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Zapata Computing, Early Quantum-AI Software Specialist, Ceases Operations

Zapata Computing, which was founded in 2017 as a Harvard spinout specializing in quantum software and later pivoted to an AI focus, is ceasing operations, according to an SEC filing last week. Zapata had gone public one year ago, via a SPAC purchase with Andretti Acquisition Corp. It was trying to straddle both the quantum and AI worlds and earlier this year had struck a collaboration deal with quantum computer developer D-Wave.
Christopher Savoie, has resigned as president and CEO. Sumit Kapur, the company’s CFO will serve as CEO and principal executive offer. Here’s an excerpt from last week’s SEC filing:
“On October 7, 2024, the board of directors of the Company approved cessation of the Company’s operations. The Company currently owes approximately $2.3 million pursuant to certain outstanding Senior Secured Promissory Notes. Such noteholders have a security interest in substantially all of the Company’s assets. Further, in addition to the Sandia Obligation described above, the Company owes additional amounts to other creditors, and expects to incur additional expenses to cease operations. The fair market value of the Company’s assets does not exceed the aggregate amount of the Company’s current and reasonably anticipated financial obligations. Accordingly, the Company believes that it is presently unable to, and is unlikely to become able to, satisfy all of its financial obligations and that, following the Company’s efforts to satisfy those obligations to the extent of available resources, it is unlikely there will be any assets remaining for distribution to holders of the Company’s outstanding common stock. In addition, due to the Company’s insolvency, the Company does not expect to initiate bankruptcy proceedings or to seek stockholder approval for the cessation of its operations.
“Following the termination of employment of all of the Company’s employees and commencement of ceasing the Company’s operations, the Company believes that it no longer has effective internal control over financial reporting or effective disclosure controls and procedures. There can be no assurance that the Company’s filings with the Securities and Exchange Commission currently reflect all material information required to be reported or that the information previously reported continues to be current.”
Details of the next steps are not fully clear.
Analyst Bob Sutor, VP and Practice Leader, Emerging Technologies, Futurum, said “It’s sad when this happens because of the employees and the shareholders. Unfortunately, being quantum or AI does not protect startups or young companies from the economic realities of the market. Unless revenue plus investment exceeds expenses and you have solid management, you can’t survive when your ROI is too far out. I don’t see this event as an indictment of the quantum industry in whole.”
Bob Sutor, Futurum
Whether this is a blip in the nascent quantum market – certainly not unexpected – or perhaps the signal of more difficulties for quantum companies as demand for returns grow is unclear. Going public is always risky. Both D-Wave (NYSE: QBTS) and Rigetti (Nasdaq: RGTI) currently face delisting.
Just before going public, Zapata had solidified its shifting focus to Gen AI. Savoie said at the time, “Our engineers and scientists have spent years building, testing, and refining our proprietary software to put Zapata AI—and our customers—at the forefront of the generative AI revolution. We believe generative AI is shaping a once-in-a-generation opportunity, and the capital and relationships afforded through this business combination will only strengthen our market position. We are participating in an enormous total addressable market where we have the potential to create disproportionate value for our customers and our investors.”
Stay tuned.