Zapata AI Ceases Operations

https://quantumcomputingreport.com/zapata-ai-ceases-operations/

by jsemrau • 2 years ago

51 37 2 years ago

quantumcomputingreport.com

rawrawrawrr• 2 years ago

I wish I knew that there existed a public quantum AI company as an easy short before they went out of business.

plegresl• 2 years ago

See also Rigetti Computing

michaelnny• 2 years ago

Wow, this is a great idea!!! Seriously!

inopinatus• 2 years ago

unfortunately the company can appear to be in either state until it collapses

fuzztester• 2 years ago

That's known as the Heisenberg Uncertainty Principle of tech companies.

freetonik7• 2 years ago

Counter-example: IONQ Inc whose stock jumped up after a recent military contract.

notRobot• 2 years ago

Originally, this payment was not due until a Valuation Date of March 28, 2026, but the company received notice from Sandia that this date had been accelerated to October 8, 2024. So the company had to shut down and terminate almost all of the employees...

Does anyone have context or can someone explain how payment dates can be arbitrarily accelerated?

JumpCrisscross3• 2 years ago

can someone explain how payment dates can be arbitrarily accelerated?

It's never arbitrary. When a company sells stock it has a fiduciary obligation to its shareholders. With a loan, however, the relationship is adversarial. (EDIT: this is a loan disguised as a stock sale, so what I say below technically doesn't apply.)

A common clause in loan documents is acceleration [1]. The most common trigger for acceleration is default; the easiest way to do this is not make payments. But there are other requirements in a loan, called covenants [2], that a borrower must adhere to. (Think: a mortgage requiring you maintain insurance.) If a borrower breaches a covenant, the loan is in technical default and the lender may accelerate.

There is a third possibility, the callable loan [3], but that wouldn't make sense here. (When you deposit money with a bank, you're lending it money on callable terms.)

[1] https://www.investopedia.com/terms/a/acceleration-clause.asp

[2] https://en.wikipedia.org/wiki/Loan_covenant

[3] https://corporatefinanceinstitute.com/resources/commercial-l...

metaphor• 2 years ago

Context is described in Zapata's 8-K filing[1].

[1] https://www.sec.gov/Archives/edgar/data/1843714/000095017024...

JumpCrisscross3• 2 years ago

Huh. So Sandia gave Zapata cash in exchange for shares to be delivered no later than March 2026. Sandia had the right to demand its cash back if Zapata's stock fell below $1/share. (Simplifying.) The stock fell below $1. Sandia exercised its right. Simple enough.

Clever way to deny the borrower interest deduction in exchange for giving the lender long-term capital gains. I've been out of the game for too long to understand why one would structure a loan this way. Poor man's convert?

EDIT: I'm struggling to understand this. Sandia gave Zapata cash in exchange for future delivery of shares, the number of shares to be based on the future price of the shares. Also, if the price goes down, they get their money back. So far, we have puttable shares. But the put amount is "a cash amount equal to $1,250,000 (less the number of any Unregistered Shares) multiplied by the volume weighted daily VWAP," which makes no sense, because you're taking a dollar amount, subtracting a number of shares, and multiplying it by a per share price. I assume the underlying agreement knows how to do basic dimensions. (Also, VWAP means volume-weighted average price, so whoever drafted these defined terms is a numpty.)

EDIT2: Oh, it's a SPAC. They already had debt [1]. The agreement still looks overly complicated [2]. Given it's a SPAC it's safe to default to the assumption that any inexplicable financial engineering is solely devoted to putting money in sponsors' pockets.

EDIT3: Love that on page 6 the font randomly changes.

[1] https://www.sec.gov/Archives/edgar/data/1843714/000119312524...

[2] https://www.sec.gov/ix?doc=/Archives/edgar/data/0001843714/0...

wokwokwok• 2 years ago

date specified by Sandia after the VWAP Price (as defined in the Forward Purchase Agreement) for 20 trading days during a 30 consecutive trading day-period has fallen below $1.00 per share (a “VWAP Trigger Event”).
Because a VWAP Trigger Event has occurred, Sandia has the right, but not the obligation, to accelerate the term of the Forward Purchase Agreement at any time

ie. The share price tanked below $1 and that was the condition.

Lookup ZPTA; the price has been below $1 for 6 months.

Presumably the announcements recently did not excite investors and they pulled the plug.

pixiemaster• 2 years ago

usually:

- missed payments on interests - failed positive guidance on going-concern - missed intermediate milestones (b2b contracts basically give you any possibilities legally wise)

jliebert• 2 years ago

It should surprise no one that quantum software companies that *do not build hardware* will flop. It does not matter if it founded by famous Harvard scientists.

Hell, even quantum hardware companies are having a really hard time building a functioning quantum computer, let alone a useful one. Setting aside whether it's worth investing in "Quantum" stock at all, it is quite simply silly to invest in anything "Quantum" if they aren't building actual quantum hardware.

Zapata's PR stunts like "Quantum AI" race cars looks all the more comedically delusional now. Though I'm sure no one's learned a lesson from this. No I am not joking, I wish I could make something like this up:

https://www.digitalengineering247.com/article/zapata-ai-andr...

baxtr3• 2 years ago

These guys will probably be able to raise capital for their next startup easily because "second time founders are the best"!

freetonik7• 2 years ago

I'm biased because I work at a full-stack quantum computing company (we produce chips and software), but I agree.

Quantum software-only companies are sometimes... strange. Most QC hardware purchases today are made by either purely research institutions (universities, labs, etc.) or research departments of commercial entities. Either way, there are usually public tender descriptions or private lists of requirements.

When you look at public tenders, you will often find seemingly arbitrary software integration requirements like "the QC must support quantum circuit compilation with ABC", where 'ABC' is some product of some quantum software company you never heard of. Then you go research that library, and if you're lucky it's open source, so you dive into their code and realize it's another attempt at building a "universal" standard for some layer of the QC stack, based on some research paper out of some university. The developers of that library would often claim that, despite them having no QC hardware of their own, they can build better software for arbitrary QCs. It's strange and unlikely to be true simply because there is no such thing as standard or even common quantum hardware. There is rarely interoperability between architectures (and I'm only talking about superconducting quantum computers, not other kinds).

And then you have to either comply and tackle a huge integration project, or convince the buyer that the software you have written for your own hardware is actually better suited for your hardware than software written by people who never seen your hardware.

baxtr3• 2 years ago

I have a bit of a strange question for you: as a physicist I sometimes really wonder if quantum computing will ever work. Any chance you could elaborate on that? I guess you’re biased but still love to hear your thoughts.

aithrowawaycomm• 2 years ago

The only legitimate quantum computing market in the 2020s is providing access to researchers on the theory/algorithms side.

Sadly there is enormous illegitimate market involving naive VCs who have read too much sci-fi and are easily spooked by nonsense like "the NSA uses a powerful quantum computer for cryptographic superposition" or "what if the Chinese out-quantums Google? We call this a Heisenberg Arms Race and it requires lots of money."

latenightcoding• 2 years ago

This company was always a grift. I dont beleive university professors should be allowed to run startups while they are still teaching.

p-a_58213• 2 years ago

Hmm - too broad a statement. Teaching load varies - it can be as low as 3 hours per week concentrated in a single term.

evrimoztamur• 2 years ago

I agree that it was a grift, I tried to tell my penny-stock chasing friend to not toss a single penny on it after he showed me their pitch deck (which made it look like nothing more than a consulting firm for large enterprises). He didn't listen...

sva_• 2 years ago

Looking at their website https://zapata.ai, the lack of blockchain is probably why they went out of business

t2o43ij2342342• 2 years ago

Considering that we're still at 15 as the largest factorized number with Shor's alg. on a physical QM, the fact that these companies exist at all is quite absurd tbh. IIRC there are also no useful ML algs. known in BQP\P, and all the quantum-simulated annealing stuff that works on noisy "QM"s doesn't seem to be a big win.

With this context, these "QM" companies are in reality, selling tech. that's even less capable than a vacuum-tube computer (much less a transistor calculator). Unless you care about simulating the hardware they have (for some reason), in which case it has "quantum supremacy" (lolz).

t2o43ij2342342• 2 years ago

Sabine has quite a few videos on the Quantum BS hype-cycle,

https://www.youtube.com/watch?v=CBLVtCYHVO8

freetonik7• 2 years ago

Factorizing numbers is not an important goal for anyone in the industry despite the popular media peddling this story for decades.

Quantum computing companies are selling research equipment and software for research organizations. It's a valid market.

vincnetas• 2 years ago

I love the landing page of the investment management company that decided to take their money back. They didn't even bother to update template content. This is when your clients find you not through the web search :D when you can have such landing page.

https://sandialp.com/about/

techjamie• 2 years ago

The default quote of "Don’t cry because it’s over, smile because it happened" being on their website in this context definitely has an air of humor to it.

Was curious to see how long that page has been that way, but it seems like the internet archive never found it somehow. Or maybe it's buggy because of all the attacks it's been under lately.

IWeldMelons2• 2 years ago

yawn

TeslaCoils• 2 years ago

Sandia the loan shark!

Zapata AI Ceases Operations

Related Stories