unless we state otherwise or the context otherwise
requires, the terms the "Company" "Zapata," "Zapata Quantum," "we," "us,"
"our" and the "Company" refer to Zapata Quantum, Inc., a Delaware corporation. Solely for convenience, the trademarks
and trade names in this report may be referred to without the and symbols, but such references should not be construed as
any indicator that their respective owners will not assert their rights thereto.

 Unless otherwise noted, the description of our
business and the discussion of related risk factors reflects Zapata Quantum's operations and strategic direction as of 2025. The
Company underwent significant changes after December 31, 2024, including a restructuring, rebranding, and renewed focus on quantum computing
application development.

 Cautionary Note Regarding Forward-Looking Statements

 This Report contains forward-looking statements,
including statements regarding our expectations for prospective future growth, operating results and financial condition, potential future
trends and developments within our industry and the U.S. and global economies generally, plans and expectations for our future business
plan and capital raising efforts, expectations and plans with respect to our products and services including the potential market for,
timing, features, and demand for such products and services, and liquidity and sources of capital. Forward-looking statements are prefaced
by words such as "anticipate," "expect," "plan," "could," "may," "will,"
"should," "would," "intend," "seem," "potential," "appear," "continue,"
"future," believe," "estimate," "forecast," "project," and similar words. We have
based these forward-looking statements largely on our current expectations and assumptions regarding our business, the economy and other
future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes
in circumstances that are difficult to predict. We caution you, therefore, against relying on any of these forward-looking statements.

 Our actual results may differ materially from those
contemplated by the forward-looking statements for a variety of reasons, including, without limitation, the possibility that estimates,
projections and assumptions on which the forward-looking statements are based prove to be incorrect, our ability to raise the necessary
capital to re-establish material operations and generate revenue and the terms and timing of any related transactions, central bank interest
rates and future interest rate changes, the risks arising from the impact of inflation, tariffs, the deterioration of the labor market
of the United States, a recession which may result on the Company's business, prospective customers, and on the national and global
economy, our ability to attract homeowners to our products and services, the potential for regulatory changes impacting quantum computing,
artificial intelligence, data privacy and other areas that impact the Company's business, and the ability of us and third parties
on which we depend to comply with applicable regulatory requirements, the risk that software and technology infrastructure on which we
depend fail to perform as designed or intended, and the risks and uncertainties disclosed under Item 1A – Risk Factors contained
in this Report. Any forward-looking statement made by us in this presentation speaks only as of the date on which it is made. Factors
or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of
them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments
or otherwise, except as may be required by law.

 ii

 Frequently Used Terms

 In this document:

 "AI" means artificial intelligence"

 "Business Combination Agreement" means the Business Combination
Agreement, dated as of September 6, 2023, by and among the Company, Merger Sub and Legacy Zapata, as may be amended from time to time.

 "Code" means the Internal Revenue Code of 1986.

 "Common Stock" means the common stock of the Company, par
value $0.0001 per share.

 "DGCL" means the General Corporation Law of the State of
Delaware.

 "Exchange Act" means the U.S. Securities Exchange Act of
1934.

 "IP" means intellectual property.

 "Legacy Zapata" means Zapata Computing, Inc., a Delaware
corporation.

 "Merger" means the merger of Merger Sub with and into Legacy
Zapata with Legacy Zapata that occurred on March 28, 2024 with Legacy Zapata surviving the Merger as a wholly owned subsidiary of the
Company as contemplated by the Business Combination Agreement.

 "Merger Sub" means Tigre Merger Sub, Inc., a Delaware corporation
and wholly owned direct subsidiary of the Company prior to the closing of the Merger.

 "Nasdaq" means the Nasdaq Stock Market.

 "Preferred Stock" means the preferred stock of the Company,
par value $0.0001 per share.

 "Sarbanes-Oxley Act" means the Sarbanes-Oxley Act of 2002.

 "SEC" means the U.S. Securities and Exchange Commission.

 "Securities Act" means the Securities Act of 1933.

 "Senior Secured Notes" means the senior secured promissory
notes issued by Zapata and its subsidiary, the obligations of which are secured by the assets thereof.

 iii

 Item 1. Business

 Overview

 Zapata Quantum is a leading pure-play hardware-agnostic
quantum software company. Following a strategic realignment in 2025, the Company will deliver 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.

 Zapata's software platform for quantum computing
applications is based on our patented technology and supports a wide range of use cases in cryptography, pharmaceuticals, manufacturing,
materials discovery and defense. The Company is the only organization to have participated across all technical areas of the Defense Advanced
Research Projects Agency's ("DARPA")'s Quantum Benchmarking program and has worked with Fortune 500 enterprises
and government agencies to unlock the potential of quantum computing.

 On March 28, 2024, we consummated the business
combination contemplated by the Business Combination Agreement, dated September 6, 2023, by and among the Company, Merger Sub and Legacy
Zapata. Pursuant to the Business Combination Agreement, the Merger took place pursuant to which Merger Sub merged with and into Legacy
Zapata resulting in Legacy Zapata becoming a wholly owned subsidiary of the Company.

 In late 2024 the Company voluntarily elected to
temporarily suspend its operations due to its limited capital resources and inability to access adequate liquidity to continue to fund
its operations and meet its outstanding debt obligations. In June 2025, the Company commenced debt restructuring and capital raising transactions
and the reinstatement of operations by (1) entering into exchange agreements with unsecured creditors pursuant to which such creditors
agreed to exchange outstanding obligations payable to them for common stock and certain rights related thereto, and (2) the Company sold
convertible notes and warrants for gross proceeds of $3 million. The Company has since been continuing efforts to negotiate and restructure
outstanding obligations and raise capital. In the furtherance of recommencing operations, the Company has also entered into advisory agreements
with third parties and agreed to compensate such parties in the form of equity and/or cash compensation. See Note 20, Subsequent Events,
in the notes to the consolidated financial statements contained in this Annual Report.

 Following a period of broader AI exploration, the
Company undertook, in 2024 and 2025, a strategic realignment to refocus on its core quantum mission: developing the software and tooling
layer that enables enterprises, governments, and researchers to harness quantum computing for economically meaningful outcomes.

 Zapata's hardware-agnostic approach and proprietary
technology address the "software bottleneck" that limits quantum adoption. The Company's products - Orquestra, Bench-Q,
Quantum Graph, and Quantum Pilot - provide the infrastructure and workflow tools that connect problem discovery, algorithm design, and
hardware execution. These tools are supported by professional services, partnerships, and licensing programs that collectively form the
Company's business model.

 The Company's business plans and operations
described herein, and our ability to execute and continue with such efforts, will depend on our ability to raise capital needed to repay
vendors and creditors, rehire various personnel and fund our working capital and growth needs. Further, our capital raising efforts and
business and operation generally are subject to numerous risks and uncertainties, as described under "Item 1A – Risk Factors."

 Introduction to Quantum Computing

 Quantum computing exploits the principles of quantum
mechanics - superposition, entanglement, and interference - to process information in fundamentally new ways. Whereas classical computers
operate on bits that are either 0 or 1, quantum computers use quantum bits, or "qubits" that can exist in multiple states
simultaneously. This enables exponential scaling of computational possibilities and the potential to solve certain classes of problems
- such as molecular simulation, combinatorial optimization, and cryptographic analysis - that are intractable on classical machines.

 The field of quantum computing is advancing rapidly, supported by significant
broad-based investment. Global governments have announced multibillion-dollar quantum initiatives, venture and public-market investment
have accelerated considerably, and major cloud computing providers now offer access to quantum processors. A 2024 Boston Consulting Group
analysis estimates that quantum technologies will create $450 billion to $850 billion of economic value globally, sustaining a $90 billion
to $170 billion market for hardware and software providers by 2040.

 Phases of Quantum Computing Technology Development

 The first phase of quantum computing has been the
arrival of Noisy Intermediate-Scale Quantum (NISQ) devices, characterized by limited qubit counts and the absence of full error correction.
Despite these constraints, NISQ computing can still deliver tangible value especially in areas such as materials, chemical simulations
and optimization.

 Zapata has contributed significantly to the advancement
of NISQ approaches including pioneering the Variational Quantum Eigensolver (VQE), a foundational hybrid quantum-classical algorithm that
combines quantum state preparation with classical optimization to estimate molecular and materials properties, with applications to other
domains as well.

 VQE demonstrated one of the first practical uses
of quantum hardware and helped establish the hybrid quantum-classical paradigm that continues to define much of the industry's progress.
Building on this foundation, Zapata develops software and tools that extend hybrid approaches to broader classes of scientific and industrial
problems, creating an adaptable framework that evolves with each generation of hardware.

 Rapid progress is now being made toward the second
phase of quantum computing, known as Fault-Tolerant Quantum Computing (FTQC), where error-corrected qubits enable deep, large-scale algorithms
with transformative performance. As these systems come online, the race is underway to display what is known as "quantum advantage"
or "quantum supremacy" in an increasing number of key problem areas.

 The number of announcements by leading FTQC hardware
providers has accelerated considerably in recent months - including improvement in qubit coherence times, falling error rates, the demonstration
of prototype logical qubits, and the announcement of quantum advantage for some problems. As these breakthroughs accumulate, the focus
of progress is shifting toward the application and software layer - where practical utility will first emerge. This is the domain where
Zapata Quantum operates.

 Unlocking the full potential of FTQC will depend
not only on better hardware, but also a mature software stack which will enhance the development of algorithms, compilers, and workflows
that translate real-world problems into quantum form. Zapata has proven itself as a leader in this space, with pioneering work across
a variety of domains - including chemistry, materials science, optimization, cryptography and machine learning.

 By advancing the software infrastructure and application
frameworks that will define the next generation of quantum computing, Zapata plays a critical role in enabling the industry's evolution
toward large-scale, fault-tolerant quantum advantage.

 Market Opportunity

 The quantum computing market is entering what many
observers describe as its "readiness phase," evidenced by Microsoft's declaration of 2025 as the year of quantum readiness.
In 2024, McKinsey & Co. estimated annual global spend on quantum computing technologies of approximately $2 billion, growing at 35%
per year, including about $400 million directed to software and services.

 While hardware improvements draw attention, the
limiting factor to adoption is the absence of a robust, reusable software infrastructure. Enterprises seeking to explore quantum advantage
face steep learning curves, fragmented hardware ecosystems, and scarce talent. Zapata addresses these pain points by providing a coherent,
hardware-agnostic software stack and associated technical services.

 The potential impact of quantum computing technology
spans nearly every high-value computational domain:

 •
 Cryptography and cybersecurity - post-quantum encryption, secure communication, and threat assessment;

 •
 Optimization - financial portfolio construction, logistics, manufacturing scheduling, and energy-grid
control;

 •
 Discovery and simulation - drug design, materials discovery, and climate modeling;

 •
 Defense and aerospace - signal processing, sensor fusion, and strategic decision optimization.

 We believe the software layer will capture a high
share of the value created by these solutions to our planet's most intractable problems. Zapata's strategy is to occupy this
enabling layer - bridging scientific discovery and commercial deployment.

 Products

 Zapata's products are organized around what
it refers to as the Generalized Quantum Stack - a three-layer model that defines the end-to-end process of quantum application development
and execution. This framework, validated through Zapata's multi-year leadership across all technical areas of DARPA's Quantum
Benchmarking program, provides the blueprint for accelerating progress from use case identification to implementation on physical hardware.

 Zapata Generalized Quantum Stack

 Layer 1: WHY - Use-Case and Utility Benchmark
Evaluation

 Defines the purpose of quantum computing by assessing
quantum-amenable problems and related utility benchmarks across domains such as chemistry, optimization, cryptography, and materials science.
This layer involves curating high-utility, domain-driven benchmarks that connect abstract industry challenges to well-defined computational
instances. Zapata's work here includes building repositories of potential applications and developing workflows for systematic problem
formulation, addressing a critical gap in how enterprises and researchers determine where quantum advantage will emerge.

 Layer 2: WHAT - Algorithm Development and Benchmarking

 Focuses on the design of quantum applications and
algorithms. Zapata's tools enable modular algorithm composition, evaluation, and benchmarking to translate domain problems into
executable quantum circuits. This layer bridges academic innovation with industrial relevance by combining Zapata's curated algorithm
library and benchmarking datasets with methods for performance comparison across algorithms and hardware types.

 Layer 3: HOW - Resource Estimation and Execution

 Represents the implementation phase, encompassing
resource estimation, compilation, and hybrid execution across quantum and classical backends. Zapata's platform, Orquestra, provides
an environment for orchestrating these workflows, allowing developers to simulate, optimize, and run algorithms on real quantum hardware
or high-performance classical infrastructure. This layer ensures forward compatibility as the industry transitions from NISQ systems to
FTQC architectures.

 Together, these layers define the roadmap for scalable
quantum application development. Zapata is the only hardware-agnostic quantum software company to have demonstrated leadership across
all three layers of this stack - uniquely positioned to lead the acceleration of the field from theoretical research to practical implementation.

 Specific Zapata products within these layers include:

 Orquestra

 Orquestra is Zapata's software platform for
developing, orchestrating, and executing quantum and hybrid classical/quantum applications. It provides a unified environment for constructing
computational workflows that combine classical and quantum resources. Orquestra manages the end-to-end lifecycle: from problem definition
through algorithm selection, circuit compilation, resource estimation, execution, and results analysis. The platform has been used in
commercial and research settings including with BP, BASF, BBVA, and DARPA.

 Bench-Q

 Bench-Q was developed under the U.S. Defense Advanced
Research Projects Agency's Quantum Benchmarking program, where Zapata uniquely participated across all technical areas (TA-1, TA-1.5
and TA-2). Bench-Q provides a standardized framework and software toolkit for evaluating quantum algorithms and hardware performance against
utility-driven benchmarks. It defines metrics and workflows that allow researchers to trace the progression from abstract problem instances
to executable circuits. The methods and data models produced in Bench-Q are core to Zapata's commercial products.

 Quantum Graph

 Quantum Graph (QG) is a structured knowledge base
that catalogs quantum use cases, algorithms, and application instances in a graph-based format. It provides a searchable, modular representation
of how problems, algorithms, and hardware resources connect, forming a foundation for composable quantum application development. QG is
currently in development.

 Quantum Pilot

 Quantum Pilot (QP) builds upon Quantum Graph by
introducing an AI-assisted development environment that helps users compose, test, and refine hybrid quantum-classical workflows. By leveraging
machine-learning models to suggest algorithmic building blocks and resource optimizations, Quantum Pilot aims to accelerate the design
of viable quantum applications by orders of magnitude relative to manual methods. QP is currently in development.

 Services

 In-line with our historical activities prior to
the cessation of operations in June 2024, we intend to complement our software offerings with high-value technical services to help customers
unlock value using Zapata's software products. Zapata's service engagements will be performed by teams of quantum scientists,
engineers, and domain experts. We expect that certain projects may evolve into longer-term subscriptions to our products, recurring research
programs, or joint development agreements that involve co-created or licensed intellectual property.

 These services will be strategically important
both in the current noisy intermediate-scale quantum (NISQ) era and as fault-tolerant quantum computers (FTQC) become commercially available.
By embedding its software and expertise in customer workflows today, Zapata intends to position itself as a long-term partner through
the industry's transition from research to scalable deployment.

 Customer Value Proposition

 Zapata's quantum application development
gives enterprises the confidence to invest in quantum computing with clarity and measurable results. It empowers customers to identify
where quantum will create real value, validate that potential through data-driven modeling and benchmarking, and prove performance on
real hardware before making costly commitments. By uniting discovery, design, and execution in one hardware-agnostic workflow, Zapata
delivers readiness by reducing uncertainty, accelerating time-to-insight, and future-proofing quantum adoption. The result is faster innovation,
smarter resource allocation, and tangible evidence of competitive advantage, turning quantum ambition into validated business outcomes.

 Customers and Go-To-Market Strategy

 The Company has previously executed multi-year
contracts and collaborative engagements with leading organizations such as BP, BASF, BBVA, Mitsubishi Chemical, BMW, and Andretti Global,
spanning industries including energy, chemicals, financial services, and advanced manufacturing.

 In the public sector, Zapata has served as a prime
contractor and collaborator under the Defense Advanced Research Projects Agency (DARPA) Quantum Benchmarking (QB) program. It was the
only provider chosen to contribute to all technical areas - TA1 (use-case identification and benchmark definition), TA1.5 (algorithm design
and implementation), and TA2 (hardware resource estimation and execution) - covering the full spectrum from problem formulation through
algorithm development to hardware realization.

 Through this work, Zapata developed the foundational
methodologies and tooling that now underpin its commercial platforms, including Bench-Q, Orquestra, Quantum Graph and Quantum Pilot, in
collaboration with leading universities, government research agencies, and hardware partners.

 The Company's go-to-market strategy combines
direct enterprise sales, channel partnerships, and ecosystem collaborations. It also partners with strategy consultancies that serve enterprise
clients exploring quantum readiness. This partnership-driven approach amplifies reach while keeping the Company focused on its core software
and IP development.

 Business Model

 Our business model is to provide subscription-based
offerings that combine Zapata Quantum software—specifically the Orquestra platform and any modules such as Bench-Q, Quantum Pilot
or Quantum Graph which are delivered on top of it—as well as related services to develop and efficiently deploy custom quantum or
hybrid quantum-classical computing applications designed to resolve our enterprise customers' specific problems.

 Our primary revenue model is based on subscription
payments for our offerings which are utilized to develop and efficiently deploy quantum or hybrid quantum-classical computing applications.
Based on our prior operating experience, these engagements typically span use case discovery to prototyping, benchmarking, and ultimately
production as quantum hardware advances. We will also, consistent with our historical activity, selectively pursue government contracts
related to the advancement of quantum computing applications as a complementary revenue source.

 Competition

 The quantum computing industry remains early and
fragmented. Competition arises from (a) hardware manufacturers developing vertically integrated stacks (e.g., IBM, IonQ, Rigetti), (b)
software-focused startups (e.g., Classiq, QC Ware, Horizon Quantum), and (c) internal R&D groups within large enterprises.

 Management believes that Zapata's differentiation
derives from several advantages:

 •
 Hardware agnosticism - Compatibility with all leading quantum hardware architectures

 •
 Comprehensive stack coverage - Participation across every technical area of DARPA's Quantum Benchmarking
Program, providing unique insight into end-to-end application development

 •
 Proprietary IP portfolio - More than 60 issued or pending patents across jurisdictions covering the
critical control points of quantum computing - program compilation, optimization methods, and information retrieval - validated by third-party
analysis as essential to the emerging quantum software ecosystem

 •
 Scientific leadership - A team of world-class researchers with deep roots in academic quantum computing,
collectively holding dozens of publications and thousands of citations

 •
 AI integration - The use of generative-AI and agent-based methods to augment and automate the creation
of quantum algorithms, enabling order-of-magnitude gains in efficiency

 These factors position Zapata as the leading pure-play
publicly traded quantum software company.

 Human Capital

 As of October 31, 2025, Zapata had six employees,
two of whom are full-time including its Chief Executive Officer. The Company intends to expand its headcount considerably upon raising
future financing including the re-hiring of certain employees who were with the Company prior to its restructuring.

 To date, Zapata has not experienced any work stoppages
and maintains good working relationships with its employees. None of our employees are subject to a collective bargaining agreement or
are represented by labor unions at this time.

 Culture

 Zapata's culture is built around its people
and network: a global cohort of accomplished scientists, engineers and business professionals. Zapata has, since its founding, demonstrated
a commitment to hiring people from diverse backgrounds and locations.

 One of Zapata's core strengths is innovation,
not only in its offerings, but also with the mindset of its people. Over the course of Zapata's eight years in business, employees
have, and continue to, organically collaborate in open forums with varying degrees of organization. Examples include, but are not limited
to:

 •
 Weekly science meetings where employees present their work;

 •
 Working groups where cross-functional group of employees converge to discuss how to move the platform
forward; and

 •
 A book club, which rotates books and members and serves as a forum to have non-work-related discussions.

 Core Values

 The company adheres to five core values:

 •
 Integrity: The practice of being honest and showing a consistent and uncompromising adherence to strong
moral, ethical, and scientific principles and values.

 •
 Revolutionary Mindset: An attitude towards changing established paradigms and looking for innovative
solutions to problems.

 •
 Transparency: Operating in a way that makes it easy for others to see what actions are performed. This
manifests itself in a culture of providing feedback and communicating clearly, recognizing our own mistakes, disagreeing in a constructive
way.

 •
 Inclusiveness: The quality of including many different types of people and treating them all fairly
and equally. We strive to be empathic and to appreciate the unique perspective of other people and teams at Zapata Quantum, their own
needs and struggles, and to build processes that intentionally include a broad range of perspectives.

 •
 Thoughtfulness: Making ourselves aware of the needs and feelings of others and acting accordingly. Bringing
new depth to solutions takes time and attention. We make decisions with a rounded view, considering the needs of all stakeholders and
the impact it will have, with as much data as possible.

 Intellectual Property

 Zapata Quantum's platform is grounded in
a broad and growing portfolio of intellectual property that secures its position as a leader in quantum software. The Company's
intellectual property (IP) strategy focuses on protecting core technologies that enable the efficient development, benchmarking, and deployment
of quantum and hybrid applications across multiple hardware platforms.

 As of October 31, 2025, Zapata Quantum held or
had pending more than 60 patents worldwide, spanning the United States, Europe, Canada, Australia, and Israel. These patents and applications
cover critical methods and systems that define the key control points in quantum software - including program compilation, optimization
methods, and information retrieval between classical and quantum computing systems.

 Representative Patents

 •
 U.S. Patent No. 11,599,344 - Computer Architecture for Compiling Hybrid AI / Quantum Programs (QIR)
- foundational compiler framework enabling concurrent classical-quantum execution through a Quantum Intermediate Representation (QIR).

 •
 U.S. Patent No. 11,615,329 - Hybrid Quantum-Classical Computer for Bayesian Inference - improves probabilistic
inference by reducing measurement overhead and enhancing efficiency as hardware scales.

 •
 U.S. Patent No. 11,605,015 - Hybrid Quantum-Classical Computer System for Implementing and Optimizing
Quantum Boltzmann Machines - supports hybrid learning models for generative AI and materials discovery.

 •
 U.S. Patent No. 11,663,513 - Quantum Computer with Exact Compression of Quantum States - reduces qubit
requirements through mathematically exact state compression.

 •
 U.S. Patent No. 11,169,801 - Hybrid Quantum-Classical Computer for Variational Coupled Cluster Methods
- pioneering VQE-based algorithm for molecular and materials simulation.

 •
 U.S. Patent No. 11,681,774 - Classically-Boosted Quantum Optimization System - enhances convergence
speed of quantum optimization algorithms using classical heuristics

 The Company's early and sustained investment
in these domains established Zapata as one of the first companies to secure foundational intellectual property for hybrid quantum-classical
computing. The Company believes its intellectual property represents a durable competitive advantage that will be increasingly difficult
for competitors to replicate. Zapata continues to evaluate opportunities to assert, license, and expand its IP rights globally to maximize
shareholder value and maintain leadership in quantum software innovation.

 Research and Development

 Research and development ("R&D")
are central to Zapata Quantum's mission of advancing practical quantum computing. The Company's R&D program focuses on
the creation of scalable algorithmic frameworks, benchmarking methodologies, and AI-assisted development tools that enhance the performance
and usability of its software platforms. These initiatives support both near-term hybrid computing and the transition to future fault-tolerant
quantum systems.

 Zapata's R&D activities are carried out
through close collaboration with government agencies, research consortia, leading universities, and quantum hardware providers. The Company
has partnered with multiple academic and national research institutions worldwide, engaging in joint projects that span algorithm design,
benchmarking, and system integration. These collaborations help validate Zapata's technologies in real-world settings and ensure
alignment with global scientific and industrial standards.

 The Company is also supported by a Scientific Advisory
Board composed of prominent researchers and technical leaders from across the globe who are recognized authorities in quantum information
science, applied mathematics, and computational physics. This board provides guidance on long-term research directions, peer review of
core technologies, and input on emerging scientific and policy trends affecting the quantum ecosystem.

 Through these efforts, Zapata seeks to accelerate
the development of useful quantum applications while deepening its intellectual-property base. The Company's integrated research
program - combining internal innovation, academic collaboration, and global scientific advisory oversight - positions it to contribute
meaningfully to the advancement and commercialization of quantum computing technologies.

 Legal Proceedings

 From time to time, Zapata Quantum may be involved
in legal proceedings and claims that arise in the ordinary course of business, including matters relating to intellectual-property protection,
contracts, employment, or regulatory compliance. As of the filing of this report, the Company is not a party to any material pending legal
proceeding that, if adversely determined, would have a material adverse effect on its financial position or results of operations.

 Government Regulation

 We may receive, store, and otherwise process personal
information and other data from and about our customers, employees, and from other stakeholders like our vendors. There are numerous federal,
state, provincial, local, and international laws and regulations regarding privacy, data protection, information security, and the storing,
sharing, use, processing, transfer, disclosure, retention, and protection of personal information and other content, the scope of which
is rapidly changing, subject to differing interpretations and may be inconsistent among regions, countries and states, or conflict with
other legal requirements. We strive to comply with applicable laws, regulations, policies, and other legal obligations relating to privacy,
data protection, and information security.

 In addition, to the extent we operate in foreign
markets, we will be subject to additional laws and regulations relating to those operations and the applicable jurisdictions, in addition
to U.S. laws and regulations applicable to the conduct of business in foreign jurisdictions.

 For a discussion of certain of the government
regulations we currently or may in the future face in conducting our business and the risks and uncertainties relating thereto, see Item
1A – Risk Factors contained in this Report.

 Item 1A. Risk Factors

 Summary of Risk Factors

 Our business is subject to numerous risks and uncertainties that you
should consider before investing in our common stock. Some of the principal risk factors that make an investment in the Company speculative
or risky are summarized as follows:

 Risks Related to our Financial Condition and Status as an Early
Stage Company

 •
 We will need additional capital to continue as a going concern.

 •
 We have a history of operating losses, which are expected to continue in the future.

 •
 We are an early stage company with a limited operating history in a nascent industry.

 •
 We may not be able to scale our business quickly enough to meet demand.

 •
 Our assets are pledged to the holders of the Secured Notes and we face risks related to the potential
failure to repay obligations or any other default events.

 •
 We have identified material weaknesses in our internal control over financial reporting, and may fail
to maintain an effective system of disclosure controls and internal control over financial reporting.

 •
 Our ability to use existing or future net operating loss carryforwards and other tax attributes may
be limited.

 Risks Related to our Business and Industry

 •
 Our business plan could suffer if we are not able to establish and grow contractual relationships with
third parties or enter into certain important strategic partnerships.

 •
 Our business plan could suffer if we are not able to enter into important strategic partnerships.

 •
 We are highly dependent on our key employees.

 •
 The failure to attract and retain additional qualified personnel or to maintain our company culture
could harm our business and prevent us from executing our business strategy.

 •
 Our business is dependent on growing and retaining qualified personnel.

 •
 Our estimate of market opportunities may prove to be inaccurate.

 •
 Our quantum computing application development solutions may not be widely accepted.

 •
 If the market for our quantum computing application development solutions fails to develop or grow as
we expect, our business could be adversely affected.

 •
 Our business plan relies upon the adoption of our quantum computing application development solutions
by enterprise customers.

 •
 We could fail to respond to rapid technological changes.

 •
 Would be negatively impacted by delays in development of our software platform.

 •
 Our success could be materially affected by problems with or defects in the Orquestra platform or our
other software offerings.

 •
 The pursuit of inorganic growth opportunities could result in harm to our business.

 Risks Related to Competition

 •
 Competitors may develop products and technologies that are superior to ours.

 •
 The quantum computing industry is highly competitive, and we may not be successful.

 •
 Our business plan depends on access to public clouds through major cloud providers

 •
 Our business plan depends on access to specialized hardware which we may struggle to access.

 Risks Related to Intellectual Property

 •
 Our patent applications may not result in issued patents or our patent rights may be contested, circumvented,
invalidated or limited in scope.

 •
 There is no guarantee that our IP will provide the desired competitive advantage.

 •
 We may face patent infringement and other intellectual property claims.

 •
 Our use of third-party open source software could negatively affect our sales efforts.

 •
 Use of open source software may result in be fewer technology barriers to entry.

 Risks Related to Government Regulation and Litigation

 •
 We may fail to comply with United States and foreign laws related to privacy, data security, and data
protection.

 •
 We are potentially subject to governmental export and import control laws.

 •
 We are subject to U.S. and foreign anti-corruption, anti-bribery, and similar laws.

 •
 We are exposed to risks associated with litigation and regulatory proceedings.

 Risks Outside Our Specific Business

 •
 Our business relies on computer systems which are vulnerable to attack and/or failure.

 •
 Widespread damage to the global economy would likely adversely affect our business.

 •
 Risks Relating to Ownership of our Common Stock

 •
 Shares of Common Stock underlying outstanding securities will cause holders to experience substantial
future dilution and downward price pressure.

 •
 The market price of our shares of Common Stock is subject to volatility.

 •
 There is currently a limited trading market for the Company's Common Stock.

 •
 Common Stock is a "penny stock" and thereby is subject to additional restrictions.

 •
 As a former shell company, we face certain disadvantages relative to other companies.

 •
 We will incur significant increased costs as a result of being a public company.

 •
 Due to our size, we have a limited management team.

 •
 We do not currently intend to pay cash dividends on our Common Stock.

 •
 Certain provisions in our Certificate of Incorporation and Bylaws and Delaware law might may adversely
affect us and/or certain investors.

 Investing in our Common Stock involves a high degree of risk. Investors
should carefully consider the following Risk Factors before deciding whether to invest in the Company. Additional risks and uncertainties
not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If
any of the events discussed in the Risk Factors below occur, our business, consolidated financial condition, results of operations or
prospects could be materially and adversely affected. In such case, the value and marketability of our securities could decline.

 Risks Related to Zapata's Financial Condition and Status as
an early-stage Company

 We will need additional capital to continue as a going concern,
implement our business plan or respond to business opportunities or unforeseen circumstances and such financing may not be available.

 Through October 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 needing to raise at least an additional $5 million to establish and continue operations over the next 12 months 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, and does not expect to generate any revenue unless and
until it can re-commence material operations which will be dependent on our ability to raise sufficient capital. These factors raise substantial
doubt about our ability to continue as a going concern.

 Our business plan also contemplates a substantial
scaling of Zapata across all departments, including science, software engineering, and product design, in order to launch multiple products
and/or offerings in a timely manner to obtain and preserve a competitive advantage. This scaling will require substantial capital at a
time when we project we will be operating at a loss and in which we have limited capital and other resources with which to execute our
business plan, and this process may take longer than we anticipate. Consequently, our expansion is limited in proportion to our growth
in revenue and available capital, as well as by our limited personnel and infrastructure. The capital required to sustain our business
during this period may be greater than anticipated. In addition, presently unforeseen opportunities or circumstances may require capital
beyond what we currently project. The period during which we expect to operate at a loss may be extended by circumstances beyond our control.

 We may 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 October 31, 2025, we have outstanding an aggregate principal amount of $4 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 10% per annum interest. These 2025 Notes are convertible into shares of Common Stock at the option of the holder based on a 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.

 There is no guarantee that future financing will
be at financial terms equal to or more favorable than those described above or that our existing indebtedness will not limit or prevent
us from raising capital in the future, and we may need to enter into future equity or, if available, debt financing at significantly less
favorable terms. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability
to pursue our business strategy.

 We may also seek additional financing even if in
our view such additional financing is not required in order to take advantage of favorable market conditions or for strategic considerations.
There can be no assurance that additional financing will be available on favorable terms, or at all. The inability to obtain such additional
financing if needed may adversely affect our ability to operate at the levels necessary to execute our business plan or may force us into
bankruptcy.

 We have a history of operating losses, which are expected to
continue for the foreseeable future.

 We have incurred significant operating losses since
our inception. We incurred net losses of $38.2 million and $29.8 million during the years ended December 31, 2024 and 2023, respectively,
and we have a cumulative deficit since the formation of Legacy Zapata in November 2017 through December 31, 2024 of approximately $127.7
million. Since 2024, 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 material operations as part of our ongoing restructuring efforts in 2025.

 We are an early stage company with a limited operating history,
in a nascent industry, making it difficult to forecast future results.

 We were founded in 2017 to develop and provide
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 indebtedness into equity, we shifted our business focus from artificial intelligence (AI) to quantum computing software and
solutions. Our ability to re-establish material 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 material 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.

 We may not be able to scale our business and quantum computing
application development solutions quickly enough to meet customer and market demand and to remain competitive in the market for quantum
computing application development solutions.

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

 •
 scale our product design team to design and continually re-design our quantum computing application
development solutions in order to maintain a competitive position in the market, including increasing the number of employees following
our previous reductions in force;

 •
 increase the size of our software engineering team to produce in a competitively timely manner stable
quantum computing application development solutions based on the chosen design elements;

 •
 increase the size of our services team to provide ongoing services in connection with our quantum computing
application development solutions;

 •
 expand our customer-support services;

 •
 expand our scientific research and development in order to generate IP required or helpful to our business,
including IP to develop our quantum computing application development solutions, to provide freedom to operate for our quantum computing
application development solutions, and to create barriers to competition, on an accelerated time frame in order to minimize the risk that
third-parties might first create potentially blocking IP;

 •
 increase our sales and marketing teams and efforts;

 •
 develop and expand relationships with large service firms to leverage sales of our quantum computing
application development solutions;

 •
 develop and expand our operational, financial and legal systems and teams to accommodate increases in
customer and partner relationships and additional legal requirements we will face as a result of international data privacy regulations,
securities compliance and reporting obligations;

 •
 establish, maintain and scale effective financial disclosure controls and procedures;

 •
 expand our executive and administrative teams in all areas including finance, accounting, operations,
human resources, and legal, in order to effectively manage our growth; and

 •
 expand our access to computing hardware and specifically Graphics Processing Unit chips ("GPUS"),
which have faced supply limitations.

 If we cannot successfully overcome these challenges
and manage the organizational growth required to do so, then our business, including our ability to establish and maintain a competitive
place in the market, financial condition, and profitability, may be materially adversely affected.

 Our assets are pledged to the holders of the Secured Notes and
failure to repay obligations to these noteholders when due, or any other default events, will have a material adverse effect on our business
and could result in foreclosure on these assets.

 In connection with the issuance of Secured Notes,
the Company entered into Security Agreements and an Intercreditor Agreement with Acquiom Agency Services LLC as collateral agent on behalf
of the noteholders (collectively, the "Security Agreement"). The Security Agreement creates a security interest in all of
the property of Zapata and its subsidiaries, subject to certain exceptions specified in the Security Agreement (the "Collateral").
Pursuant to the Security Agreement, each of Zapata Computing, Inc. and Zapata Government Services, Inc. has agreed to guarantee the obligations
of the Company under the Security Agreement and the Secured Notes.

 Upon the occurrence of an Event of Default under
the Security Agreement, the collateral agent will have certain rights under the Security Agreement, including the right to take control
of the Collateral and, in certain circumstances, sell the Collateral to cover obligations owed to the holders of the Secured Notes pursuant
to its terms. "Event of Default" under the Security Agreement means (i) any default of the terms, conditions or covenants
of the Security Agreement (after giving effect to any applicable grace or cure period) and any event of default under the Secured Notes,
which includes any failure to pay any principal or interest payment on the due date or any other payments required under the terms of
the Secured Notes, a breach of any other covenant under the Secured Notes, and entering into any voluntary or involuntary bankruptcy or
insolvency proceedings. Any such default would have a material adverse effect on Legacy Zapata's and, by extension, our, business
and our stockholders could lose their entire investment in us.

 If we fail to maintain an effective system of disclosure controls
and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable
regulations could be impaired.

 As a public company, we are subject to the reporting
requirements of the Exchange Act, the Sarbanes-Oxley Act, including regular attestations by management concerning its internal control
over financial reporting. Management may not be able to effectively and timely implement controls and procedures that adequately respond
to these increased regulatory compliance and reporting requirements. If we are not able to implement the additional requirements of Section
404 of the Sarbanes-Oxley Act ("Section 404") in a timely manner or with adequate compliance, we may not be able to assess
whether our internal control over financial reporting is effective and may fail to provide timely and accurate financial information to
investors. This may subject us to adverse regulatory consequences and could harm investor confidence. We expect that the requirements
of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more
difficult, time consuming, and costly, and place significant strain on our personnel, systems, and resources. We will need to hire additional
accounting and financial personnel in order to achieve these goals.

 The Sarbanes-Oxley Act requires, among other things,
that we maintain effective disclosure controls and procedures and internal control over financial reporting. The controls required are
not currently in place; however, we are working to develop and refine our disclosure controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized,
and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the
Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also working to design and maintain
our internal control over financial reporting.

 Our current controls and any new controls that
we develop may be inadequate because of changes in conditions in our business. In addition, changes in accounting principles or interpretations
could also challenge our internal controls and require that we establish new business processes, systems, and controls to accommodate
such changes. We have limited experience with implementing the systems and controls that will be necessary to operate as a public company,
as well as adopting changes in accounting principles or interpretations mandated by the relevant regulatory bodies. Additionally, if these
new systems, controls, or standards and the associated process changes do not give rise to the benefits that we expect or do not operate
as intended, it could adversely affect our financial reporting systems and processes, the effectiveness of internal control over financial
reporting, and/or our ability to produce timely and accurate financial reports. Moreover, our business may be harmed if we experience
problems with any new systems and controls, resulting in delayed implementation or increased costs to correct any issues.

 Further, in addition to the material weaknesses
described in the Risk Factor which follows and elsewhere in this Report, weaknesses in our disclosure controls and internal control over
financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered
in their implementation or improvement could harm our business or cause us to fail to meet our reporting obligations. That failure could
result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control
over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public
accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting. Those reports will eventually
be included in our periodic reports filed with the SEC. Ineffective disclosure controls or internal control over financial reporting could
also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on
the trading price of our Common Stock.

 Any failure to maintain effective disclosure controls
and internal control over financial reporting could harm our business and could cause a decline in the trading price of our Common Stock.

 We have identified material weaknesses in our internal control
over financial reporting. If we are unable to remediate these weaknesses, identify additional material weaknesses in the future, or otherwise
fail to maintain an effective system of internal control over financial reporting, this may result in misstatements in our financial statements,
cause us to fail to meet periodic reporting obligations, or cause our access to capital markets to be impaired.

 In connection with the preparation and audit of
our financial statements as of and for the year ended December 31, 2024, material weaknesses have been identified in its internal control
over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting
such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented
or detected on a timely basis.

 The material weaknesses we identified include:

 •
 The Company does not have sufficient segregation of duties within accounting functions, as its Chief
Executive Officer is the sole officer as of the date of this Report.

 •
 The Company does not have sufficient or complete written documentation of our internal controls policies
and procedures.

 •
 A substantial portion of the Company's financial reporting is carried out by an outside accounting
firm.

 •
 The Company's human resources, processes and systems are not sufficient to enable the production
of timely and accurate financial statements in accordance with US GAAP.

 These material weaknesses could result in a misstatement
of account balances or disclosures that would result in a material misstatement to our combined annual or interim financial statements
that would not be prevented or detected.

 In an effort to remediate the material weaknesses,
we have retained an accounting consulting firm to provide additional depth and breadth to our technical accounting and financial reporting
capabilities. We intend to engage internal control consultants to assist us in performing a risk assessment to identify relevant risks
and specify needed objectives. With their assistance, we intend to formalize and communicate our policies and procedures surrounding our
financial close, financial reporting and other accounting processes, and to further develop and document necessary policies and procedures
regarding our internal control over financial reporting, such that we are able to perform a Section 404 analysis of our internal control
over financial reporting when and as required. We cannot assure that these measures will significantly improve or remediate the material
weaknesses described above. We also cannot assure that we have identified all or that we will not have additional material weaknesses
in the future. Accordingly, a material weakness may still exist when we report on the effectiveness of our internal control over financial
reporting for purposes of our management's required attestation. Further, while we remain an emerging growth company, we will not
be required to include an attestation report on internal control over financial reporting issued by our independent registered public
accounting firm.

 We have incurred and expect to incur additional
costs to remediate these control deficiencies, though there can be no assurance that our efforts will be successful or that we will avoid
potential future material weaknesses. If we are unable to successfully remediate our existing or any future material weaknesses in our
internal control over financial reporting, or if we identify any additional material weaknesses, the accuracy and timing of our financial
reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing
of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting,
and our stock price may decline as a result. We also could become subject to investigations by the SEC or other regulatory authorities.

 Our ability to use existing or future net operating loss carryforwards
and other tax attributes may be limited.

 We have incurred net operating losses ("NOLs")
for tax purposes for each year since our incorporation and we expect to continue to operate at a loss for the foreseeable future. As of
December 31, 2024 we had a cumulative U.S. federal carryforward of approximately $68.8 million and a cumulative state NOL carryforward
of approximately $39.7 million. If not utilized, the state NOLs will expire at various dates through 2044. The U.S. federal NOLs generated
after 2017 can be carried forward indefinitely. Under the Code, the deductibility of the U.S. federal NOL carryforward as of December
31, 2024 and all future U.S. federal NOL carryforwards is limited to 80% of taxable income, limiting or delaying in part the use of NOL
carryforwards if and when we cease operating at a loss. We may potentially use these U.S. federal and state NOLs to offset taxable income
for U.S. federal and state income tax purposes. However, the use of these NOLs may be subject to numerous limitations under the Code and
under state tax laws. Among such limitations, Section 382 of the Code may limit the use of these NOLs in any year for U.S. federal income
tax purposes in the event of certain past or future changes in ownership of us or Legacy Zapata. An ownership change under Section 382
of the Code, referred to in this discussion as an ownership change, generally occurs if one or more stockholders or groups of stockholders
who own at least 5% of a company's stock increase their ownership by more than 50 percentage points over their lowest ownership
percentage within a rolling three-year period. We have not conducted a Section 382 study to determine whether the use of our NOLs is impaired
under Section 382 of the Code as a result of any prior ownership change. We may have previously undergone one or more ownership changes.
An ownership change in respect of us also could be deemed to be an ownership change in respect of Legacy Zapata. The Merger, or future
issuances or sales of our securities, including certain transactions involving our securities that are outside of our control, could result
in ownership changes. Ownership changes that have occurred in the past or that may occur in the future could result in the imposition
of an annual limit under Section 382 of the Code on the amount of pre ownership change NOLs and other tax attributes that we or Legacy
Zapata could use to reduce our taxable income, potentially increasing or accelerating its liability for income taxes, and also potentially
causing those tax attributes to expire unused.

 States may impose similar limitations on the use
of applicable NOLs. We have recorded a valuation allowance related to NOL carryforwards and other deferred tax assets due to the uncertainty
of the ultimate realization of the future benefits of those assets.

 Any limitation on using NOLs, whether under Section
382 of the Code or otherwise under U.S. federal or state tax laws, could, depending on the extent of such limitation and the NOLs previously
used, result in Legacy Zapata or us retaining less cash after payment of U.S. federal and state income taxes in respect of any year in
which we have taxable income, rather than losses, than we would be entitled to retain if such NOLs were available as an offset against
such income for U.S. federal and state income tax reporting purposes, which could adversely impact our operating results.

 Risks Related to our Business and Industry

 Failure of quantum computing solutions in general and our quantum
computing application development solutions in particular to satisfy customer demands or to achieve increased market acceptance would
adversely affect our business, results of operations, financial condition, and growth prospects, and the current state of the quantum
computing industry is still new and rapidly evolving, so there is no guarantee that it will succeed.

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

 The market for quantum computing is still in its
early stages and is rapidly evolving. Adoption depends on customer awareness of the potential benefits of quantum computing over classical
methods, the continued progress of underlying hardware, and the availability of practical quantum algorithms and workflows. There is no
assurance that quantum computing will achieve large scale commercial viability or that customers will adopt our products at the rate or
in the manner we anticipate.

 Demand for our solutions is affected by factors
largely beyond our control, including the pace of hardware advancement, competitive product introductions, data-security and regulatory
considerations, and general macroeconomic conditions. Further, the use of quantum technology is not widespread and is generally limited
to certain specific types of organizations and activities, and our prospective customer base will therefore be limited. We expect the
needs of our customers to continue to evolve and grow in complexity as the industry progresses toward fault-tolerant quantum computing.
To remain competitive, we must continually enhance the functionality, performance, and usability of our software and services to meet
these changing demands.

 If the market fails to achieve broad acceptance
of quantum computing or our application development solutions do not meet with sufficient customer demand, or if we fail to keep pace
with rapid technological change, our business, operating results, and growth prospects could be materially and adversely affected.

 While significant progress has been made in advancing
quantum hardware, the commercial utility of quantum computing remains largely unproven. As the technology is applied to new domains such
as chemistry, materials science, optimization, cryptography, and machine learning, it is possible that performance gains may be more limited
than current forecasts suggest. Techniques we or others develop could quickly become obsolete as new methods or architectures emerge.
Because many of our competitors are larger companies with greater resources, they may be able to incorporate new techniques or access
next-generation hardware more rapidly than we can.

 There can also be no assurance that our analysis
of the eventual market need for quantum computing is correct. If our assessment proves inaccurate, the future value of our products and
services, our competitive position, and our profitability could be materially lower than we currently anticipate.

 Our business plan could suffer if we are not able to establish
and grow contractual relationships with third parties or enter into certain important strategic partnerships, and if we are unable to
ensure that our quantum computing application development solutions interoperate with computing hardware or software that are developed
by others, we may become less competitive and our resulting operations may be harmed.

 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:

 •
 discontinues or limits our access to its software;

 •
 modifies its terms of service or other policies, including fees charged to, or other restrictions on
us, or other platform and application developers;

 •
 changes or modifies its open source license;

 •
 changes how information is accessed by us or our customers;

 •
 establishes more favorable relationships with one or more of our competitors; or

 •
 develops or otherwise favors its own competitive offerings over AI software libraries.

 Third-party services and products are constantly
evolving, and we may not be able to modify our quantum computing application development solutions to assure their compatibility with
that of other third parties as they continue to develop or emerge in the future or we may not be able to make such modifications in a
timely and cost-effective manner. In addition, some of our competitors may be able to disrupt the operations or compatibility of our quantum
development frameworks with their products or services, or exert strong business influence on our ability to, and terms on which we, operate
our quantum computing application development solutions. Should any of our competitors modify their products or standards in a manner
that degrades the functionality of our quantum development frameworks or gives preferential treatment to our competitors or competitive
products, whether to enhance their competitive position or for any other reason, the interoperability of our quantum computing application
development solutions with these products could decrease and our business, results of operations, and financial condition would be harmed.
If we are not permitted or able to integrate with these and other third-party applications in the future, our business, results of operations,
and financial condition would be harmed.

 Our business plan could suffer if we are not able to enter into
important strategic partnerships.

 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 is unable to do so on favorable terms, then its growth could be limited or delayed.

 If we cannot manage our growth effectively, we may not become
profitable.

 Businesses, including development stage companies
such as ours which often grow rapidly, tend to have difficulty managing their growth. If we are able to successfully market our products
and services, we will likely need to expand our management team and other key personnel by recruiting and employing experienced executives
and key employees and/or consultants capable of providing the necessary support.

 As described elsewhere in this Report, we are in
the process of developing and/or pursuing business plans for relatively novel technology in an industry that remains in its infant stages,
and which involves a unique business model and would take substantial time and resources to execute and develop into a revenue generating
enterprise. We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet
these challenges could cause us to lose money, and your investment could be lost.

 We are highly dependent on our key employees.

 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 three such individuals, and will need to re-hire and/or find suitable
replacement or supplemental personnel in order to commence material operations and execute on our business plan. The procurement and retention
of these key employees and consultants, together with additional key hires, is critical to the long-term success of the Company. All of
our personnel, including the 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 on us, and we may be unable to locate and hire suitable replacements on favorable terms or at all, and could lose competitive
advantages, market share, and the ability to operate as planned as a result of the loss of certain key personnel.

 Our future success is also highly dependent on
locating and hiring highly qualified key employees, both to replace any losses of key employees, including following our previous reductions
in force, as well as to supplement our current employees. If we are unable to grant sufficient or competitive compensation, including
equity awards and bonuses, we may be unable to attract new or retain key employees.

 The failure to attract and retain additional qualified personnel
or to maintain our company culture could harm our business and prevent us from executing our business strategy.

 To execute our business strategy, we must attract
and retain highly qualified personnel. Competition for executives, data scientists, engineers, software developers, sales personnel, and
other key employees in our industry is intense. In particular, we compete with many other companies for employees with high levels of
expertise in quantum computing, computer science, mathematics, and enterprise software, as well as sales and operations professionals,
which are specialized fields with limited pools of qualified candidates with the knowledge, education, training and experience needed
to fill various roles that will be critical to our operations. As disclosed above, we will need to hire additional personnel to execute
our business plan. At times, we have experienced, and we may continue to experience, difficulty in hiring personnel who meet the demands
of our selection process and with appropriate qualifications, experience, or expertise, and we may not be able to fill positions as quickly
as desired, particularly in light of our previous reductions in workforce. Potential candidates may not perceive our compensation package,
including our equity awards, or our future prospects as favorably as employees hired in the past which may render recruiting and retaining
qualified individuals more difficult. In addition, our recruiting personnel, methodology, and approach may need to be altered to address
a changing candidate pool and profile. We may not be able to identify or implement such changes in a timely manner.

 Many of the companies with which we compete for
experienced personnel have greater resources than we have, and some of these companies may offer more attractive compensation packages.
If the perceived value of our equity awards declines, or if the mix of equity and cash compensation that we offer is unattractive, it
may adversely affect our ability to recruit and retain highly skilled employees. Our ability to offer attractive compensation packages
to our current and prospective employees is limited by our limited capital resources and our reliance on equity compensation which may
be viewed as less attractive based on the prices and lack of liquidity of our Common Stock.

 Additionally, laws and regulations, such as restrictive
immigration laws, or export control laws, may limit our ability to recruit internationally. We must also continue to retain and motivate
existing employees through our compensation practices, company culture, and career development opportunities.

 Companies with greater resources than we have in
the past recruited or attempted to recruit our employees. If we cannot retain these employees, it may adversely affect our ability to
deliver on our quantum computing application development solutions. Furthermore, third-party offers to our employees of greater compensation
have in the past forced and may in the future force us to offer significant additional compensation, which may adversely impact our financial
performance, and we are limited in issuing equity by the number of shares reserved for issuance under our equity plans. Additionally,
continued high inflation, without regard to competition, may require us to increase compensation and failure to do so might impact our
employee retention. Such increases would also adversely impact our financial performance.

 We believe that a critical component to our success
and our ability to retain our best people is our culture. As we continue to grow and develop a public company infrastructure, we may find
it difficult to maintain our company culture. If we fail to attract new personnel or to retain our current personnel, our business would
be harmed.

 Our business is dependent on growing and retaining competitive
teams of sufficient size in the areas of algorithm development, product development, and software engineering; the failure to achieve
any one of these objectives could materially affect our business.

 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. This requires a product development team that can describe software that not only is able to use the quantum techniques
developed by its team, but also is able to handle enterprise production issues at scale. It also requires a software engineering team
that can implement the product design through products that comply with the myriad legal and enterprise information technology ("IT")
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. 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.

 There is no assurance that we will be able to hire
and retain an adequate number of quantum scientists, product design specialists, and/or software engineers with the qualifications required
to execute our business plan. Our failure to build and maintain any one or more of these requisite teams could have a material adverse
effect on our future prospects.

 Our estimate of market opportunities may prove to be inaccurate.

 At present, there is no mature market for quantum
computing solutions. This creates significant uncertainty in determining the potential market for our quantum computing application development
solutions. For example, estimates on the current and potential total addressable market for quantum computing as an industry are based
on third-party estimates and our own internal judgment, both of which may be materially inaccurate. There can be no assurance that our
or third-party estimates of the potential total addressable market for quantum computing are correct, and such numbers do not account
for the substantially more limited service obtainable market for our quantum computing application development solutions. Additionally,
our market opportunities, future prospects, and future profitability will be materially lessened by delays in widespread enterprise adoption
of quantum computing, if enterprises adopt quantum computing at all, which would reduce the relevant total addressable market.

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

 To establish material revenue following the suspension
of our operations and to increase our revenue, we must attract new customers. 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 current quantum computing application development solutions,
as well as applications, features, and functionality that we may introduce in the future or that we offer but have not yet sold, may not
be widely accepted by our customers or may receive negative attention, each of which may lower our margins and harm our business.

 Our ability to engage, retain, and increase our
base of customers and to establish and increase our 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 fail to engage, retain, and increase our base of customers, we may
fail to generate sufficient revenue, operating margin, or other value to justify our investments in such applications, any of which may
harm our business.

 If the market for our quantum computing application development
solutions fails to develop or grow as we expect, or if businesses fail to adopt our quantum computing application development solutions,
our business, operating results, and financial condition could be adversely affected.

 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 substantial
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.

 Our business plan relies upon the adoption of our quantum computing
application development solutions by enterprise customers.

 Our primary targeted customers are large enterprises
with intractable problems that require addressing at scale. The success of our business plan, therefore, materially depends upon our ability
to sell our quantum computing application development solutions to such large enterprise customers. Sales to such customers involve risks
that are different from or greater than risks involved in selling to smaller customers. Such risks include difficulties associated with
longer sales, product, evaluation, and implementation cycles; higher customer-tailored requests and greater bargaining power on the part
of the customer; and more intense competition from vendors who have been providing other software and services for years to the customer
and are embedded in the customer's IT infrastructure. If we are not able to overcome these risks and successfully establish a meaningful
share of the enterprise market, then its business prospects and future profitability could suffer.

 Our sales cycles are expected to be long and unpredictable, and
our sales efforts will require considerable time and expense.

 Our results of operations may fluctuate, in part,
because of the complexity of customer problems that our quantum computing application development solutions address, the resource-intensive
nature of our sales efforts, the length and variability of the sales cycle for our offerings, and the difficulty in making short-term
adjustments to our operating expenses. The timing of our sales is difficult to predict. The length of our sales cycle, from initial evaluation
to payment for our subscriptions and related services can vary substantially from customer to customer and could extend over a number
of years for some customers. Our sales efforts are expected to involve educating our customers about the use, technical capabilities,
and benefits of our offerings. Customers often undertake a prolonged evaluation process. In addition, the size of potential customers
may lead to longer sales cycles. We may also face unexpected deployment challenges with large organizations or more complicated deployment
of our offerings. Large organizations may demand additional features, support services, and pricing concessions or require additional
security management or control features. Some organizations may also require an on-premise solution rather than a cloud solution, which
potentially requires additional implementation time and potentially a longer sales cycle. We may spend substantial time, effort and money
on sales efforts to large organizations without any assurance that our efforts will produce any sales. As a result, it is difficult to
predict exactly when, or even if, we will make a sale to a potential customer or if we can increase sales to existing customers.

 Individual sales can be part of a long sales cycle,
which impacts our ability to plan and manage cash flows and margins. These large individual sales have, in some cases, occurred in quarters
subsequent to those we anticipated, or have not occurred at all. If our sales cycle lengthens or our substantial upfront investments do
not result in sufficient revenue to justify our investments, our operating results could be adversely affected. In addition, within each
quarter, it is difficult to project which month a deal will close. Therefore, it is difficult to determine whether we are achieving our
quarterly expectations and whether we will achieve annual expectations. We may fail to budget and manage costs and operating expenses
or anticipate working capital needs. Therefore, if expectations for our business are not accurate, we may not be able to adjust our cost
structure on a timely basis, and our margins and cash flows may differ from expectations.

 If we fail to respond to rapid technological changes, extend
our quantum computing application development solutions, or develop new features and functionality, our ability to remain competitive
could be impaired.

 The market for our quantum computing application
development solutions is characterized by rapid technological change, particularly since quantum computing is a new and evolving industry,
including frequent new hardware and software introductions and enhancements, changing customer demands, and evolving industry standards.
The introduction of software embodying new technologies can quickly make existing software obsolete and unmarketable. Quantum computing
is inherently complex, and it can take a long time and require significant research and development expenditures to develop and test new
or enhanced methods and solutions. The success of any enhancements or improvements to our existing quantum computing application development
solutions or any new applications depends on several factors, including timely completion, competitive pricing, adequate quality testing,
integration with existing technologies, and overall market acceptance, particularly as we provide custom solutions for specific use cases.

 Any failure of our quantum computing application
development solutions to operate effectively with future infrastructure platforms and technologies could impact our ability to attain
new customers and generate revenue therefrom. If we are unable to respond to these changes in a timely and cost-effective manner, our
quantum computing application development solutions may become less marketable, less competitive, or obsolete, and our business may be
adversely affected.

 The introduction of new quantum computing platforms
and applications by competitors or the development of entirely new technologies to replace existing offerings could make our quantum computing
application development solutions obsolete or adversely affect our business, results of operations, and financial condition. We may experience
difficulties with software development, design, or marketing that could delay or prevent our development, introduction, or implementation
of new quantum computing application development solutions, features, or capabilities, applying our existing quantum computing application
development solutions to new use cases. Any delays could result in adverse publicity, loss of revenue or market acceptance, or claims
by customers brought against us, all of which could harm our business.

 Our business could be negatively impacted by delays in development
of our software platform.

 We have plans, including raising sufficient capital
and obtaining adequate staffing and other resources, that we believe if successfully executed will result in the development of and continued
improvements to our software platform on a schedule that permits the execution of our business plan in a timely manner. Any delays in
platform design and engineering work required to accomplish this could result in corresponding delays in the implementation of our business
plan in the market. We are presently unaware of any outstanding design or engineering issues that cannot be resolved in the normal course,
but the failure to complete necessary components of or improvements to its platform in a timely manner would have a serious negative impact
on the company and might cause the company to fail.

 Any failure to offer high-quality support services for our customers
may harm our relationships with our customers and, consequently, our business.

 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 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
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.

 Sales to government entities and highly regulated organizations
are subject to a number of challenges and risks.

 We selectively pursue U.S. government contracts
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 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.

 Further, governmental and highly regulated entities
may demand contract terms that differ from our standard arrangements and may be less favorable than terms agreed with private sector customers.

 Contracts with governmental entities may also include
preferential pricing terms, including, but not limited to, "most favored customer" pricing. In the event that we are successful
in being awarded a government contract, such award may be subject to appeals, disputes, or litigation, including but not limited to bid
protests by unsuccessful bidders.

 As a government contractor or subcontractor, we
will be required to comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance
of government contracts, which affect how we and our partners do business with government agencies. As a result of actual or perceived
noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to non-ordinary course audits
and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue
selling our products and services to our government customers. These laws and regulations may impose other added costs on our business,
and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to
claims for damages from our channel partners, downward contract price adjustments or refund obligations, civil or criminal penalties,
and termination of contracts and suspension or debarment from government contracting for a period of time with government agencies. Any
such damages, penalties, disruption, or limitation in our ability to do business with a government would adversely impact, and could have
a material adverse effect on, our business, results of operations, financial condition, public perception and growth prospects.

 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 a 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 success could be materially affected by problems with or
defects in the Orquestra platform or our other software offerings.

 In addition to issues commonly facing all providers
of commercial software, the development of our quantum computing application development solutions involves converting novel, complex
scientific algorithms into software code. We may experience unintended design and/or implementation defects or other quality issues in
our software code. We may also experience defects in the products and services of third parties on which we rely to provide our products
and services, including third-party cloud providers. Problems can be caused by a variety of factors, including premature or failed introduction
of new products, vulnerabilities or defects in proprietary and open source software, human error or misconduct, design limitations, or
denial of service or other security-related incidents. We do not have a contractual right with our public cloud providers that will compensate
us for any losses due to availability interruptions in the public cloud.

 Any defects in the Orquestra platform or other
software offerings, whether caused by defective design, defective coding, or defects introduced through third-party components; any disruptions
in our ability to provide our quantum computing application development solutions, including by means of public cloud; and/or any other
quality issues with our quantum computing application development solutions could affect our business reputation and brand, could cause
us to spend material amounts to address the defects, could cause material delays in the execution of our business plan, and could have
a material adverse effect on our business opportunities, revenue, and future profitability.

 The pursuit of inorganic growth opportunities could result in
harm to our business.

 We may pursue growth opportunities by acquiring
complementary businesses or other assets for strategic purposes, such as companies with products and services used in, complementary to,
or overlapping with our offerings; companies with an IP portfolio that could complement ours; companies with customer lists that could
shorten the sales cycle to significant customers. The pursuit of such strategic opportunities could be both expensive and distracting,
could have a significant impact on the company's capital structure, and even if the transaction is completed as desired the results
may not be as predicted. To the extent such opportunities may arise, there can be no assurance that the pursuit of any such opportunities
will succeed and, if they fail, they could have a material adverse effect on our business and future profitability.

 Risks Related to Competition

 Competitors may develop products and technologies that are superior
to our quantum computing application development solutions.

 Our business plan is based on the belief that the
value of our quantum computing application development solutions will be enhanced by delivering, in a single unified software platform,
the ability to: allow deployment in any desired environment; permit the development or implementation of applications and services that
are capable of data handling tasks, including processing data in a manner calculated to maximize the performance of quantum and hybrid
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-launching material 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.

 Many of our existing and potential competitors
have, or could have, substantial competitive advantages such as:

 •
 greater name recognition, longer operating histories, and larger customer bases;

 •
 larger sales and marketing budgets and resources and the capacity to leverage their sales efforts and
marketing expenditures across a broader portfolio of products and services;

 •
 existing, broader, deeper, or otherwise more established relationships with sales partners and customers;

 •
 wider geographic presence or greater access to larger customer bases;

 •
 greater focus in specific geographies or industries;

 •
 lower labor and research and development costs;

 •
 larger and more mature intellectual property portfolios; and

 •
 substantially greater financial, technical, and other resources to provide support, make acquisitions,
hire talent, and develop and introduce new products and services.

 There can be no guarantee that a competitor will
not develop a product superior to ours or one that is perceived by the market to be superior. Nor can there be any guarantee that a combination
of products will not be able to provide solutions that are superior, or are perceived to be superior, to our quantum computing application
development solutions. The introduction of such a product or combination of products could have a material adverse effect on our business,
profitability, and financial condition.

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

 Quantum computing is an industry with great promise
that has attracted global interest and participation. In addition, the recent rapid rise of the quantum computing industry has given rise
to less-established public and private companies, including new startups, which may compete, in whole or in part, with our products and
services. This competition in the market for quantum computing is already great and is expected to intensify over time.

 To compete successfully in this market, we must
develop our products and technologies in a timely manner, effectively market these products against multiple competitors, and support
these products at levels expected by enterprise customers. Delays in the introduction of products and services may cause potential customers
to adopt competitors' products, making it difficult or impossible for our products later to displace the competitive products without
regard to the relative value of the respective products.

 There can be no assurance that we will be able
to timely deliver products that will result in us having a material share of this market, even if our products are superior. Our inability
to establish a position and market share in this highly competitive industry will adversely affect our future prospects and may cause
the company to fail.

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

 Our quantum computing application development solutions
will permit deployment of our software in various scenarios, including on the premises of a customer, hybrid clouds controlled by the
customer, or a public cloud controlled by us. Although not necessary in all customer engagements, an important aspect of business plan
is to make our quantum computing application development solutions available via a public cloud controlled by us. To accomplish this,
we are required to negotiate cloud access with one or more cloud providers. Multiple large public cloud providers, such as Google and
Microsoft, are both engaged in their own initiatives that could compete with our quantum computing application development solutions in
whole or in part. There is a risk that a cloud provider important to our business plan could use control of their public cloud to deny
or place us at a competitive disadvantage by various means, including embedding innovations or privileged interoperating capabilities
in products competing with ours, bundling competing products, requiring unfavorable pricing, including terms or conditions or regulatory
requirements that make our quantum computing application development solutions uncompetitive, or leveraging their existing relationships
with our customers to pressure customers to use their products rather than ours. Further, if we fail to comply with requirements of these
third parties, we could be denied access to a critical platform, which would have a material adverse effect on our business.

 There can be no guarantee that we will be able
to deploy our quantum computing application development solutions on public clouds controlled by competitors. The failure to be able to
access public clouds, or the imposition of restrictive terms as a condition to such access, limit the adoption and use of our quantum
computing application development solutions by customers, increase our operating expenses, damage our brand, and/or place us at a disadvantage
when competing for customer accounts. Any of these could have a material adverse effect on our business operations, market share, and
profitability.

 Our business plan depends, in part, on access to quantum processing
units (QPUs), high-performance classical compute resources, and other specialized hardware either directly through the purchase of computing
hardware and installation in data centers, or through third party providers. There is no guarantee that access through either path will
be available on reasonable terms, or at all.

 Many of the techniques developed by us require
the use of specialized hardware to execute an algorithm in a time or cost-efficient manner as required by the constraints of an application.
Access to this hardware can be obtained through the purchase of quantum or hybrid computing systems and installation in a data center
or on-premise, or through a third-party infrastructure service provider. Hardware could be purchased or accessed from providers such as
IBM, IonQ, D-Wave, Rigetti or NVIDIA. Many of these providers are also our competitors in that they operate in the quantum software space
in addition to hardware. Supply chain problems, chip shortages, or regulatory or geopolitical conditions beyond our control including
tariffs or trade restrictions could all impact our ability to access this hardware, either directly or through a third-party provider,
and/or the prices we must pay for the hardware. Additionally, obtaining space in an existing facility and maintaining the hardware would
require additional expertise that would need to be either hired or contracted by us, and identifying and hiring such experts could be
costly and time-consuming. We could also face difficulties securing terms to host this hardware on reasonable terms, or at all, and we
may be forced to incur substantial additional or unforeseen expenses to navigate these challenges.

 Alternatively, instead of competing to purchase
hardware directly, we could rent time on that hardware from classical or quantum cloud infrastructure service providers, such as Amazon
AWS, Amazon Braket, Oracle Cloud, Microsoft Azure, or IBM Quantum. In this case, we would rely on third-party providers to provide cloud-based
network access to these systems on an hourly, subscription, or other basis. However, there can be no assurance that these third-party
providers could obtain or maintain access to quantum hardware on reasonable terms, or at all. If we are unable to access on favorable
terms the necessary hardware to operate our business as needed to establish, sustain or grow our operations as planned, it will have a
material adverse effect on our business and results of operations.

 Risks Related to Intellectual Property

 Our patent applications may not result in issued patents or our
patent rights may be contested, circumvented, invalidated or limited in scope, any of which could have a material adverse effect on our
ability to prevent others from interfering with our commercialization of our products.

 Our patent applications may not result in issued
patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain. As a result, we cannot
be certain that the patent applications that we file will result in patents being issued, or that our patents and any patents that may
be issued to us will afford protection against competitors with similar technology. Numerous patents and pending patent applications owned
by others exist relating to quantum computing, quantum inspired classical methods, algorithms and software, differential equations and
optimization, and hardware optimization. In addition to those who may have patents or patent applications directed to relevant technology
with an effective filing date earlier than any of our existing patents or pending patent applications, any of our existing or pending
patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable. Furthermore, patent applications
filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be
certain that foreign patent applications related to issued U.S. patents will be issued.

 Even if our patent applications succeed and we
are issued patents in accordance with them, it is still uncertain whether these patents will be contested, circumvented, invalidated or
limited in scope in the future. The rights granted under any issued patents may not provide us with meaningful protection or competitive
advantages, and some foreign countries provide significantly less effective patent enforcement than in the United States. In addition,
the claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies
that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar us from licensing
and exploiting any patents that issue from our pending applications. In addition, patents issued to us may be infringed upon or designed
around by others and others may obtain patents that it needs to license or design around, either of which would increase costs and may
adversely affect our business, prospects, financial condition and operating results.

 There is no guarantee that our IP will provide the desired competitive
advantage.

 We seek to provide ourselves with a competitive
advantage by making key elements of our quantum computing application development solutions proprietary, through one of two means. First,
we pursue patent protection for some inventions that we believe qualify for protection under the patent laws. In cases in which patent
protection is sought, the details of the invention eventually will be made public in the normal course, usually within eighteen months
of filing. As to these inventions, competitors will eventually know the details of and can use the inventions to compete with us, unless
a patent is granted prohibiting such use and we can learn of violations and effectively enforce our patent rights in light of the costs
and complexities involved in such enforcement litigation. Second, some elements of our quantum computing application development solutions
we seek to protect as trade secrets. As to our trade secrets, competitors will not be able to know our techniques provided the trade secrets
are not improperly disclosed, but if a competitor independently develops the same technique and files for and is granted patent protection
we could find ourselves prohibited by the patent laws from practicing our trade secret technology.

 There is no assurance that our pending or future
patent applications will be granted and provide us patent protection as to the claims in those applications. Moreover, we cannot guarantee
that our patent rights will not be violated by competitors, that we will be able to detect such violations, or that if violations are
detected we will be in a position effectively to enforce our patent rights. Nor can we guarantee that our trade secrets will remain secret
and not be disclosed to competitors either inadvertently or through violation of contractual secrecy agreements, or that our trade secrets
are not independently developed by competitors. The failure of our IP strategy to protect key elements of our quantum computing application
development solutions could materially reduce any competitive advantage we might otherwise have and have a corresponding adverse effect
on our market share and/or profitability.

 We may face patent infringement and other intellectual property
claims that could be costly to defend, result in injunctions and significant damage awards or other costs (including indemnification of
third parties or costly licensing arrangements (if licenses are available at all)) and limit our ability to use certain key technologies
in the future or require development of non-infringing products, services, or technologies, which could result in a significant expenditure
and otherwise harm our business.

 We may become subject to intellectual property
disputes. Intellectual property litigation is often extremely expensive and entails high legal fees and costs of expert witnesses.

 Our success depends, in part, on our ability to
develop and commercialize our products, services and technologies without infringing, misappropriating or otherwise violating the intellectual
property rights of third parties. However, we may not be aware that our products, services or technologies are infringing, misappropriating
or otherwise violating third-party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation
or violation. For example, there may be issued patents of which we are unaware, held by third parties that, if found to be valid and enforceable,
could be alleged to be infringed by our current or future products, services or technologies.

 There also may be pending patent applications of
which we are not aware that may result in issued patents, which could be alleged to be infringed by our current or future products, services
or technologies. Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there
may currently be pending applications, unknown to us, that later result in issued patents that could cover our current or future products,
services or technologies. Lawsuits can be time-consuming and expensive to resolve, and they divert management's time and attention.
Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our
technology. Companies that have developed and are developing technology are often required to defend against litigation claims based on
allegations of infringement, misappropriation or other violations of intellectual property rights. Our products, services or technologies
may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially
greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. In a patent infringement
claim against us, we may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid or both.
The strength of our defenses will depend on the patents asserted, the interpretation of these patents, and its ability to invalidate the
asserted patents. However, we could be unsuccessful in advancing non-infringement and/or invalidity arguments in its defense. In the United
States, issued patents enjoy a presumption of validity, and the party challenging the validity of a patent claim must present clear and
convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance
of the evidence, which is a lower burden of proof. Our patent portfolio may not be large enough to deter patent infringement claims, and
our competitors and others may now and in the future have significantly larger and more mature patent portfolios. Any litigation may also
involve patent holding companies or other adverse patent owners that have no relevant solution revenue, and therefore, our patent portfolio
may provide little or no deterrence as it would not be able to assert its patents against such entities or individuals. If a third party
is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or
develop alternative technology for any infringing aspect of our business, we may be forced to limit or stop sales of its products, services
or technologies or cease business activities related to such intellectual property. Although the Company carries general liability insurance,
our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed.
We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on its
business, financial condition or results of operations. Any intellectual property litigation to which we might become a party, or for
which it is required to provide indemnification, regardless of the merit of the claim or its defenses, may require us to do one or more
of the following:

 •
 cease selling or using solutions or services that incorporate the intellectual property rights that
allegedly infringe, misappropriate or violate the intellectual property of a third party;

 •
 make substantial payments for legal fees, settlement payments or other costs or damages;

 •
 obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant
technology;

 •
 redesign the allegedly infringing solutions to avoid infringement, misappropriation or violation, which
could be costly, time-consuming or impossible; or

 •
 indemnify organizations using our services or platform or third-party service providers.

 Even if the claims do not result in litigation
or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of its management
and harm its business and operating results. Moreover, there could be public announcements of the results of hearings, motions or other
interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial
adverse effect on the price of our Common Stock. The occurrence of infringement claims may grow as the market for our products, services
and technologies grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further
exhaust its financial and management resources.

 Our use of third-party open source software could negatively
affect our ability to offer and sell subscriptions to our quantum computing application development solutions and subject us to possible
litigation.

 A portion of the technologies we use incorporates
third-party open source software, and we may incorporate third-party open source software in our solutions in the future. Open source
software is generally licensed by its authors or other third parties under open source licenses. From time to time, companies that use
third-party open source software have faced claims challenging the use of such open source software and requesting compliance with the
open source software license terms. Accordingly, we may be subject to suits by parties claiming ownership of what we believe to be open
source software or claiming non-compliance with the applicable open source licensing terms. Some open source software licenses require
end users who use, distribute or make available across a network software and services that include open source software to offer aspects
of the technology that incorporates the open source software for no cost. We may also be required to make publicly available source code
(which in some circumstances could include valuable proprietary code) for modifications or derivative works we create based upon, incorporating
or using the open source software and/or to license such modifications or derivative works under the terms of the particular open source
license. Additionally, if a third-party software provider has incorporated open source software into software that we license from such
provider, we could be required to disclose any of our source code that incorporates or is a modification of our licensed software. While
we employ practices designed to monitor our compliance with the licenses of third-party open source software and protect our valuable
proprietary source code, we may inadvertently use third-party open source software in a manner that exposes us to claims of non-compliance
with the terms of their licenses, including claims of intellectual property rights infringement or for breach of contract. Furthermore,
there exists today an increasing number of types of open source software licenses, almost none of which have been tested in courts of
law to provide guidance of their proper legal interpretations. If we were to receive a claim of non-compliance with the terms of any of
these open source licenses, we could be required to incur significant legal expenses defending against those allegations and could be
subject to significant damages, enjoined from offering or selling our solutions that contained the open source software, and required
to comply with the foregoing conditions, and we may be required to publicly release certain portions of our proprietary source code. We
could also be required to expend substantial time and resources to re-engineer some of our software. Any of the foregoing could disrupt
and harm our business.

 In addition, the use of third-party open source
software typically exposes us to greater risks than the use of third-party commercial software because open source licensors generally
do not provide warranties or controls on the functionality or origin of the software. Use of open source software may also present additional
security risks because the public availability of such software may make it easier for hackers and other third parties to determine how
to compromise our quantum computing application development solutions. Any of the foregoing could harm our business and could help our
competitors develop platforms and applications that are similar to or better than ours.

 In addition, companies that currently sponsor and
maintain open source software may choose to change the terms of their open source software licenses. These license changes could cause
us to lose access to upgrades for commercial use that are currently available to us or otherwise restrict the way we are currently using
them. These changes could mean that we must invest engineering resources to maintain that library itself, move to a different underlying
software library, or engineer a replacement in order to keep the same feature set in its offerings.

 Because of the characteristics of open source software, there
may be fewer technology barriers to entry by new competitors and it may be relatively easy for new and existing competitors with greater
resources than we have to compete with us.

 One of the characteristics of open source software
is that the governing license terms generally allow liberal modifications of the code and distribution thereof to a wide group of companies
and/or individuals. As a result, others could easily develop new platforms and applications based upon those open source programs that
compete with existing open source software that we support and incorporate into our quantum computing application development solutions.
Such competition with use of the open source projects that we utilize can materialize without the same degree of overhead and lead time
required by us, particularly if the customers do not value the differentiation of our proprietary components. It is possible for new and
existing competitors with greater resources than ours to develop their own open source software or hybrid proprietary and open source
software offerings, potentially reducing the demand for, and putting price pressure on, our quantum computing application development
solutions. In addition, some competitors make open source software available for free download and use or may position competing open
source software as a loss leader. We cannot guarantee that we will be able to compete successfully against current and future competitors
or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operating margins
and loss of market share, any one of which could seriously harm our business.

 If open source software programmers, many of whom
we do not employ, or our own internal programmers do not continue to develop and enhance open source technologies, we may be unable to
develop new technologies, adequately enhance our existing technologies or meet customer requirements for innovation, quality and price.

 We rely to a significant degree on a number of
open source software programmers, or committers and contributors, to develop and enhance components of our quantum computing application
development solutions. Additionally, members of the corresponding Apache Software Foundation Project Management Committees ("PMCs"),
many of whom are not employed by us, are primarily responsible for the oversight and evolution of the codebases of important components
of the open source data management ecosystem. If the open source data management committees and contributors fail to adequately further
develop and enhance open source technologies, or if the PMCs fail to oversee and guide the evolution of open source data management technologies
in the manner that we believe is appropriate to maximize the market potential of our solutions, then we would have to rely on other parties,
or we would need to expend additional resources, to develop and enhance our quantum computing application development solutions. We also
must devote adequate resources to our own internal programmers to support their continued development and enhancement of open source technologies,
and if we do not do so, we may have to turn to third parties or experience delays in developing or enhancing open source technologies.
We cannot predict whether further developments and enhancements to these technologies would be available from reliable alternative sources.
In either event, we may incur additional development expenses and experience delays in technology release and upgrade. Delays in developing,
completing, or delivering new or enhanced components to our quantum computing application development solutions could cause our offerings
to be less competitive, impair customer acceptance of our solutions, and result in delayed or reduced revenue for our solutions.

 Risks Related to Government Regulation and Litigation

 If we fail to comply with United States and foreign laws related
to privacy, data security, and data protection, it could adversely affect our operating results and financial condition.

 We, either directly or through our customers, 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-commerce platform, 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 states – California, Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska,
New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, Utah and Virginia, that have comprehensive data privacy laws in 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. During the 2025 legislative cycle, comprehensive federal
privacy reform was not prevalent in state legislatures, but at least eight 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 intend to strive to comply with all applicable
laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, and data protection. Our limited
resources may adversely affect our compliance effort. Given that the scope, interpretation, and application of these laws and regulations
are often uncertain and may be in conflict across jurisdictions, it is possible that these obligations may be interpreted and applied
in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived
failure by us, customers, or third-party vendors or end-users involved with our products to comply with our privacy or security policies
or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal data,
may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operating results
and financial condition.

 Governments are continuing to focus on privacy
and data security, and it is possible that new privacy or data security laws will be passed or existing laws will be amended in a way
that is material to our business. Any significant change to applicable laws, regulations, or industry practices regarding the personal
data of our employees, agents or customers could require us to modify our practices and may limit our ability to expand or sustain our
salesforce or bring our products to market. Changes to applicable laws and regulations in this area could subject us to additional regulation
and oversight, any of which could significantly increase our operating costs and materially affect our operating results and financial
condition.

 Outside the United States, an increasing number
of laws, regulations, industry standards and other obligations may govern privacy, data protection and security. For example, the European
Union's General Data Protection Regulation ("EU GDPR"), the United Kingdom's General Data Protection Regulation
("UK GDPR"), Brazil's General Data Protection Law (Lei Geral de Prote o de Dados Pessoais, or "LGPD")
(Law No. 13,709/2018), and China's Personal Information Protection Law ("PIPL") impose strict requirements for processing
personal data.

 For example, under the EU GDPR, companies may face
temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue,
whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection
organizations authorized at law to represent their interests. Additionally, we also target customers in Asia and may be subject to new
and emerging data protection and privacy regimes in Asia, including China's PIPL, Japan's Act on the Protection of Personal
Information, and Singapore's Personal Data Protection Act.

 In addition to privacy, data protection and security
laws, we may become subject to contractually mandated standards and/or industry standards adopted by industry groups, as well as other
potential obligations related to privacy, data protection and security, and our efforts to comply with such obligations may not be successful.

 Obligations related to privacy, data protection
and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty. Additionally, these obligations
may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for
and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information
technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

 We may at times fail, or be perceived to have failed,
in our efforts to comply with our privacy, data protection or security obligations. Moreover, despite our efforts, our personnel or third
parties on whom we rely may fail, or be perceived to have failed, to comply with such obligations, which could negatively impact our business
operations. If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable privacy,
data protection or security obligations, we could face significant consequences, including but not limited to: government enforcement
actions (e.g., investigations, fines, penalties, audits, inspections, and similar events); litigation (including class-action claims);
additional reporting requirements and/or oversight; bans on processing personal data; and orders to destroy or not use personal data.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited
to: loss of customers; inability to process personal data or to operate in certain jurisdictions; interruptions or stoppages in our business
operations or data collection; limited ability to develop or commercialize our products; expenditure of time and resources to defend any
claim or inquiry; adverse publicity; or substantial changes to our business model or operations.

 Compliance with data use, privacy, and security laws will be
an inherent feature in our product design and a change in those laws could negatively affect the value of our quantum computing application
development solutions.

 We seek to provide quantum computing application
development solutions to large enterprise users located anywhere in the world. We anticipate that the data required to be processed by
such solutions can be located in different jurisdictions, subject to different and changing data laws. We also anticipate that our future
enterprise customers may have their own policies with respect to the manner in which the data they maintain can be handled, stored, and
used. Our quantum computing application development solutions are and will continue to be designed to permit compliance with any applicable
data laws or internal IT policy of enterprise customers.

 There can be no assurance, however, that our software
product design is adequate to permit the deployment of our quantum computing application development solutions in compliance with existing
data laws or customer policies or that these laws and/or policies will not change in the future in a way that makes deployment of our
solutions impossible or more costly. A failure on our part to design and re-design our software platform to permit compliance with applicable
data laws and customer policies could limit our sales, harming our growth and profitability, or in the worst case create substantial contract
liability to a customer for causing a breach of applicable data laws with respect to the customer's data.

 We are potentially subject to governmental export and import
control laws that could negatively impact our business.

 As are all U.S.-based businesses, we are subject
to various U.S. laws prohibiting the export of certain goods and services and imposing certain trade sanctions. Presently, quantum software
including quantum inspired techniques and AI software are not generally subject to the U.S. export control regime but could be subject
to those controls depending on the specific application the software would be used to address. Moreover, the list of goods and services
subject to the U.S. export control regime is expected to change and grow in the future to include additional items relating to quantum
computing. These laws might limit our ability to sell our quantum computing application development solutions to customers.

 In addition, under the "deemed export"
rules, to the extent the export control laws prohibit a sale of certain technology to non-U.S. customers the laws also prohibit disclosure
of that technology to non-U.S. persons. Our workforce is global and includes non-U.S. employees. A prohibition on disclosure of certain
of our technology to such employees could be disruptive to our business and cause delays and additional expense in developing, selling,
and supporting our quantum computing application development solutions.

 There can be no assurance that our efforts to comply
with current and future export control laws will be successful and the failure to do so could result in significant expense associated
with governmental investigation and/or enforcement action. There also can be no assurance that the export control laws or changes to those
laws will not limit our ability to sell our quantum computing application development solutions or affect our internal operations in a
way that causes a material adverse impact on our financial condition or profitability.

 We are subject to U.S. and foreign anti-corruption, anti-bribery,
and similar laws, the violation of which can lead to substantial harm to our business.

 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 the 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 from time to time. Detecting, investigating, and resolving any actual or alleged violations of these laws can be expensive and
time-consuming.

 There can be no assurance that our efforts to comply
with these laws will be successful and a failure to comply, whether such failure results from the actions of our own employees or a third-party
representing us, could result in costly internal or outside investigations, whistleblower complaints, governmental investigations and
enforcement actions, substantial financial settlements, fines or other criminal penalties, injunctions or other bans limiting our ability
to do business, reputational harm, and other collateral consequences, any of which could have a material adverse effect on our profitability
and the value of our Common Stock.

 To the extent we have customers outside the United States, we
may be subject to increased business and economic risks that could harm our business.

 We have in the past and may in the future have
customers and business development activities in countries outside of North America, including Asia (e.g., Japan and Singapore) and Europe
(e.g., the United Kingdom, Spain and Denmark). Subject to cash availability, we plan to include international markets in addition to prospective
U.S.-based customers in our marketing efforts. Any new markets or countries into which we attempt to sell our quantum computing application
development solutions may not be receptive. For example, we may not be able to expand further in some markets if we are not able to satisfy
certain government-and industry-specific requirements. In addition, our ability to manage our business and conduct our operations internationally
in the future may require considerable management attention and resources and is subject to the particular challenges of supporting an
early stage company with limited resources in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative
dispute systems, and commercial markets. Future international expansion will require investment of significant funds and other resources.
Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with:

 •
 recruiting and retaining talented and capable employees outside the United States and maintaining our
company culture across all of our offices;

 •
 potentially different pricing environments, longer sales cycles, and longer accounts receivable payment
cycles and collections issues;

 •
 compliance with applicable international laws and regulations, including laws and regulations with respect
to privacy, data protection, and consumer protection, and the risk of penalties to us and individual members of management or employees
if our practices are deemed to be out of compliance;

 •
 operating in jurisdictions that do not protect intellectual property rights to the same extent as does
the United States and the practical enforcement of such intellectual property rights outside of the United States;

 •
 securing our locally operated systems and our data and the data of our customers and partners accessible
from such jurisdictions;

 •
 compliance by us and our business partners with anti-corruption laws, import and export control laws,
tariffs, trade barriers, economic sanctions, anti-money laundering laws and other regulatory limitations on our ability to provide our
quantum computing application development solutions in certain international markets;

 •
 foreign exchange controls that might require significant lead time in setting up operations in certain
geographic territories and might prevent us from repatriating cash earned outside the United States;

 •
 political and economic instability, including military actions affecting Russia, Ukraine and/or surrounding
regions, changes in political conditions in China and changes in the state of China-U.S. relations, including any developments or tensions
relating to tariffs and "trade wars" between the U.S. and China and potential military conflict between China and Taiwan;

 •
 changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade
protection measures, import or export requirements, trade embargoes, and other trade barriers;

 •
 generally longer payment cycles and greater difficulty in collecting accounts receivable;

 •
 double taxation of our international earnings and potentially adverse tax consequences due to changes
in the income and other tax laws of the United States or the international jurisdictions in which we operate; and

 •
 higher costs of doing business internationally, including increased accounting, travel, infrastructure,
and legal compliance costs.

 Compliance with laws and regulations applicable
to our global operations substantially increases our cost of doing business in international jurisdictions. We may be unable to keep current
with changes in laws and regulations as they occur. Although we have implemented policies and procedures designed to support compliance
with these laws and regulations, there can be no assurance that we will always maintain compliance or that all of our employees, contractors,
partners, and agents will comply. Any violations could result in enforcement actions, fines, civil and criminal penalties, damages, injunctions,
or reputational harm. If we are unable to comply with these laws and regulations or manage the complexity of our global operations successfully,
we may need to relocate or cease operations in certain foreign jurisdictions.

 We are exposed to risks associated with litigation, investigations,
and regulatory proceedings.

 We may in the future face legal, administrative,
regulatory, and/or criminal proceedings that are based on a variety of individual or governmental complaints against us, including by
way of example: shareholder direct or derivative actions alleging violations of the securities laws by the company or breach of fiduciary
duty by our directors; challenges to our IP brought by competitors; breach of contract claims asserted by customers; employee lawsuits
asserting violation of various employment or whistleblower laws; or governmental actions based on alleged violations of securities, tax,
anti-trust, export control, data privacy, or other applicable laws. Litigation and regulatory proceedings are inherently uncertain, but
in nearly every instance are time-consuming, expensive, and cause reputational damage. The potential outcomes can include substantial
monetary awards, limitations on our ability to do business, or criminal liability on the part of the company and/or some of its officers,
directors, or employees. In some instances, it may not be possible to obtain insurance against specific risks. Even when insurance is
available, we may not have purchased such insurance either by oversight or by a conscious decision that the cost of the insurance did
not justify its purchase. We also cannot guarantee 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 any future claim.

 In addition, we may conclude in the future to bring
a legal action against a customer or competitor, for example to recover damages caused to us. Such litigation can be lengthy, time-consuming,
and expensive and the outcome is uncertain. Because of these considerations, such litigation is often settled for an amount materially
less than the actual damage caused.

 There can be no assurance that we will not be subject
of litigation, investigations, and/or regulatory proceedings which, whether singly or cumulatively, will have a material adverse effect
on our financial condition or ability to do business. Nor can there be any assurance that we will prevail in any litigation brought by
us or even if we do prevail that an award or settlement will timely or adequately compensate us for the losses the litigation sought to
recover.

 Risks Outside Our Specific Business

 Our business relies on computer systems which are vulnerable
to attack and/or failure.

 As is the case with nearly every business, we rely
on computers and computer networks, both public and private, to perform most of the actions required for us to do business, including
internal and external communications, development of our software and IP, storage of our business and financial records, and deployment
of our quantum computing application development solutions. Such computer systems are inherently susceptible to unintentional failures
as well as various forms of cyber-attack, including denial of service attacks, ransomware attacks, email hacking and phishing, computer
malware and viruses, and social engineering attacks. Like other companies, we may also be the subject of unauthorized access resulting
from employee misconduct. These risks are potentially greater for us because the nature of our business provides an additional incentive
for bad actors, including foreign nation states and domestic and foreign businesses, to attack our systems for the purpose of gaining
information about generative AI, quantum computing and quantum algorithms, the development of which currently is a priority for many businesses
and countries.

 Our Orquestra platform is built to be accessed
through third-party public cloud providers such as AWS and 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.

 Any of the previously identified or similar threats
could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification,
destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information, or our technology systems, or those
of the third parties upon whom we rely. A security incident or other interruption could disrupt our ability (and that of third parties
upon whom we rely) to provide our platform or other software. Any actual or potential security breach of our software, our operational
systems, our physical facilities, or the systems or facilities of our vendors, or the perception that one has occurred, could result in
adverse consequences, such as litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation
and remediation costs, disputes, reputational harm, diversion of management's attention, and other liabilities and damage to our
business. Even though we do not control the security measures of third parties, we may be perceived or asserted to be responsible for
any breach of such measures or suffer reputational harm even where we do not have recourse to the third party that caused the breach.
In addition, any failure by our vendors to comply with applicable law or regulations could result in proceedings against us by governmental
entities or others, with further financial, operational, and reputational damage.

 The costs to respond to a security breach and/or
to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be
successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, and other harm
to our business and our competitive position. We could be required to fundamentally change our business activities and practices in response
to a security breach or related regulatory actions or litigation, which could have an adverse effect on our business. In addition, laws,
regulations, government guidance, and industry standards and practices in the United States and elsewhere are rapidly evolving to combat
these threats. We may face increased compliance burdens regarding such requirements from regulators and customers regarding our products
and services and also incur additional costs for oversight and monitoring of security risks relating to our own services. Most jurisdictions
have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain
types of data. In addition, our agreements with certain customers and partners may require us to notify them in the event of a security
breach involving customer or partner data on our systems. Such mandatory disclosures are costly, could lead to negative publicity, may
cause our customers to lose confidence in the effectiveness of our security measures, and require us to expend significant capital and
other resources to respond to or alleviate problems caused by the actual or perceived security breach may cause us to breach customer
contracts.

 If we (or a third party upon whom we rely) experience
a security incident or are perceived to have experienced a security incident, we may experience adverse consequences such as government
enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or
oversight; restrictions on processing sensitive information; litigation (including class claims); indemnification obligations; negative
publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss;
and other similar harms. Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our software,
systems, networks, or physical facilities could result in litigation with our customers or other relevant stakeholders. These proceedings
could force us to spend money in defense or settlement, divert management's time and attention, increase our costs of doing business,
or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify our software
capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and
the confidentiality, integrity or availability of our data or the data of our partners or our customers was disrupted, we could incur
significant liability, or our software, systems, or networks may be perceived as less desirable, which could negatively affect our business
and damage our reputation.

 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 as we grow our customer base, and store, transmit, and otherwise process 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.

 Widespread damage to the U.S. or global economy and/or our industry
would likely adversely affect our business.

 The U.S. economy and the global economy as a whole
is susceptible to conditions unrelated to us or the computing industry, including the possibility of an economic recession or depression,
international trade wars, the imposition of tariffs on our products or third parties' products on which we rely, political unrest,
natural catastrophes, climate change, terrorism, wars between nation states, or other matters that could have a general widespread negative
impact on global commerce. In recent times, central bank interest rates, a 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. Any such condition or development could affect our business in one or more of a variety of ways, including reducing
or eliminating the availability of capital at a time when we require such capital, denying us the ability to sell our quantum 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 currently 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 global economy could materially harm
our business and if we are unable to persevere through such adverse conditions could cause us to fail.

 Risks Relating to Ownership of our Common Stock

 Because of the number of shares of Common Stock issuable upon
conversion and exercise of outstanding securities, holders of our Common Stock will experience substantial future dilution and downward
price pressure on our Common Stock.

 There are 162,580,506 shares of our Common Stock
issued and outstanding as of the date of filing of this Report. We will be obligated to issue all or very many of the following shares
of common stock which will dilute our current stockholders: (1) 75,000,000 shares of Common Stock issuable upon conversion of outstanding
convertible promissory notes, (2) 63,749,982 shares of Common Stock issuable upon exercise of outstanding warrants, (4) 25,983,000 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 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. 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 common stock 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 common 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 within 180 days 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, and to cause such registration statement to be declared effective within 90
days thereafter. The Company also agreed to provide the holders with certain indemnification rights in connection with such registration
rights.

 Based on our capital structure and anticipated
capital raising and other transactions as described above, the issuance of the shares of Common Stock pursuant to the outstanding derivative
securities and anticipated transactions, many of which are expected to occur in the near term, will cause significant dilution to the
Company's other investors whereby their respective percentage ownership in our Company will experience a drastic decline. As a result,
the voting rights, dividend rights, and other perceived benefits of holding our Common Stock will be diluted due to the new stockholders.
Further, a majority of the newly issued shares will be freely tradeable because the transactions are subject to registration rights, so
the per-share price of our Common Stock could decline, which decline could be dramatic and long-term or permanent.

 In the future, we expect to obtain financing or
to further increase our capital resources by issuing additional shares of our capital stock or offering debt (subject to the limitations
under the existing agreements) or other equity securities, including senior or subordinated notes, debt securities convertible into equity,
or shares of preferred stock. Issuing additional shares of capital stock, other equity securities, or securities convertible into equity
may dilute the economic and voting rights of our then-existing stockholders, reduce the market price of our Common Stock, or both. Debt
securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase
the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating
distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Common
Stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond its control,
which may adversely affect the amount, timing, or nature of its future offerings. As a result, holders of our Common Stock bear the risk
that our future offerings may reduce the market price of our Common Stock and dilute their percentage ownership.

 The market price of our shares of Common Stock is subject to
volatility.

 The market price of our Common Stock has been and
may continue to be volatile and fluctuate substantially, which could cause the value of your investment to decline.

 Factors that could cause fluctuations in the trading
price of our Common Stock include the following:

 •
 price and volume fluctuations in the overall stock market from time to time;

 •
 volatility in the trading prices and trading volumes of technology industry stocks;

 •
 changes in operating performance and stock market valuations of other technology companies generally,
or those in our industry in particular;

 •
 sales of shares of our Common Stock by stockholders or by us, including sales by the various creditors
we exchanged equity for liabilities in 2025;

 •
 failure of securities analysts to maintain coverage of us, changes in financial estimates by securities
analysts who follow our company or our failure to meet these estimates or the expectations of investors;

 •
 the financial projections we may provide to the public, any changes in those projections or our failure
to meet those projections;

 •
 announcements by us or our competitors of new offerings;

 •
 the public's reaction to our press releases, other public announcements and filings with the SEC,
including the registration statement of which this prospectus is a part;

 •
 rumors and market speculation involving us or other companies in our industry;

 •
 actual or anticipated changes in our results of operations or fluctuations in our results of operations;

 •
 actual or anticipated developments in our business, our competitors' businesses or the competitive
landscape generally;

 •
 litigation involving us, our industry or both, or investigations by regulators into our operations or
those of our competitors;

 •
 developments or disputes concerning our intellectual property or other proprietary rights;

 •
 announced or completed acquisitions of businesses, services or technologies by us or our competitors;

 •
 new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

 •
 changes in accounting standards, policies, guidelines, interpretations or principles;

 •
 any significant change in our management;

 •
 economic instability in the global financial markets and slow or negative growth of our markets; and

 •
 other factors described in this "Risk Factors" section.

 In addition, in the past, following periods of
volatility in the overall market and the market price of a particular company's securities, securities class action litigation has
often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion
of our management's attention and resources.

 There is currently a limited trading market for the Company's
Common Stock.

 Because we are delinquent in our SEC reports, our
Common Stock is currently quoted on the OTC Expert Market under the symbol "ZPTA." Quotation on the Expert Market means our
Common Stock is not eligible for proprietary broker-dealer quotations, all quotes in this stock reflect unsolicited customer orders, 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 Report will enable
us 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, and we cannot assure you that a consistent, active trading market will develop. Trading on the OTC Basic Market is less
liquid than the leading national securities exchanges and higher tier OTC markets. The lack of an active market may impair your ability
to sell your shares at the time you wish to sell them or at a price that you consider reasonable.

 Our Common Stock is a "penny stock" and thereby be
subject to additional sale and trading regulations that may depress the price of our common stock.

 Our Common Stock is a "penny stock"
if it does not qualify for one of the exemptions from the definition of "penny stock" under Section 3a51-1 of the Exchange
Act. Our Common Stock may be a "penny stock" if it meets one or more of the following conditions: (i) it trades at a price
less than $5 per share; (ii) it is not traded on a "recognized" national securities exchange which excludes OTC Markets; or
(iii) is issued by a company that has been in business less than three years with net tangible assets less than $5 million. Thus, our
Common Stock is a penny stock.

 The principal result or effect of being designated
a penny stock is that securities broker-dealers participating in sales of our Common Stock are discouraged from soliciting purchases of
our Common Stock by the SEC's rules which generally results in low prices and limited trading volume. For example, SEC Rule 15g-2
requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and
to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a
penny stock for the investor's account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any
investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to:
(i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor
has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide
the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv)
receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming
for holders of our Common Stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise. In
addition, clearing firms, which hold retail accounts dislike penny stocks and through extra compliance efforts and costs they impose,
make it hard to sell penny stocks.

 As a former shell company, we face certain disadvantages relative
to other companies, including ineligibility for certain forms and rules for extended periods.

 Until 2024, we were a special purpose acquisition
company which is a form of shell company under the rules of the SEC. Shell companies are more highly regulated than non-shell operating
companies and face certain restrictions on their activities under federal securities laws. However, companies that were formerly shell
companies continue to face disadvantages under SEC rules, including (a) limitations on its stockholders to receive unrestricted stock
certificates and use the Rule 144 exemption, (b) the inability to qualify as a "well-known seasoned issuer" and file automatically
effective registration statements for three years after ceasing to be a shell company, (c) the inability to "incorporate by reference"
information in certain registration statements filed under the Securities Act for a period of three years after ceasing to be a shell
company, (d) the inability to use most free writing prospectuses until at least three years after a qualifying business combination, and
(e) exclusion from certain safe harbors for offering-related communications under the Securities Act for three years after ceasing to
be a shell company, including for research reports and certain communications in connection with business combinations. For more information
about Rule 144 and its potential impact on our stockholders, please see the section titled "Securities Act Restrictions on Resale
of Common Stock" in this prospectus. We expect that these disadvantages will make it more challenging and expensive, and create
greater risks and delays, for us and our stockholders to offer securities. These challenges may make our securities less attractive than
those of companies that are not former shell companies and may raise our relative cost of capital.

 If securities analysts do not publish research or reports about
our business or if they publish negative evaluations of our Common Stock, the market price and trading volume of our Common Stock could
decline.

 The trading market for our Common Stock will rely,
in part, on the research and reports that industry or financial analysts publish about us or our business. We have limited research coverage
by industry or financial analysts. If no, or few, additional analysts commence coverage of us, the trading price of our Common Stock would
likely decrease. If one or more of the analysts covering our business downgrade their evaluations of our Common Stock, the price of our
Common Stock could decline. If one or more of these analysts cease to cover our Common Stock, we could lose visibility in the market for
our Common Stock, which in turn could cause our stock price to decline.

 We will incur 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 "Risks Related to
Zapata's Financial Condition and Status as an Early Stage Company," 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.

 In addition, regulations and standards relating
to corporate governance and public disclosure, including the Sarbanes-Oxley Act, and the related rules and regulations implemented by
the SEC, have increased legal and financial compliance costs and will make some compliance activities more time-consuming. We intend to
invest resources to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative
expenses and may divert management's time and attention from our other business activities. If our efforts to comply with new laws,
regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice,
regulatory authorities may initiate legal proceedings against us, and we could be subject to the delisting of our Common Stock, fines,
sanctions and other regulatory action, which may be harmful to its business. In the future, it may be more expensive or more difficult
for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher
costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board,
particularly to serve on its audit committee and compensation committee, and qualified executive officers.

 Due to our size, we have a limited management team, which has
limited experience in operating a public company.

 We presently only have one executive officer, who
acts as both our Chief Executive Officer and Chief Financial Officer, and has limited experience in the management of a publicly traded
company. Until we are able to raise the capital to broaden our management, we may be handicapped in managing our business and our public
company obligations. Executives' limited experience in dealing with the increasingly complex laws pertaining to public companies
could be a significant disadvantage as they will likely need to devote an increasing amount of their time to these activities, resulting
in less time being devoted to our management and growth. We may not have adequate personnel with the appropriate level of knowledge, experience,
and training in the accounting policies, practices or internal controls over financial reporting required of public companies.

 We do not currently intend to pay cash dividends on our Common
Stock, so any returns will be substantially limited to the value of our Common Stock.

 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. 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.

 Our Certificate of Incorporation designates a state or federal
court located within the State of Delaware as the exclusive forum for certain disputes between our stockholders and us, and also provides
that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the
Securities Act, each of which could limit our stockholders' ability to choose the judicial forum for disputes with us or our directors,
officers, stockholders, or employees.

 Our Certificate of Incorporation provides that,
unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent
permitted by applicable law, be the sole and exclusive forum for any internal or intra-corporate claim or any action asserting a claim
governed by the internal affairs doctrine, including, but not limited to, (i) any derivative action brought by a stockholder on our behalf,
(ii) any claim of breach of a fiduciary duty owed by any of our directors, officers, stockholders, or employees and (iii) any claim against
us arising under our Certificate of Incorporation, Bylaws or the DGCL. The Certificate of Incorporation designates the United States District
Court for the District of Delaware as the exclusive forum for the resolution of any complaint asserting a cause of action arising under
the Securities Act.

 This exclusive forum provision will not apply to
claims under the Exchange Act, but will apply to other state and federal law claims including actions arising under the Securities Act.
Section 22 of the Securities Act, however, created concurrent jurisdiction for federal and state courts over all suits brought to enforce
any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether
a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.

 This choice of forum provision may have the effect
of increasing costs for investors to bring a claim against us and our directors and officers and of limiting a stockholder's ability
to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or
stockholders, which may discourage (but not prevent) lawsuits with respect to such claims.

 Delaware law and provisions in our Certificate of Incorporation
and Bylaws might discourage, delay or prevent a change in control of the Company or changes in our management and, therefore, depress
the trading price of our Common Stock.

 Our status as a Delaware corporation and the anti-takeover
provisions of the DGCL may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination
with an interested stockholder for a period of three years after the person becomes an interested stockholder without the approval of
holders of two-thirds of the voting power of our stockholders other than the interested stockholder, even if a change of control would
be beneficial to our existing stockholders. In addition, our Certificate of Incorporation and Bylaws contain provisions that may make
the acquisition of the Company more difficult, including the following:

 •
 our Board is classified into three classes of directors with staggered three-year terms, and directors
can only be removed from office for cause (which is not defined) by the affirmative vote of holders of at least a majority of the voting
power of our then-outstanding capital stock;

 •
 certain amendments to our Certificate of Incorporation will require the approval of stockholders holding
two-thirds of the voting power of its then-outstanding capital stock;

 •
 our stockholders will only be able to take action at a meeting of stockholders and will not be able
to take action by written consent for any matter;

 •
 vacancies on our Board will be able to be filled only by our Board and not by stockholders;

 •
 certain litigation against us can only be brought in Delaware;

 •
 our Certificate of Incorporation authorizes undesignated preferred stock, the terms of which may be
established by our Board, which shares may be issued without the approval of the holders of our capital stock; and

 •
 advance notice procedures apply for stockholders to nominate candidates for election as directors or
to bring matters before an annual meeting of stockholders.

 These anti-takeover defenses could discourage,
delay, or prevent a transaction involving a change in control of the Company. These provisions could also discourage proxy contests and
make it more difficult for stockholders to elect directors of their choosing or to cause us to take other corporate actions they desire,
any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of Common
Stock.

 We are an "emerging growth company," and a "smaller
reporting company," and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies,
this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.

 We are an "emerging growth company,"
as defined in the JOBS Act, and for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions
from various reporting requirements applicable to other public companies but not to emerging growth companies, including not being required
to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b)
in which we have total annual gross revenue of over $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our Common Stock held by non-affiliates exceeds $700 million as of the last business day of the second fiscal
quarter of such year and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year
period. We cannot predict if investors will find our Common Stock less attractive if we choose to rely on these exemptions. If some investors
find our Common Stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market
for our Common Stock, and our stock price may be more volatile.

 Further, we are a "smaller reporting company"
as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage
of these scaled disclosures for so long as the market value of our voting and any non-voting common stock held by non-affiliates is less
than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during
the most recently completed fiscal year and the market value of our voting and any non-voting common stock held by non-affiliates was
less than $700 million measured on the last business day of our second fiscal quarter. To the extent we take advantage of such reduced
disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Like all companies that utilize technology, we
are subject to threats of breaches of our technology systems. To mitigate the threat to our business, we intend to take a comprehensive
approach to cybersecurity risk management. Our Board and our management oversee our risk management program, including the management
of cybersecurity risks. We plan to establish policies, standards, processes and practices for assessing, identifying, and managing material
risks from cybersecurity threats, including those discussed in our Risk Factors. We intend to implement and maintain security measures
to meet regulatory requirements and shareholder expectations, and we intend to make investments to maintain the security of our data and
cybersecurity infrastructure when feasible. There can be no guarantee that our policies and procedures will be properly followed in every
instance or that those policies and procedures will be effective. We do not believe that risks from prior cybersecurity threats have materially
affected our business to-date. We can provide no assurance that there will not be incidents in the future or that future attacks will
not materially affect us, including our business strategy, results of operations, or financial condition.

 Item 2. Properties

 None.

 Item 3. Legal Proceedings

 From time to time, we may be involved in litigation
that arises through the normal course of business. As of the date of this filing, we are not aware of any material legal proceedings to
which we or any of our subsidiaries is a party or to which any of our property is subject, nor are we aware of any such threatened or
pending litigation or any such proceedings known to be contemplated by governmental authorities. We are not aware of any material proceedings
in which any of our directors, officers, or affiliates or any registered or beneficial stockholder of more than 5% of our common stock,
or any associate of any of the foregoing, is a party adverse to or has a material interest adverse to, us or any of our subsidiaries.

 Item 4. Mine Safety Disclosures

 Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities

 Our Common Stock is not listed on any securities
exchange, and is quoted on the OTC Expert Market under the symbol "ZPTA." Because our Common Stock is not listed on a securities
exchange and its quotations on OTC Expert Market are limited and sporadic, there is currently no established public trading market for
our Common Stock.

 Holders

 As of November 30, 2025, there were approximately
115 shareholders of record of the Company's Common Stock. We believe that additional beneficial owners of our common stock hold shares
in street name.

 Shares Eligible for Future Sale

 All of the outstanding shares of common stock of
the Company are restricted securities and cannot be sold under Rule 144 until at least six months have passed since payment, and the other
requirements of Rule 144(i)(1)(ii) have been satisfied, including the Company being current in its SEC periodic reporting obligations.

 In general, Rule 144 provides that any non-affiliate
of the Company, who has held restricted common stock for at least six-months, is entitled to sell their restricted stock freely, provided
that the Company stays current in its SEC filings.

 An officer, director or other person in control
of the Company may sell after six months with the following restrictions: (i) the Company is current in its SEC filings, (ii) certain
manner of sale provisions, (iii) the filing of a Form 144, and (iv) volume limitations limiting the sale of shares within any three-month
period to a number of shares that does not exceed 1% of the total number of outstanding shares. A person who has ceased to be an affiliate
at least three months immediately preceding the applicable sale and who has owned such shares of common stock for at least one year may
sell the shares under Rule 144 without regard to any of the limitations described above.

 Such shares may be sold outside of the United States.
Further, such shares may be sold to purchasers in the United States under Section 4(a)(1) of the Securities Act if paid for more than
two years ago and if the seller is not an affiliate of the Company. However, some broker-dealers and transfer agents will not accept legal
opinion relying on Section 4(a)(1).

 Dividend Policy

 We have not paid cash dividends on our Common Stock
and do not plan to pay such dividends in the foreseeable future. Our Board of Directors will determine our future dividend policy on the
basis of many factors, including results of operations, capital requirements, and general business conditions.

 Unregistered Sales of Equity Securities

 All unregistered sales of equity securities through
the period covered by this Report have previously been disclosed.

 Item 6. [Reserved]

 Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

 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.

 Cautionary Note Regarding Forward-Looking Statements

 This Report contains forward-looking statements,
including statements regarding our expectations for prospective future growth, operating results and financial condition, potential future
trends and developments within our industry and the U.S. and global economies generally, plans and expectations for our future business
plan and capital raising efforts, expectations and plans with respect to our products and services including the potential market for,
timing, features, and demand for such products and services, and liquidity and sources of capital. Forward-looking statements are prefaced
by words such as "anticipate," "expect," "plan," "could," "may," "will,"
"should," "would," "intend," "seem," "potential," "appear," "continue,"
"future," believe," "estimate," "forecast," "project," and similar words. We have
based these forward-looking statements largely on our current expectations and assumptions regarding our business, the economy and other
future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes
in circumstances that are difficult to predict. We caution you, therefore, against relying on any of these forward-looking statements.

 Our actual results may differ materially from
those contemplated by the forward-looking statements for a variety of reasons, including, without limitation, the possibility that estimates,
projections and assumptions on which the forward-looking statements are based prove to be incorrect, our ability to raise the necessary
capital to re-establish material operations and generate revenue and the terms and timing of any related transactions, central bank interest
rates and future interest rate changes, the risks arising from the impact of inflation, tariffs, the deterioration of the labor market
of the United States, a recession which may result on the Company's business, prospective customers, and on the national and global
economy, our ability to attract homeowners to our products and services, the potential for regulatory changes impacting quantum computing,
artificial intelligence, data privacy and other areas that impact the Company's business, and the ability of us and third parties
on which we depend to comply with applicable regulatory requirements, the risk that software and technology infrastructure on which we
depend fail to perform as designed or intended, and the risks and uncertainties disclosed under Item 1A – Risk Factors contained
in this Report. Any forward-looking statement made by us in this presentation speaks only as of the date on which it is made. Factors
or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of
them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments
or otherwise, except as may be required by law.

 Forward Looking Statements

 This Annual Report on Form 10-K contains forward-looking
statements. Statements regarding the potential combination and expectations regarding the combined business are "forward looking
statements." In addition, words such as "estimates," "expects," "anticipates," "assumes,"
"suggests," "projects," "forecasts," "seeks," "plans," "possible,"
"potential," "aims," "intends," "believes," "seeks," "may," "might,"
"will," "would," "should," "can", "could," "future," "propose,"
"target," "goal," "objective," "outlook" and variations of these words or similar expressions
(or the negative versions of such words or expressions) are intended to identify forward-looking statements. Generally, statements that
are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of
operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including
any underlying assumptions, are forward- looking statements. These forward-looking statements are not guarantees of future performance,
conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of
which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those discussed in
the forward-looking statements.

 The forward-looking statements contained in this
Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects
on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or
performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties
include, but are not limited to, those factors described under the heading "Risk Factors" in this report. Should one or more
of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements.

 We undertake no obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable
securities laws.

 Overview

 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 deliver 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.

 Recent Developments

 2025 Capital Raising and Restructuring Efforts

 In late 2024 the Company voluntarily elected to
temporarily suspend its operations due to its limited capital resources and inability to access adequate liquidity to continue to fund
its operations and meet its outstanding debt obligations. In June 2025, the Company commenced debt restructuring and capital raising transactions
and the reinstatement of operations by (1) entering into exchange agreements with unsecured creditors pursuant to which such creditors
agreed to exchange outstanding obligations payable to them for common stock and certain rights related thereto, and (2) the Company sold
convertible notes and warrants for gross proceeds of $3 million. The Company has since been continuing efforts to negotiate and restructure
outstanding obligations and raise capital. In the furtherance of recommencing operations, the Company has also entered into advisory agreements
with third parties and agreed to compensate such parties in the form of equity and/or cash compensation. See Note 20, Subsequent Events
in the notes to the consolidated financial statements contained in this Annual Report.

 Merger with Andretti Acquisition Corp. ("AAC")

 On March 28, 2024, we completed our planned business
combination with AAC, pursuant to which, among other things, Legacy Zapata became a wholly owned subsidiary of AAC (the "Merger").
Immediately prior to the Merger, 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 (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 our common stock in exchange for their Class A and Class B ordinary shares held immediately prior to
the Domestication.

 Upon 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 our common stock,
and holders of Legacy Zapata options received options to purchase an aggregate of 3,016,409 shares of our common stock, calculated in
accordance with the Business Combination Agreement by and among AAC, Legacy Zapata and Tigre Merger Sub, Inc., entered into on September
6, 2023 (the Business Combination Agreement"), by multiplying each share of Convertible Preferred Stock, Legacy Zapata common stock
(including shares underlying options) by 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.
On April 1, 2024, in connection with the consummation of the Merger, our common stock was listed on the Nasdaq Global Market and our warrants
(the "Warrants") were listed on the Nasdaq Capital Market under the new trading symbols "ZPTA" and "ZPTAW,"
respectively. Costs paid by us that were directly attributable to the Merger were $7.1 million and were treated as issuance costs and
netted against additional paid-in-capital in our consolidated balance sheets. Additionally, upon the consummation of the Merger, the holders
of certain outstanding senior secured promissory notes issued by Legacy Zapata pursuant to a Senior Secured Note Purchase Agreement (the
"Senior Secured Notes") elected to convert the principal of their notes and accrued interest thereon into 3,257,876 shares
of our 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 $2.2 million on the Senior Secured Notes remains outstanding as of December 31, 2024.

 In connection with the closing of the Merger,
the following events occurred as discussed in more detail below:

 Unvested Shares

 Concurrently with the execution of the Business
Combination Agreement, AAC, Legacy Zapata, the Andretti Sponsor LLC (the "Sponsor"), Sol Verano Blocker 1 LLC (the "Sponsor
Co-Investor") and certain key stockholders of the Sponsor entered into a sponsor support agreement. The Sponsor, the Sponsor Co-Investor,
key stockholders of the Sponsors and directors owned an aggregate of 5,750,000 Class B ordinary shares of AAC (the "Sponsor Shares"),
of which up to 1,423,500 Sponsor Shares were subject to certain vesting and forfeiture provisions as described in the sponsor support
agreement. At the closing of the Merger, 1,129,630 Sponsor Shares were determined to be unvested and are subject to forfeiture (the "Unvested
Shares") (see Note 10 in our consolidated financial statements included elsewhere in this Annual Report).

 Forward Purchase Agreement

 On March 25, 2024, we entered into a Confirmation
of an OTC Equity Prepaid Forward Transaction (the "Forward Purchase Agreement") with Sandia Investment Management LP, acting
on behalf of certain funds (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 common stock at a purchase
price of $10.99 per share (the "Additional Shares").

 In April 2024, Sandia exercised their optional
early termination rights under the Forward Purchase Agreement, pursuant to which 250,000 shares were terminated and we received payments
totaling $2.5 million under the early termination obligation prescribed in the Forward Purchase Agreement.

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

 Advisory Agreements

 On July 4, 2023, we entered into an engagement
letter with a third party, pursuant to which the third party acted as a capital markets advisor to AAC in connection with the Merger.
AAC agreed to pay the third party a fee of (i) $0.5 million in cash payable upon the closing of the Merger, plus (ii) $1.0 million in
shares of our common stock, payable 180 days after the closing of the Merger plus (iii) $1.0 million payable in either cash or shares
of our common stock, payable 270 calendar days following the completion of the Merger. On March 25, 2024, AAC and the third party entered
into an amendment to the engagement letter to settle the fee arrangement, such that there is no remaining payment obligation following
the Merger.

 On September 13, 2023, we entered into an agreement
with an additional third party for advisory services to be provided in connection with the Merger. In March 2024, the payment terms of
the agreement were amended to provide for a fee of $1.3 million to be paid by the issuance of a Senior Secured Note with a principal amount
of $1.0 million and the remaining $0.3 million in six monthly installments in cash of $42 thousand per month commencing on May 15, 2024.
During the year ended December 31, 2024, we paid $0.2 million to the third party.

 The Senior Secured Note issued to this third party
was a modified award issued subsequent to the initial date of grant. The incremental fair value of the Senior Secured Note immediately
preceding the award modification was recorded as a loss on issuance of senior secured notes within total other expense, net in the consolidated
statements of operations and comprehensive loss. The Senior Secured Note issued to the third party has the same terms as the Senior Secured
Notes issued to other noteholders. The third party did not convert the Senior Secured Note into shares of our common stock upon the Closing
of the Merger, and the Senior Secured Note remained outstanding at December 31, 2024.

 On February 9, 2024, we entered into a capital
markets advisory agreement with a third party pursuant to which we agreed to pay the third party i) $0.3 million for capital markets advisory
services provided related to the Merger, and ii) $0.2 million for services provided related to the benefit of the holders of AAC and Legacy
Zapata securities. On March 27, 2024, we agreed to issue to the third party a Senior Secured Note in the principal aggregate amount of
$0.2 million immediately prior to the closing of the Merger in exchange for additional capital markets advisory services provided in connection
with the Merger. This Senior Secured Note was then converted into 33,333 shares of our common stock at the closing of the Merger. We recorded
a reduction of $0.5 million in additional paid-in capital on the consolidated balance sheet as a transaction cost in connection with the
capital markets advisory services provided. During the year ended December 31, 2024, in connection with the 33,333 shares issued for the
additional services, we recognized $0.2 million in general and administrative expense in the consolidated statements of operations and
comprehensive loss.

 On February 9, 2024, we entered into an engagement
letter with an additional third party, as amended on February 27, 2024, pursuant to which the third party acted as a capital markets advisor
to us in connection with the Merger. We agreed to pay the third party a non-refundable cash fee of $1.8 million, payable by us in monthly
payments of $0.1 million commencing on the earlier of May 31, 2024 or the effectiveness of the Lincoln Park Registration Statement, until
the full advisory fee of $1.8 million has been paid (the "Term"), with $0.3 million of such payment waivable if we voluntarily
prepay $1.5 million to the third party prior to December 31, 2024. The Lincoln Park Registration Statement was declared effective on April
18, 2024. Notwithstanding the foregoing, we will pay the full $1.8 million upon consummation of a financing transaction with proceeds
of $15.0 million or more (not including sales under the Purchase Agreement or similar financing) during the Term. Upon the closing of
the Merger, we recognized $1.8 million as transaction costs, which we recorded as a reduction in additional paid-in capital. We also recorded
an obligation of $1.2 million to the third party in accrued expenses and other current liabilities within the consolidated balance sheet
as of December 31, 2024. During the year ended December 31, 2024, we paid $0.6 million to the third party.

 In March 2024, Legacy Zapata entered into a placement
agent agreement to retain an additional third party for the purpose of raising up to $10.0 million, for a term of 60 days from the execution
of the placement agent agreement. Legacy Zapata agreed to pay a cash fee equal to 7.0% of the gross amount of cash proceeds (the "Financing
Proceeds") received by Legacy Zapata from investors introduced by the third party directly to Legacy Zapata. The cash fee is payable
within 7 business days following Legacy Zapata's receipt of proceeds from any investors introduced by the third party. In addition,
Legacy Zapata agreed to issue a number of shares of common stock equal to 3.0% of the Financing Proceeds divided by $4.50 upon the closing
of the Merger. In connection with the placement agent agreement, we made a cash payment of $0.1 million and issued 11,666 shares of common
stock upon the closing of the Merger.

 Marketing Services Agreement

 On February 9, 2024, prior to the Merger, AAC
entered into a marketing services agreement with a third party to promote investor engagement, pursuant to which we agreed to pay the
third party in shares of our common stock with a value of $0.3 million upon the closing of the Merger. In connection with our closing
of the Merger, we issued 30,706 shares of our common stock to the third party.

 Enterprise Solution and Sponsorship Agreements with Andretti
Global

 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 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 Business Combination Agreement 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.

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

 On March 28, 2024, we 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 us a total of $1.0 million, subject to our payment of the sponsorship fee to Andretti Autosport 1, LLC. Following the Operational
Cessation, the agreement was terminated, and no payments were made.

 Purchase Agreements with Lincoln Park

 On December 19, 2023, we entered into a purchase
agreement (the "Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which Lincoln
Park agreed to purchase from us, at our option, an aggregate of up to $75.0 million of our common stock 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
the 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."

 On April 12, 2024, we filed the Lincoln Park Registration
Statement, which covers the shares of our common stock that are issuable to Lincoln Park under the Purchase Agreement (including the Commitment
Shares). The Lincoln Park Registration Statement registered for resale up to 13,000,000 shares of common stock (inclusive of the Commitment
Shares) that have been or may be issued to Lincoln Park pursuant to the Purchase Agreement. On April 11, 2024, we issued 712,025 shares
of common stock to Lincoln Park as Commitment Shares at a price of $2.37 per share. As of December 31, 2024, we issued 10,378,780 shares
of common stock to Lincoln Park for aggregate proceeds of $7.7 million (excluding the Commitment Fee shares)

 On August 13, 2024, we entered into a purchase
agreement (the "2024 Purchase Agreement") with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us, at
our option, an aggregate of up to $10.0 million of shares of our common stock from time to time over a 24-month period upon the satisfaction
of certain conditions contained in the 2024 Purchase Agreement including, but not limited to, the filing and effectiveness of a registration
statement covering shares of common stock that are issuable to Lincoln Park under the 2024 Purchase Agreement. In accordance with the
2024 Purchase Agreement, we issued 500,000 shares of common stock to Lincoln Park as a Commitment Fee. In connection with the 2024 Purchase
Agreement, we also entered into a Registration Rights Agreement (the "2024 Registration Rights Agreement") with Lincoln Park,
pursuant to which we will file a registration statement covering the shares of common stock that are issuable to Lincoln Park under the
2024 Purchase Agreement with the SEC within 15 business days following the date that the 2024 Registration Rights Agreement was executed.
We filed the Lincoln Park Registration Statement on September 3, 2024, which was declared effective on September 9, 2024. As of December
31, 2024, the we issued 2,700,000 shares of common stock to Lincoln Park under 2024 Purchase Agreement for aggregate proceeds of $0.9
million (excluding the Commitment Fee shares). In connection with the Operational Cessation described below, the Registration Statement
(which is a condition to transactions under the Purchase Agreement) is no longer effective.

 2025 Capital Raising and Restructuring Efforts

 In June 2025, the Company commenced debt restructuring
and capital raising transactions and the reinstatement of operations by (1) entering into exchange agreements with unsecured creditors
pursuant to which such creditors agreed to exchange outstanding obligations payable to them for common stock and certain rights related
thereto, and (2) the Company sold convertible notes and warrants for gross proceeds of $3 million. The Company has since been continuing
efforts to negotiate and restructure outstanding obligations and raise capital. In the furtherance of recommencing operations, the Company
has also entered into advisory agreements with third parties and agreed to compensate such parties in the form of equity and/or cash compensation.
See Note 20, Subsequent Events in the notes to the consolidated financial statements contained in this Annual Report.

 Operational Cessation

 On October 7, 2024, our board of directors approved
the cessation of our operations (the "Operational Cessation") due to insufficient financial resources to continue funding
ongoing operations and meet existing obligations. In connection with the Operational Cessation, our board of directors approved the termination
of all our employees, except for a small number of employees retained to administer termination business activities, including Sumit Kapur,
our Chief Financial Officer. All such employees were terminated effective October 9, 2024. Following the Operational Cessation, we maintained
minimal day-to-day operations.

 On October 25, 2024, trading of our common stock
and warrants was suspended and removed from the listing and registration on Nasdaq.

 Operations Prior to Operational Cessation

 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. 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.

 We had a suite of three subscription-based specialized
generative AI offerings that included software and software tools supported by services. These offerings consist of:

 •
 Zapata AI Sense ("Sense"): A suite of algorithms and complex mathematical models to enhance
analytics and other data-driven applications.

 •
 Zapata AI Prose ("Prose"): Our set of generative AI solutions based on large language models
("LLMs"), similar to widely used generic chatbot applications but customized to an enterprise's industry and its unique
problems.

 •
 Orquestra: The Company's specialized generative AI application development platform on which it
provides Sense and Prose to customers.

 Restructuring Efforts

 As noted above, since the Operational Cessation,
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,
we have financed our operations primarily through sales of our convertible preferred stock, par value $0.0001 per share (the "Convertible
Preferred Stock") and common stock and with issuances of Senior Notes and Senior Secured Notes (each as defined below and, collectively,
the "Convertible Notes"). For the year ended December 31, 2024 we have incurred net losses of $38.1 million. As of December
31, 2024 and 2023, we had an accumulated deficit of $127.7 million and $89.5 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 and 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 million of liabilities through the issuance of shares of our common 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.

 Although we believe that we will be able to continue
to raise funds through the sale of our securities to provide the additional funding needed to meet our obligations, the restructuring
activities aimed at restarting certain aspects of our core business will require substantial additional funding and there is no assurance
that we will be able to continue raising the additional capital necessary to continue operations and execute on our business plan.

 These factors raise substantial doubt about our
ability to continue as a going concern.

 The accompanying 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 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 we be unable to continue as
a going concern. We have evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial
doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
We have 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 we expand our penetration of the quantum computing
application development solutions market.

 See "Liquidity and Capital Resources"
below for additional information.

 Components of Our Results of Operations

 Revenue

 Our revenue is 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.

 Under our consulting contracts, our deliverables
may include integrated quantum, classical or hybrid quantum-classical computing solutions to our customers or to provide research and
development services regarding the potential benefits of these solutions to use cases specified by our customer. Our subscription-based
solutions consist of our commitment to provide access to our hosted software platform throughout the contract term along with stand-ready
scientific and software engineering services.

 Revenue from subscriptions to our software platform
to date have only been sold as access to the platform in our hosted environment and are therefore recognized over the contract term on
a ratable basis, as the commitment represents a stand-ready performance obligation.

 Revenue from consulting services is generally
recognized over the contract term as performance is completed on the performance obligations identified. Revenue from stand-ready scientific
and engineering services are recognized over the contract term on a ratable basis, as the obligation represents a stand-ready obligation.

 From time to time, we may enter into arrangements
to build license applications that can be used in conjunction with our software platform. To date, the license application built has been
delivered as a perpetual license with associated post-contract support. We recognize the license at the time of deployment, and the related
post-contract support over the contracted service period on a ratable basis, as it is provided as a stand-ready service.

 Our revenue recognition policies are discussed
below under the heading "Critical Accounting Policies and Significant Judgments and Estimates" and Note 2, "Summary
of Significant Accounting Policies" to our consolidated financial statements, included elsewhere in this Annual Report.

 Cost of Revenue

 Cost of revenue includes expenses related to supporting
product offerings. Our primary cost of revenue is personnel costs, including salaries and other personnel-related expense. Cost of revenue
also includes costs relating to our information technology and systems, including depreciation, network costs, data center maintenance,
database management and data processing costs. We allocate these overhead expenses based on headcount, and thus are reflected in cost
of revenue and each operating expense category.

 Sales and Marketing

 Sales and marketing expenses consist primarily
of personnel-related costs, including salaries and wages, benefits, commissions, bonuses and stock-based compensation expense for our
employees engaged in sales and sales support, business development, marketing, corporate partnerships, and customer service functions.
Sales and marketing expenses also include costs incurred for market research, tradeshows, branding, marketing, promotional expense, and
public relations, as well as facilities and other supporting overhead costs, including depreciation and amortization. Sales and marketing
expenses are primarily driven by investments in the growth of our business. We expect sales and marketing expenses, expressed as a percentage
of revenue, to vary from period to period for the foreseeable future.

 Advertising expenses, which are included in sales
and marketing expense, primarily include promotional expenditures, and are expensed as incurred. The amounts incurred for advertising
expenses for the years ended December 31, 2024 and 2023 were $3.8 million and $2.8 million, respectively.

 Research and Development

 Research and development expenses consist primarily
of personnel-related costs, including salaries and wages, benefits, bonuses, and stock-based compensation expense for our scientists,
engineers and other employees engaged in the research and development of our products. In addition, research and development expenses
include third party software subscription costs, facilities and other supporting overhead costs, including depreciation and amortization.
Research and development costs are expensed as incurred.

 General and Administrative Expenses

 General and administrative expenses consist primarily
of personnel-related costs, including salaries and wages, bonuses, benefits, and stock-based compensation expense for our finance, legal,
information technology, human resources, and other administrative personnel. General and administrative expenses also include facilities
and supporting overhead costs, including depreciation and amortization, and external professional services.

 Other Expense, Net

 Other expense, net consists primarily of fair
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.

 Income Taxes

 For the years ended December 31, 2024 and 2023,
we recorded an income tax benefit and provision of $20 thousand and $20 thousand, 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, 2024 as we believe it was more likely than not that we would not be able to utilize our deferred
tax assets.

 Results of Operations

 Comparison of the Years Ended December 31, 2024 and 2023

 The following table summarizes our results of
operations for the years ended December 31, 2024 and 2023:

 2024

 2023

 %

 Revenue ($1,300 and $1,978 from related parties, respectively)

 $
 3,876

 $
 5,683

 $
 (1,807
)

 -32
 %

 Cost of revenue

 3,241

 4,582

 (1,341
)

 (29
)

 Gross profit

 1,101

 (466
)

 (42
)

 Operating expenses:

 Sales and marketing ($2,873 and $2,873 from related parties, respectively)

 7,120

 5,885

 1,235

 Research and development

 4,420

 5,915

 (1,495
)

 (25
)

 General and administrative

 12,141

 7,409

 4,732

 Total operating expenses

 23,681

 19,209

 4,472

 Loss from operations

 (23,046
)

 (18,108
)

 (4,938
)

 Other income (expense):

 Interest expense

 (962
)

 —

 (962
)

 —

 Extinguishment of senior notes

 —

 (6,864
)

 Loss on issuance of forward purchase agreement
 derivative liability

 (4,935
)

 —

 (4,935
)

 —

 Change in fair value of forward purchase agreement derivative liability

 2,499

 —

 2,499

 —

 Change in fair value and loss on issuance of notes

 (9,776
)

 (4,779
)

 (4,997
)

 Other (expense) income, net

 (1,903
)

 (1,940
)

 NM
 **

 Total other expense, net

 (15,077
)

 (11,606
)

 (3,471
)

 Net loss before income taxes

 (38,123
)

 (29,714
)

 (8,409
)

 Provision for income taxes

 (20
)

 (20
)

 —

 —

 $
 (38,143
)

 $
 (29,734
)

 $
 (8,409
)

 %

 ** Not meaningful

 Revenue

 2024

 2023

 %

 Revenue ($1,300 and $1,978 from related parties, respectively)

 $
 3,876

 $
 5,683

 $
 (1,807
)

 (32
)%

 Revenue was $3.9 million for the year ended December
31, 2024, as compared to $5.7 million for the year ended December 31, 2023. The decrease of $1.8 million was primarily attributable to
the Operational Cessation and reductions associated with the completion of legacy contracts partially offset by increases from newly initiated
projects in 2024.

 Cost of Revenue

 2024

 2023

 %

 Cost of revenue

 $
 3,241

 $
 4,582

 $
 (1,341
)

 (29
)%

 Cost of revenue was $3.2 million for the year
ended December 31, 2024, as compared to $4.6 million for the year ended December 31, 2023. The decrease of $1.4 million was primarily
attributable to the Operational Cessation and reductions associated with the completion of legacy contracts partially offset by increases
from newly initiated projects in 2024.

 Operating Expenses

 Sales and Marketing Expenses

 2024

 2023

 %

 Sales and marketing ($2,873 and $2,873 from related parties, respectively)

 $
 7,120

 $
 5,885

 $
 1,235

 %

 Sales and marketing expense was $7.1 million for
the year ended December 31, 2024, as compared to $5.9 million for the year ended December 31, 2023. The increase of $1.2 million was primarily
driven by a $1.0 million increase in costs related to a sponsorship agreement with Andretti Autosport 1, LLC, and a $0.2 million increase
in outbound marketing during 2024.

 Research and Development Expenses

 2024

 2023

 %

 Research and development

 $
 4,420

 $
 5,915

 $
 (1,495
)

 (25
)%

 Research and development expense was $4.4 million
for the year ended December 31, 2024, as compared to $5.9 million for the year ended December 31, 2023. The decrease of $1.5 million was
primarily driven by a decrease of $1.1 million in personnel costs related to research and development headcount reductions and $0.8 million
related to the Operational Cessation, partially offset by a $0.4 million increase in hosting charges incurred as a result of a collaborative
research agreement that commenced in 2024.

 General and Administrative Expenses

 2024

 2023

 %

 General and administrative

 $
 12,141

 $
 7,409

 $
 4,732

 %

 General and administrative expenses were $12.1
million for the year ended December 31, 2024, compared to $7.4 million for the year ended December 31, 2023. The increase of $4.7 million
was primarily attributable to costs associated with our transition from a private to a public entity. This includes a $2.6 million increase
in professional services, a $0.5 million increase in compensation to our board of directors, a $0.8 million increase in directors and
officers insurance premiums, and a $0.9 million of costs incurred related to the search and replacement of our general counsel and Chief
Financial Officer, and the hiring of our Chief Product Officer.

 Other Expense, Net

 2024

 2023

 %

 Total other expense, net

 $
 (15,077
)

 $
 (11,606
)

 $
 (3,471
)

 %

 We recorded other expense, net of $15.1 million
for the year ended December 31, 2024, compared to $11.6 million for the year ended December 31, 2023. The increase in other expense, net
of $3.5 million resulted primarily from the loss on issuance of Senior Secured Notes of $9.8 million, a $4.9 million loss on issuance
of Forward Purchase Agreement, an increase of $1.8 million in transaction costs incurred related to the Lincoln Park Purchase Agreement,
and a $1.0 million increase in interest expense in connection with our Senior Secured Notes. These increases were partially offset from
the conversion of Senior Notes to Senior Secured Notes on December 22, 2023, which resulted in no income or loss related to the remeasurement
of the notes to fair value during 2024 compared to a $4.8 million loss on remeasurement of the notes to fair value during 2023, a $6.9
million loss on extinguishment of Senior Notes during 2023, and a $2.5 million change in fair value of the forward purchase agreement
derivative liability.

 Provision for income taxes

 The provision for income taxes was not material
during the year ended December 31, 2024 and 2023 and was related to our foreign operations.

 Liquidity, Going Concern and Capital Resources

 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. As of December
31, 2024, we had cash and cash equivalents of $0.4 million, excluding our restricted cash. Since our inception through December 31, 2024,
we have sold 14,222,580 shares of our Convertible Preferred Stock for aggregate net proceeds of $64.7 million, received $14.5 million
from the issuance of Senior Notes and Senior Secured Notes and $8.6 million in proceeds under an equity line of credit. Our principal
use of cash is to fund our operations and platform development to support our growth.

 As of November 30, 2025, we had approximately
$2,1 million in cash. We do not have sufficient capital to meet our working capital needs for the 12 months following the date we file
this Report.

 Senior Secured Notes

 In December 2023, prior to the Merger, we entered
into a Senior Secured Note Purchase Agreement, pursuant to which we agreed to issue and sell up to $14.4 million in aggregate principal
amount of Senior Secured Notes and offered to exchange our outstanding Senior Notes for Senior Secured Notes. All previously issued Senior
Notes were canceled in exchange for Senior Secured Notes with a principal amount equal to the principal amount of the Senior Notes of
$5.6 million plus accrued and unpaid interest of $0.6 million, through the date immediately prior to the exchange. We received gross proceeds
in cash of $8.9 million from the issuance of Senior Secured Notes, excluding funds received upon the issuance of Senior Notes. In addition,
we issued $1.1 million in aggregate principal amount of Senior Secured Notes to third party advisors in lieu of cash payment for services
related to the Merger.

 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 and Senior Secured Notes with aggregate principal and accrued interest of $2.2 million remain outstanding as of December 31, 2024.
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.

 Notes Payable – Related Parties

 To finance transaction costs in connection with
the Merger, the sponsor of AAC and certain of AAC's officers and directors made working capital loans (the "Notes Payable
– Related Party") to AAC prior to the closing of the Merger. The Notes Payable – Related Party would either be repaid
upon the consummation of the Merger, without interest, or at AAC's discretion, up to $1.5 million of such Notes Payable –
Related Party could be converted into Private Placement Warrants at a price of $1.00 per warrant on the date of the Merger (see Note 11
to our consolidated financial statements, included elsewhere in this Annual Report).

 On March 28, 2024, the terms of the Notes Payable
– Related Party were amended, pursuant to which the outstanding principal balance plus the accrued interest of $2.6 million, which
was also due per its terms at the closing of the Merger was deferred and became due in monthly installments (including interest accruing
from the closing of the Merger through the payment date) for twelve months thereafter beginning thirty days following the effectiveness
of the Lincoln Park Registration Statement. The Lincoln Park Registration Statement was declared effective on April 18, 2024. Upon the
closing of the Merger, none of the note holders elected to exercise their option of converting their respective loans into warrants. The
Notes Payable – Related Party bear interest at a rate of 4.5% per annum. As of December 31, 2024, the outstanding balance of the
Notes Payable – Related Party was $1.9 million within our consolidated balance sheet.

 Lincoln Park Purchase Agreement

 On December 19, 2023, prior to the Merger, we
entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC ("Lincoln Park") pursuant to which Lincoln Park agreed
to purchase from us, an aggregate of up to $75.0 million of common stock from time to time over a 36-month period following the closing
of the Merger. In addition, we paid Lincoln Park a Commitment Fee through the issuance of 712,025 shares of common stock. In connection
with the Purchase Agreement, we also entered into a Registration Rights Agreement with Lincoln Park, pursuant to which we are obligated
to file the Lincoln Park Registration Statement that covers the shares of common stock that are issuable to Lincoln Park under the Purchase
Agreement (including the Commitment Shares) with the SEC within 45 days following the closing of the Merger. We filed the Lincoln Park
Registration Statement on April 12, 2024.

 On August 13, 2024, we entered into the 2024 Purchase
Agreement with Lincoln Park pursuant to which Lincoln Park agreed to purchase from us, an aggregate of up to $10.0 million of shares of
common stock from time to time over a 24-month period upon the satisfaction of certain conditions contained in the 2024 Purchase Agreement
including, but not limited to, the filing and effectiveness of a registration statement covering shares of common stock that are issuable
to Lincoln Park under the 2024 Purchase Agreement. In accordance with the 2024 Purchase Agreement, we issued 500,000 shares of common
stock to Lincoln Park as a commitment fee. In connection with the 2024 Purchase Agreement, we also entered into the 2024 Registration
Rights Agreement with Lincoln Park, pursuant to which we will file a registration statement covering the shares of common stock that are
issuable to Lincoln Park under the 2024 Purchase Agreement with the SEC within 15 business days following the date that the 2024 Registration
Rights Agreement was executed. We filed the Lincoln Park Registration Statement on September 3, 2024, which was declared effective on
September 9, 2024. In connection with the Operational Cessation described above, the Registration Statement is no longer effective (which
is a condition to transactions under the Purchase Agreement).

 See Recent Developments above for additional detail
on Lincoln Park Purchase Agreement.

 Forward Purchase Agreement

 On March 25, 2024, we entered into the Forward
Purchase Agreement with Sandia, pursuant to which Sandia purchased, from the open market, 1,000,000 Recycled Shares and 500,000 Additional
Shares, which represents the maximum number of shares subject to purchase under the Forward Purchase Agreement, subject to adjustment
as described below (the "Maximum Number of Shares"). The number of shares subject to the Forward Purchase Agreement (the "Number
of Shares") is subject to reduction following a termination of the Forward Purchase Agreement with respect to such shares.

 Pursuant to the Forward Purchase Agreement, at
the closing of the Merger, we prepaid to Sandia (the "Prepayment"), with respect to the Recycled Shares, with proceeds from
the trust account, a cash amount equal to the (x) product of the number of Recycled Shares and (y) $10.99 per share, totaling $11.0 million
which was paid at the closing of the Merger. With respect to the Additional Shares, a per share amount equal to $10.99 per share was netted
against the proceeds from the Additional Shares received from Sandia, resulting in no cash received or paid for the share issuance.

 The reset price (the "Reset Price")
was initially $10.00 per share and will be subject to reset on a monthly basis (each a "Reset Date"), with the first such
Reset Date occurring 180 days after the closing date of the Merger, to be greater of (a) $4.50 and (b) the 30-day volume weighted average
price of shares of our common stock immediately preceding such Reset Date. Except as described below, the Reset Price will be reduced
immediately to any lower price at which we close any agreement to sell or grants any right to reprice, or otherwise disposes of or issues
(or announces any offer, sale, grant or any option to purchase or other disposition of) any shares of our common stock or securities or
any of our subsidiaries convertible, exercisable or exchangeable into, or otherwise entitles the holder thereof to receive, shares of
our common stock or other securities (a "Dilutive Offering and, such reset, a Dilutive Offering Reset").

 In the event of a Dilutive Offering Reset, the
Maximum Number of Shares will be increased to an amount equal to the quotient of (i) 1,500,000 divided by (ii) the quotient of (a) the
price of such Dilutive Offering divided by (b) $10.00. In such event, Sandia has the right to purchase more Additional Shares, up to the
Maximum Number of Shares, for which we will be required to provide a cash prepayment to Sandia netted against the purchase price for such
shares, and such Additional Shares will be subject to the terms of the Forward Purchase Agreement.

 To the extent Sandia does not early terminate
shares purchased under the Forward Purchase Agreement, as described below, the parties will settle the then-outstanding shares held by
Sandia upon the Valuation Date, such date being two years from the closing of the Merger, March 28, 2026, subject to acceleration under
certain circumstances, including the occurrence of a VWAP Trigger Event, defined as an event that occurs if the volume weighted average
price per share on any scheduled trading day, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per share.
On the Cash Settlement Payment Date, which is the tenth business day following the last day of the valuation period commencing on the
Valuation Date, as described in the Forward Purchase Agreement (the "Valuation Period"), Sandia will pay to us a cash amount
equal to (A) the number of shares subject to the Forward Purchase Agreement as of the Valuation Date less the number of unregistered shares,
multiplied by (B) the volume-weighted average price over the Valuation Period (the "Settlement Amount"); provided, that if
the amount of the Settlement Amount Adjustment (as defined below) payable by us to Sandia is less than the Settlement Amount, then the
Settlement Amount Adjustment will be automatically netted from the Settlement Amount and any remaining amount paid in cash. We will pay
to Sandia on the Cash Settlement Payment Date an amount (the "Settlement Amount Adjustment") equal to (1) the Number of Shares
as of the Valuation Date multiplied by $2.00 per share if the amount is to be paid in cash, or (2) if the Settlement Amount Adjustment
exceeds the Settlement Amount, the Counterparty may at its election pay the Settlement Amount Adjustment to Sandia in shares of our common
stock, in an amount equal to the product of the number of shares, including the Recycled Shares and the Additional Shares as of the Valuation
Date multiplied by $2.25; provided, that in certain circumstances as described in the Forward Purchase Agreement, including if a Delisting
Event (as defined in the Forward Purchase Agreement) occurs during the Valuation Period, such amount must be paid in cash.

 In addition, during the term of the Forward Purchase
Agreement, Sandia may elect to terminate the transaction in whole or in part by providing a written notice to us, which will specify the
quantity by which the number of shares will be reduced (such election, an "Optional Early Termination" and, the shares subject
to the Optional Early Termination, the "Terminated Shares"). We shall be entitled to an amount from Sandia, equal to the product
of (x) the number of Terminated Shares and (y) the Reset Price, on the date of notice.

 We determined that the Optional Early Termination
provision and the Variable Maturity Consideration, which is the amount of the Settlement Amount Adjustment in excess of the Settlement
Amount as defined above, within the Forward Purchase Agreement are considered as 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 meet the
definition of a derivative. We recorded the initial value of the derivative as a loss on issuance of forward purchase agreement derivative
liability of $4.9 million in the consolidated statements of operations and comprehensive loss, included elsewhere in this Annual Report.
The change in fair value of the forward purchase agreement derivative liability of $2.5 million was recorded during the year ended December
31, 2024, in the consolidated statements of operations and comprehensive loss, included elsewhere in this Annual Report.

 The Prepayment Amount is accounted for as a subscription
receivable and recorded as a reduction to equity to reflect the substance of the overall arrangement as a net repurchase of the Recycled
Shares and the Additional Shares. We recognized a subscription receivable of $11.0 million associated with the Recycled Shares as a reduction
to additional paid-in capital in our consolidated balance sheet, included elsewhere in this Annual Report, and a subscription receivable
associated with the Additional Shares was fully offset with the proceeds that Sandia paid for the purchase of these shares, resulting
in no cash received or paid for such share issuance.

 In April 2024, Sandia elected to terminate the
transaction in part by exercising the Optional Early Termination provision under the Forward Purchase Agreement, pursuant to which 250,000
shares were terminated. We received payments totaling $2.5 million under the Optional Early Termination provision prescribed in the Forward
Purchase Agreement.

 In addition, we reimbursed Sandia $0.1 million
at the closing of the Merger for reasonable out-of-pocket expenses for costs incurred in connection with the transaction, and $0.1 million
in expenses incurred in connection with the acquisition of the Recycled Shares. We will also pay to the third party a quarterly fee of
$5 thousand in consideration of certain legal and administrative obligations in connection with this transaction.

 Under the Forward Purchase Agreement, Sandia had
the right to accelerate the Valuation Date upon the occurrence of a VWAP Trigger Event, defined as our common stock trading below $1.00
per share for 20 trading days within any 30 consecutive trading-day period. Following such an event, Sandia exercised this right and accelerated
the Valuation Date to October 8, 2024. Accordingly, we became obligated to pay Sandia $2.4 million in cash or shares. In June 2025, we
settled our obligation by issuing 6,591,000 shares of our common stock to Sandia. The Forward Purchase Agreement was thereafter terminated.

 Cash Flows

 The following table summarizes our sources and
uses of cash for each of the periods presented:

 2024

 2023

 Net cash used in operating activities

 $
 (18,108
)

 $
 (14,763
)

 Net cash used in investing activities

 (34
)

 —

 Net cash provided by financing activities

 15,095

 8,043

 Effect of exchange rate changes on cash, cash equivalents and restricted cash

 (63
)

 (21
)

 Net increase (decrease) in cash, cash equivalents and restricted cash

 $
 (3,110
)

 $
 (6,741
)

 Operating Activities

 Net cash used in operating activities was $18.1
million for the year ended December 31, 2024. The factors affecting our operating cash flows during this period were our net loss of $38.1
million, partially offset by a net change in our operating assets and liabilities of $3.8 million and non-cash charges of $16.3 million.
The non-cash charges primarily consisted of $9.8 million in the loss on issuance of Senior Secured Notes, $4.9 million in the loss on
the forward purchase contract, $2.0 million in equity line of credit commitment expense, $0.9 million in non-cash interest expense, $0.6
million in stock-based compensation expense, $0.2 million in non-cash vendor payments, $0.2 million in non-cash lease expense, $0.1 million
in depreciation and amortization expense and $0.1 million loss on fixed assets disposal, partially offset by $2.5 million in change in
fair value of forward purchase contract. The change in operating assets and liabilities was driven by a $7.1 million increase in accounts
payable, $2.4 million increase in Forward Purchase Agreement Settlement obligation and $0.1 million increase in deferred revenue, partially
offset by a $4.3 million decrease in accrued expenses and other current liabilities and other non-current liabilities, a $0.7 million
decrease in deferred legal fees, a $0.5 million increase in prepaid expenses and other current and non-current assets, a $0.3 million
decrease in operating lease liabilities and a $0.1 million increase in accounts receivable. The increase in accounts payable was primarily
due to higher transaction costs and the delayed vendor and sponsorship payments following the Operational Cessation in the fourth quarter
of 2024. The Forward Purchase Agreement Settlement obligation was related to the acceleration of the Valuation Date, requiring recognition
of $2.4 million liability in the fourth quarter of 2024. The increase in deferred revenue is due to the timing of billings related to
customer contracts and revenue recognition under customer contracts. The decrease in accrued expenses and other current liabilities and
other non-current liabilities was primarily reflects payments of legal and audit fees. The decrease in deferred legal fees resulted from
payments of fees. The increase in prepaid expenses and other current and non-current assets was primarily due to the timing of vendor
invoicing and payments for sponsorship fees. The decrease in operating lease liabilities resulted primarily from lease payments. The increase
in accounts receivable is due to the timing of billings and collections from customer contracts.

 Net cash used in operating activities was $14.8
million for the year ended December 31, 2023. The factors affecting Legacy Zapata's operating cash flows during this period were
its net loss of $29.7 million, partially offset by a net change in its operating assets and liabilities of $2.0 million and non-cash charges
of $12.9 million. The non-cash charges primarily consisted of $0.2 million in depreciation and amortization expense, $4.8 million in the
change in fair value of Convertible Notes, $6.9 million in losses on extinguishment of Senior Notes, $0.3 million in non-cash lease expense,
and $0.8 million in stock-based compensation expense. The change in operating assets and liabilities was driven by a $3.5 million increase
in accounts payable, a $0.5 million increase in accounts receivable, a $0.2 million decrease in prepaid expenses and other current and
non-current assets, a $1.0 million decrease in accrued expenses and other current liabilities, a $0.2 million increase in deferred revenue
and a $0.4 million decrease in operating lease liabilities. The increase in accounts receivable is due to the timing of billings and collections
from customer contracts. The increase in accounts payable was primarily related to the timing of invoicing and payments of sponsorship
fees and professional services fees. The decrease in prepaid expenses and other current and non-current assets was primarily due to payment
of transaction costs related to the Merger. The decrease in accrued expenses and other current liabilities is primarily due to an increase
in accrued legal fees, offset by the payment of consulting and professional fees, the reversal of accrued commissions and reduction in
accrued severance, and the payment of sponsorship fees. The decrease in deferred revenue is due to the timing of billings related to customer
contracts and the recognition of revenue from customer contracts. The decrease in operating lease liabilities resulted primarily from
lease payments.

 Investing Activities

 During the year ended December 31, 2024, net cash
used in investing activities was $34 thousand, primarily consisting of purchases of property and equipment. The purchases of equipment
during these periods were primarily related to computer equipment purchases.

 There were no investing cash flow activities during
the year ended December 31, 2023.

 Financing Activities

 During the year ended December 31, 2024, net cash
provided by financing activities was $15.1 million, which consisted of $12.6 million in proceeds from the closing of the Merger, $6.0
million in proceeds received from the issuance of Senior Secured Notes, $8.6 million in proceeds from issuances of common stock under
the equity line of credit, $2.5 million in proceeds from the partial early termination of the Forward Purchase Agreement and $0.1 million
in proceeds from exercises of stock options, partially offset by the payment of $0.1 million debt discount, payment of $0.6 million of
notes payable to related parties, payment of $2.9 million of deferred offering costs and the prepayment of $11.0 million under the Forward
Purchase Agreement.

 During the year ended December 31, 2023,
net cash provided by financing activities was $8.0 million, which consisted of $37 thousand in proceeds from exercises of stock
options and $8.3 million in proceeds received from the issuance of Convertible Notes, offset by $0.3 million of transaction
costs related to the Merger.

 Off-Balance Sheet Financing Arrangements

 We have no obligations, assets or liabilities
which would be considered off-balance sheet arrangements during the periods presented. Zapata and Legacy Zapata have not entered into
any off-balance sheet financing agreements, established any special purpose entities, guaranteed any debt or commitments of other entities,
or purchased any non-financial assets.

 Contractual Obligations and Other Commitments

 Leases

 As of December 31, 2024, the Company did not have
any remaining obligations under operating lease agreements.

 License and Collaboration Agreements

 During 2018, we entered into an exclusive patent
license agreement (the "license agreement") with a term that continued unless terminated by the licensor or by us. The license
agreement contained annual license maintenance fee payments, milestone payments, as well as payments based on a percentage of net sales.
Under the license agreement, we issued shares of common stock to the licensor representing four percent of our capital stock on a fully
diluted basis.

 The license agreement obligated us to pay fixed
annual license maintenance fees of $0.1 million for the year ended December 31, 2023, and $0.1 million per year thereafter until we or
the licensor terminate the license. The license agreement obligated us to pay fixed milestone payments upon the achievement of certain
sales thresholds. The milestone payments total $0.2 million, and the maximum sales threshold was $25.0 million. We did not trigger any
payments to the licensor during the years ended December 31, 2024 and 2023.

 The license agreement obligated us to pay a royalty
equal to two percent of net sales. The license agreement also required us to make payments related to any sublicensing agreements, with
varying amounts based on the type of sublicense. We did not pay any royalties during the years ended December 31, 2024 and 2023. On February
10, 2023, we terminated the license agreement by written notice to the licensor. Upon termination, all licensing rights held by us under
the license agreement were forfeited to the licensor. We did not owe any accrued obligations or payments to the licensor as of the termination
of the license agreement or thereafter.

 Sponsorship Agreement

 During 2022, we entered into a sponsorship agreement
with Andretti Global. The total commitment under the sponsorship agreement is $8.0 million and is due and payable over the period of February
2022 through July 2024. The related expenses are amortized by straight-line method over the period. Through December 31, 2024, we paid
$3.5 million under the sponsorship agreement and 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. There was $5.5 million included in accounts payable as of December
31, 2024 related to the sponsorship agreement.

 On March 28, 2024, we entered into an additional
sponsorship agreement with Andretti Autosport 1, LLC, an affiliate of Andretti Global. The agreement expired on December 31, 2024. Subject
to the agreement, we are responsible for payments under the sponsorship agreement an amount totaling $1.0 million.

 Notes Payable—Related Parties

 Pursuant to a Deferred Payment Agreement dated
as of March 28, 2024, we amended the terms of our notes payable to related parties, pursuant to which the aggregate principal balance
of the notes plus accrued interest through the closing of the Merger of $2.6 million was deferred at closing and became due in monthly
installments (including interest accruing from the closing of the Merger though the payment date) beginning thirty days following the
effectiveness of the Lincoln Park Registration Statement. The balance will be payable over a twelve-month term (including interest accruing
from the closing of the Merger though the payment date). The Lincoln Park Registration Statement was declared effective on April 18, 2024.
The Convertible Notes bear interest at a rate of 4.5% per annum.

 Advisory and Other Agreements

 In connection with the Merger, on September 13,
2023, we 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 $1.3 million, to be paid by the issuance of a Senior Secured Note with a principal amount of $1.0 million and the remaining
$0.3 million in six monthly installments in cash of $42 thousand per month commencing on May 15, 2024. During the year ended December
31, 2024, we paid $0.2 million to the third party.

 On February 9, 2024, we entered into an engagement
letter with an additional third party, as amended on February 27, 2024. We agreed to pay the third party a non-refundable cash fee of
$1.8 million, payable in monthly payments over the Term (as defined in Recent Developments), with $0.3 million of such payment waivable
if we voluntarily prepay $1.5 million to the third party prior to December 31, 2024. Upon the closing of the Merger, we recognized $1.8
million as transaction costs, which was recorded as a reduction in additional paid-in capital. During the year ended December 31, 2024,
we paid $0.6 million to the third party.

 As of December 31, 2024, there were remaining
obligations of $5.0 million recorded in accounts payable, accrued expenses and other current liabilities, and non-current liabilities
on our consolidated balance sheet, included elsewhere in this Annual Report. These obligations are expected to be fully repaid by December
31, 2025. During the year ended December 31, 2024, we paid $2.3 million under the agreements.

 Legal Services Fees

 In connection with the Merger, we incurred $4.0
million of deferred legal fees to be paid to AAC's legal advisors upon consummation of the Merger, which were recorded as deferred
legal fees in the historical audited financial statements as of and for the year ended December 31, 2023. On March 26, 2024, we entered
into a fee letter for legal services rendered in connection with the Merger, pursuant to which the total fee of $3.3 million was to be
paid in equal monthly installments of $0.3 million per month over the twelve-month period starting on April 18, 2024. During the year
ended December 31, 2024, we paid $0.7 million to the legal advisors.

 Lincoln Park Purchase Agreement

 In accordance with the Purchase Agreement, we
paid Lincoln Park a commitment fee of approximately $1.7 million, which was recorded within other (expense) income, net in the consolidated
statement of operations for the year ended December 31, 2024, and was payable as follows: (i) on the business day prior to the filing
of the Lincoln Park Registration Statement, $0.6 million in shares of common stock and (ii) we elected 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 Registration Statement and any cash due within 90 days of the closing date of the Merger. On April 11, 2024, we issued 712,025
shares of common stock to Lincoln Park as consideration for the Commitment Fee.

 On August 13, 2024, we entered into a Purchase
Agreement (the "2024 Purchase Agreement") with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us, at
our option, an aggregate of up to $10 million of shares of common stock from time to time over a 24-month period upon the satisfaction
of certain conditions contained in the 2024 Purchase Agreement including, but not limited to, the filing and effectiveness of a registration
statement covering shares of common stock that are issuable to Lincoln Park under the 2024 Purchase Agreement. In accordance with the
2024 Purchase Agreement, we issued 500,000 shares of common stock to Lincoln Park as a commitment fee. The Company does not intend to
make additional sales under the 2024 Purchase Agreement, which would among other conditions require the filing and effectiveness of a
new registration statement.

 Forward Purchase Agreement

 On October 8, 2024, we received notice from Sandia
accelerating the Valuation Date to October 8, 2024. Upon acceleration, we became obligated to pay Sandia $2.4 million in cash or in shares.
In June 2025, we issued 6,591,000 shares of our common stock in full settlement of our obligation to Sandia. The Forward Purchase Agreement
was thereafter terminated.

 Recent Financing and Restructuring Transactions

 For a description of certain capital raising
and restructuring activities we have conducted in 2025, see Note 20, Subsequent Events in the notes to the consolidated financial statements
contained in this Annual Report.

 Critical Accounting Policies and Significant Judgments and Estimates

 Our management's discussion and analysis
of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance
with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these consolidated financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses incurred
during the reporting periods. We base our estimates on historical experience, known trends and events, and various other factors that
we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities recorded revenues and expenses that are not readily apparent from other sources. We evaluate our estimates and
assumptions on an ongoing basis. Actual results may differ from these estimates.

 While our significant accounting policies are
described in more detail in Note 2 to our consolidated financial statements included elsewhere in this Report, we believe that the following
accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

 Revenue Recognition

 In accordance with ASC 606, Revenue from Contracts
with Customers, we recognize revenue when we satisfy a performance obligation by transferring goods or services promised in a contract
to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

 We recognize revenue using the following steps:
(1) identification of the contract, or contracts with a customer, (2) identification of performance obligations in the contract, (3) determination
of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract and (5) recognition of
revenue when or as we satisfy the performance obligations.

 At contract inception, we assess the goods and
services promised in our contracts with customers and identify a performance obligation for each promise, implicit or explicit, to transfer
to the customer a good or service (or bundle of goods or services) that is distinct.

 We currently earn revenue primarily from subscriptions
to our software platform and related services. Subscriptions to our software platform are currently offered as stand-ready access to our
cloud environment on an annual or multi-year basis. Our consulting services may result in either single or multiple performance obligations
based on the contractual terms. We may also offer services in the form of stand-ready scientific and software engineering services, which
are typically only offered in conjunction with the software platform. We evaluate our contracts at inception to determine if the promises
represent a single, combined performance obligation, or multiple performance obligations. We allocate the transaction price to the performance
obligations identified. Judgment is required to allocate the transaction price to each performance obligation. We utilize a stand-alone
selling price methodology based on observable or estimated prices for each performance obligation. We consider market conditions, entity-specific
factors, and information about the customer that is reasonably available to the entity when estimating stand-alone selling price for those
performance obligations without an observable selling price. Our contracts do not contain rights of return, and any variable consideration
as the result of service level agreements has been immaterial. We do not have other contractual terms that give rise to variable consideration.

 Revenue from subscriptions to our software platform
to date have only been sold as access to the platform in our hosted environment and are therefore recognized over the contract term on
a ratable basis, as the promise represents a stand-ready performance obligation.

 Revenue from consulting services is generally
recognized over time. Our contracts typically contain fixed-fee transaction prices. We determine and record a provision for loss contracts
at the contract level when the current estimate of total costs of the contract at completion exceeds the total consideration we expect
to receive. We have not recorded any provision for loss contracts at December 31, 2024. For consulting services, we measure progress toward
satisfaction of the performance obligation as the services are provided, and revenue is generally recognized based on the labor hours
expended over time. Through this method, we recognize revenue based on the actual labor hours incurred to date compared to the current
estimate of total labors hours to satisfy the performance obligation. This method requires periodic updates to the total estimated hours
to complete the contract, and these updates may include subjective assessments and judgments. We had limited contracts, where based on
our determination of the enforceability of payment terms, revenue was recognized at a point in time when payment became enforceable.

 From time to time, we may enter into arrangements
to build license applications that can be used in conjunction with our software platform. To date, the license application built has been
delivered as a perpetual license with associated post-contract support. We recognize the license at the time of deployment, and the related
post-contract support over the contracted service period on a ratable basis, as it is provided as a stand-ready service.

 Revenue from services sold in the form of stand-ready
scientific and software engineering services are recognized over the contract term on a ratable basis, as the obligation represent a stand-ready
obligation.

 Our payment terms vary by contract and do not
contain significant financing components. Amounts collected in advance of revenue recognized are recorded as deferred revenue in the consolidated
balance sheets.

 Areas of Judgment and Estimation

 Our contracts with customers can include multiple
promises to transfer goods and services to the customer, which may be provided over one or more specified phases in the contract. Determining
whether promises and/or phases are distinct performance obligations that should be accounted for separately or not distinct within the
context of the contract and, thus, accounted for together, requires significant judgment. When customer contracts include promises for
multiple goods, services and/or phases, we determine whether the nature of our promise is to transfer (a) multiple promised goods, services
and/or phases or (b) a combined item that comprises multiple promised services and/or phases.

 For consulting services performance obligations
that are satisfied over time, we measure progress toward satisfaction of the performance obligation as the services are provided, and
revenue is generally recognized based on the labor hours expended over time. Through this method, we recognize revenue based on the actual
labor hours incurred to date compared to the current estimate of total labors hours to satisfy the performance obligation. We believe
this method best reflects the transfer of control to the customer. This method requires periodic updates to the total estimated hours
to complete the contract, and these updates may include subjective assessments and judgments.

 Significant estimates and assumptions are used
in the determination of the stand-alone selling price when multiple performance obligations are identified. We utilize a stand-alone selling
price methodology based on observable or estimated prices for each performance obligation. We consider market conditions, entity-specific
factors, and information about the customer that is reasonably available to the entity when estimating stand-alone selling price for those
performance obligations without an observable selling price. Actual results could differ from those estimates and such differences could
affect our financial position and results of operations.

 Stock-Based Compensation Expense

 We measure stock-based options granted to employees,
directors, and non-employees based on their fair value on the date of the grant using the Black-Scholes option-pricing model for stock
options. Compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period
of the respective award. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same
manner as if we had paid cash in exchange for the goods or services, which is generally the over the vesting period of the award. We use
the straight-line method to recognize the expense of awards with service-based vesting conditions. We account for forfeitures of stock-based
awards as they occur. As of December 31, 2024, all awards have service-based vesting conditions.

 Determination of the Fair Value of Legacy Zapata Common Stock

 The fair value of the common stock of Legacy Zapata
has been determined by management with consideration to a third-party valuation, which contemplates a broad range of factors, including
the illiquid nature of the investment in Legacy Zapata's common stock, our historical financial performance and financial position,
our future prospects and opportunity for liquidity events, and recent sale and offer prices of common and Convertible Preferred Stock,
if any, in private transactions negotiated at arm's length.

 Senior Notes and Senior Secured Notes

 Through December 31, 2024, we have issued $5.6
million in Senior Notes, all of which were canceled and, inclusive of interest of $0.6 million, exchanged for Senior Secured Notes on
December 22, 2023, and $10.0 million in Senior Secured Notes to certain lenders. We performed an analysis of all of the terms and features
of the Senior Notes and Senior Secured Notes. We elected the Fair Value Option to account for the Senior Notes as we identified embedded
derivatives, such as voluntary conversion upon qualified financing, automatic conversion upon a De-SPAC Transaction, defined as a business
combination between Legacy Zapata and a special purpose acquisition company, with or without a private investment in public equity ("PIPE"),
automatic conversion upon an initial public offering, repayment under a change of control event, and optional conversion under prepayment,
all of which would require bifurcation and separate accounting. The Senior Notes were remeasured at fair value at each balance sheet date
until they were converted to Senior Secured Notes in December 2023. Changes to the fair value of the Senior Notes was recorded in other
(expense) income, net in the consolidated statements of operations and comprehensive loss. We had also elected the option of combining
interest expense and the change in fair value as a single line item within the consolidated statements of operations and comprehensive
loss. The analysis of the fair value of the Senior Notes contained inherent assumptions related to the market interest rate, the probability
of alternate financing, change of control, initial public offering, De-SPAC Transaction with or without a PIPE, maturity extension, and
payment at original maturity. Due to the use of significant unobservable inputs, the overall fair value measurement of the Senior Notes
was classified as Level 3.

 We account for our Senior Secured Note issued
to a third party for capital market advisory services in connection with the Merger as a stock-based award granted to non-employees and
measure the award based on the merger date fair value using the binomial lattice model. The award is marked to its redemption value, including
paid in-kind interest, if such value exceeds the fair value of the award at the merger date and each reporting period thereafter and we
will recognize the additional fair value amount over redemption value as necessary.

 We account for our remaining Senior Secured Notes
at amortized cost, as they were issued at a substantial premium and do not qualify for the Fair Value Option. Legacy Zapata concluded
that the optional conversion feature was not required to be bifurcated or separately accounted for as a derivative. Costs related to the
issuance of the remaining Senior Secured Notes were recorded as a debt discount as a reduction of the carrying value of the notes and
amortized over the term of the notes and are recorded in other (expense) income, net within the consolidated statements of operations
and comprehensive loss using the effective interest method.

 Upon the closing of the Merger, a portion of the
aggregate outstanding Senior Secured Notes converted into 3,257,876 shares of common stock (856,202 to related parties). Upon the conversion
of the Senior Secured Notes, the principal balance of the debt of $14.2 million and associated accrued interest of $0.5 million were converted,
resulting in an increase in common stock and additional paid-in capital of $14.7 million. Certain holders of the Senior Secured Notes,
holding $2.0 million in aggregate principal amount, did not convert their Senior Secured Notes into shares of common stock and are recognized
at amortized cost. As of December 31, 2024, the $2.2 million 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.

 Forward Purchase Agreement Derivative Liability

 We utilized a Monte-Carlo simulation to value
the Forward Purchase Agreement derivative liability. We determined that the Forward Purchase Agreement contains (i) an Optional Early
Termination provision, and (ii) a Variable Maturity Consideration. The Optional Early Termination and the Variable Maturity Consideration,
as combined, are considered as a freestanding financial instrument and meet the definition of a derivative instrument. The fair value
of the forward purchase agreement derivative liability, consisting of the Optional Early Termination and the Variable Maturity Consideration,
was estimated using a Monte-Carlo Simulation in a risk-neutral framework. The fair value of the derivative liability was equal to the
difference between the fair value of the Forward Purchase Agreement and the amount of cash receivable at the two-year settlement date,
which was calculated as the present value of the initial reset price of $10.00 per share (as defined in the Forward Purchase Agreement)
discounted using the term-matched risk-free rate.

 We recorded the initial value of the instrument
as a loss on issuance of forward purchase agreement derivative liability of $4.9 million in the consolidated statements of operations
and comprehensive loss. The change in fair value of the forward purchase agreement derivative liability of $2.5 million was recorded during
the year ended December 31, 2024, in the consolidated statements of operations and comprehensive loss.

 Recently Issued and Adopted Accounting Pronouncements

 A description of recently issued accounting pronouncements
that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements,
which are included elsewhere in this Annual Report.

 Emerging Growth Company Status

 Zapata Quantum Inc. qualifies as an "emerging
growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Pursuant to the JOBS
Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by Financial Accounting
Standards Board ("FASB") or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth
companies or (ii) within the same time periods as private companies. We intend to take advantage of the exemption for complying with new
or revised accounting standards within the same time periods as private companies. Accordingly, the information contained herein may be
different than the information you receive from other public companies. We also intend to take advantage of some of the reduced regulatory
and reporting requirements applicable to emerging growth companies pursuant to the JOBS Act so long as it qualifies as an emerging growth
company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding
advisory votes on executive compensation and golden parachute payments.

 Item 7A. Quantitative and Qualitative Disclosures About Market
Risk

 Not applicable to smaller reporting companies

 Item 8. Financial Statements and Supplementary Data

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Board of Directors and Stockholders

 Zapata Quantum, Inc.

 Boston, MA

 Opinion on the Financial Statements

 We have audited the accompanying balance sheets
of Zapata Quantum, Inc. (the "Company") as of December 31, 2024 and 2023, the related statements of operations, comprehensive
loss, stockholders' deficit, and cash flows for the years then ended and the related notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

 Going Concern

 The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company has had recurring losses from
operations since inception and has incurred a net loss and used cash in operations during the year ended December 31, 2024. These matters
raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1 to the financial statements. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Accounting Oversight Board (United States) ("PCAOB") and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 We have served as the Company's auditor
since 2025.

 /s/ Weinberg & Company, P.A.

 Los Angeles, California

 F- 1

 CONSOLIDATED BALANCE SHEETS

 (In thousands, except share and per share amounts)

 2024

 2023

 Assets

 Current assets:

 Cash and cash equivalents

 $

 $
 3,332

 Accounts receivable ($ 1,567 and $ 829 from related parties, respectively)

 1,595

 1,938

 Prepaid expenses and other current assets

 Total current assets

 2,183

 5,593

 Property and equipment, net

 —

 Operating lease right-of-use assets

 —

 Deferred offering costs

 —

 1,943

 Other non-current assets

 Total assets

 $
 2,733

 $
 8,067

 Liabilities, Convertible Preferred Stock and Stockholders' Deficit

 Current liabilities:

 Accounts payable ($ 5,504 and $ 1,500 to related parties, respectively)

 $
 13,966

 $
 6,452

 Accrued expenses and other current liabilities

 2,611

 1,945

 Deferred legal fees

 2,620

 —

 Deferred revenue

 Operating lease liability, current

 —

 Forward purchase agreement settlement liability

 2,436

 —

 Note payable - related party, current

 1,618

 —

 Total current liabilities

 23,657

 9,393

 Senior secured notes

 2,237

 8,900

 Note payable - related party, non-current

 —

 Total liabilities

 26,206

 18,293

 Commitments and contingencies (Note 16)

 Convertible preferred stock (Series Seed, A, B-1 and B-2), $ 0.0001 par value; 0 and 14,647,823 shares authorized at December 31, 2024 and December 31, 2023, respectively; 0 and 13,001,114 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

 —

 Stockholders' deficit:

 Common stock, $ 0.0001 par value; 600,000,000 and 23,500,000 shares authorized at December 31, 2024 and December 31, 2023, respectively; 43,589,506 and 4,678,950 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

 —

 Additional paid-in capital

 104,301

 14,633

 Accumulated other comprehensive loss

 ( 109
)

 ( 49
)

 Accumulated deficit

 ( 127,669
)

 ( 89,526
)

 Total stockholders' deficit

 ( 23,473
)

 ( 74,942
)

 Total liabilities, convertible preferred stock and stockholders' deficit

 $
 2,733

 $
 8,067

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 2

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

 (In thousands, except share and per share amounts)

 2024

 2023

 Revenue ( $ 1,300 and $ 1,978 from related parties, respectively)

 $
 3,876

 $
 5,683

 Cost of revenue

 3,241

 4,582

 Gross profit

 1,101

 Operating expenses:

 Sales and marketing ($ 2,783 and $ 2,783 from related parties, respectively)

 7,120

 5,885

 Research and development

 4,420

 5,915

 General and administrative

 12,141

 7,409

 Total operating expenses

 23,681

 19,209

 Loss from operations

 ( 23,046
)

 ( 18,108
)

 Other income (expense):

 Interest expense

 ( 962
)

 —

 Extinguishment of senior notes

 —

 ( 6,864
)

 Loss on issuance of forward purchase agreement derivative liability

 ( 4,935
)

 —

 Change in fair value of forward purchase agreement derivative liability

 2,499

 —

 Change in fair value and loss on issuance of notes

 ( 9,776
)

 ( 4,779
)

 Other income (expense), net

 ( 1,903
)

 Total other expense, net

 ( 15,077
)

 ( 11,606
)

 Net loss before income taxes

 ( 38,123
)

 ( 29,714
)

 Provision for income taxes

 ( 20
)

 ( 20
)

 $
)

 $
)

 Net loss per share attributable to common stockholders, basic and diluted

 $
 ( 1.30
)

 $
 ( 5.82
)

 Weighted-average common shares outstanding, basic and diluted

 29,434,511

 5,104,642

 $
)

 $
)

 Foreign currency translation adjustment

 ( 60
)

 ( 24
)

 Comprehensive loss

 $
 ( 38,203
)

 $
 ( 29,758
)

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 3

 CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' DEFICIT

 For the Years Ended December 31, 2024 and 2023

 (In thousands, except share amounts)

 Convertible Preferred
 Stock ($0.0001 par
 value)

 Common Stock
 ($0.0001 par value)

 Additional
 Paid-in

 Accumulated
 Other
 Comprehensive

 Accumulated

 Total
 Stockholders'

 Shares

 Amount

 Shares

 Amount

 Capital

 Loss

 Deficit

 Deficit

 Balances at December 31, 2022

 14,222,580

 $

 5,095,831

 $
 —

 $
 2,734

 $
 ( 25
)

 $
 ( 59,792
)

 $
 ( 57,083
)

 Retroactive application of reverse recapitalization

 ( 1,221,466
)

 —

 ( 439,603
)

 —

 —

 —

 —

 —

 Adjusted balance, beginning of period

 4,656,228

 —

 2,734

 ( 25
)

 ( 59,792
)

 ( 57,083
)

 Issuance of common stock resulting from exercise of stock options

 —

 —

 22,722

 —

 —

 —

 Stock-based compensation expense

 —

 —

 —

 —

 —

 Loss on issuance of Senior Secured Notes

 —

 —

 —

 —

 11,086

 —

 —

 11,086

 —

 —

 —

 —

 —

 —

)

)

 Cumulative translation adjustment

 —

 —

 —

 —

 —

 ( 24
)

 —

 ( 24
)

 Balances at December 31, 2023

 $

 4,678,950

 $
 —

 $
 14,633

 $
 ( 49
)

 $
 ( 89,526
)

 $
 ( 74,942
)

 Issuance of common stock resulting from exercise of stock options

 —

 —

 47,183

 —

 —

 —

 Loss on issuance of senior secured notes

 —

 —

 —

 —

 9,776

 —

 —

 9,776

 Issuance of common stock pursuant to the forward purchase agreement

 —

 —

 500,000

 —

 ( 10,986
)

 —

 —

 ( 10,986
)

 Issuance of common stock related to the conversion of Senior Secured Notes
 ( 856,202 shares or $ 3,853 to related parties)

 —

 —

 3,257,876

 —

 14,660

 —

 —

 14,660

 Issuance of common stock in connection with debt issuance costs related to
 senior secured notes and capital markets advisory agreements

 —

 —

 42,372

 —

 —

 —

 Issuance of common stock pursuant to the equity line of credit

 —

 —

 13,078,780

 8,562

 —

 —

 8,564

 Conversion of redeemable convertible preferred stock into common stock in
 connection with the reverse recapitalization

 ( 13,001,114
)

 ( 64,716
)

 64,715

 —

 —

 Commitment shares issued pursuant to the equity line of credit

 —

 —

 1,212,025

 —

 1,956

 —

 —

 1,956

 Issuance of common stock upon the reverse recapitalization

 —

 —

 7,596,206

 4,477

 —

 —

 4,478

 Issuance costs in connection with the reverse recapitalization

 —

 —

 —

 —

 ( 7,058
)

 —

 —

 ( 7,058
)

 Partial early termination of the forward purchase agreement

 —

 —

 —

 —

 2,500

 —

 —

 2,500

 Issuance of common stock under the 2024 Plan

 150,000

 —

 —

 —

 Vesting of restricted stock units

 —

 —

 25,000

 —

 —

 —

 —

 —

 Stock-based compensation expense

 —

 —

 —

 —

 —

 —

 —

 —

 —

 —

 —

 —

)

)

 Cumulative translation adjustment

 —

 —

 —

 —

 —

 ( 60
)

 —

 ( 60
)

 Balances at December 31, 2024

 —

 $
 —

 43,589,506

 $

 $
 104,301

 $
 ( 109
)

 $
 ( 127,669
)

 $
 ( 23,473
)

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 4

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands)

 Year Ended

 2024

 2023

 Cash flows from operating activities:

 $
)

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation and amortization

 Non-cash interest expense

 —

 Non-cash vendor payments

 —

 Loss on issuance of forward purchase agreement derivative liability

 4,935

 —

 Change in fair value of senior notes

 9,776

 4,779

 Change in fair value of forward purchase agreement derivative liability

 ( 2,499
)

 —

 Stock-based compensation

 Non-cash lease expense

 Equity line of credit commitment expense

 1,956

 —

 Loss on fixed assets disposal

 —

 Loss on extinguishment of senior notes

 —

 6,864

 Changes in operating assets and liabilities:

 —

 —

 Accounts receivable

 ( 90
)

 ( 510
)

 Prepaid expenses and other current and non-current assets

 ( 455
)

 Accounts payable

 7,060

 3,511

 Accrued expenses and other current liabilities and other non-current liabilities

 ( 4,339
)

 ( 1,038
)

 Deferred revenue

 Deferred legal fees

 ( 678
)

 —

 Forward purchase agreement settlement obligation

 2,436

 —

 Operating lease liabilities

 ( 252
)

 ( 352
)

 Net cash used in operating activities

 ( 18,108
)

 ( 14,763
)

 Cash flows from investing activities:

 Purchases of property and equipment

 ( 34
)

 —

 Net cash used in investing activities

 ( 34
)

 —

 Cash flows from financing activities:

 Payment of deferred offering costs

 ( 2,929
)

 ( 336
)

 Proceeds from the exercise of stock options

 Issuances of common stock under equity line of credit

 8,563

 —

 Proceeds from the reverse recapitalization

 12,637

 —

 Proceeds from the partial early termination of the forward purchase agreement

 2,500

 —

 Proceeds from note payable - related party

 —

 8,342

 Payment of note payable - related party

 ( 635
)

 —

 Prepayment for forward purchase agreement

 ( 10,986
)

 —

 Debt discount paid in cash

 ( 123
)

 —

 Proceeds from senior and senior secured notes

 6,000

 —

 Net cash provided by financing activities

 15,095

 8,043

 Effect of exchange rate changes on cash and cash equivalents

 ( 63
)

 ( 21
)

 Net decrease in cash and cash equivalents

 ( 3,110
)

 ( 6,741
)

 Cash and cash equivalents and restricted cash at beginning of period

 3,469

 10,210

 Cash and cash equivalents and restricted cash at end of period

 $

 $
 3,469

 Supplemental disclosures

 Issuance of common stock in connection with conversion of senior secured notes ($ 3,853 and $ 0 from related parties, respectively)

 $
 14,660

 $
 —

 Issuance of common stock in connection with debt issuance costs related to senior secured notes and capital markets advisory agreements

 $

 $
 —

 Issuance of senior secured notes in lieu of payments for offering costs and capital markets advisory agreements

 $
 1,150

 $
 —

 Deferred offering costs included in accounts payable and accrued expenses and other current liabilities

 $
 2,793

 $
 1,607

 Debt issuance costs in included in accrued expenses and other current liabilities

 $

 $
 —

 Conversion of convertible preferred stock upon the reverse recapitalization

 $

 $
 —

 Issuance of common stock uner 2024 Equity and Incentive Plan

 $

 $
 —

 Purchases of property and equipment included in accounts payable and accrued expenses

 $
 —

 $

 Liabilities assumed from the merger

 $
 8,159

 $
 —

 $

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 5

 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

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

 1.
 Nature of the Business and Basis of Presentation

 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.

 As a result, the consolidated financial statements
included herein for the years ended December 31, 2024 and 2023 reflected (i) the historical operating results of Legacy Zapata prior to
the Merger, (ii) the combined results of the Company, Legacy Zapata and AAC following the Closing of the Merger, (iii) the assets and
liabilities of Legacy Zapata at their historical costs, (iv) the assets and liabilities of the Company and AAC at their historical costs,
which approximated fair value, and (v) the Company's equity structure for all periods presented.

 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. For more details on these activities (Note 20).

 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.

 F- 6

 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 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.

 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,
to achieve profitable operations.

 Since inception through December 31, 2024, 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 net losses of $ 38,143 and $ 29,734
for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the Company had an accumulated deficit
of $ 127,669 and $ 89,526, 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 capital raising through
the sale equity or debt securities.

 In 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, 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 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. For more details on these activities (Note
20).

 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 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 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. 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 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.

 The accompanying consolidated financial statements
reflect the operations of the Company and its wholly- owned subsidiaries. Intercompany balances and transactions have been eliminated
in consolidation.

 2. Summary of Significant Accounting Policies

 Basis of Presentation

 The accompanying consolidated financial statements
have been prepared in conformity with Generally Accepted Accounting Principles in the United States of America ("GAAP"). Any
reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification
("ASC") and Accounting Standards Updates ("ASU") of the Financial Accounting Standards Board ("FASB").

 F- 7

 Use of Estimates

 The preparation of the Company's 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 consolidated financial statements
and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected within
these 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 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.

 Foreign Currency and Currency Translation

 The functional currency for the Company's
wholly owned foreign subsidiaries in Canada, Japan, Spain and the United Kingdom is United States dollars ("USD"), Japanese
Yen, Euro and British Pound, respectively. Assets and liabilities of these subsidiaries are translated into USD at the exchange rate in
effect on the balance sheet date. Income and expenses are translated at the average exchange rate in effect during the period. Unrealized
translation gains and losses are recorded as a translation adjustment, which is included in the consolidated statements of stockholders'
deficit as a component of accumulated other comprehensive loss. Adjustments that arise from exchange rate changes on transactions denominated
in a currency other than the local currency are included in other income (expense), net in the consolidated statements of operations and
comprehensive loss.

 Concentrations of Credit Risk

 Financial instruments that subject the Company
to credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents
at high-quality and accredited financial institutions.

 The Company performs ongoing credit evaluations
of its customers and generally requires no collateral to secure accounts receivable. Accounts receivable is presented after consideration
of an allowance for credit losses, which is an estimate of amounts that may not be collectible. In determining the amount of the allowance
at each reporting date, the Company makes judgments about general economic conditions, historical write-off experience and any specific
risks identified in customer collection matters, including the aging of unpaid accounts receivable and changes in customer financial conditions.
Account balances are written off after all means of collection are exhausted and the potential for recovery is determined to not be probable.
As of December 31, 2024 and 2023, the Company recorded zero 0 allowance for credit losses.

 The following table summarizes customers who represent
greater than 10% of the Company's total revenue during the years ended December 31, 2024 and 2023, as well as customers who represent
greater than 10% of the Company's total accounts receivable as of December 31, 2024 and 2023:

 of percentage of revenue and accounts receivable

 Percentage of Revenue

 Percentage of Accounts Receivable

2024

2023

 2024

 2023

 Customer A*

 34 %

 35 %

 98 %

 43 %

 Customer B

 23 %

 20 %

 N/A**

 N/A**

 Customer C

 17 %

 17 %

 N/A**

 31 %

 Customer D

 12 %

 N/A**

 N/A**

 N/A**

 Customer E

 N/A**

 26 %

 N/A**

 26 %

 *Related party

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

 Cash and Cash Equivalents

 The Company considers all highly liquid investments
with an original maturity of three months or less at the time of initial purchase to be cash equivalents. As of December 31, 2024 and
2023, the amount of cash equivalents included in cash and cash equivalents totaled $ 38 and $ 2,693, respectively.

 Restricted Cash

 Restricted cash consists of cash on deposit to
secure a letter of credit totaling $ 0 and $ 137 as of December 31, 2024 and 2023, respectively, that was required to be maintained in connection
with the Company's lease arrangements. The lease expired on September 30, 2024, and the restricted cash was released on October
25, 2024, in accordance with the terms of the letter of credit. As of December 31, 2023, the Company classified its restricted cash as
a non-current asset and included in other non-current assets on the consolidated balance sheet.

 F- 8

 The following table provides a reconciliation
of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts
shown in the consolidated statements of cash flows:

 of cash, cash equivalents and restricted cash reported

 2024

 2023

 Cash and cash equivalents

 $

 $
 3,332

 Restricted cash

 —

 Total cash, cash equivalents and restricted cash

 $

 $
 3,469

 Deferred Offering Costs

 The Company capitalized deferred offering costs,
consisting of direct legal, accounting, capital markets advisory and other fees and costs directly attributable to the Company's
Merger with Legacy Zapata (Notes 3 and 17). Deferred offering costs were $ 1,943 at December 31, 2023. During the year ended December 31,
2024, an additional $ 5,115 of offering costs were incurred. Upon the Closing of the Merger on March 28, 2024, offering costs totaling
$ 7,058 were reclassified and recorded against additional paid-in capital in the consolidated balance sheets.

 Fair Value Measurements

 Certain assets and liabilities are carried at
fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use
of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following
three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 Level 1

 —

 Quoted prices in active markets for identical assets or liabilities.

 Level 2

 —

 Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

 Level 3

 —

 Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

 Property and Equipment

 Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the
estimated useful life of each asset as follows:

 of estimated useful lives of property plant and equipment

 Estimated Useful Life

 Computer equipment

 3 years

 Furniture and fixtures

 5 years

 Leasehold improvements

 Shorter of remaining lease term or useful life

 Costs for capital assets not yet placed into service
are capitalized and are depreciated once placed into service. Upon retirement or sale, the cost of assets disposed of, and the related
accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations.
Expenditures for repairs and maintenance that do not improve or extend the life of the respective assets are charged to expense as incurred.

 F- 9

 Impairment of Long-Lived Assets

 Long-lived assets consist primarily of property
and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances
indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized in loss from operations
when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. If
such asset group is considered to be impaired, the impairment loss to be recognized is measured based on the excess of the carrying value
of the impaired asset group over its fair value.

 The Company recognized no impairment losses for
the years ended December 31, 2024, and 2023.

 Leases

 In accordance with ASC Topic 842, Leases ("ASC
842"), the Company determines whether an arrangement is or contains a lease at inception. A contract is or contains a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company classifies
leases at the lease commencement date, when control of the underlying asset is transferred from the lessor to the lessee, as operating
or finance leases and records a right-of-use ("ROU") asset and a lease liability on the consolidated balance sheets for all
leases with a lease term of greater than twelve months. For all asset classes, the Company has elected to not recognize leases with a
lease term of twelve months or less on the balance sheet and will recognize lease payments for such short-term leases as an expense on
a straight-line basis.

 The Company enters into contracts that contain
both lease and non-lease components. Non-lease components are items or activities that transfer a good or service to the lessee, and may
include items such as maintenance, utilities, or other operating costs. The Company elected to account for the lease and associated non-lease
components as a single lease component for all existing classes of underlying assets. Variable costs associated with leases, such as utilities
or maintenance costs, are not included in the measurement of ROU assets and lease liabilities, but rather are expensed when the event
determining the amount of variable consideration to be paid occurs.

 Finance and operating lease assets and liabilities
are recognized at the lease commencement date based on the present value of the lease payments over the lease term and are measured using
the discount rate implicit in the lease if readily determinable. If the rate implicit in the lease is not readily determinable, the Company
uses its incremental borrowing rate based upon the available information at the lease commencement date. The Company's incremental
borrowing rate reflects the fixed rate at which the Company could borrow the amount of lease payments in the same currency on a collateralized
basis, for a similar term in a similar economic environment. ROU assets are further adjusted for items such as initial direct costs, prepaid
rent, or lease incentives. Operating lease payments are expensed using the straight-line method as an operating expense over the lease
term. The Company's lease terms may include options to extend the lease when it is reasonably certain that the Company will exercise
that option.

 Accrued Professional Fees

 Accrued Professional fees consist of consideration
to be paid to AAC's legal advisors in connection with its initial public offering ("IPO") and the consummation of the
Merger. The deferred legal fees were payable in equal monthly installments over the twelve-month period beginning May 3, 2024. The Company
ceased making payments in the fourth quarter of 2024 due to the Operational Cessation, and the remaining balance of 2,621 was subsequently
converted into the Company's common stock in the second quarter of 2025.

 Forward Purchase Agreement Derivative Liability

 On March 25, 2024, the Company entered into a
forward purchase agreement with Sandia Investment Management LP, acting on behalf of certain funds (collectively, "Sandia"
or the "Seller"). 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 as defined below in Note 7 (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 (as defined in Note 7) 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, in each case as such term is defined in Note 7, 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 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 consolidated statements
of operations and comprehensive loss. The forward purchase agreement derivative liability will be subsequently remeasured to fair value
at each reporting period, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss.

 F- 10

 On October 8, 2024, the Company received notice
from Sandia accelerating the Valuation Date to October 8, 2024 and required a settlement of $ 2,436. 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 (Note 7).

 Senior Notes and Senior Secured Notes

 The Company performed an analysis of all of the
terms and features of the Senior Notes and the Senior Secured Notes (as defined in Note 8). The Company elected the Fair Value Option
to account for the Senior Notes. The Senior Notes were remeasured at fair value at each balance sheet date until they were extinguished
and converted to Senior Secured Notes (Note 8) in December 2023.

 The Company accounts for its Senior Secured Note
issued to a third party for capital market advisory services in connection with the Merger as a stock-based award granted to non-employees
(Note 8) and measured the fair value of the award at the Merger date using the binomial lattice model. The liability portion of the award
is carried at redemption value, including paid in-kind interest, as Senior Secured Notes in the accompanying balance sheet. The fair value
in excess of the redemption value was recorded to additional paid-in capital and a loss at issuance.

 The Company accounts for its remaining Senior
Secured Notes at amortized cost, as they were issued at a substantial premium and do not qualify for the Fair Value Option. The Company
concluded that the optional conversion features were not required to be bifurcated and separately accounted for as a derivative.

 The substantial premium related to the remaining
Senior Secured Notes issued is recorded as a loss at issuance within total other expense, net in the consolidated statements of operations
and comprehensive loss. Costs related to the issuance of the Senior Secured Notes are recorded as a debt discount as a reduction of the
carrying value of the notes and amortized over the term of the Senior Secured Notes and are recorded in other expense, net within the
consolidated statements of operations and comprehensive loss using the effective interest method.

 Segment Information

 The Company manages its business as a single operating
segment for the purposes of assessing performance and making operating decisions. The Company's chief executive officer, who is
the chief operating decision maker, reviews the Company's financial information on a consolidated basis for purposes of evaluating
financial performance and allocating resources. As of December 31, 2024 and 2023, the Company does no t have material long-term assets
outside the U.S.

 Classification of Convertible Preferred Stock

 Legacy Zapata has classified its Series Seed Preferred
Stock ("Series Seed Preferred Stock"), Series A Preferred Stock ("Series A Preferred Stock"), Series B-1 Preferred
Stock and Series B-2 Preferred Stock (the "Series B Preferred Stock") and, together with the Series Seed Preferred Stock and
Series A Preferred Stock, the "Convertible Preferred Stock" outside of stockholders' deficit on the Company's
consolidated balance sheets because the holders of such stock had redemption features and certain liquidation rights in the event of a
deemed liquidation that, in certain situations, were not solely within the control of Legacy Zapata and would require the redemption of
the then-outstanding Convertible Preferred Stock. Upon the Closing of the Merger on March 28, 2024, 14,222,580 shares of Convertible Preferred
Stock were converted into 13,001,114 shares of the Company's common stock using the Exchange Ratio of 0.9141.

 Capitalization of Software Development Costs

 The Company incurred software development costs
related to development of its quantum computing platform. Given that the Company may sell the platform both as a service as well as a
license, the Company evaluates software development costs to determine the point where technological feasibility is established. The Company
has determined that technological feasibility is typically concurrently with the release, and therefore there have not been costs capitalized
through December 31, 2024. Costs incurred in connection with maintenance and customer support are also expensed as incurred.

 F- 11

 Revenue Recognition

 Revenue is recognized when the Company satisfies
a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration
that the Company expects to receive in exchange for those goods or services. Performance obligations in contracts represent distinct or
separate goods or services that the Company provides to customers.

 The Company recognizes revenue using the following
steps: 1) identification of the contract, or contracts with a customer, 2) identification of performance obligations in the contract,
3) determination of the transaction price, 4) allocation of the transaction price to the performance obligations in the contract and 5)
recognition of revenue when or as the Company satisfies the performance obligations.

 At contract inception, the Company assesses the
goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the
customer a good or service (or bundle of goods or services) that is distinct.

 The Company currently earns revenue primarily
from subscriptions to its software platform and related services. Subscriptions to its software platform are currently offered as stand-ready
access to its cloud environment on an annual or multi-year basis. The Company's consulting services may result in either single
or multiple performance obligations based on the contractual terms. The Company also offers services in the form of stand-ready scientific
and software engineering services, which are typically only offered in conjunction with its software platform. The Company evaluates its
contracts at inception to determine if the promises represent a single, combined performance obligation, or multiple performance obligations.
It allocates the transaction price to the performance obligations identified. Judgment is required to allocate the transaction price to
each performance obligation. The Company utilizes a stand-alone selling price methodology based on observable or estimated prices for
each performance obligation. The Company considers market conditions, entity-specific factors, and information about the customer that
is reasonably available to the entity when estimating stand-alone selling price for those performance obligations without an observable
selling price. The Company's contracts do not contain rights of return, and any variable consideration as the result of service
level agreements has been immaterial. The Company does not have other contractual terms that give rise to variable consideration.

 Revenue from subscriptions to the Company's
Orquestra Platform to date have only been sold as access to the platform in its hosted environment and are therefore recognized over the
contract term on a ratable basis, as the promise represents a stand-ready performance obligation.

 Revenue from consulting services is generally
recognized over time. The Company's contracts typically contain fixed-fee transaction prices. The Company determines and records
a provision for loss contracts at the contract level when the current estimate of total costs of the contract at completion exceeds the
total consideration the Company expects to receive. The Company has no t recorded any provision for loss contracts at December 31, 2024
or 2023.

 For consulting services, the Company measures
progress toward satisfaction of the performance obligation as the services are provided, and revenue is generally recognized based on
the labor hours expended over time. Through this method, the Company recognizes revenue based on the actual labor hours incurred to date
compared to the current estimate of total labors hours to satisfy the performance obligation. The Company believes this method best reflects
the transfer of control to the customer. This method requires periodic updates to the total estimated hours to complete the contract,
and these updates may include subjective assessments and judgments. The Company had limited contracts for which, based on the Company's
determination of the enforceability of payment terms, revenue was recognized at a point in time when payment became enforceable.

 Revenue from services sold in the form of stand-ready
scientific and software engineering services are recognized over the contract term on a ratable basis, as the obligation represents a
stand-ready obligation.

 From time to time, the Company may enter into
arrangements to build license applications that can be used in conjunction with its Orquestra Platform or separately. To date, the license
application built has been delivered as a perpetual license with associated post-contract support. The Company recognizes the license
at the time of deployment, and the related post-contract support over the contracted service period on a ratable basis, as it is provided
as a stand-ready service.

 The Company's payment terms vary by contract
and do not contain significant financing components. Amounts collected in advance of revenue recognized are recorded as deferred revenue
in the consolidated balance sheets.

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

 Contract Acquisition Costs— The Company
incurs and pays commissions at the commencement of the contract. The period of the related revenue recognition for the Company's
contracts is typically less than one year in duration, and as such, the Company applies the practical expedient to expense the costs in
the period in which they were incurred.

 For contracts that have periods that exceed one
year, the Company capitalizes contract acquisition costs. As of December 31, 2024 and 2023, capitalized contract acquisition costs of
$ 0 and $ 38, respectively, were included in prepaid expenses and other current assets on the consolidated balance sheets. There was $ 38
and $ 75 of amortization of contract acquisition costs recognized in the consolidated statements of operations and comprehensive loss for
the years ended December 31, 2024 and 2023, respectively.

 F- 12

 Accounts Receivable— Accounts receivable
represents amounts billed or unbilled to customers that have yet to be collected and represents an unconditional right to receive this
consideration from its customers. Account balances are written off against the allowance in the period in which the Company determines
that is it probable that the receivable will not be recovered. As of December 31, 2024 and 2023, there were accounts receivable due from
related parties amounting to $ 1,567 and $ 829, respectively. As of December 31, 2024 and 2023, the Company had zero allowance for credit
losses.

 Deferred Revenue— Deferred revenue
represents payments received for which revenue has not yet been recognized.

 All deferred revenue as of December 31, 2023 was
recognized as revenue during the year ended December 31, 2024. The decrease in deferred revenue is due to decreased customer billings
for revenue not yet delivered for consulting services and subscriptions relating to timing of satisfaction of the Company's performance
obligations.

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

 of balances from contracts with customers

 End of Year

 Beginning of
 Year

 Accounts receivable (including $ 1,567 and $ 562 from related parties at December 31, 2024 and 2023, respectively)

 $
 1,567

 $
 1,341

 Unbilled accounts receivable (including $ 0 and $ 267 from related parties at December 31, 2024 and 2023, respectively)

 Deferred revenue

 Balances from contracts with customers for the
year ended December 31, 2023, consist of the following:

 End of Year

 Beginning of
 Year

 Accounts receivable (including $ 562 and $ 0 from related parties at
 December 31, 2023 and 2022, respectively)

 $
 1,341

 $

 Unbilled accounts receivable (including $ 267 and $ 534 from related parties at
 December 31, 2023 and 2022, respectively)

 Deferred revenue

 All revenue from contracts with customers was
generated in the U.S. during the years ended December 31, 2024 and 2023. Revenue from contracts with customers recognized for the years
ended December 31, 2024 and 2023 consist of the following:

 of revenue from contracts with customers

 2024

 2023

 Point in time

 $
 —

 $
 —

 Over time

 3,876

 5,683

 Total

 $
 3,876

 $
 5,683

 Cost of Revenue

 Cost of revenue includes expenses related to supporting
product offerings. The Company's primary cost of revenue is personnel costs, including salaries and other personnel-related expense.
Cost of revenue also includes costs relating to the Company's information technology and systems, including depreciation, network
costs, data center maintenance, database management and data processing costs. The Company allocates these overhead expenses based on
headcount, and thus these expenses are reflected in cost of revenue and each operating expense category.

 Research and Development Expenses

 Research and development expenses consist primarily
of expenses and overhead costs incurred in developing new products. The Company expenses all research and development costs as incurred.

 Sales and Marketing Expenses

 Advertising expenses, which are included in sales
and marketing expense in the consolidated statements of operations and comprehensive loss, primarily include promotional expenditures,
and are expensed as incurred. The amount incurred for advertising expenses for the years ended December 31, 2024 and 2023 were $ 3,783
and $ 2,785, respectively.

 F- 13

 In addition, sales and marketing expenses consist
primarily of personnel-related costs, including salaries and wages, benefits, commissions, bonuses and stock-based compensation expense
for the Company's employees engaged in sales and sales support, business development, marketing, corporate partnerships, and customer
service functions. Sales and marketing expenses also include costs incurred for market research, tradeshows, branding, marketing, promotional
expense, and public relations, as well as facilities and other supporting overhead costs, including depreciation and amortization.

 General and Administrative Expenses

 General and administrative expenses consist primarily
of salaries, benefits and other related costs, for personnel and consultants in the Company's executive and finance functions. General
and administrative expenses also include professional fees for legal, finance, accounting, intellectual property, auditing, tax and consulting
services, travel expenses and facility-related expenses, which include allocated expenses for rent and maintenance of facilities and other
operating costs not otherwise included in research and development expenses or sales and marketing expenses.

 Warrant Instruments

 The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the instruments' specific terms and applicable authoritative guidance
in ASC 480 and ASC 815. The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification
under ASC 815, including whether the instruments are indexed to the Company's own common stock and whether the instrument holders
could potentially require net cash settlement in a circumstance outside of the Company's control, among other conditions for equity
classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and, for
liability-classified warrants, at each reporting period end date while the warrants are outstanding.

 The Company evaluated its outstanding warrants
and concluded that the warrants to purchase common stock at an exercise price of $ 11.50 per share that are listed on the Nasdaq Capital
Market under the ticker symbol "ZPTAW" ("Public Warrants") and warrants to purchase common stock at an exercise
price of $11.50 per share held by the Sponsor and the Sponsor Co-Investor ("Private Placement Warrants") to be issued pursuant
to the warrant agreements are indexed to its own common stock and therefore qualify for equity accounting treatment.

 Stock-Based Compensation

 The Company measures all stock-based options granted
to employees, directors and non-employees based on the fair value of the awards on the date of grant using the Black-Scholes option-pricing
model. The Company measures restricted stock awards using the difference, if any, between the purchase price per share of the award and
the fair value of the Company's common stock at the date of grant.

 The Company grants stock options and restricted
stock awards that are subject to service-based vesting conditions. Compensation expense for awards to employees and directors with service-based
vesting conditions is recognized using the straight-line method over the requisite service period, which is generally the vesting period
of the respective award. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same
manner as if the Company had paid cash in exchange for the goods or services, which is generally over the vesting period of the award.
The Company accounts for forfeitures as they occur.

 The Company classifies stock-based compensation
expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's payroll
costs are classified or in which the award recipient's service payments are classified.

 Comprehensive Loss

 Comprehensive loss includes net loss as well as
other changes in stockholders' deficit that result from transactions and economic events other than those with stockholders. The
comprehensive loss for the Company equals its net loss plus changes in foreign currency translation for all periods presented.

 F- 14

 Income Taxes

 The Company accounts for income taxes using the
asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences
of events that have been recognized in the consolidated financial statements or in the Company's tax returns. Deferred tax assets
and liabilities are determined based on the differences between the financial statement basis and tax basis of assets and liabilities
using enacted tax rates in effect for the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities
are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from
future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that
all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax
expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering
prudent and feasible tax planning strategies.

 The Company accounts for uncertainty in income
taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be
recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination
by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine
the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest
amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The provision for income taxes includes
the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest
and penalties. The Company had accrued no amounts for interest or penalties related to uncertain tax positions as of December 31, 2024
and 2023.

 Emerging Growth Company

 From time to time, new accounting pronouncements
are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. The Company qualifies
as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act").
Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued
by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the
same time periods as private companies. The Company intends to take advantage of the exemption for complying with new or revised accounting
standards within the same time periods as private companies, which means that when a standard is issued or revised and it has different
application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies
adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to "opt out"
of such extended transition period or (ii) no longer qualifies as an emerging growth company. As a result, the Company's consolidated
financial statements may not be comparable to those public companies that comply with new or revised accounting pronouncements as of public
company effective dates. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is
permitted for nonpublic companies.

 Recently Adopted Accounting Pronouncements

 In August 2020, the FASB issued ASU 2020-06, Debt
– Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity's Own
Equity (Subtopic 815 – 40) ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for certain financial instruments
with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. The ASU
is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU's amendments
became effective for the Company for annual and interim reporting periods beginning after December 15, 2023. The Company adopted ASU 2020-06
on January 1, 2024.

 F- 15

 In November 2023, the FASB issued ASU 2023-07,
 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires all public entities, including public
entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used
by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosures of
significant segment expenses and other segment items as well as incremental qualitative disclosures. The guidance in this update is effective
for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The Company adopted ASU 2023-07 in 2024
and additional required disclosures have been included in Note 14.

 Recently Issued Accounting Pronouncements Not Yet Adopted

 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 7
board members with one 1 board member designated by AAC, and each of the remaining six 6
board members were members of the board of directors of Legacy Zapata and one 1
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 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 $ 2,237 on the Senior Secured Notes remains outstanding
as of December 31, 2024.

 Merger Consideration

 The following table reconciles the elements of
the Merger to the consolidated statement of cash flows and the consolidated statement of changes in equity. 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.

 F- 16

 Schedule of the number
 of shares of company common stock outstanding in the account of merger

 March 28, 2024

 Cash - AAC Trust (net of redemptions)

 $
 20,283

 Less: AAC costs paid at Closing

 ( 7,317
)

 Less: Notes payable - related party paid at Closing

 ( 330
)

 Net proceeds from the Merger

 12,636

 Less: Liabilities obtained from AAC

 ( 8,159
)

 Merger consideration

 $
 4,477

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

 Schedule of the number
 of shares of company common stock outstanding in the account of merger

 Share
 Ownership

 Legacy Zapata equity holders

 17,696,425

 AAC public shareholders

 1,846,206

 AAC Sponsor shares

 5,750,000

 Senior Secured Note holders

 3,257,876

 Additional Shares issued pursuant to the Forward Purchase Agreement

 500,000

 Capital markets advisors

 42,372

 Total shares of common stock immediately after the Merger

 29,092,879

 4. 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:

 Summary of assets measured
 at fair value on a recurring basis

 Fair Value Measurements at December 31, 2024

 Level 1

 Level 2

 Level 3

 Total

 Assets:

 Cash equivalents:

 Money market mutual funds

 $

 $
 —

 $
 —

 $

 $

 $
 —

 $
 —

 $

 Fair Value Measurements at December 31, 2023

 Level 1

 Level 2

 Level 3

 Total

 Assets:

 Cash equivalents:

 Money market mutual funds

 $
 2,693

 $
 —

 $
 —

 $
 2,693

 $
 2,693

 $
 —

 $
 —

 $
 2,693

 The Company's
cash equivalents maintained in money market funds are based on quoted market prices in active markets, which represent a Level 1 measurement
within the fair value hierarchy. The carrying values of the Company's accounts receivable, prepaid expenses and other current assets,
accounts payable, accrued expenses and other current liabilities, the note payable – related party, deferred revenue, deferred legal
fees and the obligation to issue common stock approximate their fair values due to the short-term nature of these instruments. The Forward
Purchase Agreement derivative liability is carried at fair value, determined according to Level 3 inputs in the fair value hierarchy (Note
7).

 For the year ended December 31, 2024 and 2023,
there were no transfers between Level 1, Level 2 and Level 3.

 Valuation of Senior Notes

 The following table presents the change in fair
value of the Senior Notes for the year ended December 31, 2023:

 Schedule of change in
 fair value of forward purchase agreement derivative liability

 Amounts

 Balance as of December 31, 2022

 $
 —

 Proceeds from issuance of Senior Notes

 5,625

 Change in fair value of Senior Notes

 1,260

 Extinguishment of Senior Notes

 ( 6,885
)

 Balance as of December 31, 2023

 $
 —

 F- 17

 The Senior Notes were recorded at fair value upon
issuance, equal to the cash proceeds received on the issuance date of the Senior Notes. The loss on extinguishment of the Senior Notes
was calculated as the fair value of the Senior Notes immediately after the extinguishment less the fair value of the Senior Notes immediately
before the extinguishment, and is recorded within other income (expense), net on the consolidated statement of operations and comprehensive
loss.

 The fair value of the Senior Notes was based on
significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy. The Company's
valuation of the Senior Notes utilized a probability weighted method with a scenario-based valuation analysis, which incorporated assumptions
and estimates to value the Senior Notes and the probability and estimated timing of the conversion or repayment of the Senior Notes. The
Company assessed these assumptions and estimates at issuance, on a quarterly basis, and at the date of extinguishment of the Senior Notes,
December 15, 2023.

 The following table presents the assumptions and
estimates incorporated into the valuation of the Senior Notes at the initial issuance date and the date of extinguishment of December 15,
2023:

 Schedule of assumptions and estimates incorporat

 December 15, 2023

 Issuance Date

 Time to deSPAC closing (in years)

 0.16

 0.56

 Probability of deSPAC closing

 90.00
 %

 50.00
 %

 Probability of deSPAC not closing

 10.00
 %

 50.00
 %

 Market rate without conversion

 32.06
 %

 31.09
 %

 Discount rate

 32.10
 %

 15.00
 %

 Valuation of Forward Purchase Agreement Derivative Liability

 As described in Note 7, the Company entered into
the Forward Purchase Agreement in connection with the Merger on March 25, 2024. The Forward Purchase Agreement contains (i) an Optional
Early Termination provision, and (ii) a Variable Maturity Consideration. The Optional Early Termination and the Variable Maturity Consideration,
as combined, are considered as a freestanding financial instrument and meet the definition of a derivative instrument. The fair value
of the forward purchase agreement derivative liability, consisting of the Optional Early Termination and the Variable Maturity Consideration,
was estimated using a Monte-Carlo Simulation in a risk-neutral framework. The fair value of the derivative liability was equal to the
difference between the fair value of the Forward Purchase Agreement and the amount of cash receivable at the two-year settlement date,
which was calculated as the present value of the initial reset price of $ 10.00 per share (as defined in the Forward Purchase Agreement)
discounted using the term-matched risk-free rate.

 The Forward Purchase Agreement provided that the
settlement with respect to the shares held by Sandia will be determined as of the Valuation Date, defined as the earliest to occur of
March 28, 2026, or certain other events that may, at the discretion of Sandia or the Company, accelerate the Valuation Date. Such events
included a written notice from Sandia following a period in which the Company's common stock has a volume-weighted average price
("VWAP") below $1.00 per share for 20 trading days within any 30 consecutive trading-day period. As a result of the VWAP Trigger
Event, Sandia obtained the right, but not the obligation, to accelerate the Valuation Date and thereby settle the Forward Purchase Agreement
prior to March 28, 2026.

 On October 8, 2024, the Company received notice
from Sandia accelerating the Valuation Date to October 8, 2024. Upon acceleration, the Company became obligated to pay to Sandia an amount
in cash equal to the Settlement Amount Adjustment, less any Settlement Amount owed to the Company by Sandia. The Settlement Amount Adjustment
was calculated as 1,250,000 shares multiplied by $2.00, or $2,500, and the Settlement Amount was calculated as 1,250,000 shares less 500,000
Unregistered Shares multiplied by the volume weighted daily VWAP Price of $0.0085 per share, or $64. Accordingly, the Company became obligated
to pay Sandia an amount in cash or shares equal to $2,436.

 As described in Note 20, Subsequent Events, 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.

 The following table represents the significant
inputs used in calculating the forward purchase agreement derivative liability on the issuance date:

 of change in fair value of forward purchase agreement derivative liability

 March 28, 2024

 Stock price

 $
 13.60

 Expected volatility

 50.00
 %

 Risk-free interest rate

 4.54
 %

 Expected life (in years)

 2.00

 Expected dividend yield

 —
 %

 The Company determined the initial value
for the forward purchase agreement derivative liability of $ 4,935 using the Level 3 inputs as of the issuance date on March 28, 2024 and
recorded the loss on issuance of $ 4,935 as a loss on issuance of forward purchase agreement derivative liability in the consolidated statements
of operations and comprehensive loss. The change in fair value of the forward purchase agreement derivative liability of $ 1,676 was recorded
during the year ended December 31, 2024 in the consolidated statements of operations and comprehensive loss.

 F- 18

 The following table presents the change in fair
value of the forward purchase agreement derivative liability for the year ended December 31, 2024:

 Schedule of change in fair value of the forward purchase agreement derivative liability

 Amounts

 Balance as of December 31, 2023

 $
 —

 Forward purchase agreement derivative liability issuance

 4,935

 Partial early termination of forward purchase agreement derivative liability

 ( 823
)

 Change in fair value of forward purchase agreement derivative liability

 ( 1,676
)

 Settlement of forward purchase agreement derivative liability

 ( 2,436
)

 Balance as of December 31, 2024

 $
 —

 5. Property and Equipment, Net

 Property and equipment, net consisted of the following:

 Schedule of property
 and equipment

 2024

 2023

 Computer equipment

 $

 $

 Furniture and fixtures

 —

 Leasehold improvement

 —

 Less: Accumulated depreciation and amortization

 ( 4
)

 ( 628
)

 Property and equipment, net

 $
 —

 $

 Depreciation and amortization expense of property
and equipment for the years ended December 31, 2024 and 2023 was $ 118 and $ 164, respectively. In connection with the Company's operational
cessation, during the year ended December 31, 2024, the Company disposed certain computer equipment, furniture, and leasehold improvements
with a net carrying value of $71. Because the assets no longer provided future economic benefit, the remaining carrying value was written
off, and a loss on disposal of $71 was recognized within general and administrative expenses.

 6. Accrued Expenses and Other Current Liabilities

 Accrued expenses and other current liabilities
consisted of the following:

 of accrued expenses and other current liabilities

 2024

 2023

 Accrued employee compensation and benefit

 $

 $

 Accrued professional fees

 1,312

 1,377

 Other

 1,222

 Accrued expenses and other current liabilities

 $
 2,611

 $
 1,945

 7. Forward Purchase Agreement

 On March 25, 2024, the Company entered into the
Forward Purchase Agreement with Sandia, pursuant to which Sandia purchased, from the open market, 1,000,000 Recycled Shares and 500,000
Additional Shares, which represents the maximum number of shares subject to purchase under the Forward Purchase Agreement, subject to
adjustment as described below (the "Maximum Number of Shares"). The number of shares subject to the Forward Purchase Agreement
(the "Number of Shares") is subject to reduction following a termination of the Forward Purchase Agreement with respect to
such shares as described under "Optional Early Termination" in the Forward Purchase Agreement.

 F- 19

 Pursuant to the Forward Purchase Agreement, at
the Closing of the Merger, the Company prepaid to Sandia (the "Prepayment"), with respect to the Recycled Shares, with proceeds
from the trust account, a cash amount equal to the (x) product of the number Recycled Shares and (y) $ 10.99 per share, totaling $ 10,986
which was paid at the Closing of the Merger. With respect to the Additional Shares, a per share amount equal to $ 10.99 per share was netted
against the proceeds from the Additional Shares received from Sandia, resulting in no cash received or paid for the share issuance.

 The reset price (the "Reset Price")
was initially set at $ 10.00 per share and is subject to reset on a monthly basis (each a
"Reset Date"), with the first such Reset Date occurring 180 days after the closing date of the Merger, to be greater of (a)
$4.50 and (b) the 30 -day volume weighted average price of shares of the Company's common stock immediately preceding such Reset
Date. Except as described below, the Reset Price will be reduced immediately to any lower price at which the Company closes any agreement
to sell or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase
or other disposition of) any shares of the Company's common stock or securities of the Company or any of its subsidiaries convertible,
exercisable or exchangeable into, or otherwise entitles the holder thereof to receive, shares of the Company's common stock or other
securities (a "Dilutive Offering and, such reset, a Dilutive Offering Reset").

 In the event of a Dilutive Offering Reset, the
Maximum Number of Shares will be increased to an amount equal to the quotient of (i) 1,500,000 divided by (ii) the quotient of (a) the
price of such Dilutive Offering divided by (b) $10.00. In such event, Sandia has the right to purchase more Additional Shares, up to the
Maximum Number of Shares, for which the Company will be required to provide a cash prepayment to Sandia netted against the purchase price
for such shares, and such Additional Shares will be subject to the terms of the Forward Purchase Agreement.

 To the extent Sandia does not early terminate
shares purchased under the Forward Purchase Agreement, as described below, the parties will settle the then outstanding shares held by
Sandia upon the Valuation Date, such date being two years from the Closing of the Merger, March 28, 2026, subject to acceleration under
certain circumstances, including the occurrence of a VWAP Trigger Event, defined as an event that occurs if the volume weighted average
price per share on any scheduled trading day, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per share.
On the Cash Settlement Payment Date, which is the tenth business day following the last day of the valuation period commencing on the
Valuation Date, as described in the Forward Purchase Agreement (the "Valuation Period"), Sandia will pay the Company a cash
amount equal to (A) the number of shares subject to the Forward Purchase Agreement as of the Valuation Date less the number of unregistered
shares, multiplied by (B) the volume-weighted average price over the Valuation Period (the "Settlement Amount"); provided,
that if the amount of the Settlement Amount Adjustment (as defined below) payable by the Company to Sandia is less than the Settlement
Amount, then the Settlement Amount Adjustment will be automatically netted from the Settlement Amount and any remaining amount paid in
cash. The Company will pay to Sandia on the Cash Settlement Payment Date an amount (the "Settlement Amount Adjustment") equal
to (1) the Number of Shares as of the Valuation Date multiplied by $2.00 per share if the amount is to be paid in cash, or (2) if the
Settlement Amount Adjustment exceeds the Settlement Amount, the Company may at its election pay the Settlement Amount Adjustment to Sandia
in shares of common stock of the Company, in an amount equal to the product of the number of shares, including the Recycled Shares and
the Additional Shares as of the Valuation Date multiplied by $2.25; provided, that in certain circumstances as described in the Forward
Purchase Agreement, including if a Delisting Event (as defined in the Forward Purchase Agreement) occurs during the Valuation Period,
such amount must be paid in cash.

 In addition, during the term of the Forward Purchase
Agreement, Sandia may elect to terminate the transaction in whole or in part by providing a written notice to the Company, which will
specify the quantity by which the number of shares will be reduced (the "Terminated Shares"). The Company shall be entitled
to an amount from Sandia, equal to the product of (x) the number of Terminated Shares and (y) the Reset Price, as defined hereafter, on
the date of notice.

 The Company has determined that the Optional Early
Termination provision and the Variable Maturity Consideration, within the Forward Purchase Agreement 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 meet the definition of a derivative. The Company recorded the initial value of the instrument recorded
as a loss on issuance of forward purchase agreement derivative liability of $ 4,935 in the consolidated statements of operations and comprehensive
loss. The change in fair value of the forward purchase agreement derivative liability of $ 1,676 was recorded during the year ended December
31, 2024 in the consolidated statements of operations and comprehensive loss.

 The Prepayment is accounted for as a subscription
receivable and recorded as a reduction to equity to reflect the substance of the overall arrangement as a net repurchase of the Recycled
Shares and the Additional Shares. The Company recognized a subscription receivable of $ 10,986 associated with the Recycled Shares as a
reduction to additional paid-in capital in its consolidated balance sheet and a subscription receivable associated with the Additional
Shares was fully offset with the proceeds that Sandia paid for the purchase of these shares, resulting in no cash received or paid for
such share issuance.

 F- 20

 In April 2024, Sandia partially exercised the
optional early termination right under the Forward Purchase Agreement, pursuant to which 250,000 shares were terminated and the Company
received payments totaling $ 2,500 under the early termination obligation prescribed in the Forward Purchase Agreement.

 In addition, the Company reimbursed Sandia $ 64
at the Closing for reasonable out-of-pocket expenses for costs incurred in connection with the transaction, and (b) $ 54 in expenses incurred
in connection with the acquisition of the Recycled Shares. These expenses were recorded within other income (expense), net in the consolidated
statements of operations and comprehensive loss during the years ended December 31, 2024. The Company will also pay to the third party
a quarterly fee of $ 5 in consideration of certain legal and administrative obligations in connection with this transaction.

 Sandia had the right to accelerate the Valuation
Date upon the occurrence of a VWAP Trigger Event, defined as the Company's common stock trading below $1.00 per share for 20 trading
days within any 30 consecutive trading-day period. Following such an event, Sandia exercised this right and accelerated 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. In June 2025, the Company settled this obligation by issuing 6,591,000 shares of the Company's common stock to
Sandia, as described in Note 20, Subsequent Events.

 8. Debt

 The aggregate principal amount of debt outstanding
as of December 31, 2024 and 2023 consisted of the following:

 of the aggregate principal amount of debt outstanding

 2024

 2023

 Senior secured notes

 $
 2,237

 $
 8,900

 Note payable - related parties

 1,930

 —

 Total Debt

 $
 4,167

 $
 8,900

 Current and non-current debt obligations reflected
in the consolidated balance sheets as of December 31, 2024 and 2023 consisted of the following:

 of current and non current debt obligations reflected in the condensed consolidated balance sheets

 2024

 2023

 Current liabilities:

 Note payable - related parties

 $
 1,618

 $
 —

 Debt, current portion

 1,618

 —

 Non-current liabilities:

 Note payable - related parties

 —

 Senior secured notes

 2,237

 8,900

 Debt, net of current portion

 2,549

 8,900

 Total Debt

 $
 4,167

 $
 8,900

 Senior Notes

 On June 13, 2023, Legacy Zapata entered into a
senior note purchase agreement with and issued senior promissory notes to certain lenders. Under the agreements, Legacy Zapata was permitted
to issue convertible notes in an aggregate principal amount of up to $ 20,000 (the "Senior Notes"). The Senior Notes accrued
interest at a rate of 20.0 % per annum, had a maturity date of June 13, 2024, and could be extended one year from the maturity date at
the option of Legacy Zapata. The Senior Notes were convertible in connection with a business combination between Legacy Zapata and a publicly
traded special purpose acquisition company, including the Merger, or in connection with an IPO, in each on or prior to the maturity date,
at a conversion price of $ 8.50 per share. On December 22, 2023, the aggregate principal amount of $ 5,625 plus accrued and unpaid interest
of $ 557 of the Senior Notes were exchanged for $ 6,182 of the aggregate principal amount of the Senior Secured Notes (as defined below).
Accrued and unpaid interest on the borrowings under the Senior Notes prior to the exchange was calculated at an interest rate of 20.0 %
based on the 365-day period from the issuance date to the amendment date. As of December 22, 2023, all Senior Notes were canceled in exchange
for Senior Secured Notes with a principal amount equal to the principal amount of the Senior Notes plus accrued and unpaid interest through
the date immediately prior to the exchange.

 F- 21

 Senior Secured Notes

 On December 22, 2023, Legacy Zapata entered into
a Security Agreement and Senior Secured Note Purchase Agreement (collectively, the "Senior Secured Notes Agreements") with
new and existing noteholders. Under the Senior Secured Notes Agreements, Legacy Zapata was authorized to issue convertible notes (the
"Senior Secured Notes") in an aggregate principal amount of up to $ 14,375 and offered to exchange its outstanding Senior Notes
for Senior Secured Notes. The Senior Secured Notes accrue interest at a compound rate of 15.0 % per annum and mature on December 15, 2026.
The Senior Secured Notes Agreements allowed existing noteholders the option to surrender their existing Senior Notes in exchange for Senior
Secured Notes of an equal aggregate principal amount plus accrued and unpaid interest. All existing holders of Senior Notes exercised
this option. The total principal and accrued interest of Senior Notes exchanged amounted to $5,625 and $557, respectively. The Company
determined that the exchange is a debt extinguishment. During the year ended December 31, 2023, the Company issued an additional $ 3,275
of the 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 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 were or are, as applicable, convertible at the option of the holder in connection with
a business combination between Legacy Zapata and a publicly-traded special purpose acquisition company, including the Merger, or in connection
with an initial public offering, in each case on or prior to the maturity date, at a conversion price (as may be adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) of (i) $ 4.50 per share at the closing of such business combination,
including the Merger, or initial public offering, as applicable, or (ii) $ 8.50 per share at any time after the closing of such business
combination, including the Merger, or initial public offering, as applicable.

 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 consolidated statements of operations and comprehensive loss.

 The aggregate premium associated with the Senior
Secured Notes, which was recorded as a loss on the issuance date of $ 9,776 was recorded within other income (expense) and as additional
paid-in capital. For the years ended December 31, 2024 and 2023, the Company recognized $ 594 and $ 0 in interest expense related to contractual
interest on the Senior Secured Notes, respectively, which is recorded in interest expense within the consolidated statement of operations
and comprehensive loss. Legacy Zapata incurred an additional $ 210 debt issuance costs in connection with the Senior Secured Notes issued
from January 2024 to March 2024 and were accounted as a debt discount, of which $ 53 was settled through the issuance of 11,666 shares
of the Company's common stock upon the Closing of the Merger (Note 3). The Company recognized $ 368 in interest expense associated
with the accelerated amortization of debt issuance costs upon the conversion of a portion of the outstanding Senior Secured Notes at the
Closing of the Merger, which is recorded in interest expense within the consolidated statement of operations and comprehensive loss.

 The aggregate premium associated with the Senior
Secured Notes issued during the year ended December 31, 2024 was estimated utilizing a binomial lattice model which includes a combination
of the discounted cash flow and optional conversion with De-SPAC features. The following table presents the significant unobservable inputs
that were included in the discounted cash flow feature and the optional conversion with De-SPAC feature for the period of January 1, 2024
to March 27, 2024 (the last issuance date):

 of the significant unobservable inputs that were included in the discounted cash flow feature and the optional conversion

 Significant Unobservable Input

 Input Range

 Model

 Discounted cash flow

 Discount rate

 29.7 % to 31.4 %

 Model

 Optional conversion with De-SPAC

 Closing stock price

 $ 9.49 to $ 10.97

 Expected annual volatility

 55.0 %

 Risk free rate

 4.2 % to 4.4 %

 Dividend yield

 0.0 %

 Preferred yield

 29.7 % to 31.4 %

 F- 22

 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 $ 2,237 in aggregate principal and accrued interest as of December 31, 2024, 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 December 31, 2024, the $ 2,237 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 $ 2,237 of aggregate
principal and accrued interest on the outstanding Senior Secured Notes mature on December 15, 2026.

 Notes Payable - Related Parties

 To finance transaction costs in connection with
the Merger, the Sponsor and certain of AAC's officers and directors made working capital loans (the "Notes Payable –
Related Party") to AAC prior to the Closing. The Notes Payable – Related Party would either be repaid upon the consummation
of the Merger, without interest, or at AAC's discretion, up to $ 1,500 of such Notes Payable – Related Party could be convertible
into Private Placement Warrants of the Company at a price of $ 1.00 per warrant at the Closing Date of the Merger (Note 11).

 On March 28, 2024, the terms of the Notes Payable
– Related Party were amended, pursuant to which the outstanding principal balance plus the accrued interest of $ 2,619, which was
also due per its terms at the Closing of the Merger was deferred and became due in monthly installments (including interest accruing from
the Closing of the Merger through the payment date) for twelve months thereafter beginning thirty days following the effectiveness of
the Lincoln Park Registration Statement (Notes 3 and 10). The Lincoln Park Registration Statement was declared effective on April 18,
2024. Upon the closing of the Merger, none of the note holders elected to exercise their option of converting their respective loans into
warrants. The Notes Payable – Related Party bear interest at a rate of 4.5 % per annum. The Company assumed the obligation for the
related party notes upon the Closing. The Company accounted for the Notes Payable – Related Party under the amortized cost model.
As of December 31, 2024, the outstanding balance of the Notes Payable – Related Party was $1,930 within the Company's consolidated
balance sheet. There was no unamortized debt discount related to Notes Payable – Related Party as of December 31, 2024.

 As of December 31, 2024, future minimum payments
required on the Senior Secured Notes and the Notes Payable – Related Party are as follows:

 of senior secured notes and the notes payable related party

 Year Ending

 Amount

 2025

 1,730

 2026

 2,549

 Total future minimum payments

 4,279

 Less: imputed interest

 ( 112
)

 Total Debt

 $
 4,167

 As described in Note 20, Subsequent Events, in
the second quarter of 2025, the Company satisfied its Notes Payable – Related Party through the issuance of 5,407,000 shares of
the Company's common stock to note holders.

 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.

 F- 23

 As of December 31, 2023, the authorized, issued,
and outstanding Convertible Preferred Stock and their principal terms after retrospectively adjusting for the effect of the reverse recapitalization
were as follows:

 Summary of convertible preferred stock

 December 31, 2023

 Par Value

 Preferred
 Stock
 Authorized

 Preferred
 Stock Issued
 and Outstanding

 Carrying
 Value

 Liquidation
 Preference

 Common Stock
 Issuable Upon
 Conversion

 Series Seed Preferred Stock

 $
 0.0001

 2,163,527

 1,977,705

 $
 5,380

 $
 5,443

 1,977,705

 Series A Preferred Stock

 0.0001

 4,785,883

 4,374,866

 21,417

 21,626

 4,374,866

 Series B-1 Preferred Stock

 0.0001

 6,264,714

 5,337,972

 30,587

 30,760

 5,337,972

 Series B-2 Preferred Stock

 0.0001

 1,433,699

 1,310,571

 7,332

 7,175

 1,310,571

 14,647,823

 $

 $
 65,004

 As of December 31, 2023, the holders of the Convertible
Preferred Stock had the following rights and preferences:

 Voting Rights— The holders of Convertible
Preferred Stock voted together with all other classes and series of stock as a single class on an as-converted basis. Each share of Convertible
Preferred Stock entitled the holder to such number of votes per share as would equal the number of shares of common stock into which the
share was then convertible. The holders of the Series A Preferred stock were entitled to elect one member of the Company's Board
of Directors, holders of the Series B Preferred Stock were entitled to elect one member of the Company's Board of Directors, the
holders of Convertible Preferred Stock, voting together, were entitled to elect two members of the Company's Board of Directors,
and the holders of the common stock were entitled to elect two members of the Company's Board of Directors.

 Dividends— The Convertible Preferred
Stock had the right to receive dividends only when, as and if declared by the Company's Board of Directors. No dividends have been
declared through December 31, 2024.

 Redemption— The Series Seed Preferred
Stock, Series A Preferred Stock, and Series B Preferred Stock were not redeemable.

 Liquidation— In the event of liquidation,
dissolution or winding up of the Company, the Convertible Preferred Stockholders would be entitled to receive, in preference to all common
stockholders, an amount after retrospectively adjusting for the effect of the reverse recapitalization equal to $ 2.7524 per share for
Series Seed, $ 4.9433 per share for Series A, $ 5.7626 per share for Series B-1, and $ 5.4745 per share for Series B-2 as adjusted for certain
events, plus any declared or accrued and unpaid dividends. If upon such liquidation, dissolution, winding up or deemed liquidation event,
the assets of the Company available for distribution to it stockholders would be insufficient to pay the holders of shares of Convertible
Preferred Stock the full amount to which they would be entitled, the holders of Convertible Preferred Stock would share ratably in any
distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect
of the shares of Convertible Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares
were paid in full. After such distributions had been made, the remaining assets available for distribution would be distributed among
the common stockholders on a pro rata basis based upon the number of shares held by each common stockholder.

 Conversion— Each share of Series Seed
Preferred Stock, Series A Preferred Stock, Series B-1 Preferred Stock, and Series B-2 Preferred Stock was convertible into one share of
common stock based on a conversion price of $2.7524, $4.9433, $5.7626, and $5.4745 per share, respectively, adjustable for certain dilutive
events. Conversion was at the option of the holder. The Convertible Preferred Stock converted automatically upon the closing of an IPO
resulting in net proceeds of at least $ 50,000 or upon the decision of the holders of at least fifty percent of the outstanding Series
Seed Preferred Stock, Series A Preferred Stock, and Series B Preferred Stock.

 10. Common Stock

 As of December 31, 2023, Legacy Zapata had 23,500,000
shares of $ 0.0001 par value common stock authorized. The voting, dividend, and liquidation rights of the holders of Legacy Zapata's
common stock were subject to and qualified by the rights, powers and preferences of the holders of the Convertible Preferred Stock set
forth above and as designated by resolution of the Board of Directors. Each share of common stock entitles the holder to one vote, together
with the holders of the Convertible Preferred Stock, 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 Legacy Zapata's Board of Directors, subject to the preferential dividend
rights of Convertible Preferred Stock.

 As of December 31, 2023, after retrospectively
adjusting for the effect of the reverse recapitalization, Legacy Zapata reserved 3,276,076 shares of its common stock to provide for exercise
of outstanding stock options, and the future issuance of common stock options and restricted stock awards under the 2018 Equity and Incentive
Plan (the "2018 Plan) and 13,001,114 shares to provide for the potential conversion of shares of Convertible Preferred Stock into
common stock. Following the effectiveness of the 2024 Equity and Incentive Plan (the "2024 Plan") in March 2024, the 2018
Plan has been terminated and Legacy Zapata will not make any further awards under the 2018 Plan. 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. The Company has reserved 3,491,146 shares of the Company's common stock for issuance under the 2024 Plan
as of December 31, 2024 (Note 12). Under the 2024 Plan, as of December 31, 2024, there are 150,000 shares of common stock issued and outstanding.

 F- 24

 In connection with the consummation of the Merger,
the Company's authorized capital stock consists of 600,000,000 shares of the Company's common stock, par value $ 0.0001 per
share, and 10,000,000 shares of preferred stock, par value $ 0.0001 per share. No shares of preferred stock were issued or outstanding
as of December 31, 2024. Upon the Closing, a) 17,696,425 shares of the Company's common stock were issued to Legacy Zapata shareholders
based on the Exchange Ratio of 0.9141, b) 1,846,206 shares of the Company's common stock were held by AAC's public shareholders
who did not exercise redemption rights in connection with the Merger, c) 5,750,000 shares of the Company's common stock were held
by AAC's sponsor and sponsor co-investor and key stockholders of the Sponsors, d) 3,257,876 shares of the Company's common
stock ( 856,202 shares to related parties) were issued upon conversion of Senior Secured Notes, e) 500,000 shares of the Company's
common stock were issued to Sandia pursuant to the Forward Purchase Agreement, and f) 42,372 shares of the Company's common stock
have been issued to certain capital markets advisors. On March 29, 2024, an employee exercised an option following the Merger and the
Company issued 30,822 shares of the Company's common stock.

 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 3
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 3 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 consolidated financial statements. No Unvested Shares vested during the year ended
December 31, 2024.

 Lincoln Park Purchase Agreement

 On December 19, 2023, AAC and the Company entered
into the Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase up to $ 75,000 of shares of common stock
from time to time over a 36-month period following the Closing of the Merger, subject to the satisfaction of the conditions in the Purchase
Agreement. In accordance with the Purchase Agreement, the Company paid Lincoln Park the Commitment Fee of $ 1,688 on April 11, 2024 through
the issuance of 712,025 shares of common stock at an effective price of $ 2.37 per share (Note 3).

 In connection with the Purchase Agreement, AAC
and the Company also entered into a Registration Rights Agreement with Lincoln Park, pursuant to which the Company is obligated to file
the Lincoln Park Registration Statement that covers the shares of common stock that are issuable to Lincoln Park under the Purchase Agreement
(including the Commitment Shares) with the SEC within 45 days following the Closing of the Merger. The Company filed the Lincoln Park
Registration Statement on April 12, 2024, which was declared effective on April 18, 2024.

 As of December 31, 2024, the Company has issued
 10,378,780 shares of its common stock to Lincoln Park under Purchase Agreement for aggregate proceeds of $ 7,700 (excluding the Commitment
Fee shares).

 2024 Lincoln Park Purchase Agreement

 On August 13, 2024, the Company entered into a
purchase agreement (the "2024 Purchase Agreement") with Lincoln Park, pursuant to which Lincoln Park agreed to purchase up
to $ 10,000 of shares of common stock from time to time over a 24-month period upon the satisfaction of certain conditions in the 2024
Purchase Agreement. In accordance with the 2024 Purchase Agreement, the Company issued 500,000 shares of common stock to Lincoln Park
as Commitment Fee shares.

 F- 25

 In connection with the 2024 Purchase Agreement,
the Company also entered into a Registration Rights Agreement with Lincoln Park, (the "2024 Registration Rights Agreement")
with Lincoln Park, pursuant to which the Company will file a registration statement that covers the shares of common stock that are issuable
to Lincoln Park under the 2024 Purchase Agreement with the SEC within 15 business days following the date of the execution of the 2024
Registration Rights Agreement. The Company filed the Lincoln Park Registration Statement on September 3, 2024, which was declared effective
on September 9, 2024.

 As of December 31, 2024, the Company has issued
 2,700,000 shares of its common stock to Lincoln Park under 2024 Purchase Agreement for aggregate proceeds of $ 862 (excluding the Commitment
Fee shares).

 As of December 31, 2024 and 2023, 43,564,506 shares
and 4,678,950 shares of the Company's common stock were outstanding, respectively.

 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 1
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 1 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 December 31, 2024, 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

 The Company may redeem the outstanding warrants:

 a.
 in whole and not in part;

 b.
 at a price of $ 0.01 per Public Warrant;

 c.
 upon a minimum of 30 days' prior written notice of redemption to each warrant holder; and

 d.
 if, and only if, the closing price of the common stock equals or exceeds $ 18.00 per share for any 20
trading days within a 30 -trading day period ending three trading days before the Company can send the notice of redemption to the warrant
holders.

 If the Company calls the Public Warrants for redemption
as described above, the Company may elect to require the exercise of the Public Warrants on a "cashless basis" as described
below. If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable
to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the Public
Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public
Warrants to do so on a "cashless basis". In such event, each holder would pay the exercise price by surrendering the Public
Warrants for that number of common shares equal to the quotient obtained by dividing (x) the product of the number of the Company's
common stock underlying the Public Warrants, multiplied by the excess of the "fair market value" (as defined below) of the
Company's common stock over the exercise price of the Public Warrants by (y) the "fair market value." Solely for purposes
of this paragraph, the "fair market value" means the volume-weighted average last reported sale price of the Company's
common stock as reported for the ten trading days ending on the third trading day prior to the date on which the notice of redemption
is sent to the holders of the Public Warrants. However, except as described below, the Public Warrants will not be adjusted for issuances
of the Company's common stock at a price below their exercise price. Additionally, in no event will the Company be required to net
cash settle the Public Warrants. The Private Placement Warrants are substantially identical to the Public Warrants. There are certain
terms that differ the Private Placement Warrants from the Public Warrants including that the Private Placement Warrants and the Company's
common stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or salable until 30 days after
the Closing Date, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable on a cashless basis
and are non-redeemable. The warrant agreements also contain a provision wherein warrant holders can receive an "alternative issuance"
(as defined in the applicable warrant agreement), including as a result of a tender offer that constitutes a change of control.

 As of December 31, 2024 and 2023, there were 11,499,982
and 11,500,000 Public Warrants outstanding, respectively. As of December 31, 2024 and 2023, 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.

 F- 26

 12. Compensation Plans

 2018 Equity Incentive Plan

 In 2018, the Board of Directors adopted the 2018
Stock Incentive Plan. Under the terms of the 2018 Plan, incentive stock options ("ISO") could be granted to employees of Legacy
Zapata and nonqualified stock options ("NQ"), or restricted stock awards ("RSA") could be granted to directors,
consultants, employees and officers of Legacy Zapata. The exercise price of stock options cannot be less than the fair value of Legacy
Zapata's common stock on the date of grant. The options vest over a period determined by the
Board of Directors, generally four years, and expire not more than ten years from the date of grant.

 After retrospectively adjusting for the effect
of the reverse recapitalization, the total number of shares of common stock designated for issuance under the 2018 Plan was 4,058,126
as of December 31, 2023. As of December 31, 2023, there were 197,598 shares remaining available for future grants under the 2018 Plan.
Following the effectiveness of the 2024 Plan in March 2024, the 2018 Plan has been terminated and Legacy Zapata will not make any further
awards under the 2018 Stock Incentive Plan.

 As of December 31, 2024, 2,356,812 shares remained
outstanding under the 2018 Plan following the Operational Cessation.

 2024 Equity and Incentive Plan

 In March 2024, the Board of Directors adopted
the 2024 Plan, which has been approved by the Company's shareholders. The 2024 Plan became effective immediately prior to the consummation
of the Merger. Under the terms of the 2024 Plan, equity and equity-based incentive awards, as well as cash awards may be granted to employees,
directors and consultants. As of December 31, 2024, the Company has reserved 3,491,146 shares of the Company's common stock for
issuance under the 2024 Plan. The 2024 Plan provides that the number of shares of the Company's common stock reserved and available
for issuance under the 2024 Plan will automatically increase each January 1, beginning on January 1, 2025 and on each January 1 thereafter,
by 5 % of the outstanding number of shares of the Company's common stock on the immediately preceding December 31, or such lesser
amount as determined by the plan administrator. Shares of underlying any stock-based awards that
are forfeited, canceled, held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding,
or reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise)
will be added back to the shares available for the grant of awards under the 2024 Plan.

 As of December 31, 2024, a total of 3,491,146
shares of common stock were reserved for issuance under the 2024 Plan, of which 175,000 shares of common stock were issued and outstanding,
 50,000 shares were issuable upon the vesting of restricted awards, and 3,266,146 shares remained available for future grants and for issuance
upon the vesting of restricted awards.

 Inducement Awards

 The Company issued options exercisable for an aggregate
of 900,000 shares of its common stock as inducement awards outside of the 2024 Plan during the year ended December 31, 2024. Of these,
 300,000 options were forfeited as a result of the Operational Cessation, and 600,000 options remained outstanding as of December 31, 2024.

 Stock Option Valuation

 The Company uses the Black-Scholes option-pricing
model to value option grants on the date of grant and to determine the related compensation expense. The assumptions used in calculating
the fair value of stock-based payment awards represent management's best estimations. The Company bases its expected volatility
on the volatilities of certain publicly-traded peer companies. Management believes that the historical volatility of the Company's
stock price does not best represent the expected volatility of the stock price. The risk-free interest rate is determined by reference
to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term
of the stock options granted. The Company uses the simplified method (an expected term based on the midpoint between the vesting date
and the end of the contractual term) to calculate the expected term for awards that qualify as "plain-vanilla" options as
it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options
granted to employees. The expected dividend yield assumption is based on the Company's history and expectation of dividend payouts.

 In determining the exercise prices for
options granted, the Company has considered the fair value of the common stock as of the measurement date. Prior
to the Closing of the Merger, the fair value of the common stock was determined by management with consideration to a third-party valuation,
which contemplated a broad range of factors, including the illiquid nature of the investment in the
Company's common stock, the Company's historical financial performance and financial position, the Company's future
prospects and opportunity for liquidity events, and recent sale and offer prices of common and convertible preferred stock, if
any, in private transactions negotiated at arm's length. Following the Closing of the Merger, the fair value of the common stock
has been determined based on the traded price of the Company's common stock.

 F- 27

 The following table presents the assumptions
used in the Black-Scholes option-pricing model to determine the fair value of stock options granted during the year ended December 31,
2024 and 2023:

 Summary of assumptions used in Black-Scholes option-pricing model to determine fair value of stock options granted

 2024

 2023

 Fair value per share of underlying common stock

 $ 0.33 - $ 0.74

 $ 3.39

 Risk-free interest rate

 4.32 % - 4.50 %

 4.19 % - 4.23 %

 Expected term (in years)

 6.00

 5.31 - 6.02

 Expected volatility

 60.00 %

 48.99 % - 49.60 %

 Expected dividend yield

 0 %

 0 %

 Stock
Option

 Upon the Closing of the Merger,
the outstanding options to purchase shares of Legacy Zapata common stock were converted into 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.

 Stock option activity after retrospectively
adjusting for the effect of the reverse recapitalization during the year ended December 31, 2024 is as follows:

 Summary
 of stock option activity

 Number of
 Shares

 Weighted-
 Average
 Exercise Price

 Weighted-Average
 Remaining
 Contractual Term
 (Years)

 Aggregate
 Intrinsic Value

 Balance at December 31, 2023

 3,078,475

 $
 2.38

 6.98

 $
 4,489

 Granted

 900,000

 1.10

 Exercised

 ( 47,183
)

 1.44

 Forfeited and expired

 ( 974,544
)

 2.40

 Balance at December 31 2024

 2,956,748

 $
 1.94

 6.66

 $
 —

 Options vested and exercisable at December 31, 2024

 2,356,812

 $
 2.13

 5.98

 $
 —

 Options vested and expected to vest at December 31, 2024

 2,956,748

 $
 1.94

 6.66

 $
 —

 All
stock options granted have time-based vesting conditions and generally vest over a four-year period, with certain awards vesting over
two or three years. The weighted-average grant-date fair value of awards granted for the year ended December 31, 2024 was $ 0.62 per share
As of December 31, 2024, there was $ 405 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 3.37 years. The fair value of stock
options that vested during the years ended December 31, 2024 and 2023 was $ 95.0 and $ 148.7, respectively.

 Restricted Common Stock ("RSU")

 The Company may grant nonvested restricted common
stock to employees, directors, and consultants with or without cash consideration. These grants contain certain restrictions on the sale
of the shares. Nonvested restricted common stock are not considered issued or outstanding for accounting purposes until they vest. Upon
termination of the relationship with a holder of such shares, the Company has the right to repurchase the nonvested restricted common
stock shares at the there was no consideration, a price per share defined in the agreement.

 Nonvested restricted common stock activity during
the year ended December 31, 2024, is as follows:

 of Nonvested restricted common stock activity

 Number of
 Shares

 Weighted-
 Average
 Grant Date
 Fair Value

 Balance at December 31, 2023

 —

 $
 —

 Granted

 450,000

 0.57

 Exercised

 ( 375,000
)

 0.57

 Vested

 ( 25,000
)

 0.57

 Balance at December 31 2024

 50,000

 As of December 31, 2024, the total unrecognized
compensation cost related to unvested restricted common stock was $ 29. The Company expects to recognize the unrecognized compensation
amount over a remaining weighted-average period of 1.0 years.

 F- 28

 Employee Stock Purchase Plan

 In March 2024, the Board of Directors adopted
the 2024 Employee Stock Purchase Plan (the "2024 ESPP"), which has been approved by the Company's shareholders. The
2024 ESPP provides eligible employees with an opportunity to purchase shares of the Company's common stock through accumulated contributions,
which generally will be made through payroll deductions. The 2024 ESPP permits the administrator of the 2024 ESPP to grant purchase rights
that qualify for preferential tax treatment under Section 423 of the Internal Revenue Code of 1986 (the "Code"). In addition,
the 2024 ESPP authorizes the grant of purchase rights that do not qualify under Code Section 423 pursuant to rules, procedures or sub-plans
adopted by the administrator that are designed to achieve desired tax or other objectives. As of December 31, 2024, 581,858 shares (the
"Initial ESPP Limit") of the Company's common stock were reserved for issuance under the 2024 ESPP. The 2024 ESPP provides
that the number of shares of the Company's common stock reserved and available for issuance under such plan will automatically increase
each January 1, beginning on January 1, 2025 and on each January 1 thereafter, by the least of the Initial ESPP Limit, 1 % of the outstanding
number of shares of the Company's common stock on the immediately preceding December 31, or such lesser amount as determined by
the plan administrator.

 Each offering of the Company's common stock
under the 2024 ESPP will be for a period of year (the "offering period"). The first offering period under the 2024 ESPP will
begin and end on such date or dates as determined by the plan administrator. Subsequent offerings under the 2024 ESPP will generally begin
on the first business day occurring on or after each January 1 and July 1 and will end on the last business day occurring before the following
July 1 and January 1, respectively. Shares are purchased on the last business day of each offering period (the "exercise date").

 On the exercise date of each offering period, the eligible employee
is deemed to have exercised the option, at the exercise price, for the lowest of (i) a number of shares of the Company's common
stock determined by dividing such employee's accumulated payroll deductions or contributions on such exercise date by the exercise
price; (ii) the number of shares of the Company's common stock determined by dividing $ 25 by the fair market value of the Company's
common stock on the first day of such offering period; or (iii) such lesser number as established by the plan administrator in advance
of the offering. The exercise price is equal to the lesser of (i) 85 % the fair market value per share of the Company's common stock
on the first day of the offering period or (ii) 85 % of the fair market value per share of the Company's common stock on the exercise
date. The maximum number of shares of the Company's common stock that may be issued to any eligible employee under the 2024 ESPP
in a calendar year is a number of shares of the Company's common stock determined by dividing
$ 25 by the fair market value of the Company's common stock, valued at the start of the offering period, or such other lesser
number of shares as determined by the plan administrator from time to time.

 As of December 31, 2024, the Company has not issued any
shares under the 2024 ESPP.

 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 consolidated statements of operations and comprehensive loss:

 Summary
 of the classification of the company's stock-based compensation expense

 2024

 2023

 Research and development

 $

 $

 Sales and marketing

 General and administrative

 Cost of revenue

 $

 $

 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. On July 19, 2024, the Company entered into a six months
lease for office space in the United States commenced on September 3, 2024:

 of the company's operating lease costs

 2024

 2023

 Operating lease cost

 $

 $

 Short-term lease cost

 Total lease costs

 $

 $

 F- 29

 There were no variable lease costs for the years
ended December 31, 2024 and 2023.

 The following table sets forth supplemental information
about the leases for the year ended December 31, 2024 and 2023:

 of the leases

 2024

 2023

 Cash paid for amounts included in the measurement of operating liabilities

 $

 $

 Weighted-average remaining lease term – operating leases

 —

 —

 Weighted-average discount rate – operating leases

 —

 11.41
 %

 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
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 balance sheet as total consolidated assets. The Company's long-lived assets consist
primarily of property and equipment, net. As of December 31, 2024 the Company does not have material long-term assets outside the
U.S.

 15. Income Taxes

 The components of (loss) income before provision
for income taxes for the years ended December 31, 2024 and 2023 were:

 Schedule of components of (loss) income before provision
for income taxes

 2024

 2023

 United States

 $
 ( 38,247
)

 $
 ( 29,823
)

 Foreign

 Loss before income taxes

 $
 ( 38,126
)

 $
 ( 29,714
)

 The components of the provision for income taxes
are as follows:

 Schedule of
 components of provision for income taxes

 2024

 2023

 Current tax provision

 Federal

 $
 —

 $
 —

 State

 —

 —

 Foreign

 Total current tax provision

 Deferred tax provision

 Federal

 —

 —

 State

 —

 —

 Foreign

 —

 —

 Total deferred tax provision

 —

 —

 Total provision for income taxes

 $

 $

 F- 30

 A reconciliation of the Company's statutory income
tax rate to the Company's effective income tax rate for each reporting period is as follows:

 Schedule of statutory income tax rate

 2024

 2023

 Income at US statutory rate

 $
 ( 8,006
)

 $
 ( 6,272
)

 State taxes, net of federal benefit

 ( 801
)

 ( 497
)

 Permanent differences

 3,399

 2,600

 Tax credits

 —

 ( 166
)

 Change in valuation allowance

 5,420

 4,289

 Other

 Loss before income taxes

 $

 $

 The provision for income taxes differs from the
expense that would result from applying statutory rates to income before income taxes. The differences primarily result from changes in
valuation allowance.

 Deferred income taxes reflect impact of carryforwards
and temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured
by tax laws. The carryforwards and temporary differences, which give rise to a significant portion of the Company's deferred tax
asset as of December 31, 2024 and 2023, are as follows:

 Schedule of deferred tax asset

 2024

 2023

 Deferred tax assets:

 Federal and state net operating loss carryforwards

 $
 17,070

 $
 15,264

 Research and Development Credits

 Section 174 Capitalized R&D

 3,315

 2,887

 Lease liability

 —

 Accruals & payables

 3,160

 Other DTA

 Total deferred tax assets

 24,342

 18,977

 Right of use asset

 —

 ( 49
)

 Other DTL

 ( 1
)

 ( 9
)

 Total deferred tax liabilities

 ( 1
)

 ( 58
)

 Valuation allowance

 ( 24,341
)

 ( 18,919
)

 Net deferred tax assets (liability)

 $
 —

 $
 —

 As of December 31, 2024 and 2023, the Company
is in a net deferred tax asset position before valuation allowance. The future realization of the tax benefits from existing temporary
differences and tax attributes ultimately depends on the existence of sufficient future taxable income. In assessing the realization of
the deferred tax assets, the Company considers whether deferred tax assets will not be realized. The Company considers projected future
taxable income, scheduled reversal of existing deferred tax liabilities, and tax planning strategies in making this assessment. As of
December 31, 2024 and 2023, the Company has considered all available evidence, both positive and negative, and determined that it is more
likely than not that the Company's net deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation
allowance as of December 31, 2024 and 2023. The change in the valuation allowance for years ended December 31, 2024 and 2023 was an increase
of $ 5,422 and $ 4,289, respectively.

 As of December 31, 2024, the Company had federal
net operating loss carryforwards totaling $ 68,803, which are available to reduce the Company's future taxes and have an unlimited
carryforward period. As of December 31, 2024, the Company had state net operating loss carryforwards totaling $ 39,687. As of December
31, 2024 and 2023, the Company had federal research and development tax credits of $ 345 and $ 345, respectively that generally expire at
various dates through 2039. As of December 31, 2024 and 2023, the Company had state research and development tax credits of $ 261 and $ 261
that generally expire at various dates through 2039.

 The future realization of the net operating loss
carryforwards may be limited by the change in ownership rules under Section 382 of the Internal Revenue Code ("Section 382").
Under Section 382, if a corporation undergoes an ownership change (as defined), the corporation's ability to utilize its net operating
loss carryforwards and other tax attributes to offset income may be limited. The Company has not completed a study to assess whether a
change of ownership has occurred, or whether there have been multiple ownership changes since its formation. Any limitation may result
in expiration of a portion of the net operating loss carryforwards or research and development credit carryforward before utilization.

 F- 31

 The Company files income tax returns in the U.S.
federal tax jurisdiction and in various state and foreign jurisdictions in which it operates and is therefore subject to tax examination
by various taxing authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by
the U.S. federal, foreign, state and local income tax authorities for all tax years in which a loss carryforward is available. The Company
is currently not under examination by the Internal Revenue Service or any other jurisdiction for any tax years. The Company has no t recorded
any interest or penalties on any unrecognized tax benefits as of December 31, 2024 and 2023.

 The Company accounts for uncertain tax positions
recognized in the consolidated financial statements following a more-likely-than-not threshold for financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. When uncertain tax positions exist, the Company recognizes
the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. As of December 31, 2024 and 2023,
the Company has no t identified any uncertain tax positions. The Company will recognize interest and penalties, if any, related to uncertain
tax positions in income tax expense. As of December 31, 2024, no interest or penalties have been accrued.

 16. Retirement Plan

 The Company maintains a defined-contribution plan
under Section 401(k) of the Internal Revenue Code of 1986 (the "401(k) Plan"). The Company's 401(k) Plan covers all
eligible employees and allows participants to defer a portion of their annual compensation on a pre-tax basis. Employees of the Company
may participate in the 401(k) plan immediately upon hiring, as there are no age or service requirements. The Company does not match employee
contributions. The 401(k) Plan was terminated effective December 31, 2024 following the Operational Cessation and termination of employees.

 17. Commitments and Contingencies

 License and Collaboration Agreements

 During 2018, the Company entered into an exclusive
patent license agreement (the "license agreement") with a term that continued unless terminated by the Company or the licensor.
The license agreement contained annual license maintenance fee payments, milestone payments, as well as payments based on a percentage
of net sales. Under the license agreement, the Company issued shares of its common stock to the licensor representing four percent of
the Company's capital stock on a fully diluted basis.

 The license agreement obligated the Company to
pay fixed annual license maintenance fees of $ 100 for the year ended December 31, 2023, and $ 100 per year thereafter until the Company
or the licensor terminates the license.

 The license agreement obligated the Company to
pay fixed milestone payments upon the achievement of certain sales thresholds. The payments total $ 150, and the maximum sales threshold
is $ 25,000. The Company did not trigger any payments to the licensor during the year ended December 31, 2024 and 2023.

 The license agreement obligated the Company
to pay a royalty calculated as two 2 percent of net sales. The license agreement also required the Company to make payments related
to any sublicensing agreements, with varying amounts based on the type of sublicense. The Company paid $ 0 in royalties during the
year ended December 31, 2024 and 2023. On February 10, 2023, the Company terminated the license agreement by written notice to the
licensor. Subsequent to the termination of the license agreement, all licensing rights held by the Company were forfeited to the
licensor. The Company did not owe any accrued obligations or payments to the licensor after the license agreement was
terminated.

 Andretti Agreements – Related Party

 On February 10, 2022, Legacy Zapata 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 December 31, 2024, the Company has paid $ 3,500 under the agreement and for
the years ended December 31, 2024 and 2023, the Company recorded $ 2,783 and $ 2,783 in sales and marketing expense related to the sponsorship
agreement. There was $ 4,500 included in accounts payable as of December 31, 2024 related to the sponsorship agreement.

 On March 28, 2024, Legacy Zapata 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, Legacy Zapata is responsible for payments under the sponsorship agreement in an amount totaling $ 1,000.

 F- 32

 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, 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, and the remaining balance was subsequently converted into the Company's common stock in the second quarter of 2025.

 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 consolidated balance sheet as of December 31, 2024. During the year ended
December 31, 2024, the Company paid $ 2,272 under the agreements.

 of obligations recorded in accounts payable accrued expenses and other current liabilities and non current liabilities

 Year ending

 Amount

 2025

 $
 4,986

 Total

 $
 4,986

 In the fourth quarter of 2024, due to the Operational
Cessation, 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 described in Note 20, Subsequent Events.

 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 Zapata'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 December 31, 2024, the remaining purchase commitment for
the cloud services is $ 3,800.

 The cloud service agreement effectively terminated
in October 2024 in connection with the Company's operational cessation described in Note 20, Subsequent Events.

 18. Net Loss per Share

 The Company applies the two-class method when computing
net (income) loss per share attributable to common stockholders as the Company has issued shares
that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and
participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class
method requires income (loss) available to common stockholders for the period to be allocated between common and participating securities
based upon their respective rights to share in the undistributed earnings as if all income (loss) for the period had been distributed.
There is no allocation required under the two-class method during periods of loss since the participating securities do not have a contractual
obligation to share in the losses of the Company. The convertible preferred stock was determined to be participating security, and for
all periods presented in which the convertible preferred stock was outstanding, the Company incurred a net loss; therefore, no allocation
is required.

 F- 33

 Basic net loss per share available to common stockholders
is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for
the periods presented. The weighted-average number of common stock outstanding excludes any unvested
shares that have not met their vesting conditions during the periods presented.

 Diluted net loss per share reflects the potential
dilution that could occur using the treasury stock and if-converted methods, as applicable. For
purposes of this calculation, outstanding stock options and warrants to purchase common stock, Unvested Shares, unvested RSUs,
Senior Secured Notes including accrued interest and the potential issuance of common stock upon the conversion of the Convertible Preferred
Stock prior to the Closing of the Merger were considered common stock equivalents, but were excluded from the calculation of diluted net
loss per share for all periods in which the Company reported a net loss, as their effect was anti-dilutive.

 Accordingly, in periods in which the Company reports
a net loss available to common stockholders, diluted net loss per share available to common stockholders is the same as basic net loss
per share available to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

 The following table
sets forth the computation of net loss per share:

 of potential common shares, presented based on amounts outstanding

 2024

 2023

 Numerator:

 Net loss attributable to common stockholders

 $
)

 $
)

 Denominator:

 Weighted-average common shares outstanding, basic and diluted

 29,434,511

 4,659,269

 Net loss per share attributable to common stockholders, basic and diluted

 $
 ( 1.30
)

 $
 ( 6.38
)

 The table below presents
common stock equivalents that were excluded from the calculation of diluted net loss per share for the periods presented.

 of potential common shares, presented based on amounts outstanding

 2024

 2023

 Convertible preferred stock (as converted to common stock)

 —

 Senior Secured Notes, including accrued interest

 263,142

 —

 Public Warrants

 11,499,982

 —

 Private Placement Warrants

 13,550,000

 —

 Unvested Shares

 1,129,630

 —

 Stock options to purchase common stock

 2,956,748

 3,078,542

 Restricted stock units

 50,000

 —

 29,449,502

 16,079,656

 19. Related Party Transactions

 Legacy Zapata's Chief Executive Officer
and member of the Company's Board of Directors, as well as the its Chief Technology Officer, entered into a Second Amended and Restated
Right of First Refusal and Co-Sale Agreement on August 31, 2020. This agreement provides for customary rights of first refusal and co-sale
related to certain sales of Zapata capital stock. This agreement terminated upon the Closing of the Merger.

 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 year ended December
31, 2024 and 2023, the Company remitted fees of $ 48 and $ 62 to the member of its Board of Directors for these services. Additionally,
a former member of Legacy Zapata's Board of Directors that left the Board of Directors in January 2023 also provided consulting
services to Legacy Zapata. The amount of fees that Legacy Zapata remitted to the former member of its Board of Directors for the services
rendered during the year ended December 31, 2023 was immaterial.

 F- 34

 On June 13, 2023, Legacy Zapata issued two Senior
Notes with respective principal amounts of $ 500 to each of two greater than 5% stockholders of Legacy Zapata. On June 28, 2023, Legacy
Zapata approved the appointment of a new member of its Board of Directors. Legacy Zapata issued a Senior Note with a principal amount
of $ 500 to this member on July 2, 2023. In December 2023, all outstanding Senior Notes were canceled and reissued as Senior Secured Notes
(Note 8). On March 28, 2024, each of the two notes issued on June 13, 2023 was converted in full into 127,554 shares of common stock,
and the note issued on July 2, 2023 was converted into 126,348 shares of common stock.

 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 18), both of which expire on December 31, 2024. During
the years ended December 31, 2024 and 2023, the Company recorded $ 1,300 and $ 1,733 in revenue related to the enterprise solution subscription
agreement. Andretti Global also entered into a managed service agreement with the Company in October 2022. For the years ended December
31, 2024 and 2023, the Company recorded $ 0 and $ 245, respectively, in revenue related to the enterprise managed service agreement.

 For the years ended December 31, 2024 and 2023,
the Company recorded $ 2,783 and $ 2,783 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 December 31,
2024 include $5,504 in accounts payable at December 31, 2024. There was $ 1,567 and $ 829 due from related parties as of December 31, 2024
and 2023 and $ 5,504 and $ 1,500 of payables due to related parties in connection with these agreements as of December 31, 2024 and 2023,
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, the agreement was terminated and no payments were made.

 20. Subsequent Events

 The Company has evaluated all events subsequent
to December 31, 2024 and through December 9, 2025, which represents the date these consolidated financial statements were available
to be issued.

 Forward Purchase Agreement

 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.

 F- 35

 Senior Secured Note Transfer

 In January 2025, the senior secured note and related
accrued and unpaid interest 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.

 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 each of the transactions described
above, 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.

 F- 36

 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.

 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.

 F- 37

 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.

 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.

 Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures

 Item 9A. Controls and Procedures

 Disclosure Controls and Procedures

 Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange Commission (the "SEC"). Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company
reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 Management's
Annual Report on Internal Control Over Financial Reporting

 Management
is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the
Company's principal executive and principal financial officers and effected by the Company's board of directors, management,
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal
control over financial reporting might not prevent or detect misstatements.

 Management (with the participation
of our principal executive officer and principal financial officer) conducted an evaluation of the effectiveness of its internal control
over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that during the periods presented
in the consolidated financial statements at and as of December 31, 2024, our internal control over financial reporting was not effective.

 A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

 Material Weaknesses

 Management has identified the following material
weaknesses which have caused management to conclude that, as of December 31, 2024, our disclosure controls and procedures were not effective:
(i) failure to employ sufficient accounting and financial reporting personnel with requisite knowledge and experience in the application
of U.S. GAAP and SEC rules to facilitate accurate and timely financial reporting; (ii) lack of an effective risk assessment process, which
led to improperly designed controls; (iii) failure to design and maintain appropriate control activities; including those to support the
appropriate segregation of duties over the review of account reconciliations, manual journal entries and safeguarding of assets; (iv)
failure to design and maintain formal accounting policies, procedures and controls over significant accounts and disclosures to achieve
complete, accurate and timely financial accounting, reporting and disclosures; and (v) failure to document, thoroughly communicate, and
monitor controls processes and relevant accounting policies and procedures.

 Plans for Remediation
of Material Weaknesses

 Management has taken actions to remediate the
deficiencies in its internal controls over financial reporting and implemented additional processes and controls designed to address the
underlying causes associated with the above-mentioned material weaknesses. Management is committed to finalizing the remediation of the
material weaknesses. Management's internal control remediation efforts include the following:

 We are currently in the process of identifying and engaging
internal control consultants to assist us in performing a risk assessment as well as identifying and designing a system of internal controls
necessary to mitigate the risks identified, including preparation of written documentation and testing of our internal control policies
and procedures, such that we are able to perform a Section 404 analysis of our internal control over financial reporting when and as required;

 We plan to increase our personnel resources and technical
accounting expertise within the accounting function to replace our outside service providers; until we have sufficient technical accounting
and financial reporting capabilities, we have retained an accounting consulting firm to provide support and to assist us in our evaluation
of more complex applications of U.S. GAAP and assist us with financial reporting.

 Changes in Internal Control Over Financial Reporting

 Other than with respect to the ongoing remediation
efforts on the material weaknesses, there were no changes in our internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

 Limitations of the Effectiveness of Internal Controls

 A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because
of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control
issues, if any, within a company have been detected.

 Item 9B. Other Information

 Insider Trading Arrangements and Policies

 During the fiscal year ended December 31, 2024,
no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule
10b5-1 trading arrangement" as each term is defined in Item 408(a) of Regulation S-K.

 Other Information

 None.

 Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent
Inspections

 Item 10. Directors, Executive Officers and Corporate Governance

 Name

 Age

 Title

 Sumit
 Kapur

 Chief
 Executive Officer and Chief Financial Officer, Director

 Clark
 Golestani

 Chairman
 of the Board of Directors

 William
 E. Klitgaard

 Director

 Sumit Kapur, has served as Chief Executive
Officer of the Company since October 7, 2024, Chief Financial Officer since May 8, 2024, and a director since October 9, 2025. Mr. Kapur
previously served as the chief financial officer of 3Degrees Inc., a financial services and technology company in the energy sector, from
May 2012 to January 2024. Prior to that, Mr. Kapur served as vice president – structured finance, of Sungevity, a solar electricity
company, from May 2010 to September 2011, investment analyst at Stark Investments, an investment management firm, from February 2008 to
June 2009, and vice president – structured finance group, of Morgan Stanley from August 2004 to February 2008. Mr. Kapur has served
on multiple boards of private entities, including the board of directors of Tulip.ai, a venture backed startup making holistic healthcare
solutions more accessible and effective through the application of artificial intelligence models, since January 2021.

 Clark Golestani, has served as Chairman
of the Board of Directors of the Company (the "Board") since October 9, 2025, a member of our Board since March 2024 and
as a member of the Legacy Zapata Board since September 2018. Mr. Golestani has over 35 years of experience in health, life sciences and
technology, and is an active investor, advisor and board member across the healthcare and technology, media, and telecommunications ("TMT")
sectors. Mr. Golestani serves as the Managing Director of C Sensei Group, a business consulting and services company since April 2018,
as a Senior Advisor at New Mountain Capital, a private equity firm since April 2018, as an Industry Advisor at Advent, a private equity
firm since September 2025. Mr. Golestani also serves as the Managing Director of the K2 Access Fund since October 2020, and as a member
of the investment committee of The CXO Fund since August 2018, both venture capital firms that invest in early-stage companies.

 Previously, from June 1994 to April 2018, Mr.
Golestani served in multiple positions at Merck & Co. (NYSE: MRK) ("Merck"), a multinational pharmaceutical company, where
he was responsible for, among other things, Merck's portfolio of digital health services and solutions companies, most recently
as President, Emerging Businesses and Global Chief Information Officer, prior to his retirement in April 2018. Mr. Golestani also
serves as a member of the board of directors of a number of companies, including: eMids, a consulting firm that provides IT and business
process management solutions to the healthcare industry, since April 2020; Emmes, a clinical research organization, since March 2021;
Iridius.ai, a next-generation agentic AI platform accelerating innovation in the world's most regulated industries, since September 2025;
Otonoma, a secure platform that powers the next generation of digital operations with its Paranet system, since August 2024. Mr. Golestani
also previously served as a director on the boards of a number of companies, including: Sparta Systems, Inc. as Chairman, an enterprise
quality management software provider that was acquired by Honeywell, Inc. (April 2018 to February 2021); CIOX Health, a healthcare information
management company (September 2018 to October 2021); Molecula Corp., an artificial intelligence and data analytics company which was acquired
by Circuit.ai (September 2020 to June 2024); Toposware Inc., a developer of blockchain technology acquired by Polygon Labs
(December 2020 to May 2024); TruU, Inc. a cybersecurity company (May 2018 to December 2022); UMUC Ventures Inc., a non-profit
that provides innovative technology transformation services to educational organizations (April 2016 to September 2020); Seal Software
Limited, a contract discovery and contract management software solutions company that was acquired by DocuSign, Inc. (April 2016 to May
2020); and Liaison Technologies, Inc., a global integration and data management company (November 2011 to September 2015). Mr. Golestani
is also a co-founder of Cross Road Technologies, Inc., an IT applications development company. We believe Mr. Golestani is qualified to
serve on our Board due to his vast experience and success as a director and executive officer of both public and private companies in
the healthcare and TMT sectors and his expertise in finance and venture capital.

 William E. Klitgaard, has
served as a director of the Company since October 8, 2025 and was previously a member of our Board from March 2024 to October 15, 2024.
Mr. Klitgaard has been a member of the Legacy Zapata Board since June 2023. Mr. Klitgaard
has served as an operating executive at Avista Capital Partners, a private equity firm, since 2020. Mr. Klitgaard most recently served
as President of Enlighten Health, a division of LabCorp (NYSE:LH) that focuses on innovation and creation of new information-based services
utilizing core assets of LabCorp and Covance, Inc. Previously, he spent 19 years at Covance, one of the world's largest contract
research organizations, where he served for three years as Corporate Senior Vice President and Chief Information Officer, and nearly twelve
years as Corporate Senior Vice President and Chief Financial Officer. Mr. Klitgaard has served as a director and chair of the audit committee
of XIFIN, Inc., a healthcare innovative technology company, since January 2020. Mr. Klitgaard previously served as a director of Syneos
Health, Inc. (NASDAQ: SYNH), from March 2017 to September 2023, Inform Diagnostics, from December 2019 to April 2022, Liaison Technologies,
from August 2013 to December 2018, Bioclinica, Inc., from June 2018 to March 2019, and Certara, L.P., from September 2017 to July 2020.
We believe Mr. Klitgaard's private equity investment and company oversight experience and background, as well as his financial experience,
makes him well qualified to serve on our Board.

 Corporate
Governance

 Appointment
of Officers

 Each executive officer serves
at the discretion of our Board and holds office until his successor is duly elected and qualified or until his earlier resignation or
removal.

 Board Composition

 Our business and affairs are organized
under the direction of our Board, which consists of three members, with Clark Golestani serving as chair and lead independent director,
William Klitgaard and Sumit Kapur. The primary responsibilities of our Board include providing oversight, strategic guidance, counseling
and direction to our management. Our Board meets on a regular basis and additionally as required.

 In accordance with the terms of our Bylaws, each
director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until
 such director's successor is elected and qualified or until such director's earlier death,
resignation or removal.

 Any director may be removed from office by our
stockholders as provided in Section 141(k) of the Delaware General Corporation Law (the "DGCL"), our Bylaws and our Certificate
of Incorporation.

 Our Board consists of three classes, each representing
a separate term of directorship. As of the date of this Report, the classification of our Board is as follows: Mr. Kapur is serving a
one year term or until the next annual meeting of the Company's stockholders ("Annual Meeting"), Mr. Klitgaard is serving
a two year term or until the second Annual Meeting and Mr. Golestani is serving a three year term or until the third Annual Meeting. After
such initial terms expire, the subsequent terms of each class are three years, or the third Annual Meeting following the Annual Meeting
at which the applicable director was most recently elected.

 Board
of Directors

 Our business and
affairs are managed under the direction of our Board. We currently have three directors.

 Director
Independence

 Our
Board has determined that with the exception of Sumit Kapur, each of our directors are considered "independent" as such term
is defined under the rules of The Nasdaq Stock Market, LLC.

 Role of our Board in Risk Oversight/Risk
Committee

 One of the key functions of our Board is informed
oversight of our risk management process. Our Board does not have a standing risk management committee, but administers this oversight
function directly through our Board as a whole, as well as through various standing committees of our Board that address
risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic
risk exposure and our audit committee has the responsibility to consider and discuss our major financial risk exposures and the steps
our management takes to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment
and management is undertaken.

 Our audit committee monitors compliance with legal
and regulatory requirements, and our compensation committee assesses and monitors whether our compensation plans, policies and programs
comply with applicable legal and regulatory requirements.

 Family
Relationships

 There are no family
relationships among our directors and executive officers.

 Board and Committee
Meetings

 Our Board
has three standing committees—an audit committee, a compensation committee, and a nominating and corporate governance committee.
Copies of the charters for each committee are available on our website, www.zapata.ai.

 Our Board held 4 meetings during 2024.
The Board took formal action by unanimous consent on 15 occasions in 2024. We have no formal policy regarding attendance by directors
or officers at our stockholders' meetings.

 During 2024, our audit committee held 2 meetings,
the corporate governance and nominating committee held 1 meeting, and the compensation committee held 2 meetings.

 Audit Committee

 The members of our
audit committee are William E. Klitgaard and Clark Golestani. Mr. Klitgaard serves as the chair of the audit committee. Our Board determined
that Mr. Klitgaard qualifies as an audit committee financial expert within the meaning of SEC regulations. In making this determination,
our Board considered formal education and previous experience in financial roles. Our independent registered public accounting firm and
management periodically meets privately with our audit committee.

 The functions of this committee
include, among other things:

 •
 selecting a qualified firm to serve as the independent registered public accounting firm to audit our
financial statements;

 •
 meeting periodically with each of our management, internal auditors, and independent auditors;

 •
 helping to ensure the independence and performance of the independent registered public accounting firm;

 •
 discussing the scope and results of our audit with the independent registered public accounting firm,
and reviewing, with management and the independent accountants, our interim and year-end operating results;

 •
 developing procedures for employees to submit concerns anonymously about questionable accounting or
audit matters;

 •
 reviewing with management and our auditors any earnings press releases and any financial information
and earnings guidance provided to analysts and rating agencies;

 •
 reviewing policies on risk assessment and risk management;

 •
 reviewing related party transaction;

 •
 obtaining and reviewing a report by the independent registered public accounting firm at least annually
that describes the internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such
issues when required by applicable law, and any government investigation within the past five years regarding any audits carried out by
our independent auditors, as well as any steps taken to deal with any issues; and

 •
 approving (or, as permitted, pre-approving) all audit and all permissible non-audit service to be performed
by the independent registered public accounting firm.

 The composition and function of
the audit committee complies with all applicable requirements of the Sarbanes-Oxley Act and all applicable SEC rules and regulations.
Our audit committee operates under a written charter that in accordance with the rules and regulations of the SEC.

 Compensation Committee

 The members of our
Compensation Committee are Clark Golestani and William E. Klitgaard, and Clark Golestani serves as the chairman of the compensation committee.
Our Board has determined that each of the members of the compensation committee is a non-employee
director, as defined in Rule 16b-3 promulgated under the Exchange Act. The functions of the committee include, among other things:

 •
 reviewing and recommending that our Board approve the compensation of our executive officers;

 •
 reviewing and recommending the compensation of directors;

 •
 reviewing and recommending that our Board approves the terms of compensatory arrangements with executive
officers;

 •
 administering stock and equity incentive plans;

 •
 selecting independent compensation consultants and assessing whether there are any conflicts of interest
with any of the committee's compensation advisors, and providing oversight of any such advisors;

 •
 reviewing and approving the compensation of the Company's compensation advisors;

 •
 reviewing and recommending that our Board approves incentive compensation and equity plans, severance
agreements, change-of-control protections and any other compensatory arrangements for executive officers and other senior management,
as appropriate;

 •
 reviewing and establishing general policies relating to compensation and benefits of employees; and

 •
 reviewing our overall compensation philosophy.

 The composition
and function of its compensation committee will comply
with all applicable requirements of the Sarbanes-Oxley Act and applicable SEC rules and regulations. Our compensation committee operates
under a written charter in accordance with the applicable rules and regulations of the SEC.

 Nominating
and Corporate Governance Committee

 The members of our
nominating and corporate governance committee are Clark
Golestani and William E. Klitgaard, and Clark Golestani serves as the chairman of the nominating committee.

 The functions of this committee include, among other things:

 •
 identifying, evaluating and selecting, or recommending that the Board approve, nominees for election
as directors;

 •
 approving the retention of director search firms;

 •
 evaluating the performance of the Board and of individual directors;

 •
 reviewing developments in corporate governance practices;

 •
 evaluating the adequacy of corporate governance practices and reporting;

 •
 reviewing management succession plans; and

 •
 developing and making recommendations to the Board regarding corporate governance guidelines and matters.

 The composition
and function of the nominating and corporate governance committee complies with all applicable requirements of the Sarbanes-Oxley Act
and applicable SEC rules and regulations. Our nominating and corporate governance committee operates under a written charter in accordance
with the applicable rules and regulations of the SEC.

 Compensation Committee Interlocks and
Insider Participation

 None of the members of our compensation committee
has ever been an executive officer or employee of the Company. None of our executive officers
currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other
entity that has one or more executive officers that serve as a member of our Board or compensation committee.

 Section 16(a) Beneficial
Ownership Reporting Compliance

 Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our officers, directors and persons who
beneficially own more than ten percent of our ordinary shares to file reports of ownership and changes in ownership with the SEC. These
reporting persons are also required to furnish us with copies of all Section 16(a) forms they file. Based solely upon a review of
such forms, we believe that during the 12 months ended December 31, 2024, there were no delinquent filers.

 Limitation on Liability and Indemnification
of Directors and Officers

 Our Certificate of Incorporation limits our directors'
liability to the fullest extent permitted under the DGCL. The DGCL provides that directors of a corporation will
not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability:

 •
 for any transaction from which the director derives an improper personal benefit;

 •
 for any act or omission not in good faith or that involves intentional misconduct or a knowing violation
of law;

 •
 for any unlawful payment of dividends or redemption of shares; or

 •
 for any breach of a director's duty of loyalty to the corporation or its stockholders.

 If the DGCL is amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or
limited to the fullest extent permitted by the DGCL, as so amended. The DGCL and our Bylaws provide that we will, in certain situations,
indemnify our directors and officers and may indemnify other employees and other agents, to the fullest extent permitted by law. Any indemnified
person is also entitled, subject to certain limitations, to advancement, direct payment, or reimbursement of reasonable expenses (including
attorneys' fees and disbursements) in advance of the final disposition of the proceeding.

 In addition, we have entered into separate indemnification
agreements with our directors and officers. These agreements, among other things, require us to indemnify our directors and officers for
certain expenses, including attorneys' fees, judgments, fines, and settlement amounts incurred by a director or officer in any action
or proceeding arising out of their services as one of our directors or officers or any other company or enterprise to which the person
provides services at our request.

 We maintain a directors' and officers'
insurance policy pursuant to which our directors and officers are insured against liability for actions taken in their capacities as directors
and officers. We believe these provisions in our Certificate of Incorporation and Bylaws and these indemnification agreements are necessary
to attract and retain qualified persons as directors and officers.

 These provisions may discourage stockholders from
bringing a lawsuit against our directors for breach of their fiduciary duties. These provisions also may have the effect of reducing the
likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit
us and our stockholders. Furthermore, a stockholder's investment may be adversely affected to the extent we pay the costs of settlement
and damage awards against officers and directors pursuant to these indemnification provisions.

 Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers, or control persons, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.

 Code
of Business Conduct and Ethics for Employees, Executive Officers, and Directors

 Our Board has adopted a code of business conduct
and ethics (the "Code of Conduct"), applicable to all of our employees, executive officers and directors. The Code of Conduct
is available on our website at www.zapata.ai. Information contained on or accessible through our website is not a part of this prospectus,
and the inclusion of our website address in this prospectus is an inactive textual reference only. Our Board is responsible for overseeing
the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. Any amendments
to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.

 Insider Trading Policy

 We are committed
to promoting high standards of ethical business conduct and compliance with applicable laws, rules, and regulations. As part of this commitment,
we have adopted our Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by our directors,
officers, and employees that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations,
and the exchange listing standards applicable to us. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report
on Form 10-K for the year ended December 31, 2024.

 Anti-Hedging Policy

 Under the Company's Insider
Trading Policy, all officers, directors and certain identified employees are prohibited from engaging in hedging transactions.

 Item 11. Executive Compensation

 The following information is related to the compensation
paid, distributed or accrued by us for the fiscal years ended December 31, 2024 and 2023 to our
Chief Executive Officer (principal executive officer), two other most highly compensated executive officers serving as of December 31,
2024 whose compensation exceeded $100,000, and up to two additional individuals who would have met the above criteria except such individual(s)
were not serving as of December 31, 2024 (the "Named Executive Officers").

 Summary Compensation Table

 Name
 and
 Principal Position
 (a)

 Year

 (b)

 Salary

 ($)(c)

 Option

 Awards
 ($)(f)

 All
 Other
 Compensation
 ($)(i)

 Total

 ($)(j)

 Sumit Kapur (1)

 2024

 309,167
 *

 483,434

 33,758

 826,358

 Chief Executive Officer

 2023

 —

 —

 Christopher Savoie (2)

 2024

 214,615
 *

 24,995

 239,611

 Former President and Chief Executive Officer

 2023

 270,000

 270,000

 Mimi Flanagan (3)

 2024

 111,199
 *

 25,109

 136,308

 Former Chief Financial Officer

 2023

 280,923

 280,923

 Yudong Cao, Ph. D. (4)

 2024

 172,596
 *

 15,060

 187,656

 Former Chief Technology Officer and Founder

 2023

 200,000

 200,000

 *In connection with the cessation of
operations in 2025, the Company paid all employees through October 9, 2024.

 (1)
 Mr.
 Kapur joined the Company on May 13, 2024 with a base salary of $350,000 and bonus target
 of 30% or $105,000. In the table above his salary for 2024 includes $134,167 standard pay
 through September 30, 2024 and $175,000 for a six months' advance/prepayment of salary
 to retain services to conduct the cessation of operations. Mr. Kapur's "All Other
 Compensation" for 2024 includes a payment for his unused paid time off as of the cessation
 date, $9,898 as well as $23,860 for a six months' advance/prepayment of health insurance.
 Mr. Kapur was awarded an Inducement Award on May 8, 2024 which included 656,370 options at
 an exercise price of $1.12 vesting at "one year cliff, then 36 monthly vest".
 These were awarded under the 2018 Plan. The amount under "Option Awards" represents
 the fair market value of such grant calculated in accordance with ASC 718. This amount does
 not reflect the actual economic value realized by the officer.

 (2)
 Mr.
 Savoie resigned from his position as Chief Executive Officer on October 7, 2024. He was paid
 through October 4, 2024. His salary above includes $210,000 standard pay through September
 30, 2024 and $4,615 for the four business days he worked in October. All other compensation
 of $24,995 includes payment for his unused paid time off hours.

 (3)
 Ms.
 Flanagan resigned from her position as Chief Financial Officer on May 20, 2024. She was paid
 through May 20, 2024. "All Other Compensation" of $25,109 includes a payment
 for her unused paid time off hours.

 (4)
 Mr.
 Cao was relieved of his position of Chief Technology Officer on October 9, 2024 as part of
 the cessation of operations. He was paid $162.981 through this date. Mr. Cao's services
 were retained for an additional two weeks to support the Company in the cessation of its
 operations. For his services he was paid $9,615, a prorated portion of his annual salary.
 "All Other Compensation" of $15,060 includes payment for his unused paid time
 off hours.

 Employment Agreements

 Sumit Kapur. Mr. Kapur is employed by the
Company pursuant to an oral agreement under which he receives the compensation described in the table above and such other compensation
as may be approved by the Board.

 Outstanding Awards at Fiscal Year End

 Listed below is information
with respect to unexercised options that have not vested and equity incentive plan awards for each named executive officer outstanding
as of December 31, 2024.

 Outstanding Equity Awards At Fiscal Year-End

 Name

 Number of Securities
 Underlying
 Unexercised
 Options (#)
 Exercisable

 Number of Securities Underlying Unexercised Options
 (#)
 Unexercisable

 Equity Incentive
 Plan Awards:
 Number of Securities
 Underlying Unexercised
 Unearned Options

 Option
 Exercise Price

 Option
 Expiration Date

 Number of Shares or Units of Stock That Have Not Vested

 Market Value of Shares or Units of Stock That Have Not Vested

 Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested

 Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

 (a)

 (b)

 (c)

 (d)

 ($)(e)

 (f)

 (g)

 ($)(h)

 (i)

 (j)

 Christopher J Savoie

 345,589

 —

 N/A

 $
 1.25

 N/A

 N/A

 N/A

 N/A

 Christopher J Savoie

 377,493

 —

 N/A

 $
 2.01

 N/A

 N/A

 N/A

 N/A

 Sumit Kapur

 —

 600,000

 N/A

 $
 1.23

 5/8/2034

 N/A

 N/A

 N/A

 N/A

 Clark Golestani

 34,279

 —

 N/A

 $
 2.01

 2/4/2031

 50,000

 28,600

 N/A

 N/A

 Clark Golestani

 68,559

 —

 N/A

 $
 3.80

 8/1/2033

 —

 —

 N/A

 N/A

 Dana Jones

 68,559

 —

 N/A

 $
 2.01

 —

 —

 N/A

 N/A

 Dana Jones

 34,279

 —

 N/A

 $
 3.80

 —

 —

 N/A

 N/A

 Jeff Huber

 68,559

 —

 N/A

 $
 2.01

 —

 —

 N/A

 N/A

 Jeff Huber

 34,279

 —

 N/A

 $
 3.80

 —

 —

 N/A

 N/A

 Matt Brown

 No option award as of 12/31/24

 —

 N/A

 $
 —

 1/0/1900

 —

 —

 N/A

 N/A

 Raj Ratnakar

 No option award as of 12/31/24

 —

 N/A

 $
 —

 1/0/1900

 —

 —

 N/A

 N/A

 William Klitgaard

 34,279

 —

 N/A

 $
 3.80

 —

 —

 N/A

 N/A

 Mimi Flanagan

 37,136

 —

 N/A

 $
 2.01

 5/20/2029

 N/A

 N/A

 N/A

 N/A

 Mimi Flanagan

 63,988

 —

 N/A

 $
 2.69

 5/20/2029

 N/A

 N/A

 N/A

 N/A

 Mimi Flanagan

 15,997

 —

 N/A

 $
 2.01

 5/20/2029

 N/A

 N/A

 N/A

 N/A

 Yudong Cao

 13,332

 —

 N/A

 $
 1.25

 N/A

 N/A

 N/A

 N/A

 Yudong Cao

 168,692

 —

 N/A

 $
 2.01

 N/A

 N/A

 N/A

 N/A

 Compensation of Directors

 In the fiscal year ended December 31, 2024, non-employee
members of our Board of Directors were compensated for as follows:

 Name
 (a)

 Fees Earned or
 Paid in
 Cash
 ($)(b)

 Stock
 Awards
 ($)(c)(1)

 Total
 ($)(j)

 Clark Golestani

 95,000

 57,200

 152,000

 William E. Klitgaard

 62,500

 76,800

 Dana Jones (2)

 62,500

 76,800

 Jeffrey Huber (2)

 60,000

 74,300

 Raj Ratnaka (2)r

 60,000

 74,300

 William Matthew Brown (2)

 50,000

 64,300

 (1) Amounts reported
represent the aggregate grant date fair value of awards granted without regards to forfeitures granted to the independent members of
our Board of Directors during the fiscal year ended December 31, 2024, computed in accordance with ASC 718. This amount does not reflect
the actual economic value realized by the director.

 (2) Is a former
director.

 The table below sets forth the unexercised options
held by each of our non-employee directors outstanding as of December 31, 2024.

 Name

 Aggregate Number of Unexercised Option
 Awards Outstanding at December 31,2024

 Aggregate Number of Unexercised Stock
 Awards Outstanding at December 31, 2024

 Clark Golestani

 102,838

 152,838

 William E. Klitgaard

 Dana Jones

 Jeffrey Huber

 Raj Ratnakar

 William Matthew Brown

 Equity Compensation Plan Information

 The following table contains information about
the Equity Compensation Plan as of December 31, 2024:

 Plan
 category

 Number
 of securities
 to
 be issued upon
 exercise
 of
 outstanding
 options, warrants
 and rights

 Weighted-

 average
 exercise
 price of
 outstanding
 options,
 warrants
 and rights

 Number
 of securities
 available
 for future issuance under equity compensation
 plans
 (excluding securities
 reflected
 in column (a))

 (a)

 (b)

 (c)

 Equity compensation plans approved by stockholders:

 2,356,812

 2.13

 3,266,146

 Equity Compensation Plan

 Equity compensation not approved by stockholders

 Total

 2,356,812

 3,266,146

 Item 12. Security Ownership of Certain Beneficial Owner and Management
and Related Stockholder Matters

 PRINCIPAL STOCKHOLDERS

 The following table sets forth the number of shares
of our common stock beneficially owned as of December 4, 2025 by (i) our named executive officers, (ii) each director, (iii) those persons
known by us to be owners of more than 5% of our common stock, and (iv) all of our executive officers and directors as a group. Unless
otherwise specified in the footnotes to this table, the address for each person is: c/o Zapata Quantum, Inc., 6 Liberty Square #2488,
Boston, MA 02109.

 Beneficial Owner Name & Address

 Amount of Class of Stock Beneficially Owned (1)

 Percent of Class of Stock Beneficially Owned (1)

 Pro Forma Fully Diluted Beneficial Ownership (2)

 Pro Forma Fully Diluted Percentage Beneficially Owned (2)

 Executive
Officers and Directors

 Sumit Kapur, Chief Executive Officer, Chief Financial Officer and Director (3)

 36,962,500

 22.1
 %

 42,850,000

 11.7
 %

 Clark Golestani, Director (4)

 36,654,125

 22.0
 %

 37,529,125

 10.2
 %

 William E. Klitgaard, Director (5)

 4,026,348

 2.4
 %

 4,901,348

 1.3
 %

 All
directors and executive officers as a group (7 persons)

 77,642,973

 44.4
 %

 85,280,473

 23.2
 %

 5% beneficial owners

 Diametric True Alpha Enhanced Market Neutral Master Fund, LP (6)

 11,899,731

 7.3
 %

 11,899,731

 3.2
 %

 Diametric True Alpha Market Neutral Master Fund, LP (7)

 11,250,662

 6.9
 %

 11,250,662

 3.1
 %

 William J. Sandbrook (8)

 15,396,567

 9.3
 %

 15,396,567

 4.2
 %

 (1)
Applicable percentages are based on 162,580,506 shares of common stock issued and outstanding as of December 4, 2025. Shares of common
stock subject to options, warrants, convertible preferred stock and other derivative securities currently exercisable or convertible,
or exercisable or convertible within 60 days are deemed outstanding for computing the percentage of the person holding such securities
but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this
table, the Company believes that each of the shareholders named in the table has sole voting and investment power with respect to the
shares indicated as beneficially owned by them.

 (2)
Assumes full vesting of all derivative securities held by the individuals listed, based on 366,892,003 shares of Common Stock on a fully-diluted
basis which amount assumes and gives effect to full conversion and exercise of all outstanding convertible promissory notes, warrants,
convertible preferred stock, options and other derivative securities outstanding as of November 26, 2025.

 (3) Sumit Kapur.
Common stock beneficially owned consists of (i) 32,500,000 restricted shares of the Issuer's common stock, vesting in equal monthly installments
over a two-year period; (ii) 275,000 shares of common stock underlying stock options, which represent a portion of a grant of 600,000
stock options on May 20, 2024 with an exercise price of $1.23 per share, the remainder of which vests in equal monthly increments over
three years from March 13, 2025; (iii) 2,500,000 shares of common stock issuable upon conversion of a convertible promissory note in
the principal amount of $100,000 with a conversion price of $0.04 per share, (iv) 1,250,000 shares of common stock issuable upon exercise
of a five-year warrant to purchase shares of common stock with an exercise price of $0.04 per share, (v) 125,000 shares of common stock
underlying stock options, which represent a portion of a grant of 1,000,000 stock options on October 9, 2025 with an exercise price of
$0.08 per share, the remainder of which vests in equal monthly increments over two years, and (vi) 312,500 shares of common stock underlying
stock options, which represent a portion of a grant of 5,000,000 stock options on October 9, 2025 with an exercise price of $0.08 per
share, the remainder of which vests in equal monthly increments over four years.

 (4) Clark Golestani.
Common stock beneficially owned consists of (i) 32,500,000 restricted shares of the Issuer's common stock, vesting in equal monthly installments
over a two-year period, (ii) 176,288 additional shares of the Issuer's common stock, (iii) 34,279 shares of common stock underlying stock
options exercisable until February 4, 2031, with an exercise price of $2.02 per share; (iv) 68,558 shares of common stock underlying
stock options exercisable until July 31, 2033, with an exercise price of $3.80 per share; (v) 2,500,000 shares of common stock issuable
upon conversion of a convertible promissory note in the principal amount of $100,000 with a conversion price of $0.04 per share, (vi)
1,250,000 shares of common stock issuable upon exercise of a five-year warrant to purchase shares of common stock with an exercise price
of $0.04 per share, and (vii) 125,000 shares of common stock underlying stock options, which represent a portion of a grant of 1,000,000
stock options on October 9, 2025 with an exercise price of $0.08 per share, the remainder of which vests in equal monthly increments
over two years.

 (5) William Klitgaard.
Common stock beneficially owned consists of 151,348 shares of common stock, (ii) 2,500,000 shares of common stock issuable upon conversion
of a convertible promissory note in the principal amount of $100,000 with a conversion price of $0.04 per share, (iii) 1,250,000 shares
of common stock issuable upon exercise of a five-year warrant to purchase shares of common stock with an exercise price of $0.04 per
share, and (iv) 125,000 shares of common stock underlying stock options, which represent a portion of a grant of 1,000,000 stock options
on October 9, 2025 with an exercise price of $0.08 per share, the remainder of which vests in equal monthly increments over two years.

 (6) Diametric
True Alpha Enhanced Market Neutral Master Fund, LP. Nick Thakore is the Chief Executive Officer of Diametric True Alpha Market Neutral
Master Fund, LP and deemed the beneficial owner of its common stock. Address is One Nexus Way, Camana Bay, Grand Cayman, KY1-9005.

 (7) Diametric
True Alpha Market Neutral Master Fund, LP. Nick Thakore is the Chief Executive Officer of Diametric True Alpha Market Neutral Master
Fund, LP and deemed the beneficial owner of its common stock. Address is One Nexus Way, Camana Bay, Grand Cayman, KY1-9005.

 (8) William J.
Sandbrook. is our former Co-Chief Executive Officer and Chairman. Address is 2500 N. Houston St, Apt 2801, Dallas, TX 75219.

 Item 13. Certain Relationships and Related
Transactions and Director Independence.

 The following is a description of transactions
since January 1, 2023 as to which the amount involved exceeds the lesser of $120,000 or one percent (1%) of the average of the Company's
total assets at year-end for the last two completed fiscal years, which is $54,000, and in which any related person has or will have a
direct or indirect material interest, other than equity, compensation, termination and other arrangements.

 On June
12, 2025, the Company entered into a Securities Purchase Agreement with Sumit Kapur, the Company's Chief Executive Officer, pursuant
to which the Company sold Mr. Kapur a secured convertible promissory note in the original principal amount of $100,000 and warrants to
purchase 1,250,000 shares of Common Stock having an exercise price of $0.04, in exchange for total gross proceeds of $100,000.

 On June
12, 2025, the Company entered into a Securities Purchase Agreement with Clark Golestani, a director, pursuant to which the Company sold
Mr. Golestani a secured convertible promissory note in the original principal amount of $100,000 and warrants to purchase 1,250,000 shares
of Common Stock having an exercise price of $0.04, in exchange for total gross proceeds of $100,000.

 On October 8, 2025, 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 $100,000 per year for services as director, and (iii) additional cash compensation of $25,000 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 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 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, and 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.

 In connection with
the Merger and in accordance with the terms set forth in the Senior Secured Note Purchase Agreement
and the Business Combination Agreement, the SPAC entered into exchange agreements with certain holders of Senior Secured Notes, including
certain current and former executive officers and members of the Board, and beneficial holders of more than five percent of New Company
Common Stock pursuant to which all of the outstanding principal and accrued interest as of March 27, 2024 was converted into shares
of New Company Common Stock at a conversion price of $4.50 per share. The following table describes, with respect to each current and
former executive officer and member of the Board whose notes converted, the amount of aggregate principal and interest outstanding and
the number of shares issued in connection with such conversion.

 Name

 Relationship
 to Surviving Company

 Amount of Note

 (Principal and
 Interest) ($)

 Shares of New

 Company Common
 Stock Issued at
 Closing (#)

 William M. Brown

 Director; Former President and Chief Financial Officer

 156,349.32

 34,744

 William E. Klitgaard

 Director

 568,568.92

 126,348

 William J. Sandbrook

 Former Co-Chief Executive Officer and Chairman

 1,095,159.13

 243,368

 Michael M. Andretti

 Former Co-Chief Executive Officer and Director

 1,669,153.87

 370,923

 Gerald D. Putnam(1)

 Former Director

 259,452.06

 57,656

 Peter C. Brown

 Brother of William M. Brown.

 104,233.92

 23,163

 Comcast Ventures LP

 5% Beneficial Owner

 573,994.74

 127,554

 Prelude Fund LP

 5% Beneficial Owner

 573,994.74

 127,554

 (1)
The Senior Secured Notes were purchased on behalf of Mr. Putnam and his wife, Sharron Putnam, through each individual's respective
investment retirement account.

 Pursuant to a Deferred Payment
Agreement dated as of March 28, 2024, the Surviving Company amended the terms of the outstanding unsecured promissory notes (the
"Notes") issued to the Sponsor on January 25, 2023 and to each of Michael M. Andretti, William J. Sandbrook
and William M. Brown on March 27, 2023 (each a "Lender" and, together, the "Lenders").The table
below reflects the aggregate outstanding principal and interest due under the Notes at the Closing Date.

 Lender

 Relationship
 to Surviving Company

 Date
 of Issuance
 (as amended)

 Total
 Due
 (Principal and
 Interest)

 Sponsor

 5% Beneficial Owner

 January 25, 2023

 $
 256,756.13

 Willam J. Sandbrook

 Former Co-Chief Executive Officer and Chairman

 May 23, 2023

 $
 1,177,843.08

 Michael M. Andretti

 Former Co-Chief Executive Officer and Director

 May 23, 2023

 $
 1,177,843.08

 William M. Brown

 Director; Former President and Chief Financial Officer

 May 23, 2023

 $
 235,220.19

 Pursuant to the amended terms,
we paid $30,000 to the Sponsor and $100,000 to each Lender for aggregate payments of $330,000 at the Closing. The remaining aggregate
balance of the Notes, plus accrued interest through the Closing Date, of approximately $2.5 million was deferred at the Closing and
is due in monthly installments (including interest accruing from the Closing Date through the payment date) beginning thirty days following
the effectiveness of the Surviving Company's registration statement on Form S-1 registering shares of New Company
Common Stock to be issued pursuant to the Purchase Agreement with Lincoln Park. The balance will be payable over a twelve month term,
except for the principal balance due to the Sponsor at closing, which must be repaid (including interest accruing from the Closing Date
through the payment date) prior to December 31, 2024. The Notes bear interest at a rate of 4.5% per annum.

 On January 28, 2021, our
sponsor paid $25,000, or approximately $0.003 per share, to cover certain of our offering and formation costs in consideration of 7,187,500
Class B ordinary shares, par value $0.0001. On March 2, 2021, our sponsor transferred 30,000 founder shares to Cassandra S.
Lee and 25,000 founder shares to each of Zakary C. Brown, James W. Keyes, Gerald D. Putnam and John J. Romanelli, resulting in our sponsor
holding 7,057,500 founder shares. On November 17, 2021, our sponsor surrendered an aggregate of 1,437,500 Class B ordinary shares
for no consideration, thereby reducing the aggregate number of Class B ordinary shares held by our sponsor to 5,620,000 founder shares.
Immediately prior to the Initial Public Offering, the Sponsor forfeited 1,430,923 founder shares in connection with the issuance of founder
shares to the sponsor co-investor.

 Our sponsor and sponsor co-investor
 purchased 13,550,000 private placement warrants for a purchase price of $1.00 per warrant in a private placement that occurred simultaneously
with the closing of the IPO. As such, our sponsor's interest in the IPO is valued at $13,550,000. Each private placement warrant
entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as provided
herein. The private placement warrants (including the Class A ordinary shares issuable upon exercise of the private placement warrants)
may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of
our initial business combination.

 We entered into an Administrative
Services Agreement pursuant to which we will also pay an affiliate of our sponsor a total of $15,000 per month for office space, administrative
and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Accordingly, in the event the consummation of our initial business combination takes the maximum 24 months, an affiliate of our sponsor
will be paid a total of $360,000 ($15,000 per month) for office space, administrative and support services and will be entitled to be
reimbursed for any out-of-pocket expenses.

 Our sponsor, officers and directors
or any of their respective affiliates are reimbursed for any out-of-pocket expenses incurred in connection with activities on
our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee
reviews on a quarterly basis all payments that are made by us to our sponsor, officers, directors or our or any of their respective affiliates
and determines which expenses and the amount of expenses that would be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket
expenses incurred by such persons in connection with activities on our behalf.

 We have entered into a registration
rights agreement with respect to the founder shares, private placement warrants and warrants issued upon conversion of working capital
loans (if any). The holders of the founder shares, private placement warrants and warrants that may be issued upon conversion of working
capital loans (and any Class A ordinary shares issuable upon the exercise of the private placement warrants or warrants issued upon
conversion of the working capital loans and upon conversion of the founder shares) will be entitled to registration rights pursuant to
a registration rights agreement, dated as of January 12, 2022, requiring us to register such securities for resale (in the case of
the founder shares, only after conversion to Class A ordinary shares). The holders of these securities will be entitled to make up
to three demands, excluding short form registration demands, that we register such securities. In addition, the holders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and
rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights
agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination
of the applicable lock-up period, which occurs: (i) in the case of the founder shares, on the earlier of (A) one year after
the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the last reported
sale price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial
business combination, or (y) the date following the completion of our initial business combination on which we complete a liquidation,
merger, stock exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to
exchange their Class A ordinary shares for cash, securities or other property, and (2) in the case of the private placement
warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of our initial business
combination. We will bear the expenses incurred in connection with the filing of any such registration statements.

 Related Party Policy

 We had not yet adopted a formal
policy for the review, approval or ratification of related party transactions as of the completion of the IPO. Accordingly, the transactions
discussed were not reviewed, approved or ratified in accordance with any such policy.

 After the completion of the IPO,
we adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions
approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under
our code of ethics, conflict of interest situations would include any financial transaction, arrangement or relationship (including any
indebtedness or guarantee of indebtedness) involving the company.

 In addition, our audit committee,
pursuant to a written charter, was responsible for reviewing and approving related party transactions to the extent that we entered into
such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present
was required in order to approve a related party transaction. A majority of the members of the entire audit committee constitutes a quorum.
Without a meeting, the unanimous written consent of all of the members of the audit committee was required to approve a related party
transaction. Our audit committee reviewed on a quarterly basis all payments that were made by us to our sponsor, officers or directors,
or our or any of their affiliates.

 These procedures were intended
to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the
part of a director, employee or officer.

 To further minimize conflicts
of interest, we agreed not to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers
or directors unless we, or a committee of independent and disinterested directors, have obtained an opinion from an independent investment
banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company
from a financial point of view. There would be no finder's fees, reimbursement, consulting fee, monies in respect of any payment
of a loan or other compensation paid by us to our sponsor, officers or directors or our or any of their respective affiliates, for services
rendered to us prior to or in connection with the completion of our initial business combination (regardless of the type of transaction
that it is). However, the following payments would be, or have been, made to our sponsor, officers or directors, or our or their affiliates,
and, if made prior to our initial business combination would be made from (i) funds held outside the trust account or (ii) permitted
withdrawals:

 •
 payment to an affiliate of our sponsor of a total of $15,000 per month, for up to 24 months, for office
space, administrative and support services;

 •
 reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an
initial business combination; and

 •
 repayment of loans which may be made by our sponsor, an affiliate of our sponsor or our officers and
directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined
nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants of
the post-business combination entity at a price of $1.00 per warrant at the option of the lender.

 These payments may be funded using
the net proceeds of the IPO and the sale of the private placement warrants not held in the trust account or, upon completion of the initial
business combination, from any amounts remaining from the proceeds of the trust account released to us in connection therewith.

 Item 14. Principal Accounting Fees and Services

 As we retained Weinberg & Company,
our current independent registered public accounting firm, in 2025, we did not pay such firm any fees in 2024 or 2023.

 The
following table sets forth the aggregate fees paid for or accrued by the Company for audit and other services provided by Deloitte
& Touche LLP and Marcum LLP, for the years ended December 31, 2024 and 2023.

 2024
 ($)(2)

 2023
 ($)(3)

 Audit Fees (1)

 600,000

 164,715

 Audit Related Fees

 —

 —

 Tax Fees

 —

 —

 All Other Fees

 1,040,588

 —

 Total

 1,640,588

 164,715

 (1)

 Audit Fees – these
 fees relate to fees billed for professional services rendered for the audit
 of our year-end financial
 statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by
 Marcum for professional services rendered for the audit of our annual financial statements, and other required filings with the SEC
 for the years ended December 31, 2023 totaled $164,715. The above amounts include interim procedures and audit fees, as well
 as attendance at audit committee meeting s.

 (2)

 Represents
 fees paid or accrued to Deloitte & Touche LLP, the Company's former independent
 registered public accounting firm, in 2024.

 (3)

 Represents
 fees or accrued to Marcum LLP, the Company's former independent registered public accounting firm, in 2023.

 Item 15. Exhibits, Financial Statement Schedules

 EXHIBIT INDEX

 Incorporated
 by Reference

 Exhibit

 No.

 Description

 Filed/Furnished

 Herewith

 Form

 Exhibit

 No.

 Filing

 Date

 2.1

 Business Combination Agreement,
 dated as of September 6, 2023, by and among the Company, Tigre Merger Sub, Inc. and Legacy Zapata

 2.1

 9/6/23

 3.1

 Certificate of Incorporation

 3.1

 3.1(a)

 Certificate of Amendment
 to Certificate of Incorporation

 3.1

 8/27/25

 3.2

 Bylaws of Zapata Computing
 Holdings Inc.

 3.2

 3.3

 Certificate of Designations,
 of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock

 4.1

 10/28/25

 3.4

 Certificate of Designations
 of Preferences, Rights and Limitations of the Series C Convertible Preferred Stock

 4.1

 7/24/25

 3.4(a)

 Certificate of Amendment
 to the Certificate of Designation of Preferences, Rights and Limitations of the Series C Convertible Preferred Stock

 4.1

 11/6/25

 4.1

 Form of Note

 4.1

 4.2

 Form of Warrant

 4.2

 4.3

 Description of Securities

 4.6

 3/17/2022

 4.4

 Public Warrant Agreement, dated as of January 12, 2022,
 by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent

 4.1

 1/19/22

 4.5

 Private Warrant Agreement, dated as of January 12,
 2022, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent

 4.2

 1/19/22

 10.1

 Form of Forbearance Agreement+

 10.1

 10/28/25

 10.2

 Form of Securities Purchase Agreement+

 10.2

 10/28/25

 10.3

 Form of Stock Option
 Agreement

 10.1

 10/15/25

 10.4

 Form of Stock Option
 Agreement

 10.1

 8/22/25

 10.5

 Form of Conversion Agreement+

 10.1

 10.6

 Form of Securities Purchase
 Agreement+

 10.2

 10.7

 Form of Consent Agreement

 10.3

 10.8

 Form of Universal Resale
 and Registration Provisions+

 10.4

 10.9

 Form of Security Agreement+

 10.5

 10.10

 Form of Intercreditor
 Agreement

 10.6

 10.11

 Consulting Agreement,
 effective as of May 21, 2024, by and between Mimi Flanagan and Zapata Computing, Inc.

 10.29

 8/14/24

 10.12

 Purchase Agreement,
 dated as of August 13, 2024, by and between Zapata Computing Holdings Inc. and Lincoln Park Fund, LLC

 10.32

 8/14/24

 10.13

 Registration Rights
 Agreement, dated as of August 13, 2024, by and between Zapata Computing Holdings Inc. and Lincoln Park Fund LLC

 10.33

 8/14/24

 10.14

 Nonstatutory Stock Option
 Award Agreement (Inducement Award)

 S-8

 99.4

 6/17/24

 10.15

 Zapata Computing Holdings
 Inc. 2024 Inducement Stock Incentive Plan#

 S-8

 99.5

 6/17/24

 10.16

 Offer Letter, dated
 May 8, 2024, by and between Sumit Kapur and Zapata Computing, Inc.#

 10.1

 5/13/24

 10.17

 Amended and Restated
 Registration Rights Agreement, dated as of September 6, 2023, by and among the Company and certain security holders

 10.4

 10.18

 Zapata Computing Holdings
 Inc. 2024 Equity and Incentive Plan#

 10.5

 Incorporated
 by Reference

 Exhibit

 No.

 Description

 Filed/Furnished

 Herewith

 Form

 Exhibit

 No.

 Filing

 Date

 10.19

 Form of Incentive Stock
 Option Agreement under the Zapata Computing Holdings Inc. 2024 Equity and Incentive Plan

 10.6

 10.20

 Form of Nonstatutory
 Stock Option Agreement under the Zapata Computing Holdings Inc. 2024 Equity and Incentive Plan

 10.7

 10.21

 Form of Restricted Stock
 Unit Award Agreement under the Zapata Computing Holdings Inc. 2024 Equity and Incentive Plan

 10.8

 10.22

 Zapata Computing Holdings
 Inc. 2024 Employee Stock Purchase Plan#

 10.9

 10.23

 Senior Secured Note
 Purchase Agreement, dated as of December 15, 2023, by and among Zapata Computing, Inc., Zapata Government Services, Inc., the
 individuals and entities who become parties thereto and Acquiom Agency Services LLC in its capacity as collateral agent

 10.24

 10.24

 Deferred Payment Agreement,
 dated March 28, 2024, by and among Zapata Computing Holdings Inc. (f/k/a Andretti Acquisition Corp.), Andretti Sponsor LLC, Michael
 M. Andretti, William J. Sandbrook and William M. Brown

 10.35

 10.25

 Order Form to Zapata
 Enterprise Solution Subscription Agreement, dated March 28, 2024, by and between Zapata Computing Holdings Inc. and Andretti Autosport
 Holding Company, LLC

 10.36

 10.26

 Sponsorship Agreement,
 dated March 28, 2024, by and between Zapata Computing Holdings Inc. and Andretti Autosport 1, LLC

 10.37

 10.27

 Confirmation of an OTC
 Equity Prepaid Forward Transaction, dated as of March 25, 2024, among Andretti Acquisition Corp., Zapata Computing, Inc. and Sandia
 Investment Management LP, acting on behalf of certain funds

 10.1

 3/26/24

 10.28

 FPA Funding Amount PIPE
 Subscription Agreement, dated as of March 25, 2024, among Andretti Acquisition Corp., Zapata Computing, Inc. and Sandia Investment
 Management LP, acting on behalf of certain funds

 10.2

 3/26/24

 10.29

 Zapata Computing, Inc.
 2018 Stock Incentive Plan#

 S-4/A

 10.7

 12/1/23

 10.30

 Form of Indemnification
 Agreement

 S-4/A

 10.13

 12/22/23

 14.1

 Code of Ethics

 16.1

 Letter from Deloitte

 16.1

 7/23/25

 16.2

 Letter from Marcum LLP
 to the Commission

 16.1

 19.1

 Insider Trading Policy

 21.1

 List of Subsidiaries

 21.1

 31.1

 Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 31.2

 Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 32.1

 Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover Page Interactive Data File (formatted as inline

 +

 Certain schedules, appendices and exhibits to this agreement have been
 omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished
 supplementally to the SEC Staff upon request.

 #

 Indicates management contract or compensatory plan,
 contract or agreement.

 (1)

 Filed herein

 (2)

 Furnished herein.

 Item 16. Form 10-K Summary

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

 By:

 /s/ Sumit Kapur

 Sumit Kapur

 Chief Executive Officer, Chief Financial Officer

 (Principal Executive, Financial and Accounting)

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 SIGNATURE

 TITLE

 DATE

 /s/ Clark Golestani

 Chairman of the Board of Directors

 Roger Kornberg

 /s/ William Klitgaard

 Director

 William Klitgaard

 /s/ Sumit Kapur

 Chief Executive Officer, Chief Financial Officer and Director

 Sumit Kapur

 (Principal Executive, Financial and Accounting Officer)