THIS ANNOUNCEMENT ("ANNOUNCEMENT") AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, ITS STATES, TERRITORIES AND POSSESSIONS ("UNITED STATES"), AUSTRALIA, CANADA, JAPAN, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE PROHIBITED BY ANY APPLICABLE LAW.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU, WHICH IS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND ("UK") PURSUANT TO THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

27 May 2025

capAI plc

("capAI" or the "Company")

Strategic Alliance with R42

capAI plc (LSE: CPAI) is pleased to announce that it has today entered into an English law governed strategic alliance agreement (the "Alliance Agreement"; "Alliance") with R42 Group, Inc. ("R42"), the US venture capital firm founded and led by Professor Ronjon Nag, Executive Director of capAI.

The Alliance, which shall come into effect on 1 June 2025, will represent a significant step forward in the Company's refined three-pillar operating strategy: Identify; Incubate; and Invent.

Alliance Highlights

The Alliance will encompass three core components:

1.   Preferential Development Rights: capAI has secured the right of first refusal to jointly develop selected R42 projects, subject to the process outlined in the Alliance Agreement. This arrangement provides capAI shareholders ("Shareholders") with structured access to early-stage artificial intelligence ("AI") opportunities that would otherwise be available only through private U.S. venture channels.

2.   Joint Incubation Framework: capAI and R42 will collaborate on incubating external AI projects outside their existing portfolios, combining expertise and resources under a jointly agreed framework.

3.   Strategic Flexibility: While focused on media and medicine, the Alliance also provides strategic flexibility to pursue exceptional, high-growth opportunities across the broader AI landscape, ensuring capAI remains agile and responsive to emerging innovations.

Projects Under Review

In line with the Company's strategic focus on high-impact AI breakthroughs in media and medicine, several promising AI projects are currently under review for potential development under the terms of the Alliance, which include but not limited to:

·      AI Book-to-Movie Platform: A transformative system that converts literary works into cinema-quality screenplay adaptations, unlocking scalable IP monetisation pathways for the entertainment industry.

·      AI Book-to-Game Platform: Technology that translates narrative content into interactive gaming experiences, opening new avenues for storytelling and audience engagement.

·      AI Media Creator: An integrated solution for generating multi-format content, including books, screenplays, and audio productions, powered by advanced language models.

·      AI Aging Vaccine Research: A pioneering medical research initiative exploring AI-driven approaches to address cellular aging processes.

·      AI Scientific Research Agents: Automated systems designed to accelerate scientific discovery through hypothesis generation, experimental design, and data analysis.

Other AI projects are also expected to come under review and capAI and R42 are undergoing a prioritisation process.

Corporate Governance

The entry by capAI and R42 into the Alliance Agreement constitutes a material related party transaction for the purposes of DTR 7.3 and was, accordingly, voted upon by the statutory directors of capAI (the "Directors") deemed independent in relation to the Alliance, comprising Richard Edwards, Sarah Davy and Marcus Yeoman (excluding Professor Nag, who constituted a "related party" (as such term is defined in IFRS)), and such independent Directors consider the material related party transaction in respect of the Alliance Agreement to be fair and reasonable from the perspective of the Company and its Shareholders who are not a related party. Shareholders should note that Professor Nag recused himself from all deliberations concerning the Alliance Agreement, ensuring robust governance and full compliance with applicable regulatory standards.  These steps reflect the Company's ongoing commitment to transparent corporate governance and robust Shareholder protections.

Comments

Comment from Richard Edwards, Executive Chairman of capAI:

"This Alliance with R42 marks a major step forward in executing our refined operating strategy. Together, we are establishing a powerful, transatlantic innovation platform that brings together world-class AI expertise, capital efficiency, and public market access. The projects under review exemplify our commitment to transformative AI solutions in media and medicine; sectors we believe offer exceptional long-term growth potential and strong alignment with our vision of AI-empowered value creation."

Comment from Professor Ronjon Nag, Founder of R42 and Executive Director of capAI:

"The formalisation of this Alliance establishes a unique innovation pipeline, linking entrepreneurial AI ventures with the resources and execution capabilities needed to scale. By combining R42's venture-building expertise with capAI's public market access, we can accelerate the commercialisation of breakthrough technologies. This collaboration reflects our shared commitment to capital-efficient innovation and the pursuit of high-impact AI opportunities in media and medicine."

Summary

The Alliance with R42 enhances capAI's operating model by creating a transatlantic platform for sourcing, developing, and commercialising early-stage AI opportunities in media and medicine. It enables capAI to access high-quality innovation with capital efficiency by leveraging R42's existing network and infrastructure. The agreement also reflects a carefully structured approach to a related-party relationship, with governance safeguards in place to protect shareholder interests. This positions the Company to pursue AI breakthrough opportunities with both strategic focus and operational discipline.

For the purposes of UK MAR, the person responsible for arranging release of this Announcement on behalf of capAI is Richard Edwards, Executive Chairman.

Enquiries

Company:

capAI plc [email protected]

Broker Enquiries:

Peterhouse Capital Limited Tel: +44 (0) 207 469 0930

Appendix - Detailed Investor Clarifications

To assist Shareholders in understanding the Alliance between capAI and R42, the board of Directors ("Board") provides the following clarifications on key terms and corporate governance considerations:

1.   Financial Commitments and Capital Allocation

·      The Alliance does not involve any binding capital commitments at this stage. capAI will assess each opportunity on its individual merits, taking into account strategic fit, value potential, and execution requirements.

·      The Company retains full discretion over its capital allocation, with any material commitments subject to separate Board approval and appropriate disclosure in line with applicable regulations.

2.   Execution, Valuation, and Milestones

·      The Alliance strengthens capAI's ability to deliver on its strategy by expanding access to breakthrough AI innovation. Projects will be structured collaboratively, with participation determined case-by-case to maximise strategic and financial return.

·      Valuation outcomes will be driven by the maturity and success of individual AI projects, and material developments will be communicated to Shareholders in accordance with market disclosure obligations.

3.   Intellectual Property ("IP") Ownership and Commercial Rights

·      IP ownership will be defined for each project individually, reflecting respective contributions and risk.

·      Commercial returns may take the form of royalties, equity, licensing or revenue-sharing arrangements, with terms to be formalised in each AI project-specific agreement and disclosed as appropriate

4.   Impact on Core Strategy and Alignment

·      The Alliance aligns fully with capAI's vision of capital-efficient, AI-driven value creation, with a focus on transformative technologies in media and medicine.

·      Professor Ronjon Nag's dual role as both founder of R42 and Executive Director of capAI provides a strong platform for collaboration, underpinned by robust governance protocols and the full oversight of the independent Directors.

5.   Strategic Flexibility and Opportunity Capture

·      While capAI's strategy is grounded in its three core pillars: Identify; Incubate; and Invent, the Company retains the flexibility to pursue exceptional opportunities that fall outside its immediate thematic focus, where these offer compelling potential.

·      This agile, opportunity-led approach enables capAI to respond to sector inflections and emerging innovation, helping to drive asymmetric long-term value for Shareholders.

6.   Operational Focus and Structuring for Investment Exposure

·    capAI is committed to building value as an operating company, focused on the development, invention and incubation of AI ventures; a strategy that plays to the Company's core strengths and is uniquely supported by Professor Ronjon Nag's deep expertise in creating and commercialising breakthrough technologies.

·    As a London Stock Exchange Main Market listed company, capAI operates within a regulatory framework that does not permit portfolio-style investing unless the company is specifically listed in the investment sector.

·    To pursue broader investment activity, such as holding minority stakes across a portfolio, a separate investment structure would likely be required. In that scenario, Shareholders may have the opportunity to participate in both an operating vehicle (capAI) and a dedicated investment vehicle, each designed to serve distinct but complementary roles.

Important Legal Information

The information contained in this Announcement is for background purposes only and does not purport to be full or complete, nor does this Announcement constitute or form part of any invitation or inducement to engage in investment activity. No reliance may be placed by any person for any purpose on the information contained in this Announcement or its accuracy, fairness or completeness. The contents of this Announcement are not to be construed as legal, financial or tax advice.

This Announcement is not for release, publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, Japan or the Republic of South Africa or in any other jurisdiction where, or to any person to whom, to do so would constitute a violation of applicable law or regulation. The securities mentioned herein have not been registered under the United States Securities Act of 1933, as amended.

This Announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities, nor shall it (or any part of it), or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

This Announcement may include forward-looking statements, which are based on current expectations and projections about future events. These statements may include, without limitation, any statements preceded by, followed by or including words such as "believe", "expect", "intend", "may", "project", "will", "shall", "likely", "should", "would", "could" and any other words and terms of similar meaning or the negative thereof. These forward-looking statements are subject to risks, uncertainties and assumptions about capAI and R42. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. Past performance cannot be relied upon as a guide to future performance and should not be taken as a representation that trends or activities underlying past performance will continue in the future. No representation or warranty is made or will be made that any forward-looking statement will come to pass. The forward-looking statements in this Announcement speak only as at the date of this Announcement.

Persons considering making investments should consult an authorised person specialising in advising on such investments.

The Company expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statements contained in this Announcement and disclaims any obligation to update its view of any risks or uncertainties described in this Announcement or to publicly announce the results of any revisions to the forward-looking statements made in this Announcement, whether as a result of new information, future developments or otherwise, except as required by law.