REG - capAI PLC - Execution of Heads of Terms for Movie42

capAIAnnouncement

05/08/2025 08:45

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RNS Number : 0154U  capAI PLC  05 August 2025

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5 August 2025

capAI plc

(the "Company" and, together with its subsidiaries and subsidiary
undertakings, the "Group" or "capAI")

 

Execution of Heads of Terms for Movie42

 

 

capAI (LSE: CPAI) is pleased to announce that it has entered into non-binding
heads of terms ("HOTs") with R42 Group LLC ("R42") in relation to Movie42, an
AI-powered book-to-film platform that converts written content into cinematic
storyboards, scripts, and production-ready visual assets ("Movie42").

 

The proposed transaction, which remains subject to receipt of regulatory
approval and entry into an agreed form of definitive licence and option
agreement ("LOA"), would contribute to the evolution of capMedia, the
Company's specialised media division focused on deploying scalable AI
technologies.

 

Movie42 remains under active development by R42, with delivery of a minimum
viable product ("MVP") targeted by 31 March 2026. The licence and option
rights that would be granted to capAI under the LOA will only become effective
upon formal delivery of a completion notice (the "Completion Notice")
confirming the platform is ready for commercialisation.

 

Further details are provided below.

 

About Movie42

 

Movie42 is a generative artificial intelligence ("AI") platform designed to
translate narrative text into production-grade visual content and script
materials. It incorporates scene analysis, visual composition, dialogue
automation, and AI-assisted casting frameworks. The platform aims to serve
independent creators, production studios, and literary IP owners by
significantly reducing the resource intensity of early-stage film development.

 

By automating traditionally manual workflows in pre-production, Movie42 allows
for scalable generation of pitch decks, storyboards, mood boards, and draft
scripts derived directly from written works. This facilitates faster
adaptation cycles and lowers the barriers to converting books into film-ready
formats.

 

Market Opportunity and Disruption Potential

 

The AI in film market, covering essential tools for pre‑production
activities such as script generation, storyboarding, and visual planning, is
projected to expand from US $1.8 billion in 2024 to approximately
US $14.1 billion by 2033, reflecting a compound annual growth rate
("CAGR") of 25.7%, according to Market.us.  1 

 

Broadening the context further, estimates for the AI in media market vary
depending on scope and methodology. Grand View Research forecasts the broader
category to reach US $99.48 billion by 2030 (CAGR of 24.2% from 2025)  2 
while, MarketsandMedia projects a core segment to grow from US $8.21 billion
in 2024 to US $51.08 billion by 2030 (CAGR of 35.6%). 3 

 

These combined trends point to a transformational shift in how media content
is conceived and produced. Movie42 is being built to seize this opportunity;
offering scalable, AI-native tools that reduce pre-production friction,
accelerate development cycles, and unlock new monetisation channels for
narrative IP across a multi-billion-dollar creative economy.

 

Proposed Transaction Structure and Conditions

 

The proposed transaction is subject to regulatory clearance. Upon receiving
such regulatory clearance, the Company and R42 intend to execute an agreed
form LOA pursuant to the previously announced strategic alliance between the
two parties.

 

The HOTs mirror the structure announced on 4 August 2025 for Game42.

 

The terms of the proposed transaction specified in the HOTs (which would only
be effective on receipt of regulatory clearance and entry by the parties to
the agreed form LOA) include, inter alia:

 

·      Since Movie42 is still in development by R42, any rights granted
to capAI shall only commence upon delivery of the Completion Notice by R42 to
capAI.

 

·      The Completion Notice shall confirm, in good faith and in
consultation with the capAI / R42 Alliance Steering Committee, that Movie42
meets the mutually agreed MVP criteria and is functionally complete and ready
for commercialisation.

 

·      R42 shall use commercially reasonable efforts to deliver the
Completion Notice by 31 March 2026, it being acknowledged by the Parties that
this is a non-binding estimate subject to development progress.

 

·      If the Completion Notice has not been delivered by 30 September
2026, either party may terminate the LOA with immediate effect by written
notice to the other party, without liability, save in respect of any clause
that are normally expressed to survive termination.

 

·      capAI shall be granted an exclusive worldwide licence for a
12-month period to operate the Movie42 platform, commencing only upon capAI's
receipt of the Completion Notice (the "Licence Period"), which carries no
upfront payment or consideration, giving capAI operational freedom without
initial capital outlay.

 

·      capAI shall retain full commercial and operational control and
shall be entitled to 100% of revenue generated under the licence.

 

·      During the Licence Period, capAI shall commercially advance
Movie42 in good faith, including maintaining a dedicated development team,
overseen via the capAI / R42 Alliance Steering Committee.

 

·      capAI has the right, but not the obligation, to acquire 100% of
the Movie42 IP (including any enhancements or derivative works) at any time
during the Licence Period (the "Option"); R42 cannot oblige capAI to exercise
the Option.

 

·      If the Option is exercised by capAI, capAI shall issue £2
million in new ordinary shares to R42, with the number of new ordinary shares
calculated based on a volume-weighted average price (VWAP) over a defined
pricing period prior to exercise.

 

·     To preserve regulatory flexibility, should the issuance of such new
ordinary shares exceed applicable thresholds or require prior shareholder
approval, capAI and R42 may agree to settle part or all of the consideration
in the form of unsecured convertible loan notes carrying a 10% non-compounding
interest rate on equivalent terms.

 

·     As further consideration, to the extent the Option is exercised by
capAI, R42 shall also be entitled to 20% of any net proceeds from a future
monetisation, sale, or liquidity event involving all or substantially all of
the Movie42 IP.

 

·      If capAI does not exercise the Option within the Licence Period,
all rights revert to R42, including any improvements or derivative works
created by capAI.

 

This structure provides capAI with commercial flexibility during development
while  securing long-term strategic value alignment with R42.

Governance and Related Party Considerations

 

The HOTs have been entered into within the framework of the strategic alliance
between capAI and R42. Professor Ronjon Nag, Executive Director of capAI and
Founder of R42, has recused himself from all negotiations and approvals
relating to the proposed transaction from capAI's perspective. The Company's
board of directors has implemented appropriate governance protocols, including
independent review of the terms.

 

Management Commentary

 

Richard Edwards, Executive Chairman of capAI, commented:

 

"Subject to completion and regulatory clearance, Movie42 is expected to become
the next AI-native initiative within capAI's strategy to transform how
creative IP is developed, adapted, and commercialised. Alongside Author42 and
Game42, it reflects our ambition to scale intelligent automation across
publishing, gaming, and filmed entertainment; three of the most valuable and
dynamic sectors in global media."

 

Professor Ronjon Nag, Executive Director of capAI, added:

 

"Pending development completion and formal licensing, Movie42 would extend our
alliance into cinematic storytelling, enabling written narratives to be
rendered screen-ready through generative AI. It reinforces our belief that AI
will play a central role in reshaping the creative production process across
content verticals."

 

The Company will provide further updates as regulatory clearance is obtained
and the agreed form LOA is executed.

 

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 hello@capaiplc.com

 

Broker Enquiries:

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

 

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 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, including about the
Group's operations, strategy, financial performance, development milestones,
and the future prospects of its business divisions, including capMedia Inc and
the Movie42 platform. These statements may include, without limitation, any
statements preceded by, followed by or including words such as "target",
"believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan",
"project", "will", "can have", "likely", "should", "would", "could" and any
other words and terms of similar meaning or the negative thereof.

 

Forward-looking statements are based on current expectations and are subject
to various risks and uncertainties that could cause actual outcomes to differ
materially. These risks include, but are not limited to: successful execution
of definitive agreements; regulatory approvals; development timelines; market
acceptance; technological shifts; and broader economic conditions. No
representation or warranty is made or will be made that any forward-looking
statement will come to pass, and no assurance can be given that any
forward-looking statement will prove accurate. Except as required by law,
capAI undertakes no obligation to revise or update any forward-looking
statement. The forward-looking statements in this Announcement speak only as
at the date of this Announcement.

 1  https://market.us/report/ai-in-film-market/
(https://market.us/report/ai-in-film-market/)

 

 2 
https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-media-entertainment-market-report
(https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-media-entertainment-market-report)

 

 3 
https://www.marketsandmarkets.com/Market-Reports/ai-in-media-market-213984142.html
(https://www.marketsandmarkets.com/Market-Reports/ai-in-media-market-213984142.html)

 

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