Exercise of Warrants, Circular and Notice of GM

THIS ANNOUNCEMENT ("ANNOUNCEMENT") AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, ITS STATES, TERRITORIES AND POSSESSIONS, 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.

2 May 2025

capAI plc ("capAI" or the "Company")

Exercise of Warrants, Posting of Circular and Notice of General Meeting

capAI plc (LSE: CPAI) announces that it has received conditional notices of exercise of certain warrants ("Warrants") to subscribe for a total of 400,000,000 new ordinary shares of nominal value £0.00001 each in the capital of the Company ("Ordinary Shares"; "Warrant Shares"). The total consideration to be paid to the Company on exercise of such Warrants (the "Warrant Exercise") is £150,000.

For the Company to facilitate the timely delivery of the Warrant Shares to the relevant holders of Warrants in connection with the Warrant Exercise, the Company proposes to enter into an English law governed stock loan agreement (cast as a deed) with Richard Andrew Edwards, a Director designated as Executive Chairman (the "Stock Loan Agreement"). The proposed Stock Loan Agreement constitutes a 'substantial property transaction' under section 190 of the UK Companies Act 2006 (the "Companies Act 2006") which requires approval by the registered holders of Ordinary Shares (the "Shareholders").

Pursuant to the Stock Loan Agreement:

· Mr. Edwards will, at the request of the Company, make available for transfer to the Company 400,000,000 Ordinary Shares held by Mr. Edwards which are required by the Company to settle the Warrant Exercise and deliver the Warrant Shares to the relevant holders of Warrants;

· following the transfer by Mr. Edwards of Ordinary Shares to the Company pursuant to the Stock Loan Agreement (the "Borrowed Shares"), the Company will issue and allot new Ordinary Shares to Mr. Edwards of an equivalent number to the Borrowed Shares (the "Equivalent Shares"); and

· any loan of Borrowed Shares shall involve no cash consideration being paid by the Company to Mr. Edwards, and nor will any interest be payable under the Stock Loan Agreement.

The Company intends to enter into the Stock Loan Agreement with Mr. Edwards on the date on which the Shareholders approve the Stock Loan Agreement as a 'substantial property transaction' under section 190 of the Companies Act 2006.

Pursuant the Stock Loan Agreement, the Company will irrevocably undertake to make a request for the transfer of Borrowed Shares following such Shareholders' approval. It is expected that the Warrant Shares will be delivered to the holders of the Warrants within two Business Days of the date of such borrowing request.

The Company will issue and allot 400,000,000 Equivalent Shares to Mr. Edwards within three business days of the delivery of the Warrant Shares to the relevant holders of Warrants. It is proposed that the Equivalent Shares will be issued and allotted to Mr. Edwards under an exemption from the requirement to issue a prospectus, and that the delivery of the Warrant Shares to the holders of the Warrants being exercised is being undertaken solely to ensure the maintenance of market stability in the stock.

For the avoidance of doubt, as the Company will be obliged to redeliver Equivalent Shares to Mr. Edwards and the loan of the Borrowed Shares cannot be cash settled and shall not attract and accrued any interest, the Company is not subject to any economic risk on the Borrowed Shares.

The Equivalent Shares will rank pari passu with the existing Ordinary Shares and, following the issue of the Equivalent Shares, the Company will make an application for the Equivalent Shares to be admitted to the equity shares (transition) category of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc ("Admission"). It is expected that Admission will become effective at 8.00 a.m. on 9 June 2025.

In connection with the Warrant Exercise and the Stock Loan Agreement, capAI further announces that it has today published a circular (containing a notice of general meeting of the Company (the "General Meeting")) and accompanying form of proxy to the Shareholders (the "Circular"). The Circular contains, inter alia, details of capAI's proposed entry into the Stock Loan Agreement, and the proposed resolution to approve the Stock Loan Agreement as a 'substantial property transaction' under section 190 of the UK Companies Act 2006.

The Circular also contains details of a 'serious loss of capital' within the Company. Under section 656(1) of the Companies Act 2006, the directors of the Company are required to call the General Meeting to consider whether any, and if so what, steps should be taken to deal with the serious loss of capital.

The General Meeting is due to be held at the offices of offices of Orrick, Herrington & Sutcliffe (UK) LLP, 9th Floor, 107 Cheapside, London EC2V 6DN, United Kingdom at 4.00 p.m. on 28 May 2025.

Extracts from the Circular are appended to this Announcement without amendment. A copy of the Circular will be available today on the Company's website at https://capai.group/investors#circulars.

Capitalised terms in this Announcement have the meaning ascribed to them in the Definitions section of the Circular, unless otherwise defined in this Announcement.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates set out above and mentioned elsewhere in this document may be subject to change at the absolute discretion of the Company. All times referred to in this document are, unless otherwise stated, references to London, UK.

Any changes to the expected timetable of principal events will be notified by the Company through a RIS.

For further information, please contact:

Company:capAI plc hello@capaiplc.com

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

EXTRACTS FROM THE LETTER FROM THE INDEPENDENT NON-EXECUTIVE DIRECTOR

1. Introduction

Exercise of Warrants and Stock Loan Agreement

The Company has received notices from certain investors in the Company in the respect of the conditional exercise of 400,000,000 outstanding warrants over Ordinary Shares (the "Warrants"), requiring the Company to deliver 400,000,000 Ordinary Shares in aggregate (the "Warrant Shares") to the relevant holders of Warrants (the "Warrant Exercise").

The Warrants have an exercise price of £0.000375 and therefore the Warrant Exercise will raise gross proceeds of £150,000 in aggregate for the Company.

For the Company to facilitate the timely delivery of the Warrant Shares to the relevant holders of Warrants in connection with the Warrant Exercise, the Company proposes to enter into an English law governed stock loan agreement (cast as a deed) with Richard Andrew Edwards, a Director designated as Executive Chairman (the "Stock Loan Agreement").

The Company and the holders of the Warrants have agreed that the Warrant Exercise will be conditional on and will take effect on the passing of Resolution 1 at the General Meeting and the Company's entry into the Stock Loan Agreement (the "Warrant Exercise Effective Date").

Pursuant to the Stock Loan Agreement:

· Mr. Edwards will, at the request of the Company, make available for transfer to the Company 400,000,000 Ordinary Shares held by Mr. Edwards which are required by the Company to settle the Warrant Exercise and deliver the Warrant Shares to the relevant holders of Warrants;

· following the transfer by Mr. Edwards of Ordinary Shares to the Company pursuant to the Stock Loan Agreement (the "Borrowed Shares"), the Company will issue and allot new Ordinary Shares to Mr. Edwards of an equivalent number to the Borrowed Shares (the "Equivalent Shares"); and

· any loan of Borrowed Shares shall involve no cash consideration being paid by the Company to Mr. Edwards, and nor will any interest be payable under the Stock Loan Agreement.

The proposed Stock Loan Agreement constitutes a 'substantial property transaction' under section 190 of the UK Companies Act 2006 (the "Companies Act 2006"), which requires approval by the registered holders of Ordinary Shares (the "Shareholders"), which the Company will seek under Resolution 1 at the General Meeting.

The Company intends to enter into the Stock Loan Agreement with Mr. Edwards on the date of the General Meeting provided that the Shareholders approve the Stock Loan Agreement as a 'substantial property transaction' under section 190 of the Companies Act 2006 by passing Resolution 1.

Pursuant to the Stock Loan Agreement, the Company shall irrevocably undertake to make a request for the transfer of Borrowed Shares on the Warrant Exercise Effective Date, provided that Resolution 1 is duly passed at the General Meeting. It is expected that the Warrant Shares will be delivered to the holders of the Warrants within two Business Days of the Warrant Exercise Effective Date.

The Company will issue and allot 400,000,000 Equivalent Shares to Mr. Edwards within three Business Days of the delivery of the Warrant Shares to the relevant holders of Warrants. It is proposed that the Equivalent Shares will be issued and allotted to Mr. Edwards under an exemption from the requirement to issue a prospectus, and that the delivery of the Warrant Shares to the holders of the Warrants being exercised is being undertaken solely to ensure the maintenance of market stability in the stock.

For the avoidance of doubt, as the Company will be obliged to redeliver Equivalent Shares to Mr. Edwards and the loan of the Borrowed Shares cannot be cash settled and shall not attract and accrued any interest, the Company is not subject to any economic risk on the Borrowed Shares.

Following the issue and allotment of the Equivalent Shares, the Company will make an application for 400,000,000 Equivalent Shares to be admitted to a listing on the equity shares (transition) category of the official list maintained by the UK Financial Conduct Authority ("FCA") pursuant to Part VI of FSMA ("Official List") under Chapter 22 of the UK listing rules made by the FCA under section 73A of FSMA (an "ES(T)C Listing") ("UKLRs") and to trading on the main market for listed securities of London Stock Exchange plc (the "Main Market") ("Admission"). The Company expects that Admission will become effective at 8.00 a.m. on 9 June 2025.

The proposed Stock Loan Agreement is included as an appendix to this document.

Serious loss of capital

Under the Companies Act 2006, a 'serious loss of capital' occurs once the value of a company's net assets is less than half of its called-up share capital. In such circumstances, the directors of a company are required, pursuant to section 656(1) of the Companies Act 2006, to call a general meeting to consider whether any, and if so what, steps should be taken to deal with the situation. Accordingly, in addition to the approval of the Stock Loan Agreement, the Board is also calling the General Meeting to ensure that this matter is addressed and discussed with the Shareholders as required by the Companies Act 2006.

Although the Directors are addressing this matter as part of the General Meeting, Shareholders should note that this is not specifically related to the Company's current business and is not a new issue which has arisen since the publication of the annual financial statements for the year ended 30 September 2024.

The Directors have reviewed the historical financial information of the Company and note that the situation giving rise to a 'serious loss of capital' primarily manifested from previous business activities undertaken by the Company before any of the current Directors were appointed.

The current Directors have been unable to ascertain whether a general meeting was previously held by the Company by the-then directors to address a 'serious loss of capital' as required by the Companies Act 2006. Therefore, the Directors are addressing this as part of the General Meeting.

The Directors consider that, as shown in the recent RIS announcement on 14 April 2025 (RNS Number: 8619E), the strategy change to henceforth solely focus on the Artificial Intelligence space, and the appointment of Professor Ronjon Nag to the Board to oversee this, should assist in alleviating the loss of capital. Furthermore, the Directors also consider that the 'serious loss of capital' does not in itself have any specific bearing on the Company's financial position or current performance, and therefore they remain positive about the Company's future.

The Board welcomes dialogue with Shareholders on this matter and the General Meeting will provide a forum for such discussions to take place. Shareholders should note that they will not be asked to vote on this agenda item at the General Meeting, which is for discussion only.

2. General Meeting

In the usual way the Directors ask and encourage Shareholders to vote for the Resolutions by appointing me, as Independent Non-Executive Director, as chair of the General Meeting (the "Chair") as a Shareholder's proxy. Accordingly, Shareholders are encouraged to complete the Form of Proxy accompanying this document which must be completed and returned, in accordance with the instructions printed on it, so as to be received by the Registrar, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom as soon as possible, but in any event not later than 4.00 p.m. on 23 May 2025.

The General Meeting shall take place at 4.00 p.m. on 28 May 2025.

The Chair will then formally put the Resolutions to the General Meeting and advise of the proxy votes received in advance.

Following the Chair putting the Resolutions to the General Meeting, the Chair will invite the General Meeting to discuss the serious loss of capital within the Company and whether any, and if so what, steps should be taken to address the serious loss of capital. Following this discussion, the General Meeting will then formally close.

The results of the General Meeting will be announced via a RIS and posted to the Company's website https://capai.group/ on the day of the General Meeting.

3. Substantial Property Transaction

The Company's entry into the Stock Loan Agreement with Mr. Edwards constitutes a 'substantial property transaction' under section 190 of the Companies Act 2006, as the Borrowed Shares which Mr. Edwards will make available to the Company under the Stock Loan Agreement have a value of approximately £1,740,000 in aggregate (based on the closing price for the Ordinary Shares on 29 April 2025).

Accordingly, under section 190 of the Companies Act 2006, the Company's entry into the Stock Loan Agreement requires the approval of the Shareholders. This will be achieved by the passing of Resolution 1 in the Notice of General Meeting, set out at the end of this document and as summarised below.

Mr. Edwards has voluntarily agreed not to vote on Resolution 1 and has undertaken to take all reasonable steps to ensure that his close family and associates who hold Ordinary Shares do not vote on Resolution 1.

4. Related Party Transaction

The Board consider that the Company's entry into the Stock Loan Agreement with Mr. Edwards is a material related party transaction for the purposes of rule 7.3 of the disclosure guidance and transparency rules of the FCA made in accordance with section 73A of FSMA (the "Disclosure Guidance and Transparency Rules" or "DTRs").

Mr. Edwards is, and has been since 16 October 2024, a Director designated as Executive Chairman. As at 1 May 2025 (being the latest practicable date before the publication of this document ("Latest Practicable Date")), Mr. Edwards personally holds 454,000,000 Ordinary Shares and his close family and associates hold 301,793,650 Ordinary Shares, therefore Mr. Edwards and his close family and associates hold 755,793,650 Ordinary Shares in aggregate, representing approximately 23.39% of the issued share capital of the Company. In addition, Mr. Edwards and his close family and associates hold 462,500,000 warrants over Ordinary Shares in aggregate.

Pursuant to the Stock Loan Agreement, Mr. Edwards will make available to the Company 400,000,000 Borrowed Shares, which have a value of approximately £1,740,000 in aggregate (based on the closing price for the Ordinary Shares on 29 April 2025). If Mr. Edwards transfers any Borrowed Shares to the Company under the Stock Loan Agreement, the Company will issue and allot Equivalent Shares to Mr. Edwards of an equivalent number to the Borrowed Shares to facilitate the redelivery of the Equivalent Shares by the Company to Mr. Edwards.

The Company confirms that Directors other than Mr. Edwards (the "Independent Directors"), having exercised reasonable care, skill and diligence, considered the material related party transaction in respect of the Stock Loan Agreement to be fair and reasonable from the perspective of the Company and the Shareholders who are not a related party (as such term is defined in UK-adopted International Financial Reporting Standards ("UK IFRS")).

5. Business of the General Meeting

The notes below explain the proposed business of the General Meeting, being the Resolutions and the discussion regarding the significant loss of capital within the Company.

With regards to the Resolutions, Resolution 1 is proposed as an ordinary resolution. This means that if Resolution 1 is to be passed, more than half of the votes cast must be in favour of Resolution 1. Resolution 2 is proposed as a special resolution. This means that for Resolution 2 to be passed, at least three quarters of the votes cast must be in favour of the Resolution 2.

The Board welcomes dialogue with Shareholders at the General Meeting on the serious loss of capital within the Company. Shareholders should note that they will not be asked to vote on this agenda item at the General Meeting, which is for discussion only.

Explanatory notes to Resolutions

Resolution 1Ordinary Resolution: Substantial Property Transaction

To facilitate the timely delivery of 400,000,000 Warrant Shares to certain investors following the Warrant Exercise, the Company proposes to enter into the Stock Loan Agreement with Richard Andrew Edwards, pursuant to which Mr. Edwards will, at the request of the Company, make available for transfer to the Company 400,000,000 Ordinary Shares held by Mr. Edwards which are required by the Company to settle the Warrant Exercise and deliver the Warrant Shares to the relevant holders of Warrants. The Company has irrevocably undertaken to make a request for the transfer of 400,000,000 Borrowed Shares on the Warrant Exercise Effective Date, provided that Resolution 1 is duly passed at the General Meeting.

Following Mr. Edwards transferring the Borrowed Shares to the Company pursuant to the Stock Loan Agreement, the Company will issue and allot Equivalent Shares to Mr. Edwards of an equivalent number to the Borrowed Shares.

The proposed Stock Loan Agreement is included as an appendix to this document.

The Company's entry into the Stock Loan Agreement constitutes a 'substantial property transaction' under section 190 of the Companies Act 2006, which requires the approval of the Shareholders pursuant to Resolution 1.

Mr. Edwards has voluntarily agreed not to vote on Resolution 1 and has undertaken to take all reasonable steps to ensure that his close family and associates who hold Ordinary Shares do not vote on Resolution 1.

As the Company's proposed entry into the Stock Loan Agreement constitutes a material related party transaction for the purposes of DTR 7.3, the Company confirms that the Independent Directors, having exercised reasonable care, skill and diligence, have considered the material related party transaction to be fair and reasonable from the perspective of the Company and its Shareholders who are not a related party (as such term is defined in UK IFRS).

Resolution 2Special Resolution: Calling general meetings by not less than 21 clear days' notice

The Companies Act 2006 requires the notice period for general meetings of the Company to be at least 21 days. The Company, however, would value the power to call general meetings (other than an annual general meeting) on at least 14 clear days' notice. In order to be able to do so, Shareholders must approve the calling of general meetings on at least 14 clear days' notice.

Resolution 2, which will be proposed as a special resolution, seeks such approval. The approval will be effective until the Company's next annual general meeting, when it is intended that a similar resolution will be proposed. The shorter notice period would not be used as a matter of routine for general meetings, but only where the flexibility is merited by the business of the meeting and is thought to be to the advantage of Shareholders as a whole.

Shareholder discussionSerious loss of capital

The Board believes that a 'serious loss of capital' has occurred within the Company. In such circumstances, the Directors are required, pursuant to section 656(1) of the Companies Act 2006, to call a general meeting to consider whether any, and if so what, steps should be taken to deal with the situation. In addition to the approval of the Stock Loan Agreement, the Board is also calling the General Meeting to ensure that this matter is addressed and discussed with the Shareholders as required by the Companies Act 2006.

6. Basis of voting

In accordance with the articles of association of the Company, all Shareholders entitled to vote and be present by proxy at the General Meeting have one vote in respect of every Ordinary Share held.

In this way all proxy votes will count towards the voting on the Resolutions.

7. Action to be taken

Shareholders will find enclosed a Form of Proxy for use in connection with the General Meeting. Whether or not Shareholders propose to attend the General Meeting, they are requested to complete, sign and return the Form of Proxy as soon as possible, in accordance with the instructions printed on it.

To be valid, the enclosed Form of Proxy must be lodged with the Registrar, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol BS13 8AE, United Kingdom as soon as possible and, in any event, so as to arrive by no later than 4.00 p.m. on 23 May 2025.

8. Recommendation

The Independent Directors consider the Stock Loan Agreement and the Company's entry into the Stock Loan Agreement to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Independent Directors unanimously recommend that Shareholders vote or procure votes in favour of Resolution 1, as the Independent Directors who hold Ordinary Shares have irrevocably undertaken to do in respect of their own beneficial holdings (and the beneficial holdings which are under their control and those of their close relatives), which amount to 156,250,000 Ordinary Shares (in aggregate), representing approximately 4.83% of the issued share capital of the Company (as at 1 May 2025, being the Latest Practicable Date). As a "related party" Richard Andrew Edwards has not taken part in the Board's consideration of the Stock Loan Agreement and has voluntarily agreed not to vote on Resolution 1 and has undertaken to take all reasonable steps to ensure that his close family and associates who hold Ordinary Shares do not vote on Resolution 1.

In addition, the Board considers the passing of Resolution 2 to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote or procure votes in favour of Resolution 2, as the Directors who hold Ordinary Shares have irrevocably undertaken to do in respect of their own beneficial holdings (and the beneficial holdings which are under their control and those of their close relatives), which amount to 912,043,650 Ordinary Shares (in aggregate), representing approximately 28.22% of the issued share capital of the Company (as at 1 May 2025, being the Latest Practicable Date).