SOCIAL REALITY, INC. (NASDAQ:SRAX) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01

On April 21, 2017, Social Reality, Inc. (the Company) entered
into a definitive securities purchase agreement (the Securities
Purchase Agreement) with certain accredited investors (the
Purchasers) set forth on the pages of the Securities Purchase
Agreement for the purchase and sale of an aggregate of: (i)
$3,720,000 principal amount 12.5% secured convertible debentures
(the Debentures); and (ii) five year Series A warrants (the
Series A Warrants) representing the right to acquire up to
620,001 shares of our Class A common stock in a transaction
exempt from registration under the Securities Act of 1933, as
amended (the Securities Act), in reliance on an exemption
provided by Rule 506(b) of Regulation D and Section 4(a)(2) of
the Securities Act.

The Debentures, which mature three years from the date of
issuance, pay interest in cash at the rate of 12.5% per annum,
payable quarterly on January 1, April 1, July 1 and October 1,
beginning on July 1, 2017. Our obligations under the Debentures
are secured by a second position security interest in our
accounts receivable and a first position security interest in the
balance of our assets, and we are subject to continued compliance
with certain financial covenants. The Debentures are convertible
at the option of the holder into shares of our Class A common
stock at an initial conversion price of $3.00 per share, subject
to adjustment as hereinafter set forth. Subject to our compliance
with certain equity conditions set forth in the Debentures, upon
20 trading days’ notice to the holders we have the right to
redeem the Debentures in cash at a 120% premium during the first
year and a 110% premium during the remaining term of the
Debentures. Upon any optional redemption, we are obligated to
issue the holder five year warrant Series B warrants, the terms
of which will be identical to the Series A Warrants, to purchase
a number of shares of our Class A common stock as shall equal 50%
of conversion shares issuable on an as-converted basis as if the
principal amount of the Debenture had been converted immediately
prior to the optional redemption. In the event of future
financings by us, subject to certain exempt issuances, the
holders have the right to cause us to allocate 20% of the
proceeds we may receive to as a mandatory redemption of a portion
of the principal amount then outstanding Debentures. We are also
required to redeem the Debentures upon our failure to maintain
certain financial covenants.

The Debenture also contains certain customary Events of Default
(including, but not limited to, default in payment of principal
or interest thereunder, breaches of covenants, agreements,
representations or warranties thereunder, the occurrence of an
event of default under certain material contracts of the Company,
changes in control of the Company and the entering or filing of
certain monetary judgments against the Company). Upon the
occurrence of any such Event of Default, the outstanding
principal amount of the Debenture, plus liquidated damages,
interest and other amounts owing in respect thereof through the
date of acceleration, shall become, at the holders election,
immediately due and payable in cash. The Company is also subject
to certain customary non-financial covenants under the Debenture.

The Series A Warrants are initially exercisable at $3.00 per
share and, if at any time after the six month anniversary of the
issuance the underlying shares of our Class A common stock are
not covered by an effective resale registration statement, the
Series A Warrants are exercisable on a cashless basis. The
conversion price of the Debentures and the exercise price of the
Series A Warrants are subject to adjustments upon certain events,
including stock splits, stock dividends, subsequent equity
transactions (other than specified exempt issuances), subsequent
rights offerings, and fundamental transactions, subject to a
floor of $1.40 per share. If we fail to timely deliver the shares
of our Class A common stock upon any conversion of the Debentures
or exercise of the Series A Warrants we will be subject to
certain buy-in provisions. to the terms of the Debentures and
Series A Warrants, a holder will not have the right to convert
any portion of the Debentures or exercise any portion of the
Series A Warrants if the holder (together with its affiliates)
would beneficially own in excess of 4.99% of the number of shares
of Class A common stock outstanding immediately after giving
effect to such conversion or exercise, as such percentage
ownership is determined in accordance with the terms of the
Debentures and the Series A Warrants; provided that after the
Shareholder Approval Date at the election of a holder and notice
to us such percentage ownership limitation may be increased or
decreased to any other percentage, not to exceed 9.99%; provided
that any increase will not be effective until the 61^st
day after such notice is delivered from the holder to us.

In accordance with the Nasdaq Marketplace Rules, until such time
as our stockholders have approved the Securities Purchase
Agreement and the transactions thereunder (the Shareholder
Approval Date), we are not obligated to issue any shares of our
Class A common stock upon any conversion of the Debentures and/or
exercise of the Series A Warrants, and the holders have no right
to receive upon conversion and/or exercise thereof any shares of
our Class A common stock, to the extent the issuance of such
shares of Class A common stock would exceed 20% of our
outstanding Class A common stock prior to the transaction. We are
obligated to file a proxy statement for a special meeting of our
stockholders prior to April 30, 2017 for the purpose of
submitting the approval of the Securities Purchase Agreement and
the transactions thereunder to our stockholders. Stockholders
representing approximately 21% of our Class A common stock have
executed a voting agreement with us agreeing to vote to approve
the Securities Purchase Agreement and the transactions
contemplated thereunder.

We agreed to file a registration statement registering the resale
of the shares of our Class A common stock underlying the
Debentures and the Series A warrants. Under the terms of the
Securities Purchaser Agreement, we also granted the purchasers of
the Debentures the right to purchase an additional $2 million of
Debentures upon the same terms and conditions for a period
beginning on the Shareholder Approval Date and expiring on
earliest of the date that (a) the initial registration statement
has been declared effective by the Securities and Exchange
Commission, (b) all of the underlying shares have been sold to
Rule 144 or may be sold to Rule 144 without the requirement for
our company to be in compliance with the current public
information required under Rule 144 and without volume or
manner-of-sale restrictions, (c) following the one year
anniversary of the closing date provided that a holder of the
underlying shares is not an affiliate of Social Reality or (d)
all of the underlying shares may be sold to an exemption from
registration under Section 4(a)(1) of the Securities Act.

Chardan Capital Markets, LLC (Chardan Capital) and Noble
Financial Capital Markets (Noble), both broker-dealers and
members of FINRA, acted as our placement agents in connection for
us in connection with the sale of the securities to the
Securities Purchase Agreement. In addition, an affiliate of Noble
purchased $720,000 principal amount of Debentures and was issued
Series A Warrants to purchase 120,000 shares of our Class A
common stock in this offering. We paid Chardan Capital a cash
commission of $120,000, paid Noble a cash commission of $57,600
and issued Chardan Capital placement agent warrants (Placement
Agent Warrants) to purchase 100,000 shares of our Class A common
stock at an exercise price of $3.75 per share which exercisable
for 5.5 years commencing six months from the issuance date. We
will include the shares underlying the Placement Agent Warrants
in the aforedescribed resale registration statement we expect to
file.

The net proceeds to us from the offering, after deducting
placement agent fees and estimated offering expenses, was
approximately $3.5 million. We utilized $2.5 of the net proceeds
to satisfy a put obligation under the Series B warrants issued to
investors in a registered direct offering we conducted in January
2017. The balance of the net proceeds will be used for working
capital.

The foregoing descriptions of the terms and conditions of the
Securities Purchase Agreement, Debentures, Series A Warrants,
Registration Rights Agreement, Security Agreement and Placement
Agent Warrants are qualified in their entirety by references to
the agreements, copies of which are filed as Exhibits 10.1, 4.2,
4.1, 10.2, 10.3 and 4.3, respectively.

The disclosure included in Item 1.01 above is incorporated herein
by reference.

On April 21, 2017 we issued a press release announcing the
execution of a Securities Purchase Agreement described in Item
1.01 of this report. A copy of this press release is furnished as
Exhibit 99.1 to this report. to General Instruction B.2 of Form
8-K, the information in this Item 7.01 of Form 8-K, including
Exhibit 99.1, is being furnished and shall not be deemed filed
for the purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise be subject to the liabilities of that section,
nor is it incorporated by reference into any filing of Social
Reality, Inc. under the Securities Act of 1933 or the Securities
Exchange Act of 1934, whether made before or after the date
hereof, regardless of any general incorporation language in such
filing.

About SOCIAL REALITY, INC. (NASDAQ:SRAX)

Social Reality, Inc. is an Internet advertising and platform technology company. The Company provides tools to automate the digital advertising market. It is engaged in the sales of digital media advertising campaigns to advertising agencies and brands; sales of media inventory through real-time bidding (RTB) exchanges; sale and licensing of its SRAX Social platform and related media, and creation of custom platforms for buying media on SRAX for various brands. Its technology assists publishers in delivering their media inventory to the RTB exchanges. It provides the SRAX platform to brands and their advertising agencies. SRAX Social is a social media and loyalty platform that allows brands to launch and manage their social media initiatives. SRAX MD is an advertisement targeting and data platform for healthcare brands and medical content publishers. SRAX APP is a platform that allows publishers and content owners to launch native mobile applications through its SRAX platform.

SOCIAL REALITY, INC. (NASDAQ:SRAX) Recent Trading Information

SOCIAL REALITY, INC. (NASDAQ:SRAX) closed its last trading session down -0.10 at 1.96 with 5,000 shares trading hands.