VSBLTY Advances Deal To Acquire Grocer-Focused Retail Media Operator Shelf Nine

October 25, 2023 by Dave Haynes

Philly-based VSBLTY has progressed from an LOI to a definitive purchase agreement for retail media network operator Shelf Nine, which has some 4,500 screens running in US groceries.

The deal is positioned as a merger and is built around shares, as opposed to a cash transaction. It also appears to get Shelf Nine clear of debt owed to a grocery operator – presumably one that has screens in it.

“The opportunity to merge our company with VSBLTY is ideal for our company moving forward,” says Shelf Nine CEO Mike Manion. “With our digital media network of 4500 screens starting to generate revenue and the enhanced capabilities of VSBLTY’s latest analytics software offerings, we truly have a media product that is unique in the market.”

“Not only does this allow us to expand screen deployments in our existing locations, but also gives us a compelling opportunity to quickly acquire new locations. Initially we will focus on offering more services to our existing client base, including more VSBLTY software features, along with the recently announced full panel, full video, cooler doors that can also run in transparent mode. We are very excited to find a company that we have both cultural and strategic alignment with as we enter this new growth phase for Shelf Nine.”

Shelf Nine is based in Norwalk, CT.

VSBLTY launched in 2015 as a computer vision solution for audience measurement, and as retail media networks have gained attraction and adoption, it now touts a model of retail environments as measurable ad mediums:

In-store retail media networks are foundational to VSBLTY’s “Store as a Medium” model and include a collection of digital channels including in-store interactive digital displays (strategically placed throughout the store), integrating loyalty apps, websites, etc. VSBLTY software enables these networks to deliver brands and retailers “first of its kind” computer vision driven data analytics about their customers.

“Our media offering is unlike any other traditional “Out of Home” awareness product,” says VSBLTY Co-founder & CEO Jay Hutton. “Using our anonymous customer analytics software, we can not only confirm impressions, but we can state, who, when, where and for how long the advertisement was viewed. Media companies, advertisers, and retailers understand this powerful new “In Store Network” that is expected to outpace traditional radio, TV and Internet media spend.”

“This acquisition, along with our Mexican, Brazilian and other in-store media opportunities will see media revenue become a large contributor to our bottom line in 2024 and beyond. This is transformative for all involved. Developing additional revenue streams and increased recurring revenue are key to our expansion plans.”

The “unlike any other” suggestion is a bit of a reach, as there are all kinds of audience measurement tools out there, including third-party computer vision platforms and other technologies – like radar – that can also develop shopper analytics for retail environments. That noted, there’s a lot of value in using technology to take the guess-work out of putting screens in retail environments and understanding viewer dynamics and responses.

If you are a finance nerd and into deal terms …

Pursuant to the Purchase Agreement, VSBLTY will issue an aggregate of 12,500,000 Shares to the owners of Shelf Nine at closing of the Transaction (“Closing”), with a deemed value of US$500,000, with 1,250,000 of such Shares being subject to escrow for a period of 15 months following Closing. As well, the sellers will be entitled to earn up to an additional US$3,890,000 worth of shares subject to achieving agreed upon revenue milestones over the three years (the “Earn-Out”). The revenue milestones commence in July, 2023 and end in June, 2026.

The number of Shares to be issued pursuant to the Earn-Out will be determined based on the volume weighted average trading price at the time of issuance, and within the pricing requirements of the Canadian Securities Exchange (the “CSE”). Pursuant to the Purchase Agreement, VSBLTY will also settle USD$132,900 in existing debts of Shelf Nine through the issuance of 3,322,500 Shares to the creditor, Village Super Market, Inc. (“Village”). At Closing, VSBLTY, through its wholly-owned subsidiary, VSBLTY, Inc. (“Subco”), has also agreed to assume approximately US$336,096.67 in existing promissory notes of Shelf Nine the (“Loan”). In this regard, Subco and Shelf Nine, as co-makers, will issue a secured promissory note to the creditor, Village.

In connection with the Transaction, the key employees of Shelf Nine have agreed to continue their employment and can receive additional performance incentives of US$250,000, pursuant to their employment agreements. The acquisition of Shelf Nine is very strategic to VSBLTY’s North American expansion, and is further compensated for, based on performance, with the issuance of common stock at prevailing prices.

The Transaction is expected to close before the month’s out.