Item 1.01 Entry into a Material Definitive Agreement.
Registered Direct Offering
Social Reality, Inc. (the “Company”) entered into securities purchase agreements dated April 7, 2019 (the “Purchase Agreements”) with certain investors (“Investors”) for the sale by the Company of 1,687,825 shares of the Company’s Class A common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $4.00 per share resulting in gross proceeds to the Company of approximately $6.75 million (the “Registered Direct Offering”). The Purchase Agreements contain representations, warranties, and covenants of both the Investors and the Company that are customary for tranactions of this type.
The Registered Direct Offering is anticipated to close on April 10, 2019, subject to customary closing conditions. The Company estimates that the net proceeds from the offering will be approximately $6.17 million after deducting certain fees due to the placement agent and other estimated transaction expenses. The net proceeds received by the Company from the transactions will be used for working capital purposes.
The securities sold in the Registered Direct Offering were offered and sold by the Company pursuant to an effective “shelf” registration statement on Form S-3, which was declared effective by the United States Securities and Exchange Commission on November 28, 2016 (File No. 333-214644).
In connection with the Registered Direct Offering, we entered into a placement agent agreement (“Placement Agent Agreement”) whereby the placement agent received a cash fee equal to 7.0% of the gross proceeds received by the Company from the sale of the shares of Common Stock, warrants to purchase up to 101,270 shares of Common Stock at an exercise price of $5.00 per share (the “Placement Agent Warrants”), and reimbursement of up to $50,000 for offering related expenses. The Placement Agent Warrants are exercisable beginning one-year after the date of issuance for a period of four years subsequent to such one-year anniversary, contain one-time demand and unlimited piggyback registration rights, and have a cashless exercise provision in the event the shares underlying the Placement Agent Warrants are not subject to an effective registration statement at the time of exercise. The Placement Agent Agreement also contains representations, warranties and indemnification and other provisions that are customary for transactions of this nature. The Placement Agent Warrants were sold and issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act for transactions not involving a public offering and Rule 506 promulgated under the Securities Act, and in reliance on similar exemptions under applicable state laws.
The foregoing description of the Purchase Agreements, Placement Agent Agreement and Placement Agent Warrants, are not complete and are qualified in their entirety by references to the full text of the Purchase Agreement, Placement Agent Agreement and Placement Agent Warrant, which are filed hereto as exhibits 10.01, 10.02 and 4.01, respectively, and are incorporated by reference.
This Current Report on Form 8-K does not constitute an offer to sell any securities or a solicitation of an offer to buy any securities, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such state or jurisdiction.
The legal opinion and consent of the Silvestre Law Group, P.C. relating to the validity of the shares of Common Stock being issued in the Registered Direct Offering are filed herewith as Exhibits 5.01 and 23.01, respectively.