Expansion into AI-powered online entertainment industry reflects strategic evolution of the business model

NANPING, China, Sept. 6, 2023 /PRNewswire/ -- Paranovus Entertainment Technology Ltd. (Nasdaq: PAVS) (the "Company") today announced that it has signed a non-binding Letter of Intent (LOI) to acquire 100% of BlueLine Studios Inc. ("BlueLine"), a portfolio company of Caravan Digital L.P. ("Caravan"), a co-founder of consumer companies authentically powered by iconic artists and athletes in partnership with Creative Artists Agency ("CAA").

The deal is anticipated to close in the fourth quarter of 2023, provided that the parties reach a definitive agreement and the Company secures financing of at least $5 million. The completion of the deal is subject to customary approvals and closing conditions, including but not limited to satisfactory completion of due diligence and the Company's receipt of the payoff letters pertaining to certain indebtedness of BlueLine.

Under the terms of the LOI, PAVS would acquire 100% of BlueLine's equity interests from Caravan and other equity owners of BlueLine. The consideration to be paid by the Company to purchase the equity interests is approximately $3.2 million in cash and unregistered Class A ordinary shares. Additionally, the Company will issue $1.11 million worth of its unregistered Class A ordinary shares to Caravan. Furthermore, the Company will issue $3.6 million worth of its unregistered Class A ordinary shares and $2.0 million worth of restricted stock units to a special purpose vehicle ("SPV") controlled by Mike Teh Wang, who represents BlueLine management. Finally, the Company will make a payment of $1.63 million in cash and unregistered Class A ordinary shares to the financial advisor for this Acquistion at the closing.

Based in Vancouver, BlueLine is a video game developer that builds engaging interactive gaming experiences powered by world-class celebrity talent. BlueLine's portfolio of games includes a previously released match-3 mobile game, Apple Arcade's first trivia game, and other strategic projects in development.

Before joining BlueLine, its team had amassed extensive experience in the gaming industry. Their track record includes participating in the development of multiple AAA titles, such as numerous Need For Speed and EA Sports games at Electronic Arts as well as top mobile titles such as the Simpsons: Tapped Out at Electronic Arts and Disney Magic Kingdom at Gameloft. Additionally, their past expertise extends to helping engineer backend systems used by some of the biggest games in the industry such as EA Sports titles at Electronics Arts.

Under the terms of the LOI, BlueLine will have a right of first offer for any talent-related game development projects from Caravan for five years following the closing of the acquisition. During this period, BlueLine can decide to take on any potential gaming-related collaboration with talent which would allow BlueLine to execute its vision of delivering unforgettable, interactive chart-topping experiences that connect fans with their favorite celebrities.

The BlueLine team intends to leverage its experience in Artificial Intelligence (AI) in games and incorporate advancements in content generation to create ever expanding experiences. Following the acquisition, BlueLine will focus on the development of the Hollywood Sunshine project. This new game project, is expected to be a unique social gaming platform that features multiple celebrities and is driven by AI-generated content (AIGC). The Hollywood Sunshine project will be an engaging story-based role-playing game (RPG) set in an open world, available on both PC and mobile platforms. BlueLine aims to captivate users with real-time, instantaneous player-specific content generation, offering many hours of narrative-driven gameplay. Additonally, Caravan has agreed to bring at least three relevant star talents to participate in the game, assuming the acquisition is successfully completed.

Xuezhu Wang, CEO and the Chairman of the Board of the Company, commented, "Completing this acquisition as envisioned would signify the beginning of an exciting new chapter for Paranovus Entertainment Technology Ltd. It will position us favorably as an AI-driven gaming and entertainment enterprise. The extensive expertise of BlueLine's seasoned team and their long-standing relationships with Caravan and CAA will bring tremendenous value to our Company. Furthermore, the potential synergies between BlueLine and 2Lab3, both sharing a similar focus on AI, will further contribute to our future growth."

"Partnering with a company that supports and shares our vision and values presents a remarkable opportunity," stated Mike Teh Wang, CEO of BlueLine. "Our talented team is thrilled to join forces with PAVS after the close of the acqusition, leveraging our AI-powered technology and unique celebrity resources to develop and deliver an exclusive social gaming platform highlighting various celebrities."

If successfully finalized, the acquisition of BlueLine will be the latest milestone for the Company, further demonstrating its new strategic focus on the burgeoning field of AI-powered pan-entertainment. In March 2023, PAVS acquired 2Lab3, a Los Angeles-based firm that initially focused on Web3 but has recently shifted its focus towards the development of AI-powered applications, marking the Company's first step into this emerging technology field.

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About Paranovus Entertainment Technology Ltd.

Headquartered in Nanping, China, Paranovus Entertainment Technology Ltd. (fka Happiness Development Group Limited) is currently planning a strategic transition. As part of this transition, the Company will suspend its loss-incurring e-commerce and internet information and advertising businesses in September. Instead, the Company intends to shift its focus to the AI-powered entertainment industry by entering into a non-binding Letter of Intent (LOI) with BlueLine.

Following the suspension of these businesses and the disposal of its nutraceutical and dietary supplements business in August 2023, the Company's only remaining operating business in China will be the automobile sales business.

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BlueLine Studios Inc.

Headquartered in Vancouver, Canada, BlueLine Studios Inc. is a gaming studio that specializes in creating interactive entertainment in collaboration with world-class celebrities. Being backed by Caravan enables BlueLine access to star talents to deliver chart-topping interactive experiences for users.

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Forward-Looking Statements

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and North America, and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Media Contact:
Michael Chen
Paranovus
929.288.7418
[email protected]

Investor Relations Contact:
Jackson Lin
Lambert
646.717.4593
[email protected]

SOURCE Paranovus Entertainment Technology Ltd