Extension of Licence and Option Agreements

capAI (LSE: CPAI, OTCQB: CPIQF), the applied artificial intelligence ("AI") venture platform, is pleased to announce that it has agreed with R42 Group LLC ("R42") to extend the licence and option arrangements in place across its capMedia platform portfolio, comprising Author42, Movie42 (formerly Creator42) and Gamers42 (formerly Game42), so as to provide additional time for the continued development and commercialisation of each platform.

Background

The Company holds separate licence and option agreements with R42 in respect of Author42 (dated 24 July 2025), Movie42 (dated 28 August 2025) and Gamers42 (dated 30 August 2025) (together, the "LOAs" and each an "LOA"), further to the Company's prior announcements on 25 July 2025, 29 August 2025 and 2 September 2025 respectively. Under each LOA, capAI holds an exclusive licence to develop and commercialise the relevant platform and a discretionary option (the "Option") to acquire the associated intellectual property for consideration of £2,000,000 per platform, on the terms previously announced by the Company.

Under the Author42 LOA and the Movie42 LOA, capAI's licence period (the "Licence Period") runs for 12 months from the relevant commencement date, being 24 July 2025 for Author42 and 14 October 2025 for Movie42, the latter following delivery by R42 of a completion notice confirming that Movie42 had reached minimum viable product ("MVP") readiness, as announced by the Company on 15 October 2025. Absent extension, the Author42 Licence Period would accordingly have expired on 24 July 2026 and the Movie42 Licence Period on 14 October 2026.

Gamers42 remains under development by R42, and the Gamers42 LOA provides that capAI's Licence Period will only commence upon delivery by R42 of a completion notice confirming that Gamers42 has reached MVP readiness. That completion notice has not yet been delivered. The Gamers42 LOA provided for a longstop date of 30 June 2026 (the "Longstop Date"), after which either party would be entitled, but not obliged, to terminate the Gamers42 LOA if the completion notice had not by then been delivered. Neither party has exercised that right, and the Gamers42 LOA continues in full force and effect on its original terms.

Extension of Licence Periods and Longstop Date

The Company's board of directors (the "Board") has agreed with R42 to align the LOAs around a common extended date, and the Company and R42 have accordingly entered into separate deeds of amendment on 8 July 2026 (together, the "Deeds of Amendment") as follows:

• Author42: the Licence Period has been extended so as to expire at 11.59 p.m. on 7 July 2027 (rather than 24 July 2026).
• Movie42: the Licence Period has been extended so as to expire at 11.59 p.m. on 7 July 2027 (rather than 14 October 2026).
• Gamers42: the Longstop Date by which R42 must deliver the completion notice has been extended to 11.59 p.m. on 7 July 2027, and the parties' non-binding target date for MVP delivery has been revised to 31 March 2027. Once the completion notice is delivered, the Licence Period for Gamers42 will, as before, run for 12 months from the date of delivery.

Other than the amendments described above, the terms of each LOA remain unchanged, including the £2,000,000 Option consideration, capAI's discretionary right (but not the obligation) to exercise its Option in respect of each platform, and R42's entitlement to 20% of net proceeds from any future monetisation of the underlying intellectual property following completion of the relevant Option.

Rationale

The Board believes that extending the LOAs provides capAI with the additional time needed to continue developing, testing and commercialising Author42, Movie42 and Gamers42, consistent with the Company's disciplined, capital-efficient venture model described in its prior announcements. Shareholders should note that there can be no guarantee that the Company will ultimately exercise its Option under any LOA, and that decisions to do so will continue to be made selectively, having regard to technical progress, market potential and capital allocation considerations.

Related Party Considerations

R42 is a venture capital firm founded and led by Professor Ronjon Nag, Executive Chairman of capAI. Each of the original LOAs constituted a material related party transaction for the purposes of DTR 7.3 of the disclosure guidance and transparency rules of the Financial Conduct Authority. As the Deeds of Amendment constitute a material change to the terms of those transactions, the Company is required to re-comply with DTR 7.3.8R in relation to the transactions pursuant to DTR 7.3.9R. Accordingly, the Company's entry into each of the Deeds of Amendment was voted upon only by the statutory directors of capAI deemed independent in relation to the transactions, comprising Jack Allardyce, Sarah Jane Davy and Marcus Yeoman (the "Independent Directors"), Professor Nag having recused himself from all deliberations concerning the Deeds of Amendment and not having voted on the relevant Board resolutions. The Independent Directors, having exercised reasonable care, skill and diligence, consider the material change to the LOAs effected by the Deeds of Amendment to be fair and reasonable from the perspective of the Company and holders of Ordinary Shares ("Shareholders") who are not a related party (as such term is defined in UK-adopted International Financial Reporting Standards). These steps reflect the Company's ongoing commitment to transparent corporate governance and robust Shareholder protections.

Commenting, Professor Ronjon Nag, Executive Chairman of capAI, said:

"Author42, Movie42 and Gamers42 are all progressing well, and this extension simply gives each platform the runway it needs to keep building a genuine commercial user base before we take any decision on exercising our options. R42 remains fully committed to development of the capMedia portfolio, and this extension reflects the strength of the ongoing alliance with capAI."

Further updates will be provided in due course.