Mr. Cory Brandolin reports

RAILTOWN AI TECHNOLOGIES EXECUTES AMALGAMATION AGREEMENT WITH AI PARTNERSHIPS CORP. AND ANNOUNCES MOU WITH Digital

Further to Railtown AI Technologies Inc.'s previously announced memorandum of understanding with AI Partnerships Corp. (AIP), it has entered into an amalgamation agreement with AIP, pursuant to which Railtown will acquire all of the issued and outstanding shares of AIP in exchange for common shares of Railtown by way of a three-cornered amalgamation and AIP will become a wholly owned subsidiary of Railtown. This milestone marks a major step in Railtown's vision to create a first-of-its-kind artificial intelligence (AI) affiliate marketplace, leveraging its core technologies and agentic frameworks to connect Canada's AI ecosystem to secure, sovereign computer infrastructure.

As explained in more detail below, highlights of the transaction are:

• Forty million shares issued at a deemed price of 50 cents per share (representing 17.8 per cent of the fully diluted posttransaction shares outstanding); such shares restricted to staged release over 18 months or 36 months (in the case of AIP's founders).
• An additional 10 million performance shares at a deemed price of 50 cents per share (representing 4.5 per cent of the fully diluted posttransaction shares outstanding) issued into escrow to be released upon recurring revenue milestones as delineated below.

Strengthening the ecosystem through Digital partnership

Following completion of the transaction, Railtown is also pleased to announce that it will have the benefit of a memorandum of understanding entered into by AIP and Digital. Digital connects technology builders and buyers to accelerate the adoption and commercialization of Canadian solutions. key aspects of this partnership include:

• Bidirectional referrals: connecting Digital members with AIP affiliates and vice versa to enhance collaboration;
• Joint initiatives: co-hosting events, webinars and ideation sessions to drive AI thought leadership;
• Ecosystem engagement: inviting members, clients and personnel from both organizations to participate in working groups, roundtables and knowledge-sharing events.

"I expect that partnering with Digital will empower Railtown and AIP affiliates to tap into a world-class network of innovators and ecosystem leaders," said Tom Corr, chief executive officer of AIP. "By integrating marketplace connections, compute infrastructure and ecosystem engagement, we're fuelling collaboration and growth across Canada's AI sector."

"Access to compute and customers are among the top barriers for Canadian AI innovators," said Serena Nguyen, chief development officer of Digital, one of Canada's global innovation clusters. "The collaboration between AIP and Railtown unlocks an exciting combination of networks and AI infrastructure. This is how we unlock Canada's AI commercialization potential and lead on the global stage."

Digital is a national non-profit that grows Canadian companies by accelerating the development, adoption and commercialization of Canadian digital technologies. Through a unique combination of co-investment, cross-industry collaboration, IP creation and digital talent development, Digital has built one of the strongest digital innovation ecosystems in Canada.

First-of-its-kind AI affiliate marketplace

Railtown's acquisition of AIP, combined with AIP's strategic partnership with Digital, underscores Railtown's vision to create a first-of-its-kind AI affiliate marketplace. This platform is expected to leverage AIP's existing partnership network by connecting AIP affiliates to Railtown's agentic frameworks, sovereign compute resources, investment opportunities and ecosystem support. By looking to position itself at the heart of Canada's AI innovation ecosystem, Railtown believes it is accelerating adoption, commercialization and growth for Canadian AI companies.

"I believe the acquisition of AIP will amplify Railtown's ability to connect Canadian AI innovators with secure, sovereign compute infrastructure, driving scalable growth," said Cory Brandolini, chief executive officer of Railtown.

"In my view, the combination of Railtown with AIP represents an opportunity for AIP to leverage the Railtown application development and agentic product offerings by AIP's affiliate network and their end-users, while at the same time growing the AIP affiliate network and the AI product marketplace," stated Dr. Tom Corr, chief executive officer of AIP.

The transaction

Under the terms of the transaction, Railtown will acquire all of the outstanding shares of AIP from the holders thereof in exchange for up to 50 million common shares of Railtown representing an exchange ratio of approximately 2.52 Railtown shares for each AIP share acquired (subject to adjustment in accordance with the amalgamation agreement). The consideration shares will be subject to escrow and contractual restrictions on transfer as follows:

• 10 million of the consideration shares, on a pro rata basis to all AIP shareholders, will be placed in escrow upon closing of the transaction (the effective date) and subject to release or cancellation on the following basis:
  • One million escrow shares (the indemnity shares), on a pro rata basis to all AIP shareholders, will be subject to cancellation for no consideration in the event Railtown makes an indemnification claim prior to the date that is 12 months from the effective date, with one consideration share being cancelled for every 50 cents of Railtown's claim;
  • 50 per cent of the escrow shares (including any indemnity shares that were not cancelled) will be eligible for release from escrow upon Railtown recording annual recurring revenue from AIP affiliates equal to or greater than $1-million from the effective date to the date that is 36 months from the effective date (the first milestone) and the remaining 50 per cent of the escrow shares will be eligible for release from escrow upon Railtown recording annual recurring revenue from AIP affiliates equal to or greater than $2-million (the second milestone) from the effective date to the date that is 36 months from the effective date. If the first milestone and/or second milestone are not met by the date that is 36 months from the effective date, the escrow shares that were to be released upon satisfaction of such milestone will be cancelled for no consideration. The escrow shares to be released from escrow as a result of satisfaction of the first milestone or second milestone will be released upon satisfaction of such milestone but no earlier than 18 months from the effective date and no later than 36 months from the effective date, provided that certain consideration shares received by key AIP shareholders will instead be released from escrow on the date that is 36 months from the effective date.
• All other key shareholder shares received by the key shareholders will be placed into escrow on the effective date and released in equal quarterly instalments during the 36 months following the effective date, with 10 per cent of four-fifths of the total number of key shareholder shares held by the key shareholders being released on the effective date;
• All other consideration shares will be subject to a contractual restriction on transfer pursuant to the amalgamation agreement with 10 per cent of such shares being released from any restriction on transfer as of the effective date and the remainder being released in six equal instalments of 15 per cent on a quarterly basis until the date that is 18 months from the effective date.

The amalgamation agreement was negotiated at arm's length between representatives of Railtown and AIP. In connection with the execution of the amalgamation agreement and in support of the transaction, shareholders of AIP holding approximately 51.24 per cent of the outstanding shares of AIP have entered into voting support agreements with Railtown and AIP in support of the transaction.

Completion of the transaction is subject to a number of conditions, including, but not limited to, receipt of required shareholder approval by AIP. There can be no assurance that the transaction will be completed as proposed or at all. The completion of the transaction is also subject to other customary conditions for a transaction of this nature.

About Railtown AI Technologies Inc.

Railtown AI Technologies is dedicated to transforming the way agentic software is built, deployed and scaled. Through its intelligent AI frameworks and observability solutions, Railtown believes it empowers companies and developers to quickly build and deploy agentic solutions while simultaneously providing observability into agent health, reliability and performance.

About AI Partnerships Corp.

AI Partnerships was formed in 2020 with the goal of establishing a worldwide affiliate network of AI-as-a-service based companies that are focused on providing AI-based solutions in a select number of sectors. These sectors include health care, manufacturing, supply chain and financial technology, as well as sector agnostic AI development tools and applications. AIP has established a network of over 180 SaaS-based AI affiliates, primarily headquartered in Canada and the United States, who have offices in 13 countries worldwide.

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