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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant x Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Under Rule 14a-12

HYDRA INDUSTRIES ACQUISITION CORP.
(Name of Registrant as Specified in Its Charter)

(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

¨ No fee required.

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: Common stock, $0.0001 par value per share, of Hydra Industries Acquisition Corp.
(2) Aggregate number of securities to which transaction applies: Up to 12,600,000 shares of Hydra Industries Acquisition Corp. common stock
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):  $10.00
(4) Proposed maximum aggregate value of transaction: $131,476,000 (includes $53,200,000 of estimated cash consideration)
(5) Total fee paid: $13,240

x Fee paid previously with preliminary materials.

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:

HYDRA INDUSTRIES ACQUISITION CORP.
250 West 57th Street, Suite 2223

New York, New York 10107

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
HYDRA INDUSTRIES ACQUISITION CORP.

To Be Held on December 13, 2016

To the Stockholders of Hydra Industries Acquisition Corp.:

NOTICE IS HEREBY GIVEN that a special meeting (the “special meeting”) of Hydra Industries Acquisition Corp., a Delaware corporation (“we,” “us,” “our,” “Hydra Industries” or the “Company”), will be held on December 13, 2016, at 10:00 a.m. Eastern time, at the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036. You are cordially invited to attend the special meeting for the following purposes:

(1) The Business Combination Proposal — to consider and vote upon a proposal to approve a share sale agreement, dated as of July 13, 2016, as it may be amended (the “Sale Agreement”), by and among the Company and those persons identified on Schedule 1 thereto (the “Selling Group”), DMWSL 633 Limited (“Target Parent”), DMWSL 632 Limited and Gaming Acquisitions Limited and the transactions contemplated thereby, which provides for the acquisition by us of all of the outstanding equity and shareholder loan notes of Inspired Gaming Group (“Inspired”) and its affiliates (together with Inspired, the “Inspired Group”) through the purchase of all of the outstanding equity and shareholder loan notes of the Target Parent. Inspired, through its subsidiaries, conducts its business under the “Inspired Gaming Group” name. We refer to Target Parent and its consolidated subsidiaries (including the Inspired Group) collectively as “Target,” and we refer to such acquisition and the other transactions contemplated by the Sale Agreement collectively as the “Business Combination.”

The Charter Proposals — to approve and adopt separate proposals for amendments to the Company’s amended and restated certificate of incorporation (the “existing charter”), in each case effective upon the closing of the Business Combination, to:

(2) Proposal 2 — increase the Company’s authorized common stock (“Proposal 2”);

(3) Proposal 3 — provide for the declassification of our board of directors and make certain related changes (“Proposal 3”);

(4) Proposal 4 — provide for certain changes, including changing the Company’s name from “Hydra Industries Acquisition Corp.” to “Inspired Entertainment, Inc.” and making the Company’s corporate existence perpetual, which our board of directors believes are necessary or appropriate to address the circumstances and needs of the Company following the Business Combination (“Proposal 4”);

(5) Proposal 5 — provide the Company with the ability to restrict securities ownership by persons who fail to comply with informational or other regulatory requirements under applicable gaming laws, who are found unsuitable to hold the Company’s securities by gaming authorities or who could by holding its securities cause the Company or any affiliate to fail to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority (“Proposal 5” and each of Proposals 2, 3, 4 and 5, a “Charter Proposal,” and collectively, the “Charter Proposals”);

The Corporate Governance Proposals – to approve and adopt separate proposals related to the corporate governance of Hydra Industries:

(6) Proposal 6 — to consider and vote upon a proposal to elect seven directors, effective upon the closing of the Business Combination, to serve on our board of directors until the 2017 annual meeting of stockholders and until their respective successors are duly elected and qualified. Pursuant to the Sale Agreement, it is a condition to the institutional sellers’ obligation to consummate the Business Combination that three individuals designated by their representative, Vitruvian Directors I Limited, have been duly elected or appointed to the board of directors of the Company. Nicholas Hagen, John Vandemore and Philip Russmeyer have been so designated. Our board of directors has nominated for election to the board at the special meeting each of these designees, as well as (i) A. Lorne Weil, a current director, our current CEO and Chairman of the Board, (ii) Luke Alvarez, the current CEO of Inspired and prospective CEO of the Company following the Business Combination, (iii) Ira Raphaelson and (iv) Roger Withers, each to take office immediately upon the closing of the Business Combination (the “Director Election Proposal”). Messrs. Dannhauser, Miller, Shea and Stevens, who currently serve on our board, have submitted prospective resignations from their positions as directors, effective immediately upon the closing of the Business Combination. This proposal is conditioned upon the approval of Proposal 3, but is not conditioned upon the approval of the Business Combination Proposal. However, if the Business Combination Proposal is not approved, the proposed amendments to the Company’s existing charter, including Proposal 3, will not be implemented, the prospective resignations submitted by four of our current directors will not become effective, and the election of the seven directors will not take effect. For a description of the Stockholders Agreement which is to be executed and delivered at the closing of the Business Combination as described in Schedule 4 to the Sale Agreement, which provides, among other things, for the composition of the board of directors following the Business Combination, see “Management After the Business Combination – Stockholders Agreement.”

(7) Proposal 7 — to consider and vote upon a proposal to approve and adopt, effective upon the closing of the Business Combination, the Inspired Entertainment, Inc. 2016 Long-Term Incentive Plan (the “Incentive Plan Proposal”); and

(8) Proposal 8 — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Proposals or the Director Election Proposal (the “Adjournment Proposal”).

Only holders of record of our common stock at the close of business on November 9, 2016 are entitled to notice of the special meeting and to vote at the special meeting and any adjournments or postponements of the special meeting. A complete list of our stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

In connection with the Company’s October 27, 2016 meeting of stockholders to, among other things, approve an extension of the date before which the Company must complete an initial business combination from October 29, 2016 to December 29, 2016 (the “Extension Meeting”), a total of 3,415,392 shares of common stock were redeemed. On November 1, 2016, Hydra Industries Sponsor LLC, which we refer to as our “Hydra Sponsor”, and MIHI LLC, which we refer to as our “Macquarie Sponsor”, deposited into the trust account an aggregate of $229,230.40 (the “Contribution”), which amount was equal to $0.05 for each of the 4,584,608 public shares of the Company that were not redeemed in connection with the extension. As a result of the Contribution, the pro rata amount of the funds available in the trust account for the public shares that were not redeemed increased from approximately $10.00 per share to approximately $10.05 per share.

Pursuant to the existing charter, we are providing our public stockholders with the opportunity to redeem their public shares, upon the closing of the transactions contemplated by the Sale Agreement, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of the Business Combination, including interest income (net of taxes payable), divided by the number of then outstanding shares of common stock that were sold as part of the units in our initial public offering that closed on October 29, 2014 (the “IPO”). For illustrative purposes, based on funds in the trust account of approximately $46 million on November 17, 2016, the estimated per share redemption price would have been approximately $10.05. Public stockholders may elect to redeem their shares even if they vote for the Business Combination Proposal . A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, of 25% or more of the shares of common stock sold in the IPO (the “25% threshold”). Holders of our outstanding public warrants, rights and units do not have redemption rights in connection with the Business Combination. Holders of outstanding units must separate the underlying public shares, public rights and public warrants prior to exercising redemption rights with respect to the public shares. The holders of shares of Hydra common stock issued prior to our IPO, which we refer to as “founder shares,” have agreed to waive their redemption rights with respect to any shares of our capital stock they may hold in connection with the consummation of the Business Combination, and, as described above, the founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, our CEO, A. Lorne Weil, our Hydra Sponsor, our Macquarie Sponsor, certain of their affiliates and our independent directors own approximately 30.4% of our issued and outstanding shares of common stock, including all of the founder shares.

Approval of the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by stockholders present in person or represented by proxy at the special meeting. Approval of the Charter Proposals requires the affirmative vote of holders of a majority of our outstanding shares of common stock. Approval of the Director Election Proposal requires the affirmative vote of the holders of a plurality of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. The board of directors of Hydra Industries has already approved the Business Combination.

Each redemption of shares of Hydra Industries common stock by our public stockholders will decrease the amount in our trust account, which holds approximately $46 million as of November 17, 2016. If the Company’s available cash at closing is insufficient to pay all liabilities and obligations of the Company and Target due and required to be paid at closing or by reason of closing, Target may, at its option, elect to not consummate the Business Combination.

Your attention is directed to the proxy statement accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of our proposals. We encourage you to read this proxy statement and the accompanying Annual Report on Form 10-K for the year ended December 31, 2015 carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali at (800) 662-5200 (toll free) or banks and brokers can call collect at (203) 658-9400.

This proxy statement is dated November 21, 2016, and is expected to be first mailed to stockholders on or about November 23, 2016.

By Order of the Board of Directors,
Sincerely,
/s/ A. Lorne Weil
A. Lorne Weil
Chairman of the Board and Chief Executive Officer

November 21, 2016

TABLE OF CONTENTS

Page
SUMMARY TERM SHEET 1
FREQUENTLY USED TERMS 8
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS 11
SUMMARY OF THE PROXY STATEMENT 24
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF TARGET 31
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 35
RISK FACTORS 36
General 67
Date, Time and Place of Special Meeting 67
Voting Power; Record Date 67
Vote of Sponsors 67
Quorum and Required Vote for Proposals for the Special Meeting 67
Recommendation to Hydra Industries Stockholders 68
Broker Non-Votes and Abstentions 69
Voting Your Shares 69
Revoking Your Proxy 70
No Additional Matters May Be Presented at the Special Meeting 70
Who Can Answer Your Questions About Voting 70
Redemption Rights 70
Appraisal Rights 72
THE BUSINESS COMBINATION PROPOSAL 73
The Sale Agreement 73
Voting and Support Letter Agreements 75
Existing Target Indebtedness 75
Background of the Business Combination 75
Hydra Industries’ Board of Directors’ Reasons for the Approval of the Business Combination 79
Satisfaction of 80% Test 79
Certain Benefits of Hydra Industries’ Directors and Officers and Others in the Business Combination 79
Potential Purchases of Public Shares 80
Total Shares of Hydra Industries Common Stock to be Issued in the Business Combination 81
Sources and Uses of Funding for the Business Combination 81
Board of Directors of Hydra Industries Following the Business Combination 82
Redemption Rights 83
Appraisal Rights 83

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Material U.S. Federal Income Tax Considerations for Stockholders Exercising Redemption Rights 84
Vote Required for Approval 88
Recommendation of the Board 88
THE CHARTER PROPOSALS 89
Reasons for the Proposed Charter Amendments 89
Authorization to Increase the Company’s Authorized Share Capital (Proposal 2) 89
Vote Required for Approval 91
Recommendation of the Board 91
DIRECTOR ELECTION PROPOSAL 92
Vote Required for Approval 94
Recommendation of the Board 94
INCENTIVE PLAN PROPOSAL 95
Overview of Proposal 95
Background 95
Alignment of the Incentive Plan with the Interests of the Company and Stockholders 95
Key Features of the Incentive Plan 95
Summary of the Incentive Plan 96
Purpose 96
Administration 97
Shares Available for Issuance Under the Incentive Plan and Limits on Awards 97
Eligibility 97
Grants of Awards 98
Equity Restructuring 100
Corporate Events 100
Non-Transferability of Awards 100
Termination and Amendment 101
Material U.S. Federal Income Tax Consequences 101
New Plan Benefits 102
Vote Required for Approval 102
Recommendation of the Board 102
THE ADJOURNMENT PROPOSAL 103
Consequences if the Adjournment Proposal is Not Approved 103
Vote Required for Approval 103
Recommendation of the Board 103
INFORMATION ABOUT HYDRA INDUSTRIES 104
General 104
Effecting Our Initial Business Combination 104
Selection of a Target Business and Structuring of our Initial Business Combination 105
Redemption Rights for Holders of Public Shares 105

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Submission of Our Initial Business Combination to a Stockholder Vote 105
Limitation on Redemption Rights 105
Employees 106
Management 106
Executive Compensation 112
Fees and Services 112
Pre-Approval Policy 113
HYDRA INDUSTRIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 114
Compensation of the Named Executive Officers 127
MANAGEMENT AFTER THE BUSINESS COMBINATION 149
DESCRIPTION OF SECURITIES 154
BENEFICIAL OWNERSHIP OF SECURITIES 165
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 169
PRICE RANGE OF SECURITIES AND DIVIDENDS 174
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 175
APPRAISAL RIGHTS 175
DELIVERY OF DOCUMENTS TO STOCKHOLDERS 175
TRANSFER AGENT AND REGISTRAR 175
SUBMISSION OF STOCKHOLDER PROPOSALS 175
FUTURE STOCKHOLDER PROPOSALS 175
WHERE YOU CAN FIND MORE INFORMATION 176
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-0
ANNEX A – SHARE SALE AGREEMENT A-1
ANNEX B – SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION B-1
ANNEX C – 2016 LONG-TERM INCENTIVE PLAN C-1
ANNEX D – VOTING AND SUPPORT AGREEMENTS D-1

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SUMMARY TERM SHEET

This Summary Term Sheet, together with the sections entitled “Questions and Answers About the Proposals for Stockholders” and “Summary of the Proxy Statement,” summarize certain information contained in this proxy statement, but do not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the special meeting. You should also read carefully the accompanying Annual Report on Form 10-K for the year ended December 31, 2015. In addition, for definitions of terms commonly used throughout this proxy statement, including this Summary Term Sheet, see the section entitled “Frequently Used Terms.”

· Hydra Industries is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

· There currently are 6,584,608 shares of Hydra Industries common stock issued and outstanding, consisting of 4,584,608 shares originally sold as part of units in Hydra Industries’ IPO and 2,000,000 founder shares that were issued to our Sponsors prior to Hydra Industries’ IPO. The Company initially issued 2,875,000 founder shares, however, 300,000 of such shares were forfeited as a result of the underwriters’ determination not to exercise their over-allotment option and 575,000 of such shares were returned to the Company and subsequently cancelled prior to the IPO.

· In addition, there currently are 15,500,000 warrants of Hydra Industries outstanding, consisting of 8,000,000 public warrants originally sold as part of units in Hydra Industries’ IPO and 7,500,000 private placement warrants issued to our Sponsors in a private placement simultaneously with the consummation of Hydra Industries’ IPO. Each warrant entitles the holder thereof to purchase one-half of one share of Hydra Industries’ common stock at a price of $5.75 per half share ($11.50 per whole share). Warrants may be exercised only for a whole number of shares of Hydra Industries’ common stock. No fractional shares will be issued upon exercise of the warrants. The public warrants will become exercisable thirty days after the completion of Hydra Industries’ initial business combination and expire at 5:00 p.m., New York time, five years after such business combination or earlier upon redemption or liquidation. Hydra Industries may redeem the public warrants at a price of $0.01 per warrant, provided that the last sale price of Hydra Industries’ common stock equals or exceeds $24.00 per share for any 20 trading days within a 30 trading day period ending on the third trading day before Hydra Industries sends the notice of redemption to the warrant holders and certain other conditions are met. The private placement warrants, however, are non-redeemable so long as they are held by our Sponsors or their permitted transferees. For more information about Hydra Industries and its securities, see the sections entitled “Information About Hydra Industries,” “Hydra Industries Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Securities.”

· Target is a global gaming technology company, supplying Virtual Sports and Server Based Gaming (“SBG”) systems to regulated lottery, betting and gaming operators worldwide through an “omni-channel” distribution strategy. Target provides end-to-end digital gaming solutions on its proprietary and secure network that accommodates a wide range of devices, including land-based gaming machine products, mobile devices such as smartphones and tablets, as well as PC and social applications. Target believes this omni-channel distribution strategy, combined with its common technology platform, allows it to keep pace with evolving requirements in game play, security, technology and regulations in the global gaming and lottery industry. For more information about Target, see the sections entitled “Information About Target,” “Target Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Management After the Business Combination” and “Risk Factors — Risk Factors Relating to Target’s Business and Industry.”

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· Pursuant to the Share Sale Agreement, dated as of July 13, 2016, as it may be amended (the “Sale Agreement”), by and among the Company and those persons identified on Schedule 1 thereto (the “Selling Group”), DMWSL 633 Limited (“Target Parent”), DMWSL 632 Limited and Gaming Acquisitions Limited and the transactions contemplated thereby, we will consummate the acquisition of all of the outstanding equity and shareholder loan notes of Inspired Gaming Group (“Inspired”) and its affiliates (together with Inspired, the “Inspired Group”) through the purchase of all of the outstanding equity and shareholder loan notes of the Target Parent.

· Target Parent, through its subsidiaries, conducts its business under the “Inspired Gaming Group” name. We refer to Target Parent and its consolidated subsidiaries (including Inspired) collectively as “Target,” and we refer to such sale and the other transactions contemplated by the Sale Agreement collectively as the “Business Combination.” For more information about the transactions contemplated by the Sale Agreement, which is referred to herein as the “Business Combination,” see the section entitled “The Business Combination Proposal” and the copy of the Sale Agreement attached to this proxy statement as Annex A .

· The Sale Agreement reflects a transaction value for the Business Combination of £200 million (equivalent to approximately $264 million based on the USD/GBP exchange rate of $1.32/£1.00 as of the July 13, 2016 date of the Sale Agreement), plus an earn-out of up to 2.5 million Hydra shares, subject to certain customary anti-dilution adjustments (having a value of up to $25 million at an assumed value of $10.00 per share). The transaction is expected to represent approximately £96 million of equity value after adjusting for the maintenance of debt and certain other liabilities (equivalent to approximately $126 million based on the USD/GBP exchange rate of $1.32/£1.00 as of July 13, 2016). Exclusive of the potential earn-out, the consideration to be paid for the equity and shareholder loan notes of the Target Parent and the Inspired Group will be the aggregate of the Base Consideration (as defined below), less a fixed amount of Accruing Negative Consideration (£21,500 per day from but excluding July 2, 2016 through and including the closing of the Business Combination).

· The “Base Consideration” to be paid for the equity and shareholder loan notes pursuant to the Sale Agreement will equal (i) £100,363,394, plus (ii) any amount by which the Company’s transaction expenses (“Purchaser Costs”) referred to in Schedule 6 to the Sale Agreement exceeds £8,237,909, minus (iii) certain expenses of the Selling Group noticed by its representatives, not to exceed £3,000,000, minus (iv) certain excess interest payments owing on the Inspired Group’s existing financing arrangements.

· The Selling Group will be paid the Base Consideration, adjusted for the Accruing Negative Consideration (the “Completion Payment”), partially in cash (the “Cash Consideration”), to the extent available after the payment of transaction expenses and working capital adjustments, if any, and partially in newly-issued shares of Company common stock (“Purchaser Shares”) at a value of $10.00 per share (the “Stock Consideration”), as follows:

· The Cash Consideration represents the cash Hydra Industries will have available at closing to pay the Completion Payment. The Cash Consideration will equal (i) the Company’s then current cash in trust (after any redemptions), the $20,004,347 proceeds of a private placement to Macquarie Capital pursuant to the Contingent Forward Purchase Contract, the form of which was included as Exhibit 10.12 to its registration statement on Form S-1 (the “Macquarie Forward Purchase”) and any other available funds, minus (ii) an agreed amount of Purchaser Costs (including expenses incurred in connection with the preparation of the proxy statement and meetings with Hydra Industries stockholders), minus (iii) an agreed amount of the Selling Group’s transaction expenses, minus (iv) the amount of repayment required under certain of the Inspired Group’s financing arrangements, minus (v) £5 million for the purposes of retaining cash on the Company’s balance sheet.

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· Upon closing of the Business Combination, the Cash Consideration will be deposited into an account designated by the Selling Group’s attorneys and the Company shall not be responsible for the application of the funds to individual members of the Selling Group.

· The Stock Consideration will be the number of Purchaser Shares equal to the amount of the Completion Payment minus the Cash Consideration, divided by $10.00 per share, and is currently estimated to be approximately 10.7 million shares of our common stock, assuming, for illustrative purposes only, no redemption of shares by our existing public stockholders and closing of the Business Combination as of September 24, 2016. The Stock Consideration will fluctuate if either of these assumptions should change. For example, should redemption of shares by our existing public stockholders reach 2.3 million shares, or 49.6% of the public shares currently outstanding, and assuming that the Business Combination closed as of September 24, 2016, it is estimated that the Stock Consideration would be approximately 12.6 million shares of our common stock.

· The earn-out payment of up to 2.5 million Hydra Industries shares, subject to certain customary anti-dilution adjustments (having a value of up to $25 million at an assumed value of $10.00 per share) (the “Earn-out Consideration”) shall be paid to the Selling Group exclusively in Purchaser Shares and will be determined based on the Inspired Group’s performance in certain jurisdictions through September 30, 2018 pursuant to a formula set forth in Schedule 5 to the Sale Agreement. For a more detailed discussion of the Earn-out Consideration, see the section entitled “The Business Combination Proposal — The Sale Agreement — Consideration.”

· The Cash Consideration is anticipated to be funded through a combination of (i) cash held in our trust account after redemptions (as described herein), (ii) the proceeds of the Macquarie Forward Purchase and (iii) additional funds, if any, otherwise available at closing. If the Company’s available cash at closing is insufficient to pay all liabilities and obligations of the Company and Target due and required to be paid at closing or by reason of closing, the Selling Group may elect to not consummate the Business Combination. At November 17, 2016, the balance in our trust account was approximately $46 million. For additional information regarding sources and uses for funding the Total Consideration, see “The Business Combination Proposal — Sources and Uses for the Business Combination.” For more information on the Company’s shares, see the section entitled “The Business Combination Proposal — Total Shares of Hydra Common Stock to be Issued in the Business Combination.” For more information about the Sale Agreement and related transaction agreements, see the section entitled “The Business Combination Proposal — The Sale Agreement.”

· It is anticipated that, following completion of the Business Combination and if there are no further redemptions, Hydra Industries’ existing public stockholders will retain an ownership interest of approximately 26% in Hydra and our initial stockholders and affiliates will retain an ownership interest of approximately 23% in Hydra Industries. If any of Hydra’s existing public stockholders exercise their redemption rights, the ownership interest in Hydra Industries of Hydra Industries’ public stockholders will decrease. These ownership percentages with respect to Hydra following the Business Combination do not take into account (i) the issuance of any shares upon completion of the Business Combination under the Company’s proposed 2016 Long- Term Incentive Plan (the “Incentive Plan”) or (ii) the 17,500,000 warrants to purchase up to a total of 8,750,000 shares of Hydra Industries common stock that will remain outstanding following the Business Combination. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Hydra Industries’ existing stockholders in Hydra Industries will be different. See “Summary of the Proxy Statement — Impact of the Business Combination on Hydra’s Public Float” for further information.

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· Our management and board of directors considered various factors in determining whether to approve and recommend to our stockholders the Sale Agreement and the transactions contemplated thereby, including determining that the value of the Business Combination is equal to at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $2,800,000 payable to the underwriters of our IPO and taxes payable on interest earned). For more information about our decision-making process, see the section entitled “The Business Combination Proposal — Hydra Industries’ Board of Directors’ Reasons for the Approval of the Business Combination.”

· Pursuant to our existing amended and restated certificate of incorporation, as amended (the “existing charter”), in connection with the Business Combination, holders of our public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the existing charter. As of November 17, 2016, this would have amounted to approximately $10.05 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of our common stock for cash and will no longer own shares of the Company and will not participate in the future growth, if any, of the Company. Such a holder will be entitled to receive cash for its public shares only if it (i) affirmatively votes for or against the Business Combination Proposal and (ii) properly demands redemption and delivers its shares (either physically or electronically) to our transfer agent at least two business days prior to the special meeting. See the section entitled “Special Meeting of Hydra Industries Stockholders— Redemption Rights.”

· In addition to voting on the Business Combination Proposal, at the special meeting, the stockholders of Hydra Industries will be asked to vote upon:

· The Charter Proposals — to approve and adopt separate proposals for amendments to the existing charter, in each case effective upon the closing of the Business Combination:

· Proposal 2 — increase the Company’s authorized common stock (“Proposal 2”);

· Proposal 3 — provide for the declassification of our board of directors and make certain related changes (“Proposal 3”);

· Proposal 4 —provide for certain additional changes, including changing the Company’s name from “Hydra Industries Acquisition Corp.” to “Inspired Entertainment, Inc.” and making the Company’s corporate existence perpetual, which our board of directors believes are necessary or appropriate to address the circumstances and needs of the Company following the Business Combination (“Proposal 4”); and

· Proposal 5 – provide the Company with the ability to restrict securities ownership by persons who fail to comply with informational or other regulatory requirements under applicable gaming laws, who are found unsuitable to hold the Company’s securities by gaming authorities or who could by holding its securities cause the Company or any affiliate to fail to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority (“Proposal 5” and each of Proposals 2, 3, 4 and 5, a “Charter Proposal,” and collectively, the “Charter Proposals”), all as reflected in the proposed second amended and restated certificate of incorporation of the Company (the “proposed charter”) attached hereto as Annex B ;

· In addition to voting on the Business Combination Proposal and Charter Proposals, at the special meeting, the stockholders of Hydra Industries will be asked to vote upon:

· The Corporate Governance Proposals – to approve and adopt separate proposals related to the corporate governance of Hydra Industries:

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· Proposal 6 — to consider and vote upon a proposal to elect seven directors, effective upon the closing of the Business Combination, to serve on our board of directors until the 2017 annual meeting of stockholders and until their respective successors are duly elected and qualified. Pursuant to the Sale Agreement, it is a condition to the institutional sellers’ obligation to consummate the Business Combination that three individuals designated by their representative, Vitruvian Directors I Limited, have been duly elected or appointed to the board of directors of the Company. Nicholas Hagen, John Vandemore and Philip Russmeyer have been so designated. Our board of directors has nominated for election to the board at the special meeting each of these designees, as well as (i) A. Lorne Weil, a current director, our current CEO and Chairman of the Board, (ii) Luke Alvarez, the current CEO of Inspired and prospective CEO of the Company following the Business Combination, (iii) Ira Raphaelson and (iv) Roger Withers, each to take office immediately upon the closing of the Business Combination (the “Director Election Proposal”). Messrs. Dannhauser, Miller, Shea and Stevens, who currently serve on our board, have submitted prospective resignations from their positions as directors, effective immediately upon the closing of the Business Combination. This proposal is conditioned upon the approval of Proposal 3, but is not conditioned upon the approval of the Business Combination Proposal. However, if the Business Combination Proposal is not approved, the proposed amendments to the Company’s existing charter, including Proposal 3, will not be implemented, the prospective resignations submitted by four of our current directors will not become effective, and the election of the seven directors will not take effect. For a description of the Stockholders Agreement which is to be executed and delivered at the closing of the Business Combination as described in Schedule 4 to the Sale Agreement, which provides, among other things, for the composition of the board of directors following the Business Combination, see “Management After the Business Combination – Stockholders Agreement.”

· Proposal 7 — to consider and vote upon a proposal to approve and adopt, effective upon the closing of the Business Combination, the Incentive Plan (the “Incentive Plan Proposal”); and

· Proposal 8 — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Proposals or the Director Election Proposal (the “Adjournment Proposal”).

· The transactions contemplated by the Sale Agreement will be consummated only if the Business Combination Proposal and, unless waived, the Director Election Proposal and the Charter Proposals are approved at the special meeting. In addition, (i) the Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal, (ii) the Charter Proposals are conditioned on the approval of the Business Combination Proposal and (iii) the Director Election Proposal is conditioned on the approval of Proposal 3. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement.

· Upon the closing of the Business Combination, and the effectiveness of Proposal 3 of the Charter Proposals, we anticipate increasing the size of our board of directors from five to seven directors. Four incumbent directors of Hydra Industries, Messrs. Dannhauser, Miller, Shea and Stevens, have submitted their prospective resignations from our board of directors effective immediately upon closing of the Business Combination. Concurrently, we are nominating three designees of Vitruvian Directors I Limited , as well as (i) A. Lorne Weil, a current director, our current CEO and Chairman of the Board, (ii) Luke Alvarez, the current CEO of Inspired and prospective CEO of the Company following the Business Combination, (iii) Ira Raphaelson and (iv) Roger Withers, each to take office immediately upon the closing of the Business Combination (the “Director Election Proposal”). If all director nominees are elected and the Business Combination is consummated, our board of directors will consist of one re-elected Hydra Industries director, A. Lorne Weil, along with six newly elected directors, including Luke Alvarez, who shall also continue as the CEO of Inspired and become CEO of Hydra Industries, as well as Nicholas Hagen, Ira Raphaelson, Philip Russmeyer, John Vandemore and Roger Withers. See the sections entitled “Director Election Proposal” and “Management After the Business Combination.”

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· Unless waived by the parties to the Sale Agreement, in accordance with applicable law, the closing of the Business Combination is subject to a number of conditions set forth in the Sale Agreement including, among others, receipt of the requisite stockholder approval contemplated by this proxy statement. For more information about the closing conditions to the Business Combination, see the section entitled “The Business Combination Proposal — The Sale Agreement — Conditions to Closing of the Business Combination.”

· The Sale Agreement may be terminated at any time prior to the consummation of the Business Combination upon agreement of the parties thereto, or by the Selling Group or the Company acting alone, in specified circumstances. For more information about the termination rights under the Sale Agreement, see the section entitled “The Business Combination Proposal— The Sale Agreement — Termination.”

· The proposed Business Combination involves numerous risks. For more information about these risks, see the section entitled “Risk Factors.”

· In considering the recommendation of Hydra Industries’ board of directors to vote FOR the proposals presented at the special meeting, you should be aware that our executive officers and members of our board of directors have interests in the Business Combination that are different from, or in addition to, the interests of our stockholders generally. The members of our board of directors were aware of these differing interests and considered them, among other matters, in evaluating and negotiating the transaction agreements and in recommending to our stockholders that they vote in favor of the proposals presented at the special meeting. These interests include, among other things:

· the fact that our Sponsors, our independent directors and officers paid an aggregate of $3,775,000 for their founder shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

· the fact that certain directors and officers may enter into employment agreements with the Company after the consummation of the Business Combination;

· the Macquarie Forward Purchase;

· the advisory services fee payable to Macquarie Capital upon consummation of the Business Combination;

· the fact that A. Lorne Weil, our Chairman and Chief Executive Officer and the managing member of our Hydra Sponsor, has agreed that he will be liable to us, and our Macquarie Sponsor has agreed to indemnify Mr. Weil for 50% of any such liability, if and to the extent any claims by a vendor for services rendered or products sold to us, or the Target, reduce the amount of funds in the Trust Account to below $10.00 per public share or such lesser amount per public share held in the Trust Account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act;

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· the fact that our directors and officers will lose their entire investment in the Company if the Business Combination is not completed;

· the fact that our Sponsors will lose the Contribution and additional funds loaned to the Company if the Business Combination is not completed;

· the continuation of one of our five existing directors as a director of the Company; and

· the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence our directors in making their recommendation that you vote in favor of the approval of the Business Combination. These interests were considered by our Board when our Board approved the Business Combination.

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Hydra Industries” refer to Hydra Industries Acquisition Corp., and the terms “combined company” and “post-combination company” refer to Hydra Industries and its subsidiaries, including Inspired, following the consummation of the Business Combination.

In this document:

“Accruing Negative Consideration” means an amount equal to £21,500 per day from but excluding July 2, 2016 through and including the closing of the Business Combination

“Base Consideration” means an amount equal to (i) £100,363,394.31, plus (ii) any amount by which the Company’s transaction expenses (“Purchaser Costs”) referred to in Schedule 6 to the Sale Agreement exceeds £8,237,909.41, minus (iii) certain expenses of the Selling Group noticed by the Institutional Vendors’ Representative, not to exceed £3,000,000, minus (iv) certain excess interest payments owing on the Inspired Group’s existing financing arrangements.

“Business Combination” means the acquisition by us of all of the equity and shareholder loan notes of Target Parent and the Inspired Group.

“Cash Consideration” means an amount equal to (i) the Company’s then current cash in trust (after any redemptions), the $20,004,347 proceeds of the Macquarie Forward Purchase and any other available funds, minus (ii) an agreed amount of Purchaser Costs (including expenses incurred in connection with the preparation of the proxy statement and meetings with Hydra Industries stockholders), minus (iii) an agreed amount of the Selling Group’s transaction expenses, minus (iv) the amount of repayment required under certain of the Inspired Group’s financing arrangements, minus (v) £5 million for the purposes of retaining cash on the Company’s balance sheet.

“Completion Payment” means the aggregate of the Base Consideration and the Accruing Negative Consideration.

“Contribution” means the $229,230.40 loan deposited into the trust account subsequent to the Extension Meeting (equal to $0.05 for each of the 4,584,608 public shares of the Company that were not redeemed in connection with the extension).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Earn-out Consideration” means an amount of Purchaser Shares, not to exceed 2,500,000 Purchaser Shares, to be determined based on Inspired’s performance in certain jurisdictions through September 30, 2018 pursuant to a formula set forth in Schedule 5 to the Sale Agreement.

“existing charter” means our amended and restated certificate of incorporation filed with the Secretary of State of the State of Delaware on October 24, 2014, as amended.

“founder shares” means the 2,875,000 shares of Hydra Industries common stock issued to our Sponsors in a private placement prior to our IPO, 300,000 of which were forfeited as a result of the underwriters’ overallotment option in our IPO not being exercised and 575,000 of which were returned to Hydra Industries and subsequently cancelled prior to the consummation of the IPO.

“Hydra Industries” or “Hydra” means Hydra Industries Acquisition Corp., a Delaware corporation.

“Hydra Industries common stock” or “our common stock” means common stock, par value $0.0001 per share, of Hydra Industries.

“Hydra Sponsor” means Hydra Industries Sponsor LLC.

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“initial stockholders” means our Sponsors and our officers, directors and advisors that hold founder shares.

“Inspired” means Inspired Gaming Group Ltd. and its affiliates.

“IPO” means the initial public offering of Hydra Industries units, each comprised of one share of common stock, one right and one warrant, consummated on October 29, 2014 with respect to 8,000,000 units at $10.00 per unit.

“Macquarie Forward Purchase” means the purchase of 2,000,000 units and 500,000 shares of the Company’s common stock for an aggregate purchase price of $20,004,347 by our Macquarie Sponsor pursuant to the Contingent Forward Purchase Contract, dated as of October 24, 2014, by and between the Company and the Macquarie Sponsor.

“Macquarie Sponsor” means MIHI LLC.

“Private Placement Warrants” means the 7,500,000 warrants issued to our Sponsors in the private placement that occurred simultaneously with the consummation of our IPO for a purchase price of $0.50 per placement warrant for a total purchase price of approximately $3,750,000, each of which is exercisable for one-half of one share of Hydra Industries common stock at a price of $5.75 per half share ($11.50 per whole share), in accordance with its terms. Warrants may be exercised only for a whole number of shares of Hydra Industries’ common stock. No fractional shares will be issued upon exercise of the warrants.

“Proposed Charter” means the proposed second amended and restated certificate of incorporation of Hydra Industries, which will become the Company’s certificate of incorporation upon the approval of the Charter Proposals and the Business Combination Proposal and the consummation of the Business Combination. A copy of the proposed charter is attached hereto as Annex B .

“Public Shares” means shares of Hydra Industries common stock issued in our IPO (whether they were purchased in the IPO or thereafter in the open market).

“Public Stockholders” means holders of public shares, including the initial stockholders to the extent the initial stockholders hold public shares, provided that the initial stockholders will be considered a “public stockholder” only with respect to any public shares held by them.

“Public Warrants” means the warrants issued in Hydra Industries’ IPO, each of which is exercisable for one-half of one share of Hydra Industries common stock, in accordance with its terms.

“Purchase Price” means (i) the Base Consideration, minus (ii) the Accruing Negative Consideration, plus (iii) the Earn-out Consideration.

“Purchaser Shares” means shares of our common stock issued as Stock Consideration.

“Rights” means the right, underlying each of our units, to receive one-tenth (1/10) of one share of our common stock upon consummation of the Business Combination, even if the holder of such right redeemed all shares of common stock held by it in connection with the Business Combination.

“Sale Agreement” means the Sale Agreement, dated as of July 13, 2016, as it may be amended, by and among the Company, the Selling Group, the Target Parent, DMWSL 632 Limited and Gaming Acquisitions Limited.

“Securities Act” means the Securities Act of 1933, as amended.

“Selling Group” means those persons identified in Schedule 1 to the Sale Agreement.

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“Special Meeting” means the special meeting of stockholders of Hydra Industries that is the subject of this proxy statement.

“Sponsors” means Hydra Industries Sponsor LLC, a Delaware limited liability company, and MIHI LLC, a Delaware limited liability company (each individually, a “Sponsor”).

“Stock Consideration” means the Total Consideration minus the Cash Consideration, divided by $10.00 per share.

“Target” means DMWSL 633 Limited and its consolidated subsidiaries (including Inspired).

“Target Parent” means DMWSL 633 Limited.

“Total Consideration” means (i) the Base Consideration, minus (ii) the Accruing Negative Consideration.

“Warrants” means the Private Placement Warrants and the Public Warrants, taken together.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to our stockholders. We urge stockholders to read carefully this entire proxy statement, including the annexes and the other documents referred to herein. You should also read carefully the accompanying Annual Report on Form 10-K for the year ended December 31, 2015.

Q: Why am I receiving this proxy statement?

A: Our stockholders are being asked to consider and vote upon a proposal, which we refer to as the “Business Combination Proposal,” to approve a sale agreement (the “Sale Agreement”) providing for the acquisition by us of all of the outstanding equity and shareholder loan notes of Inspired Gaming Group (“Inspired”) through the purchase of all of the outstanding equity and shareholder loan notes of Target Parent. Target Parent, through its subsidiaries, conducts its business under the “Inspired Gaming Group” name. We refer to Target Parent and its consolidated subsidiaries (including Inspired) hereafter collectively as “Target,” and we refer to such acquisition and the other transactions contemplated by the Sale Agreement collectively as the “Business Combination.”

The Sale Agreement reflects a transaction value for the Business Combination of £200 million (equivalent to approximately $264 million based on the USD/GBP exchange rate of $1.32/£1.00 as of the July 13, 2016 date of the Sale Agreement), plus an earn-out of up to 2.5 million Hydra shares, subject to certain customary anti-dilution adjustments (having a value of up to $25 million at an assumed value of $10.00 per share). The transaction is expected to represent approximately £96 million of equity value after adjusting for the maintenance of debt and certain other liabilities (equivalent to approximately $126 million based on the USD/GBP exchange rate of $1.32/£1.00 as of July 13, 2016). Exclusive of the potential earn-out, the consideration to be paid for the equity and shareholder loan notes of the Target Parent and the Inspired Group will be the aggregate of the Base Consideration (as defined below), less a fixed amount of Accruing Negative Consideration (£21,500 per day from but excluding July 2, 2016 through and including the closing of the Business Combination).

The “Base Consideration” to be paid for the equity and shareholder loan notes pursuant to the Sale Agreement will equal (i) £100,363,394, plus (ii) any amount by which the Company’s transaction expenses (“Purchaser Costs”) referred to in Schedule 6 to the Sale Agreement exceeds £8,237,909, minus (iii) certain expenses of the Selling Group noticed by its representatives, not to exceed £3,000,000, minus (iv) certain excess interest payments owing on the Inspired Group’s existing financing arrangements.

Upon closing of the Business Combination, the Cash Consideration will be deposited into an account designated by the Selling Group’s attorneys and the Company shall not be responsible for the application of the funds to individual members of the Selling Group.

The Stock Consideration will be the number of Purchaser Shares equal to the amount of the Completion Payment minus the Cash Consideration, divided by $10.00 per share, and is currently estimated to be approximately 10.7 million shares of our common stock, assuming, for illustrative purposes only, no redemption of shares by our existing public stockholders and closing of the Business Combination as of September 24, 2016. The Stock Consideration will fluctuate if either of these assumptions should change. For example, should redemption of shares by our existing public stockholders reach 2.3 million shares, or 49.6% of the public shares currently outstanding, and assuming that the Business Combination closed as of September 24, 2016, it is estimated that the Stock Consideration would be approximately 12.6 million shares of our common stock.

The earn-out payment of up to 2.5 million Hydra shares, subject to certain customary anti-dilution adjustments (having a value of up to $25 million at an assumed value of $10.00 per share) (the “Earn-out Consideration”) shall be paid to the Selling Group exclusively in Purchaser Shares and will be determined based on the Inspired Group’s performance in certain jurisdictions through September 30, 2018 pursuant to a formula set forth in Schedule 5 to the Sale Agreement.

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The Cash Consideration is anticipated to be funded through a combination of (i) cash held in our trust account after redemptions (as described herein), (ii) the proceeds of the Macquarie Forward Purchase and (iii) additional funds, if any, otherwise available at closing. If the Company’s available cash at closing is insufficient to pay all liabilities and obligations of the Company and Target due and required to be paid at closing or by reason of closing, the Selling Group may elect to not consummate the Business Combination. At November 17, 2016, the balance in our trust account was approximately $46 million. For additional information regarding sources and uses for funding the Total Consideration, see “The Business Combination Proposal — Sources and Uses for the Business Combination.” For more information on the Company’s shares, see the section entitled “The Business Combination Proposal — Total Shares of Hydra Common Stock to be Issued in the Business Combination.” For more information about the Sale Agreement and related transaction agreements, see the section entitled “The Business Combination Proposal — The Sale Agreement.”

It is anticipated that, following completion of the Business Combination and if there are no redemptions, Hydra’s public stockholders will retain an ownership interest of approximately 26% in Hydra and our initial stockholders and affiliates will retain an ownership interest of approximately 23% in Hydra. If any of Hydra’s stockholders exercise their redemption rights, the ownership interest in Hydra Industries of Hydra Industries’ public stockholders will decrease. These percentages are calculated based on a number of assumptions (as described below) and are subject to adjustment in accordance with the terms of the Sale Agreement. A copy of the Sale Agreement is attached hereto as Annex A .

Our common stock, units, rights and warrants are currently listed on The NASDAQ Capital Market (“NASDAQ”) under the symbols “HDRA,” “HDRAU,” “HDRAR” and “HDRAW,” respectively. We will apply to continue the listing of our common stock and warrants on NASDAQ under the new symbols “INSE” and “INSEW,” respectively, upon the closing of the Business Combination. At the closing, our units will separate into their component shares of Hydra common stock, par value $0.0001 per share (“Hydra common stock”), and warrants to purchase one-half of one share of Hydra common stock, and cease separate trading. Upon consummation of the Business Combination, holders of our rights will receive one-tenth (1/10) of one share of Hydra common stock in respect of each right, with no fractional shares being issued, and such rights will cease to be outstanding.

This proxy statement and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. You should read this proxy statement and its annexes carefully and in their entirety. You should also carefully read the accompanying Annual Report on Form 10-K for the year ended December 31, 2015.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its annexes.

Q: What is being voted on at the special meeting?

A: Below are proposals on which our stockholders are being asked to vote.

1. To approve the Sale Agreement and the other transactions contemplated by the Sale Agreement (the “Business Combination Proposal”);

To approve and adopt the following separate proposals for amendments to the Company’s existing charter, in each case effective upon the closing of the Business Combination:

2. To increase the Company’s authorized common stock (“Proposal 2”);

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3. To provide for the declassification of our board of directors and make certain related changes (“Proposal 3”);

4. To provide for certain additional changes, including changing the Company’s name from “Hydra Industries Acquisition Corp.” to “Inspired Entertainment, Inc.” and making the Company’s corporate existence perpetual, which our board of directors believes are necessary or appropriate to address the circumstances and needs of the Company following the Business Combination (“Proposal 4”);

5. To provide the Company with the ability to restrict securities ownership by persons who fail to comply with informational or other regulatory requirements under applicable gaming laws, who are found unsuitable to hold the Company’s securities by gaming authorities or who could by holding its securities cause the Company or any affiliate to fail to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority (“Proposal 5”);

Each of Proposals 2, 3, 4 and 5, a “Charter Proposal”, and collectively, the “Charter Proposals.”

6. To elect seven directors, effective upon the closing of the Business Combination, to serve as directors on our board of directors until the 2017 annual meeting of stockholders and until their respective successors are duly elected and qualified (the “Director Election Proposal”);

7. To approve and adopt, effective upon the closing of the Business Combination, the Incentive Plan, a copy of which is attached hereto as Annex C (the “Incentive Plan Proposal”); and

8. To adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Proposals or the Director Election Proposal (this proposal is referred to herein as the “Adjournment Proposal”). This proposal will only be presented at the special meeting if there are not sufficient votes to approve the Business Combination Proposal, the Charter Proposals or the Director Election Proposal.

Q: Are the proposals conditioned on one another?

A: The transactions contemplated by the Sale Agreement will be consummated only if the Business Combination Proposal and, unless waived, the Director Election Proposal and Charter Proposals are approved at the special meeting. In addition, (i) the Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal, (ii) the Charter Proposals are conditioned on the approval of the Business Combination Proposal and (iii) the Director Election Proposal in conditioned on the approval of Proposal 3. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the proxy statement. It is important for you to note that in the event that the Business Combination Proposal, the Charter Proposals or the Director Election Proposal do not receive the requisite vote for approval, then (absent a waiver with respect to the Director Election Proposal and Charter Proposals) we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination by December 29, 2016 (subject to the requirements of law), we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

Q: Why is Hydra Industries providing stockholders with the opportunity to vote on the Business Combination?

A: Under the existing charter, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. We are seeking to obtain the approval of our stockholders for the Business Combination Proposal in order, among other things, to allow our public stockholders to effectuate redemptions of their public shares in connection with the closing of our Business Combination.

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Q: What will happen in the Business Combination?

A: At the closing of the Business Combination, the Company will purchase all of the existing equity and shareholder loan notes of Target Parent from the Selling Group in exchange for their respective portion of the Total Consideration (excluding any potential Earn-out Consideration), consisting of the Cash Consideration and the Stock Consideration, as determined in accordance with the Sale Agreement. If Inspired meets certain performance targets in certain jurisdictions through September 30, 2018, pursuant to a formula set forth in Schedule 5 to the Sale Agreement, all or part of the Earn-out Consideration will be paid to the Selling Group in the form of Hydra shares.

Q: What equity stake will (i) current Hydra Industries stockholders hold in the Company after the closing of the Business Combination and (ii) Hydra Industries hold in Target after the closing of the Business Combination?

A: It is anticipated that, following completion of the Business Combination and if there are no redemptions, Hydra Industries’ public stockholders will retain an ownership interest of approximately 26% of Hydra Industries and our initial stockholders and affiliates will retain an ownership interest of approximately 23% of Hydra Industries. If any of Hydra Industries’ stockholders exercise their redemption rights, the ownership interest in Hydra Industries of Hydra Industries’ public stockholders will decrease. If 50% of Hydra Industries’ public stockholders exercise their redemption rights, Hydra Industries’ public stockholders will retain an ownership interest of approximately 15% of Hydra Industries and our initial stockholders and affiliates will retain an ownership interest of approximately 23% of Hydra Industries. Upon the closing of the Business Combination, Hydra Industries will own 100% of the outstanding equity of Target Parent. These ownership percentages with respect to Hydra Industries following the Business Combination do not take into account (i) the issuance of any shares upon completion of the Business Combination under the proposed Incentive Plan or (ii) any or all of the 17,500,000 warrants to purchase up to a total of 8,750,000 shares of Hydra Industries common stock that will remain outstanding following the Business Combination. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Hydra Industries’ existing stockholders in Hydra Industries will be different. If fewer than 50% of Hydra Industries’ public stockholders exercise their redemption right, the percentage ownership retained by Hydra Industries’ public stockholders would be more than 15%, while if more than 50% of Hydra Industries’ public stockholders exercise their redemption rights, the percentage ownership retained by Hydra Industries’ public stockholders would be less than 15%. In addition, for example, if the Business Combination is consummated at a later date so that the daily Accruing Negative Consideration under the Sale Agreement is computed for a longer period, if certain expenses of the Selling Group are greater than assumed, or if certain interest payments of the Inspired Group are greater than assumed, the effect would be to decrease the aggregate consideration payable to the Selling Group and increase the percentage ownership retained by Hydra Industries’ existing stockholders; if certain expenses of the Company are greater than assumed, the effect would be to increase the aggregate consideration payable to the Selling Group and decrease the percentage ownership retained by Hydra Industries’ existing stockholders. See “Summary of the Proxy Statement—Impact of the Business Combination on Hydra Industries’ Public Float” for further information.

Q: What conditions must be satisfied to complete the Business Combination?

A: There are a number of closing conditions in the Sale Agreement, including that our stockholders have approved and adopted the Sale Agreement and, unless waived, the Director Election Proposal and Charter Proposals. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “The Business Combination Proposal — The Sale Agreement — Conditions to Closing of the Business Combination.”

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Q: Why is Hydra Industries proposing the Charter Proposals?

A: The proposed amended charter that we are asking our stockholders to approve in connection with the Business Combination provides for an increase in the number of authorized shares of our common stock, the declassification of our board of directors and certain additional changes which our board of directors believes are necessary or appropriate to address the circumstances and needs of the Company following the Business Combination. Unless waived, approval of the Director Election Proposal and Charter Proposals is a condition to the consummation of the Business Combination pursuant to the Sale Agreement.

Q: Why is Hydra Industries proposing the Director Election Proposal?

A: Upon the closing of the Business Combination, four of Hydra Industries’ incumbent directors, Messrs. Dannhauser, Miller, Shea and Stevens, will resign, and the size of our board of directors will be increased from five to seven directors. The Hydra Industries board has nominated A. Lorne Weil, Luke Alvarez, Nicholas Hagen, Ira Raphaelson, Philip Russmeyer, John Vandemore and Roger Withers to serve as directors for a term expiring at the Company’s annual meeting in 2017. See the section entitled “Director Election Proposal” for additional information.

Q: Why is Hydra Industries proposing the Incentive Plan Proposal?

A: The purpose of the Incentive Plan is to enable us to offer eligible employees, directors and consultants cash and stock-based incentive awards in order to attract, retain and reward these individuals and strengthen the mutuality of interests between them and our stockholders. Stockholder approval and adoption of the Incentive Plan will be effective only upon the closing of the Business Combination.

Q: What happens if I sell my shares of Hydra Industries common stock before the special meeting?

A: The record date for the special meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Hydra Industries common stock after the record date, but before the special meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of Hydra Industries common stock prior to the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account.

Q: What vote is required to approve the proposals presented at the special meeting?

A: Approval of the Business Combination Proposal, Incentive Plan Proposal and Adjournment Proposal requires the affirmative vote of a majority of the votes cast by stockholders present in person or represented by proxy at the special meeting. Accordingly, a Hydra Industries stockholder’s failure to vote by proxy or to vote in person at the special meeting or the failure of a Hydra Industries stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee (a “broker non-vote”) will result in that stockholder’s shares not being counted towards the number of shares of Hydra Industries common stock required to validly establish a quorum, but if a valid quorum is otherwise established, it will have no effect on the outcome of any vote on the Business Combination Proposal, the Incentive Plan Proposal or the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the outcome of the Business Combination Proposal, the Incentive Plan Proposal or the Adjournment Proposal.

The approval of the Charter Proposals each require the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Accordingly, a Hydra Industries stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting or a broker non-vote with regard to any such proposal will have the same effect as a vote “AGAINST” such proposal.

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Directors are elected by a plurality of all of the votes cast by holders of shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. This means that the seven nominees will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Abstentions and broker non-votes will have no effect on the election of directors.

Q: May Hydra Industries or the Sponsors, Hydra Industries’ directors, officers, advisors or their affiliates purchase shares in connection with the Business Combination?

A: In connection with the stockholder vote to approve the proposed Business Combination, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of the consummation of the Business Combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We have an insider trading policy which requires insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information and (ii) clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including, but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.

Q: How many votes do I have at the special meeting?

A: Our stockholders are entitled to one vote at the special meeting for each share of Company common stock held of record as of November 9, 2016, the record date for the special meeting. As of the close of business on the record date, there were 6,584,608 outstanding shares of our common stock.

Q: What constitutes a quorum at the special meeting?

A: Holders of a majority in voting power of the Company’s common stock issued and outstanding and entitled to vote at the special meeting, present in person or represented by proxy, constitute a quorum. In the absence of a quorum, a majority of our stockholders, present in person or represented by proxy, will have the power to adjourn the special meeting. As of the record date for the special meeting, 3,292,305 shares of our common stock would be required to achieve a quorum.

Q: How will Hydra Industries’ Sponsors, directors and officers vote?

A: In connection with our IPO, we entered into letter agreements (the “2014 Letter Agreements”) with each of our initial stockholders, consisting of the Sponsors, our directors, our executive officers and our advisors, pursuant to which each agreed to vote any shares of Hydra Industries common stock owned by them in favor of the Business Combination Proposal. None of our initial stockholders has purchased any shares during or after our IPO in the open market and, with the exception of the Macquarie Forward Purchase, neither we nor our initial stockholders have entered into agreements, and are not currently in negotiations, to purchase shares. As of the date hereof, our initial stockholders and affiliates own shares equal to 20.0% of our issued and outstanding shares of common stock.

In addition, concurrently with the execution of the Sale Agreement, our Sponsors entered into Voting and Support Letter Agreements with Target (the “Voting and Support Agreements”), copies of which are attached hereto as Annex D . Pursuant to the Voting and Support Agreements, the Sponsors, among other things, confirmed their obligations under the 2014 Letter Agreements to vote the shares of Hydra Industries common stock held by them (representing as of the record date approximately 30% of the voting power of the Company) in favor of the Business Combination Proposal described in this proxy statement, and agreed that the Selling Group would be entitled to enforce such obligations.

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Q: What interests do Hydra Industries’ current officers and directors have in the Business Combination?

A: Our directors and executive officers, as well as our nominees to our board of directors, have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. These interests include:

· the fact that our Sponsors, our independent directors and officers paid an aggregate of $3,775,000 for their founder shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

· the fact that certain directors and officers may enter into employment agreements with the Company after the consummation of the Business Combination;

· the Macquarie Forward Purchase;

· the advisory services fee payable to Macquarie Capital upon consummation of the Business Combination;

· the fact that A. Lorne Weil, our Chairman and Chief Executive Officer and the managing member of our Hydra Sponsor, has agreed that he will be liable to us, and our Macquarie Sponsor has agreed to indemnify Mr. Weil for 50% of any such liability, if and to the extent any claims by a vendor for services rendered or products sold to us, or the Target, reduce the amount of funds in the Trust Account to below $10.00 per public share or such lesser amount per public share held in the Trust Account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act;

· the fact that our directors and officers will lose their entire investment in the Company if the Business Combination is not completed;

· the fact that our Sponsors will lose the Contribution and additional funds loaned to the Company if the Business Combination is not completed;

· the continuation of one of our five existing directors as a director of the Company; and

· the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence our directors in making their recommendation that you vote in favor of the approval of the Business Combination. These interests were considered by our Board when our Board approved the Business Combination.

Q: What happens if I vote against the Business Combination Proposal?

A: If the Business Combination Proposal is not approved and we do not otherwise consummate an alternative business combination and close such transaction by December 29, 2016 (subject to the requirements of law), we will be required to dissolve and liquidate our trust account by returning the then remaining funds (including interest income, net of taxes payable and an amount up to $50,000 to pay dissolution expenses) in such account to the public stockholders.

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Q: Do I have redemption rights?

A: If you are a holder of public shares, you may redeem your public shares for cash equal to a pro rata share of the aggregate amount on deposit in the trust account which holds the proceeds of our IPO as of two business days prior to the consummation of the Business Combination, less taxes payable, upon the consummation of the Business Combination. A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming his, her or its shares or, if part of such a group, the group’s shares, with respect to an aggregate of 25% or more of the shares of common stock sold in the IPO. Our Sponsors and initial stockholders have agreed to waive their redemption rights with respect to any shares of our capital stock they may hold in connection with the consummation of the Business Combination, and the founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. For illustrative purposes, based on funds in the trust account of approximately $46 million on November 17, 2016, the estimated per share redemption price would have been approximately $10.05. Additionally, shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the trust account (including interest but net of taxes payable and dissolution expenses) in connection with the liquidation of the trust account. If the Business Combination is not consummated, we may enter into an alternative business combination and close such transaction by December 29, 2016 (subject to the requirements of law).

Q: As long as I vote on the Business Combination Proposal, will how I vote affect my ability to exercise redemption rights?

A: No. You may exercise your redemption rights whether you vote your shares of Hydra Industries common stock for or against the Business Combination Proposal or any other proposal described in this proxy statement. As a result, the Sale Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash and the potential inability to meet the listing standards of NASDAQ.

Q: How do I exercise my redemption rights?

A: In order to exercise your redemption rights, you must (i) check the box on the proxy card to elect redemption, (ii) check the box on the proxy card marked “Shareholder Certification”, (iii) affirmatively vote either for or against the Business Combination Proposal and, (iv) prior to 5:00 p.m., Eastern time on December 9, 2016 (two business days before the special meeting), (x) submit a written request to our transfer agent that we redeem your public shares for cash, and (y) deliver your stock to our transfer agent physically or electronically through Depository Trust Company, or DTC. The address of Continental Stock Transfer & Trust Company, our transfer agent, is listed under the question “Who can help answer my questions?” below.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the phone number or address listed under the question “Who can help answer my questions?” below.

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Q: What are the federal income tax consequences of exercising my redemption rights?

A: Hydra Industries stockholders who exercise their redemption rights to receive cash from the trust account in exchange for their shares of Hydra Industries common stock generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the shares of Hydra Industries common stock redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. The redemption, however, may be treated as a distribution if it does not effect a meaningful reduction in the redeeming stockholder’s percentage ownership in Hydra Industries, taking into account certain attribution rules. Any such distribution will be treated as dividend income to the extent of our current or accumulated earnings and profits. Any distribution in excess of our earnings and profits will reduce the redeeming stockholders’ basis in the Hydra Industries common stock, and any remaining excess will be treated as gain realized on the sale or other disposition of the Hydra Industries common stock. See the section entitled “The Business Combination Proposal—Material U.S. Federal Income Tax Considerations for Stockholders Exercising Redemption Rights.”

Q: If I am a Hydra Industries warrantholder or rightholder, can I exercise redemption rights with respect to my warrants or rights?

A: No. The holders of our warrants or rights have no redemption rights with respect to our warrants or rights.

Q: If I am a Hydra Industries unit holder, can I exercise redemption rights with respect to my units?

A: No. Holders of outstanding units must separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares.

If you hold units registered in your own name, you must deliver the certificate for such units to Continental Stock Transfer & Trust Company, our transfer agent, with written instructions to separate such units into public shares and public warrants. This must be completed far enough in advance to permit the mailing of the public share certificates back to you so that you may then exercise your redemption rights with respect to the public shares upon the separation of the public shares from the units. See “How do I exercise my redemption rights?” above. The address of Continental Stock Transfer & Trust Company is listed under the question “Who can help answer my questions?” below.

If a broker, dealer, commercial bank, trust company or other nominee holds your units, you must instruct such nominee to separate your units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, our transfer agent. Such written instructions must include the number of units to be split and the nominee holding such units. Your nominee must also initiate electronically, using DTC’s deposit withdrawal at custodian (DWAC) system, a withdrawal of the relevant units and a deposit of an equal number of public shares and public warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights with respect to the public shares upon the separation of the public shares from the units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your public shares to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

Q: Do I have appraisal rights if I object to the proposed Business Combination?

A: No. There are no appraisal rights available to holders of Hydra Industries common stock in connection with the Business Combination.

Q: What happens to the funds held in the trust account upon consummation of the Business Combination?

A: If the Business Combination is consummated, the funds held in the trust account will be released (i) first, to pay Hydra Industries stockholders who properly exercise their redemption rights, (ii) after all redemption payments are made, the remaining cash balance will be used to pay an agreed amount of Purchaser Costs (including expenses incurred in connection with the preparation of the proxy statement and meetings with Hydra stockholders), an agreed amount of the Selling Group’s transaction expenses and the amount of repayment required under certain of the Inspired Group’s financing arrangements, and to retain £5 million of cash on the Company’s balance sheet, (iii) after all redemption payments and such fees, costs and expenses are paid, and such cash amount is retained on the balance sheet, the remaining cash balance will be paid to existing holders of equity and shareholder loan notes of Target as a component of the Cash Consideration of the Total Consideration.

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Q: What happens if the Business Combination is not consummated?

A: There are certain circumstances under which the Sale Agreement may be terminated. See the section entitled “The Business Combination Proposal — The Sale Agreement — Termination” for information regarding the parties’ specific termination rights.

If we do not consummate the Business Combination and fail to complete an initial business combination by December 29, 2016 (subject to the requirements of law), the existing charter provides that we will (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

We expect that the amount of any distribution our public stockholders will be entitled to receive upon our dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to Hydra Industries’ obligations under the Delaware General Corporation Law (“DGCL”) to provide for claims of creditors and other requirements of applicable law. Holders of our founder shares have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to Hydra Industries’ outstanding warrants to purchase common stock. Accordingly, the warrants, as well as the rights to receive shares of our common stock upon consummation of an initial business combination, will expire worthless.

Q: When is the Business Combination expected to be completed?

A: It is currently anticipated that the Business Combination will be consummated promptly following the special meeting, provided that all other conditions to the consummation of the Business Combination have been satisfied or waived. For a description of the conditions to the completion of the Business Combination, see the section entitled “The Business Combination Proposal — The Sale Agreement — Conditions to Closing of the Business Combination.”

Q: What do I need to do now?

A: You are urged to read carefully and consider the information contained in this proxy statement, including the annexes, and to consider how the Business Combination will affect you as a stockholder. You should also carefully read the accompanying Annual Report on Form 10-K for the year ended December 31, 2015. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

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Q: How do I vote?

A: If you were a holder of record of our common stock on November 9, 2016, the record date for the special meeting, you may vote with respect to the proposals in person at the special meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker, bank or nominee.

Q: What will happen if I abstain from voting or fail to vote at the special meeting?

A: At the special meeting, we will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. A failure to vote or an abstention will have the same effect as a vote “AGAINST” the Charter Proposals, but will have no effect on the other proposals. Additionally, if you abstain from voting or fail to vote at the special meeting, you will not be able to exercise your redemption rights (as described above).

Q: What will happen if I sign and return my proxy card without indicating how I wish to vote?

A: Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal described herein and in favor of all director nominees.

Q: If I am not going to attend the special meeting in person, should I return my proxy card instead?

A: Yes. Whether you plan to attend the special meeting or not, please read the enclosed proxy statement carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Q: If my shares are held in “street name,” will my broker, bank or other nominee automatically vote my shares for me?

A: No. Under the rules of various national and regional securities exchanges, your broker, bank or other nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to the stockholders at the special meeting will be considered non-discretionary and therefore your broker, bank or other nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your broker, bank or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purpose of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting. Your broker, bank or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your nominee to vote your shares in accordance with directions you provide.

Q: May I change my vote after I have mailed my signed proxy card?

A: Yes. You may change your vote by sending a later-dated, signed proxy card to our secretary at the address listed below so that it is received by our secretary prior to the special meeting or by attending the special meeting in person and voting. You also may revoke your proxy by sending a notice of revocation to our secretary, which must be received by our secretary prior to the special meeting.

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Q: What should I do if I receive more than one set of voting materials?

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards as well as the accompanying Annual Report on Form 10-K for the year ended December 31, 2015. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Q: Who will solicit and pay the cost of soliciting proxies?

A: Hydra Industries will pay the cost of soliciting proxies for the special meeting. Hydra Industries has engaged Morrow Sodali to assist in the solicitation of proxies for the special meeting. Hydra Industries has agreed to pay Morrow Sodali a fee of $15,000 plus costs and expenses and a per call fee for any incoming or outgoing stockholder calls for such services, which fee also includes Morrow Sodali acting as the inspector of elections at the special meeting. Hydra Industries will reimburse Morrow Sodali for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses, damages and expenses. Hydra Industries will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Hydra Industries’ common stock for their expenses in forwarding soliciting materials to beneficial owners of Hydra Industries’ common stock and in obtaining voting instructions from those beneficial owners. Our directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q: Who can help answer my questions?

A: If you have questions about the proposals or if you need additional copies of this proxy statement or the enclosed proxy card or the accompanying Annual Report on Form 10-K for the year ended December 31, 2015, you should contact:

Martin E. Schloss, Executive Vice President, General Counsel and Secretary
250 West 57th Street, Suite 2223

New York, New York 10107
Email: marty@hydramgmt.com

Tel: (646) 565-3861

You may also contact our proxy solicitor at:

Morrow Sodali
470 West Avenue

Stamford, Connecticut 06902

Tel: (800) 662-5200

Banks and brokers can call collect: (203) 658-9400

Email: HDRA.info@morrowco.com

To obtain timely delivery, our stockholders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

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If you intend to seek redemption of your public shares, you will need to send a letter requesting redemption and deliver your stock (either physically or electronically) to our transfer agent at least two business days prior to the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com

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SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the Business Combination and the proposals to be considered at the special meeting, you should read this entire proxy statement carefully, including the annexes. See also the section entitled “Where You Can Find More Information.” This proxy statement also includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” See “Target Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” below for additional information.

Unless otherwise specified, all share calculations do not take into account (i) the issuance of any shares upon completion of the Business Combination under the Company’s proposed Incentive Plan, or (ii) any of the 17,500,000 warrants to purchase up to a total of 8,750,000 shares of Hydra Industries common stock that will remain outstanding following the Business Combination (including 2,000,000 warrants issuable pursuant to the Macquarie Forward Purchase). Unless otherwise specified, currency amounts have been converted to U.S. dollars based on a USD/GBP exchange rate of $1.32/£1.00 as of the July 13, 2016 date of the Sale Agreement.

Parties to the Business Combination

Hydra Industries Acquisition Corp.

Hydra Industries is a Delaware special purpose acquisition company incorporated on May 30, 2014 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving Hydra Industries and one or more businesses.

Hydra Industries’ securities are traded on The NASDAQ Capital Market (“NASDAQ”) under the ticker symbols “HDRA,” “HDRAU,” “HDRAR” and “HDRAW.” We will apply to continue the listing of our common stock and warrants on NASDAQ under the new symbols “INSE” and “INSEW”, respectively, upon the closing of the Business Combination.

The mailing address of Hydra Industries’ principal executive office is 250 West 57 th Street, Suite 2223, New York, New York 10107 and its phone number is (646) 565-3861.

DMWSL 633 Limited

DMWSL 633 Limited (“Target Parent”) is an English private limited company incorporated on March 3, 2010 with unrestricted objects under its constitution.

The mailing address of Target Parent’s principal executive office is 3 The Maltings, Wetmore Road, Burton on Trent, Staffs, DE14 1SE, United Kingdom and its phone number is 00 44 (0) 1283 512777.

Inspired Business Overview

Inspired is a global gaming technology company, supplying Virtual Sports and Server Based Gaming (“SBG”) systems to regulated lottery, betting and gaming operators worldwide through an “omni-channel” distribution strategy. Inspired provides end-to-end digital gaming solutions on its proprietary and secure network that accommodates a wide range of devices, including land-based gaming machine products, mobile devices such as smartphones and tablets, as well as PC and social applications. Inspired believes this omni-channel distribution strategy, combined with its common technology platform, allows it to keep pace with evolving requirements in game play, security, technology and regulations in the global gaming and lottery industry.

Global gaming and lottery growth has been steady and resilient to economic cycles over the last decade. According to H2 Gambling Capital, it has grown at a 3.8% compounded annual growth rate from 2005 to 2015, driven by increased consumer spend and the introduction of new regulated markets.

During this period, digital gaming and lottery (online and mobile) have grown at a faster pace. According to H2 Gambling Capital, it has grown at a 10.6% compound annual growth rate, driven by rapid growth in the deployment of digital games and technologies such as Virtual Sports and digital SBG terminals into land-based venues in markets such as the U.K. and Italy, where regulators have supported the transition to digital, online and retail channels. According to H2 Gambling Capital, Digital now accounts for over 30% of gaming revenues in the U.K. and 9% of gaming revenues in Italy.

Inspired believes that the overall global gaming and lottery industry will continue to grow steadily, with more robust growth in mobile and land-based digital gaming and lottery markets. Inspired believes the industry is content driven and, much like music, videogames and motion pictures, will continue to be transformed by the propagation of digitally-networked technologies.

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Target Organizational Structure

The following diagram illustrates the organizational structure of the Company immediately following the Business Combination.

Redemption Rights

Pursuant to the existing charter, in connection with the Business Combination, holders of our public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the existing charter. As of November 17, 2016, this would have amounted to approximately $10.05 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Hydra Industries common stock for cash and will no longer own shares of Hydra Industries common stock and will have no right to participate in, or have any interest in, the future growth of the Company, if any. Such a holder will be entitled to receive cash for its public shares only if it (i) affirmatively votes for or against the Business Combination Proposal and (ii) properly requests redemption and delivers its shares (either physically or electronically) to our transfer agent at least two business days prior to the special meeting in accordance with the procedures described herein. See the section entitled “Special Meeting of Hydra Industries Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Impact of the Business Combination on Hydra Industries’ Public Float

It is anticipated that, following completion of the Business Combination and if there are no redemptions, Hydra Industries’ public stockholders will retain an ownership interest of approximately 26% in Hydra Industries and our initial stockholders and affiliates will retain an ownership interest of approximately 23% in Hydra Industries. If Hydra Industries’ stockholders exercise their redemption rights, the ownership interest in Hydra Industries of Hydra Industries’ public stockholders will decrease. Upon completion of the Business Combination, Hydra Industries will own 100% of the outstanding equity and shareholder loan notes of Target. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Hydra Industries’ existing stockholders in Hydra Industries will be different. If the Company’s available cash at closing is insufficient to pay all liabilities and obligations of the Company and Target due and required to be paid at closing or by reason of closing, the Selling Group may elect to not consummate the Business Combination. At November 17, 2016, the balance in our trust account was approximately $46 million.

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The following table illustrates varying potential future ownership levels in Hydra Industries assuming varying illustrative levels of redemptions by Hydra Industries’ public stockholders (and assuming consummation of the Business Combination as of September 24, 2016):

Assumed % of Hydra Industries Public Shares
Redeemed (and Proceeds Remaining in Trust Account After Redemption)
0% redeemed ($45.8
million remaining in
trust)
25% redeemed ($34.4
million remaining in
trust)
50% redeemed ($22.9
million remaining in
trust)
75% redeemed ($11.5
million remaining in
trust)
Hydra Industries public stockholders 25.9 % 20.3 % 15.1 % 10.4 %
Hydra Industries founders 7.6 % 7.6 % 7.7 % 8.4 %
Hydra Industries Board 0.5 % 0.5 % 0.5 % 0.5 %
Macquarie Sponsor 14.5 % 14.5 % 14.8 % 16.1 %
Existing Target equity and shareholder loan note holders 51.6 % 57.1 % 61.8 % 64.6 %

Ownership of Hydra Industries Following the Business Combination

It is anticipated that, following completion of the Business Combination and if there are no redemptions, our existing public stockholders will retain an ownership interest of approximately 26% in Hydra Industries and our initial stockholders and affiliates will retain an ownership interest of approximately 23% in Hydra Industries. If any of our existing public stockholders exercise their redemption rights, the ownership interest of Hydra Industries’ public stockholders will decrease and the ownership interest of the Selling Group will increase. These illustrative ownership percentages with respect to Hydra Industries following the Business Combination do not take into account (i) the issuance of any shares upon completion of the Business Combination under the Company’s proposed 2016 Long-Term Incentive Plan (the “Incentive Plan”) or (ii) the 17,500,000 warrants to purchase up to a total of 8,750,000 shares of Hydra Industries common stock that will remain outstanding following the Business Combination. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by our existing stockholders in Hydra Industries will be different.

Approval and Adoption of the Proposals Related to the Proposed Charter

At the special meeting, the Company’s stockholders will be asked to approve and adopt separate proposals for amendments to the existing charter to:

· Proposal 2 — increase the Company’s authorized common stock ;

· Proposal 3 — provide for the declassification of our board of directors and make certain related changes;

· Proposal 4 —provide for certain additional changes, including changing the Company’s name from “Hydra Industries Acquisition Corp.” to “Inspired Entertainment, Inc.” and making the Company’s corporate existence perpetual, which our board of directors believes are necessary or appropriate to address the circumstances and needs of the Company following the Business Combination; and

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· Proposal 5 — provide the Company with the ability to restrict securities ownership by persons who fail to comply with informational or other regulatory requirements under applicable gaming laws, who are found unsuitable to hold the Company’s securities by gaming authorities or who could by holding its securities cause the Company or any affiliate to fail to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority.

For more information, see the section entitled “The Charter Proposals.”

Appraisal Rights

Appraisal rights are not available to our stockholders in connection with the Business Combination.

Reasons for the Business Combination

We were organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. We have sought to capitalize on the ability of our management team to identify, acquire and partner with management to operate a business, focusing on the international gaming industry. The Business Combination was the result of a thorough search for a potential transaction utilizing the extensive network and investing and operating experience of our management team and board of directors. The terms of the Business Combination were the result of thorough negotiations between the representatives of Hydra Industries and Target.

From the date of our IPO through execution of the Sale Agreement on July 13, 2016, we identified and preliminarily evaluated more than 140 potential acquisition target companies, conducted initial business and financial due diligence or had meaningful discussions with representatives of 12 potential acquisition targets (other than Inspired), provided an initial non-binding indication of interest to five potential acquisition targets (other than Inspired) and submitted a letter of intent and commenced further due diligence with respect to two potential acquisition targets (other than Inspired). In doing so, we followed the initial set of criteria and guidelines outlined below which we believed were important in evaluating prospective targets. In reviewing the Target opportunity, our board considered the following factors consistent with our strategy:

· Middle-Market Businesses . We focused on the potential acquisition of one or more businesses which in our view would have an aggregate enterprise value of approximately $250 million to $500 million, determined according to reasonably accepted valuation standards and methodologies, including comparative analyses of selected companies and transactions we deemed comparable or relevant for such purposes, believing that the middle market segment would provide the greatest number of opportunities for investment and would be the market most consistent with our management team’s previous investment history. This segment is where we believed we had the strongest network to identify opportunities and where our experience in developing companies would be most useful.

· Businesses with Proven Track Records and Strong Free Cash Flow Generation. We focused on the potential acquisition of one or more businesses that already had consistent, stable and increasing free cash flow. We focused on businesses that had a history of strong operating and financial results, strong fundamentals, and predictable revenue streams.

· Businesses that Will Benefit from Being a Public Company. We focused on the potential acquisition of one or more businesses that would benefit from being publicly traded and could effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company.

· Experienced Management Team. We focused on the potential acquisition of one or more businesses with an experienced management team that could provide a platform for us to further develop the management capabilities of the acquired business. We sought to partner with a potential target’s management team and expected that the operating and financial abilities of our executive team and board would complement their own capabilities.

· Businesses with a Catalyst that Will Significantly Improve Financial Performance. We focused on the potential acquisition of one or more established businesses where we believed that our operating expertise could serve as a catalyst for near term improvement in the business performance or to help to develop the acquired business as a platform for long term growth.

Quorum and Required Vote for Proposals for the Special Meeting

A quorum of Hydra Industries stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if a majority of the common stock outstanding and entitled to vote at the special meeting is represented in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum.

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Approval of the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by stockholders present in person or represented by proxy at the special meeting. Accordingly, a Hydra Industries stockholder’s failure to vote by proxy or to vote in person at the special meeting or the failure of a Hydra Industries stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee (a “broker non-vote”) will result in that stockholder’s shares not being counted towards the number of shares of Hydra Industries common stock required to validly establish a quorum, but if a valid quorum is otherwise established, it will have no effect on the outcome of any vote on the Business Combination Proposal, the Incentive Plan Proposal or the Adjournment Proposal. Abstentions will also have no effect on the outcome of the Business Combination Proposal, the Incentive Plan Proposal or the Adjournment Proposal.

The approval of the Charter Proposals requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Accordingly, a Hydra Industries stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting, or a broker non-vote with regard to any Charter Proposal will have the same effect as a vote “AGAINST” such Charter Proposal.

Directors are elected by a plurality of all of the votes cast by holders of shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. This means that the seven nominees will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Abstentions and broker non-votes will have no effect on the election of directors.

The transactions contemplated by the Sale Agreement will be consummated only if the Business Combination Proposal and, unless waived, the Director Election Proposal and Charter Proposals are approved at the special meeting. In addition, (i) the Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal, (ii) the Charter Proposals are conditioned on the approval of the Business Combination Proposal and (iii) the Director Election Proposal is conditioned on the approval of Proposal 3.

The Adjournment Proposal does not require the approval of any other proposal to be effective. It is important for you to note that in the event that the Business Combination Proposal and, unless waived, the Director Election Proposal and Charter Proposals do not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination by December 29, 2016 (subject to the requirements of law), we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

Recommendation to Hydra Industries Stockholders

Our board of directors believes that each of the Business Combination Proposal, the Charter Proposals, the Director Election Proposal, the Incentive Plan Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of the Company and our stockholders and unanimously recommends that our stockholders vote “FOR” each of these proposals and “FOR” each of the director nominees.

When you consider the recommendation of our board of directors in favor of approval of these proposals, you should keep in mind that our directors, officers and nominees to our board of directors have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests as a stockholder. These interests include, among other things:

· the fact that our Sponsors, our independent directors and officers paid an aggregate of $3,775,000 for their founder shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

· the fact that certain directors and officers may enter into employment agreements with the Company after the consummation of the Business Combination;

· the Macquarie Forward Purchase;

· the advisory services fee payable to Macquarie Capital upon consummation of the Business Combination;

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· the fact that A. Lorne Weil, our Chairman and Chief Executive Officer and the managing member of our Hydra Sponsor, has agreed that he will be liable to us, and our Macquarie Sponsor has agreed to indemnify Mr. Weil for 50% of any such liability, if and to the extent any claims by a vendor for services rendered or products sold to us, or the Target, reduce the amount of funds in the Trust Account to below $10.00 per public share or such lesser amount per public share held in the Trust Account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act;

· the fact that our directors and officers will lose their entire investment in the Company if the Business Combination is not completed;

· the fact that our Sponsors will lose the Contribution and additional funds loaned to the Company if the Business Combination is not completed;

· the continuation of one of our five existing directors as a director of the Company; and

· the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence our directors in making their recommendation that you vote in favor of the approval of the Business Combination. These interests were considered by our Board when our Board approved the Business Combination.

Risk Factors

In evaluating the proposals set forth in this proxy statement, you should carefully read this proxy statement, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 38.

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SELECTED HISTORICAL INFORMATION OF HYDRA INDUSTRIES

The following table sets forth selected historical Hydra financial information. Our balance sheet data as of September 30, 2016 and 2015 and our income statement data for the nine months ended September 30, 2016 and 2015 are derived from our unaudited financial statements included elsewhere in this proxy statement. Our balance sheet data as of December 31, 2015 and 2014 and income statement data for the year ended December 31, 2015 and for the period from May 30, 2014 (inception) through December 31, 2014 are derived from our audited financial statements included elsewhere in this proxy statement.

The following information is only a summary and should be read in conjunction with our financial statements and related notes contained elsewhere in this proxy statement and information discussed under “ Hydra’s Management’s Discussion and Analysis of Financial Condition and Results of Operations. ” The historical results included below and elsewhere in this proxy statement are not indicative of our future performance.

Nine Months Ended
September 30,
Year Ended
December 31,
For the Period
from May 30,
2014
(inception)
Through
December 31,
(dollars in thousands, except per share data) 2016 2015 2015 2014
Income Statement Data:
Operating costs $ 2,015 $ 2,806 $ 3,530 $ 142
Unrealized gain (loss) on securities 6 (6 ) (10 )
Interest income 107 14 14
Net loss (1,902 ) (2,798 ) (3,526 ) (142 )
Basic and diluted loss per share (0.62 ) (1.02 ) (1.27 ) (0.06 )

September 30, December 31,
(dollars in thousands) 2016 2015 2014
Balance Sheet Data:
Cash $ 218 $ 256 $ 1,123
Cash and securities held in Trust Account 80,018 80,009 80,005
Total assets 80,260 80,330 81,296
Common stock subject to redemption 67,982 69,884 73,410
Total stockholders’ equity 5,000 5,000 5,000

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF TARGET

The following table sets forth selected historical Target financial information. Target’s balance sheet data as of September 26, 2015 September 27, 2014, September 28, 2013, September 29, 2012 and September 24, 2011 and income statement data for the fiscal periods ended September 26, 2015 September 27, 2014, September 28, 2013, September 29, 2012 and September 24, 2011 are derived from its audited financial statements included elsewhere in this proxy statement.

The following information is only a summary and should be read in conjunction with Target’s financial statements and related notes contained elsewhere in this proxy statement and information discussed under " Target’s Management's Discussion and Analysis of Financial Condition and Results of Operations. " The historical results included below and elsewhere in this proxy statement are not indicative of Target’s future performance, or our future performance following the Business Combination.

September
26, 2015
September
27, 2014
September
28, 2013
September
29, 2012
September
24, 2011
$ '000 $ '000 $ '000 $ '000 $ '000
Assets
Current assets
Cash and cash equivalents 4,060 19,252 17,200 36,237 29,875
Accounts receivable, net 25,740 32,861 39,592 28,507 43,133
Property and equipment, net 75,786 73,006 73,725 101,176 82,710
Software development costs, net 30,463 21,771 20,473 18,059 15,100
Goodwill and intangibles 71,561 80,733 83,788 110,294 140,778
Total assets 239,940 251,818 265,505 323,295 329,247
Senior Bank Debt 114,751 115,899 78,998 81,084 73,992
Long-term debt 337,891 316,294 272,847 233,790 188,683
Total liabilities 516,780 479,920 416,008 407,111 345,304
Total stockholders' deficit (276,840 ) (228,102 ) (150,503 ) (83,816 ) (16,057 )
Total liabilities and stockholders' deficit 239,940 251,818 265,505 323,295 329,247

For the period ended
September 26, September 27, September 28, September 29, September 24,
2015 2014 2013 2012 2011
$ '000 $ '000 $ '000 $ '000 $ '000
Net revenues 127,573 146,798 114,481 130,995 120,808
Impairment of goodwill - - - (32,021 ) -
Net operating (loss)/profit (1,269 ) (12,748 ) (1,556 ) (26,294 ) 14,270
Net (loss) from continuing operations Discontinued operations (59,847 ) (67,811 ) (48,728 ) (63,038 ) (17,052 )
(Loss) profit from discontinued operations - - (2,572 ) 5,774 6,476
Loss on sale of assets - - (11,292 ) - -
Net (loss) profit from discontinued operations - - (13,864 ) 6,481 6,476

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SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

We are providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination.

The following unaudited pro forma condensed combined balance sheet as of September 30, 2016 combines the unaudited historical condensed consolidated balance sheet of Target as of July 2, 2016 with the unaudited historical condensed balance sheet of Hydra as of September 30, 2016, giving effect to the Business Combination as if it had been consummated as of that date.

The following unaudited pro forma condensed combined income statement for the nine months ended September 30, 2016 combines the unaudited historical condensed consolidated statement of operations of Target for the forty week period ended July 2, 2016 with the unaudited historical condensed statement of operations of Hydra for the nine months ended September 30, 2016, giving effect to the Business Combination as if it had occurred on January 1, 2016.

The following unaudited pro forma condensed combined income statement for the year ended December 31, 2015 combines the audited historical consolidated statement of operations of Target for the fiscal period ended September 26, 2015 with the audited historical statement of operations of Hydra for the year ended December 31, 2015, giving effect to the Business Combination as if it had occurred on January 1, 2015.

The unaudited pro forma condensed combined balance sheet as of September 30, 2016, the unaudited pro forma condensed combined income statements for the nine months ended September 30, 2016 and the unaudited pro forma condensed combined income statements for the year ended December 31, 2015 have been prepared assuming the following circumstances: (1) no holders of Hydra common stock exercise their right to have their shares redeemed upon the consummation of the Business Combination and (2) holders of no more than 2,670,533 shares of Hydra common stock elect to have their shares redeemed upon consummation of the Business Combination at a redemption price of approximately $10.05 per share, which represents the maximum redemption amount before no cash consideration would be paid to the Selling Group if the Business Combination were consummated as of September 30, 2016.

In addition, the unaudited pro forma condensed combined financial statements give effect to Hydra’s extension of the date by which it has to consummate a Business Combination. As a result of the extension amendment, 3,415,392 shares of common stock were presented for redemption. The Company paid cash in the aggregate amount of $34,153,920, or approximately $10.00 per share, to redeeming shareholders which was released from the Trust Account. In addition, the pro forma condensed combined financial statements give effect to the contribution of $0.05 per share, or $229,230, to the Trust Account for each public share that was not redeemed in connection with the extension amendment.

The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination, are factually supportable and are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Business Combination.

The historical financial statements of Hydra and Target have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The historical financial information of Target was derived from the audited consolidated financial statements of Target as of September 26, 2015 and September 27, 2014 and for the fiscal periods ended September 26, 2015, September 27, 2014 and September 28, 2013 included elsewhere in this proxy statement. The historical financial information for Target as of July 2, 2016 and for the forty week period ended July 2, 2016 has been derived from Target’s unaudited financial statements. The historical financial information of Hydra was derived from the audited financial statements of Hydra for the years ended December 31, 2015 and 2014 and the unaudited condensed financial statements of Hydra for the nine months ended September 30, 2016 and 2015 included elsewhere in this proxy statement. This information should be read together with Target’s and Hydra’s audited and unaudited financial statements and related notes, “ Target’s Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Hydra’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and other financial information included elsewhere in this proxy statement.

The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. Target and Hydra have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

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Selected Unaudited Pro Forma Financial Information

(dollars in thousands except per share amounts)

Target Hydra

Pro Forma
Combined
Assuming No

Redemption

Pro Forma
Combined
Assuming
Maximum
Redemption
Statement of Operations Data – For the Forty Weeks Ended July 2, 2016 (Target) and Nine Months Ended September 30, 2016 (Hydra)
Revenues $ 90,480 $ $ 90,480 $ 90,480
Operating expenses $ 74,061 $ 2,015 $ 73,232 $ 73,232
Operating (loss) income $ 2,419 $ (2,015 ) $ 3,248 $ 3,248
Net loss $ (42,863 ) $ (1,902 ) $ (9,202 ) $ (9,339 )
Net loss per common share – basic and diluted $ (0.62 ) $ (0.44 ) $ (0.45 )
Balance Sheet Data – As of July 2, 2016 (Target) and September 30, 2016 (Hydra)
Total current assets $ 48,117 $ 242 $ 54,029 $ 54,029
Total assets $ 195,545 $ 80,260 $ 201,457 $ 201,457
Total current liabilities $ 51,766 $ 4,478 $ 40,370 $ 44,330
Total liabilities $ 480,757 $ 7,278 $ 179,230 $ 183,190
Total stockholders’ equity (deficit) $ (285,212 ) $ 5,000 $ 22,227 $ 18,267

Target Hydra Pro Forma
Combined
Assuming No
Redemption
Pro Forma
Combined
Assuming
Maximum
Redemption
Statement of Operations Data – For the Year Ended September 26, 2015 (Target) and Year Ended December 31, 2015 (Hydra)
Revenues $ 127,573 $ $ 127,573 $ 127,573
Operating expenses $ 104,615 $ 3,530 $ 105,093 $ 105,093
Operating loss $ (1,269 ) $ (3,530 ) $ (1,747 ) $ (1,747 )
Net loss $ (59,847 ) $ (3,526 ) $ (18,249 ) $ (18,433 )
Net loss per common share – basic and diluted $ (1.27 ) $ (0.88 ) $ (0.91 )

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COMPARATIVE PER SHARE DATA

The following table sets forth the per share data of Hydra and Target on a stand-alone basis and the unaudited pro forma condensed combined per share data for the nine months ended September 30, 2016 and the year ended December 31, 2015 after giving effect to the Business Combination, assuming (1) no holders of the Company’s common stock exercise their right to have their shares redeemed upon the consummation of the Business Combination and (2) holders of no more than 2,670,533 shares of Hydra common stock elect to have their shares converted upon consummation of the Business Combination.

You should read the information in the following table in conjunction with the selected historical financial information summary included elsewhere in this proxy statement, and the historical financial statements of Hydra and Target and related notes that are included elsewhere in this proxy statement. The unaudited Hydra and Target pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Hydra and Target would have been had the companies been combined during the period presented.

Target Hydra Pro Forma
Combined
Assuming No
Redemption
Pro Forma
Combined
Assuming
Maximum
Redemption
(in thousands except share and per share amounts)
Forty Weeks Ended July 2, 2016 (Target) and Nine Months Ended September 30, 2016 (Hydra)
Net loss $ (42,863 ) $ (1,902 ) $ (9,202 ) $ (9,339 )
Stockholders’ equity (deficit) at September 30, 2016 $ (285,212 ) $ 5,000 $ 22,227 $ 18,267
Weighted average shares outstanding – basic and diluted 3,070,014 20,908,476 20,525,828
Basic and diluted net loss per share $ (0.62 ) $ (0.44 ) $ (0.45 )
Stockholders’ equity per share - basic and diluted – at September 30, 2016 $ 1.63 $ 1.06 $ 0.89
Year Ended September 26, 2015 (Target) and Year Ended December 31, 2015 (Hydra)
Net loss $ (59,847 ) $ (3,526 ) $ (18,249 ) $ (18,433 )
Weighted average shares outstanding – basic and diluted 2,787,207 20,815,207 20,090,601
Basic and diluted net loss per share $ (1.27 ) $ (0.88 ) $ (0.91 )

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this proxy statement. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business, and the timing and ability for us to complete the Business Combination. Specifically, forward-looking statements may include statements relating to:

· the benefits of the Business Combination;

· the future financial performance of the Company following the Business Combination;

· changes in the market for Target’s products and services;

· expansion plans and opportunities, including future acquisitions or additional business combinations; and

· other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

These forward-looking statements are based on information available as of the date of this proxy statement, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

· the occurrence of any event, change or other circumstances that could give rise to the termination of the Sale Agreement;

· the outcome of any legal proceedings that may be instituted against Target or Hydra Industries following announcement of the proposed Business Combination and related transactions;

· the inability to complete the transactions contemplated by the proposed Business Combination due to the failure to obtain approval of the stockholders of Hydra Industries, or to satisfy other conditions to closing in the Sale Agreement;

· the inability to maintain the listing of the Company’s common stock on NASDAQ following the Business Combination;

· the risk that the proposed Business Combination disrupts current plans and operations as a result of the announcement and consummation of the transactions described herein;

· the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the business to grow and manage growth profitably;

· costs related to the Business Combination;

· changes in applicable laws or regulations;

· the possibility that Target or Hydra Industries may be adversely affected by other economic, business, and/or competitive factors; and

· other risks and uncertainties indicated in this proxy statement, including those described under “Risk Factors,” or indicated in the accompanying Annual Report on Form 10-K for the year ended December 31, 2015.

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RISK FACTORS

The following risk factors apply to the business and operations of Target, Hydra Industries, the Business Combination and the business and operations of the combined company following the completion of the Business Combination. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of Target. You should carefully consider the following risk factors in addition to the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” as well as in the accompanying Annual Report on Form 10-K for the year ended December 31, 2015. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included elsewhere in this proxy statement.

RISK FACTORS RELATING TO TARGET’S BUSINESS AND INDUSTRY

Target operates in highly competitive industries and its success depends on its ability to effectively compete with numerous worldwide businesses.

Target faces competition from a number of worldwide businesses, some of which have substantially greater financial resources and operating scale than it does. Such competition could impact Target’s ability to win new contracts and renew existing contracts. Target continues to operate in a period of intense price-based competition in some key markets, which could affect the profitability of the contracts it does win.

Moreover, Target’s businesses in certain markets also face competition from suppliers or operators, who offer products for internet gaming in illegal, unregulated or lightly regulated markets, but are still permitted to supply into certain regulated markets. As Target generally operates only with regulated products in regulated markets, these competitors often have substantially greater financial resources which could impact the Target’s ability to win new contracts and renew existing contracts that can affect its future profitability.

Target’s business is subject to evolving technology.

The markets for all of Target’s products and services are affected by changing technology, new regulations and evolving industry standards. Target’s ability to anticipate or respond to such changes and to develop and introduce new and enhanced products and services on a timely basis will be a significant factor in its ability to expand, remain competitive, attract new customers and retain existing contracts.

There can be no assurance that Target will achieve the necessary technological advances, have the financial resources, introduce new products or services on a timely basis or otherwise have the ability to compete effectively in the markets it serves.

Target is heavily dependent on its ability to renew its long-term contracts with its customers and it could lose substantial revenue if it is unable to renew certain of these contracts.

Generally, Target’s Virtual Sports contracts are for initial terms of three to five years, with renewals at the customer’s option. SBG terminal contracts typically are for terms of four to six years, but certain customers have options for early termination under certain circumstances and there may be competitive pressure to renew or upgrade terminals during the life of the contract. This can adversely affect revenues and / or return on capital and leave Target with surplus terminals. Certain key contracts in the UK and Italy are subject to renewal or early termination options in the next two years.

There can be no assurance that Target’s current contracts will be extended or that it will be awarded new contracts as a result of competitive bidding processes in the future. The termination, expiration or failure to renew one or more of Target’s contracts could cause it to lose substantial revenue. Additionally, certain customer contracts contain change of control provisions allowing the customer to terminate the contract which may be triggered by completion of the Transaction.

Changes in applicable gambling regulations or taxation regimes may affect the revenues or profits generated by the contracts which Target enters into with its customers. Many of the contracts which Target has with its customers are on revenue-sharing terms, and therefore changes which adversely affect Target's customers may also adversely affect Target. In addition, such changes may cause Target's customers to seek to renegotiate their contracts or may alter the terms on which such customers are prepared to renew their contracts.

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Target’s ability to bid on new contracts is dependent upon its ability to fund any required up-front capital expenditures through Target’s cash from operations, incurrence of indebtedness or raising additional equity capital.

Target’s SBG terminal contracts in UK and in Italy often require significant up-front capital expenditures for terminal assembly, software customization and implementation, systems and equipment installation and telecommunications configuration. Historically, Target has funded these up-front costs through cash flows generated from operations, available cash on hand and borrowings under its credit facilities. Target’s ability to continue to procure new contracts will depend on, among other things, its liquidity levels at the time or its ability to obtain additional debt or equity funding at commercially acceptable terms to finance the initial up-front costs. If Target does not have adequate liquidity or is unable to obtain other funding for these up-front costs on favorable terms or at all, it may not be able to bid on certain contracts, which could restrict its ability to grow and have a material adverse effect on its ability to retain existing contracts and therefore on future profitability.

Target’s business depends on the protection of its intellectual property and proprietary information.

Target believes that its success depends, in part, on protecting its intellectual property in the United Kingdom and in other countries. Target’s intellectual property includes certain patents and trademarks relating to its systems, as well as proprietary or confidential information that is not subject to patent or similar protection. Target’s intellectual property protects the integrity of its games, systems, products and services, which is a core value of the industries in which it operates. Competitors may independently develop similar or superior products, software, systems or business models. In cases where Target’s intellectual property is not protected by an enforceable patent, or other intellectual property protection, such independent development may result in a significant diminution in the value of its intellectual property.

There can be no assurance that Target will be able to protect its intellectual property. Target enters into confidentiality or license agreements with its employees, vendors, consultants and, to the extent legally permissible, its customers, and generally controls access to, and the distribution of, its game designs, systems and other software documentation and other proprietary information, as well as the designs, systems and other software documentation and other information it licenses from others. Despite Target’s efforts to protect these proprietary rights, unauthorized parties may try to copy its gaming products, business models or systems, use certain of its confidential information to develop competing products, or develop independently or otherwise obtain and use its gaming products or technology, any of which could have a material adverse effect on its business. Policing unauthorized use of Target’s technology is difficult and expensive, particularly because of the global nature of its operations. The laws of other countries may not adequately protect Target’s intellectual property.

There can be no assurance that Target’s business activities, games, products and systems will not infringe upon the proprietary rights of others, or that other parties will not assert infringement claims against it. Any such claim and any resulting litigation, should it occur, could subject Target to significant liability for damages and could result in invalidation of its proprietary rights, distract management, and/or require it to enter into costly and burdensome royalty and licensing agreements. Such royalty and licensing agreements, if required, may not be available on terms acceptable to Target, or may not be available at all. In the future, Target may also need to file lawsuits to defend the validity of its intellectual property rights and trade secrets, or to determine the validity and scope of the proprietary rights of others. Such litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources.

Target also relies on certain products and technologies that it licenses from third parties. There can be no assurance that these third-party licenses, or the support for such licenses, will continue to be available to Target on commercially reasonable terms.

Target’s business competes on the basis of the stability, security and integrity of its software, networks, systems, games and products.

Target believes that its success depends, in part, on providing secure products and systems to its vendors and customers with high levels of uptime, quality and availability. Attempts to penetrate security measures may come from various combinations of customers, retailers, vendors, players, employees and others. Target’s ability to monitor and ensure quality of its products is periodically reviewed and enhanced. There can be no assurance that Target’s business might not be affected by a security breach, virus, Denial of Service attack, or technical error, failure or lapse which could have a material adverse impact on its business.

Additionally, Target maintains a large number of games and terminals and jackpot systems, which rely on algorithms and software designed to pay out winnings to players at certain ratios. Target’s systems, testing and processes to monitor and ensure the payout of games are periodically reviewed and enhanced, and are additionally reviewed and tested by third-party expert test houses. There can be no assurance that Target’s business might not be affected by a malicious or unintentional breach or technical error, failure or lapse which could have a material adverse impact on payout ratios which would consequently have a material adverse effect on its business in the form of lost revenues or penalty payments to players or customers. Gaming regulators may take enforcement action against the Target (including the imposition of significant fines) where the payout ratios fall below the ratios advertised to customers, or the Target's software, networks, systems, games and/or products otherwise suffer from technical error, failure or lapse.

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Target’s industry is subject to strict government regulations that may limit its existing operations and have a negative impact on its ability to grow.

In many jurisdictions, forms of wagering, betting and lottery must be expressly authorized by law. Once authorized, such activities are typically subject to extensive and evolving governmental regulation. Moreover, such gaming regulatory requirements vary from jurisdiction to jurisdiction. Therefore, Target is subject to a wide range of complex gaming laws and regulations in the jurisdictions in which it is licensed. Most jurisdictions require that Target be licensed, that its key personnel and certain of its security holders be found suitable or be licensed, and that its products be reviewed, tested and approved before placement. If a license, approval or finding of suitability is required by a regulatory authority and Target fails to seek or does not receive the necessary approval, license or finding of suitability, then it may be prohibited from distributing its products for use in the respective jurisdiction. Additionally, such prohibition could trigger reviews of Target by regulatory bodies in other jurisdictions.

The regulatory environment in any particular jurisdiction may change in the future, and any such change could have a material adverse effect on Target’s results of operations. Moreover, there can be no assurance that the operation of Server Based Gaming terminals, Video Lottery Terminals, Virtual Sports Betting, Gaming or Lottery, Internet or Mobile gaming, betting, lottery or other forms of wagering systems will be approved by additional jurisdictions or that those jurisdictions in which these activities are currently permitted will continue to permit such activities. While Target believes that it has developed procedures and policies designed to comply with the requirements of evolving laws, there can be no assurance that law enforcement or gaming regulatory authorities will not seek to restrict its business in their jurisdictions or even institute enforcement proceedings. Moreover, in addition to the risk of enforcement action, Target is also at risk from loss of business reputation in the event of any potential legal or regulatory investigation whether or not Target is ultimately accused of or found to have committed any violations.

Target supplies certain of its products to operators who operate gaming websites. Some of those operators may accept customers from so-called 'grey markets' in which the provision of online gaming is unregulated or where there may be uncertainty as to the legal standing for the provision of online gaming. If any of those operators is subjected to investigatory or enforcement action by local regulatory or police authorities, that may result in the operator withdrawing from that market which may adversely affect such operator’s revenues. The suppliers to such operators may themselves become subject to investigatory or enforcement action (if and to the extent that local laws impose secondary liability on suppliers for the activities of the customers that they supply). Target takes steps which are common within the online gaming industry to protect itself against any secondary liability for the activities of the operators that it supplies, including contractually requiring those operators not to operate in certain territories and only supplying operators who are considered to uphold high standards of regulatory compliance. Nonetheless, there is a risk that Target may become subject to local investigatory or enforcement action should any of its customers be accused of breaching local laws. Such action may adversely impact the management time of Target, and impact its standing with its own gaming regulators.

Target is required to obtain and maintain licenses from various state and local jurisdictions in order to operate certain aspects of its business and it is subject to extensive background investigations and suitability standards. Target may also become subject to regulation in any other jurisdiction where its customers operate in the future. There can be no assurance that Target will be able to obtain new licenses or renew any of its existing licenses, and the loss, denial or non-renewal of any of its licenses could have a material adverse effect on its business. Generally, regulatory authorities have broad discretion when granting, renewing or revoking approvals and licenses. Target’s failure, or the failure of any of its key personnel, systems or machines, in obtaining or retaining a required license or approval in one jurisdiction could negatively impact Target’s ability (or the ability of any of its key personnel, systems or gaming machines) to obtain or retain required licenses and approvals in other jurisdictions. The failure to obtain or retain a required license or approval in any jurisdiction would decrease the geographic area where Target may operate and generate revenues, decrease its share in the gaming marketplace and put it at a disadvantage compared with its competitors.

Some jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage (typically 5% or more) of equity securities of licensed or regulated businesses. Following the Business Combination, the failure of beneficial owners of Hydra Industries’ common stock to submit to such background checks and provide required disclosure could jeopardize Target’s business. In light of these regulations and the potential impact on Target’s business, the Board of Directors of Hydra Industries has proposed the adoption of an amendment to our restated certificate of incorporation, subject to a vote of the stockholders at the special meeting, which amendment would allow for the prohibition of stock ownership by persons or entities who fail to comply with informational or other regulatory requirements under applicable gaming law, who are found unsuitable to hold our stock by gaming authorities or whose stock ownership adversely affects our ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority. The licensing procedures and background investigations of the authorities that regulate our businesses and the proposed amendment may inhibit potential investors from becoming significant stockholders or inhibit existing shareholders from retaining or increasing their ownership.

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Target has developed and implemented an internal compliance program in an effort to ensure that it will comply with legal requirements imposed in connection with its wagering-related activities. Following the Business Combination, the compliance program will be run on a day-to-day basis by its Chief Legal Officer with compliance and technical advice provided by its Compliance Director and outside experts. The compliance program is expected to be overseen by the Audit Committee of our Board of Directors, consisting of three outside directors. There can be no assurance that such steps will prevent the violation of one or more laws or regulations, or that a violation by us or an employee will not result in the imposition of a monetary fine or suspension or revocation of one or more of our licenses.

Gaming opponents persist in their efforts to curtail legalized gaming, which, if successful, could limit Target’s existing operations.

Legalized gaming is subject to opposition from gaming opponents, including in the UK, Italy and other markets where Target is active. There can be no assurance that this opposition will not succeed in preventing the legalization of gaming in jurisdictions where these activities are presently prohibited or prohibiting or limiting the expansion or continuance of gaming where it is currently permitted, in either case to the detriment of Target’s business, financial condition, results and prospects.

Target’s industry is subject to taxation by government and by regulations that set parameters for levels of gaming or wagering duty, tax, stake, prize and return to player.

In most jurisdictions in which Target operates or expects to seek to operate, the level of duty and/ or taxation and the stake, prize and return to player of wagering, betting and lottery games, and the speed at which players can participate in gaming, is defined in government regulations which are subject to change. Those regulations may also affect the premises in which gaming activities may take place ( i.e ., by limiting the number of gaming machines which may be housed in licensed gaming premises, or by restricting the locations in which licensed gaming premises may be situated). Once authorized, such parameters are subject to extensive and evolving governmental regulation. Moreover, such gaming regulatory requirements vary from jurisdiction to jurisdiction. Therefore, Target is subject to a wide range of complex gaming parameters in the jurisdictions in which it is licensed. If a key parameter is changed, such as the level of taxation or duty or the maximum stake or prize or return to player of a game, then it may be to the detriment of Target’s business, financial condition, results and prospects and / or the Target may be unable to distribute its products profitably for use in the prospective jurisdiction or existing products in which the Target has invested may become economically unviable.

Following the Business Combination, our inability to complete future acquisitions of gaming and related businesses and integrate those businesses successfully could limit our future growth, if any.

Following the Business Combination, we expect to pursue expansion and acquisition opportunities in gaming and related businesses and we could face significant challenges in managing and integrating the expanded or combined operations including acquired assets, operations and personnel. There can be no assurance that acquisition opportunities will be available on acceptable terms or at all or that we will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. Our ability to succeed in implementing our strategy will depend to some degree upon the ability of our management to identify, complete and successfully integrate commercially viable acquisitions. Acquisition transactions may disrupt our ongoing business and distract management from other responsibilities. Any future acquisition transactions involving the use of company stock have the potential of dilution to our existing shareholders and earnings per share.

Target’s business may be affected by changes in general and local economic and political conditions.

The demand for Target’s services is sensitive to general and local economic conditions over which Target has no control, including changes in the levels of consumer disposable income and geographical exposure to macro-economic trends and taxation. In addition, the economic stability of certain Eurozone countries where Target conducts or intends to conduct business may become affected by sovereign debt crises. Adverse changes in economic conditions may affect Target’s business generally or may be more prevalent or concentrated in particular markets in which Target operates. Any deterioration in economic conditions or the continuation of uncertain economic conditions could have a material adverse effect on Target’s business, financial condition, results of operations and prospects. Other economic risks which may adversely impact Target’s performance include high interest rates, inflation and volatile foreign exchange markets.

The performance of Target’s business may also be subject to political risks in certain jurisdictions where it operates, including change of government, political unrest, war or terrorism.

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Target’s revenues fluctuate due to seasonal, weather and other variations and you should not rely upon its periodic operating results as indications of future performance.

Target’s revenues are subject to seasonal and other variations. Wagering equipment sales and software license revenues usually reflect a limited number of large transactions, which may not recur on an annual basis. Consequently, revenues and operating results can vary substantially from period to period as a result of the timing of revenue recognition for major equipment sales and software license revenue. In addition, revenues may vary depending on the season and timing of contract awards, changes in customer budgets and general economic conditions. Revenues may also vary based on adverse sequences of payouts of prizes, unusual jackpot wins, and other variations in game margin.

Target’s business could also be impacted by natural or man-made disasters such as floods, storms or terrorist attacks. Target has taken steps to have disaster recovery plans in place but there can be no assurance that such an event would not have a significant adverse impact on its business.

Target is dependent on its suppliers and contract manufacturers, and any failure of these parties to meet its performance and quality standards or requirements or unexpected price raises could cause it to incur additional costs or lose customers.

Target is dependent on a select group of suppliers and manufacturers. In addition, Target’s business has signed a number of significant contracts whose performance depends on third party suppliers delivering equipment on schedule for Target to meet its contract commitments. Failure of the suppliers to meet their delivery commitments could result in Target being in breach of and subsequently losing those contracts, which loss could have a material adverse effect on its revenue.

Target has operations in a variety of countries, which subjects it to additional risks.

Target’s business in foreign markets subjects it to risks customarily associated with such operations, including:

foreign withholding taxes on its subsidiaries’ earnings that could reduce cash flow available to meet its required debt service and its other obligations;

the complexity of foreign laws, regulations and markets;

the impact of foreign labor laws and disputes;

other economic, tax and regulatory policies of local governments; and

the ability to attract and retain key personnel in foreign jurisdictions.

Target’s consolidated financial results are, and our consolidated financial results following the Business Combination will be, significantly affected by foreign currency exchange rate fluctuations. Foreign currency exchange rate exposures arise from current transactions and anticipated transactions denominated in currencies other than UK pounds or, following the Business Combination, U.S. dollars, and from the translation of foreign currency balance sheet accounts into UK pound-denominated or U.S. dollar-denominated balance sheet accounts. Exposure to currency exchange rate fluctuations exists and will continue because a significant portion of Target’s revenues are denominated in currencies other than the U.S. dollar, particularly the British pound sterling and the Euro. Exchange rate fluctuations have in the past adversely affected operating results and cash flows and may continue to adversely affect results of operations and cash flows and the value of assets.

There can be no assurance that Target will be able to operate successfully in any foreign market.

Target’s business is capital intensive and the retention of customers may be influenced by Target’s ability to deploy additional capital.

Customers of Target’s server based gaming products frequently request Target to incur capital expenditures to provide gaming terminals to support their land-based operations.  While Target seeks to obtain what it believes to be satisfactory rates of return on such investments, these capital expenditures can be meaningful and may be concentrated within short periods of time.  To the extent that Target has insufficient access to capital and/or liquidity at the time that a customer, or prospective customer, makes such a request, Target may be at a competitive disadvantage in retaining or attracting such customer.  Such a circumstance could have a material adverse effect on Target’s business, financial condition, results of operations or prospects.

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The Business Combination is subject to the receipt of approvals, consents or clearances from regulatory authorities that may impose conditions that could have an adverse effect on Target or, if not obtained, could prevent completion of the Business Combination.

Completion of the Business Combination is conditioned upon the receipt of certain governmental approvals, including, without limitation, gaming regulatory approvals. Although each party has agreed to use their respective reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will be obtained and that the other conditions to completing the Business Combination will be satisfied. In addition, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the Business Combination or require changes to the terms of the Business Combination or other agreements to be entered into in connection with the Sale Agreement. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the transaction or of imposing additional costs or limitations on us following completion of the Business Combination, any of which might have an adverse effect on us following completion of the Business Combination.

Target may be adversely affected by disruptions in its transaction gaming and lottery systems, as well as internal enterprise and information technology systems.

Target’s operations are dependent upon its transactional gaming, lottery and information technology systems. Target relies upon such systems to manage customer systems on a timely basis, to coordinate its sales and installation activities across all of its locations and to manage invoicing. A substantial disruption in Target’s transactional gaming, lottery and information technology systems for any prolonged time period (arising from, for example, system capacity limits from unexpected increases in Target’s volume of business, outages, computer viruses, unauthorized access or delays in its service) could result in delays in serving its customers, which could adversely affect Target’s reputation and customer relationships. Target’s systems might be damaged or interrupted by natural or man-made events or by computer viruses, physical or electronic break-ins, or similar disruptions affecting the Internet and Target’s disaster recovery plan may be ineffective at mitigating the effects of these risks. Such delays, problems or costs could have a material adverse effect on Target’s financial condition, results of operations and cash flows.

Target may be subject to claims arising from the operations of its various businesses for periods prior to the dates Target acquired them.

Target has consummated two acquisitions since 2010. Target may be subject to claims or liabilities arising from the ownership or operation of acquired businesses for the periods prior to its acquisition of them, including environmental, employee-related and other liabilities and claims not covered by insurance. These claims or liabilities could be significant. Target’s ability to seek indemnification from the former owners of its acquired businesses for these claims or liabilities may be limited by various factors, including the specific time, monetary or other limitations contained in the respective acquisition agreements and the financial ability of the former owners to satisfy its indemnification claims. In addition, insurance companies may be unwilling to cover claims that have arisen from acquired businesses or locations, or claims may exceed the coverage limits that Target’s acquired businesses had in effect prior to the date of acquisition. If Target is unable to successfully obtain insurance coverage of third-party claims or enforce its indemnification rights against the former owners, or if the former owners are unable to satisfy their obligations for any reason, including because of their current financial position, Target could be held liable for the costs or obligations associated with such claims or liabilities, which could adversely affect Target’s financial condition and results of operations.

Target’s success depends on its key personnel.

Target’s business results depend largely upon the continued contributions of its chief executive officer and other members of its management team, as well as certain key technical specialists, game designers, operational experts and other developers and operators of key intellectual property and processes. If Target loses the services of one or more members of its management team or key employees, its business, financial condition and results of operations, as well as the market price of its securities, could be adversely affected.

The long-term performance of Target’s businesses relies on its ability to attract, develop and retain talented personnel and its labor force while controlling its labor costs.

To be successful, Target must attract, develop and retain highly qualified and talented personnel who have the experience, knowledge and expertise to successfully implement its key business strategies. Target also must attract, develop and retain its labor force while maintaining labor costs. Target competes for employees, including sales people, regional management, executive officers and others, with a broad range of employers in many different industries, including large multinational firms, and Target invests significant resources in recruiting, developing, motivating and retaining them. The failure to attract and retain key employees, or to develop effective succession planning to assure smooth transitions of those employees and the knowledge, customer relationships and expertise they possess, could negatively affect Target’s competitive position and its operating results. Further, if Target is unable to cost-effectively recruit, train and retain sufficient skilled personnel, it may not be able to adequately satisfy increased demand for its products and services, which could impact Target’s operating results.

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The obligations associated with being a public company will require significant resources and management attention.

Following the Business Combination, we and Target will face legal, accounting, administrative and other costs and expenses applicable to a U.S. public company that Target did not incur as a private company, particularly after we are no longer an emerging growth company. In addition, Target has been a private company with limited accounting personnel and other related resources and will need to add personnel in areas such as accounting, financial reporting, investor relations and legal in connection with its operations as a public company. Target expects to incur incremental costs related to operating as a public company of approximately $2.0 million annually, although there can be no assurance that these costs will not be higher, particularly when Target no longer qualifies as an emerging growth company. The combined company will be subject to the reporting requirements of the Exchange Act, which requires us to file annual, quarterly and current reports with respect to our business and financial condition and proxy and other information statements, and the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act, the Public Company Accounting Oversight Board and the NASDAQ, each of which imposes additional reporting and other obligations on public companies. Target’s senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including establishing and maintaining internal controls over financial reporting. Target’s compliance with existing and evolving regulatory requirements will result in increased administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities, which could have a material adverse effect on Target’s business, financial condition, results of operations and cash flows.

Target depends upon a limited number of customers in any given period to generate a substantial portion of its revenue, the loss of any of which may adversely affect Target’s business or results of operations.

Certain key customers, including certain U.K. and Italian SBG Terminal customers and certain Virtual Sports customers make a significant contribution to Target’s revenues and profitability. Target’s top ten customers generated 69% of total revenues and 81% of recurring revenues in its most recently ended fiscal year. The loss of any of these customers, whether through contract expiry and non-renewal, exercise of change of control rights, breach of contract or other adverse factors may materially adversely affect revenues and / or return on capital and leave Target with surplus terminal and or software assets. If any of these customers’ experiences reduced sales or revenue, such reduction may materially impact any revenue-share arrangements Target has with those customers.

Restrictions in Target’s existing credit agreement, or any other indebtedness Target may incur in the future, could adversely affect its business, financial condition, results of operations, and our ability to make distributions to stockholders and the value of our common stock.

Target’s existing credit agreement, or any future credit facility or other indebtedness it enters into, may limit its, or our, ability to, among other things:

incur or guarantee additional debt;

make distributions or dividends on or redeem or repurchase shares of common stock;

make certain investments and acquisitions;

make capital expenditures;

incur certain liens or permit them to exist;

enter into certain types of transactions with affiliates;

acquire, merge or consolidate with another company; and

transfer, sell or otherwise dispose of all or substantially all of Target’s assets.

The provisions of Target’s existing credit agreement or other debt instruments may affect its ability to obtain future financing and pursue attractive business opportunities and its flexibility in planning for, and reacting to, changes in business conditions. In addition, a failure to comply with the provisions of Target’s credit agreement, any future credit facility or other debt instruments could result in a default or an event of default that could enable its lenders or other debt holders to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If the payment of Target’s debt is accelerated, its assets may be insufficient to repay such debt in full, and we or you could experience a partial or total loss of our investment.

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Target may have future capital needs and may not be able to obtain additional financing on acceptable terms.

Economic and credit market conditions, the performance of the gaming industry, and Target’s financial performance, as well as other factors, may constrain its financing abilities. Target’s ability to secure additional financing, if available, and to satisfy its financial obligations under indebtedness outstanding from time to time will depend upon its future operating performance, the availability of credit, economic conditions and financial, business and other factors, many of which are beyond Target’s control.

Target may be unable to identify sufficient new products and product lines and integrate them into its existing business, which may impact Target’s ability to compete; Target’s expansion into new markets may present competitive and regulatory challenges that differ from current ones.

Target’s business depends in part on its ability to identify future products and product lines that complement existing products and product lines and that respond to its customers’ needs. Target may not be able to compete effectively unless its product selection keeps up with trends in the markets in which it competes or trends in new products. In addition, Target’s ability to integrate new products and product lines into its existing business could affect its ability to compete. Furthermore, the success of new products and product lines will depend on market demand and there is a risk that new products and product lines will not deliver expected results, which could negatively impact Target’s future sales and results of operations. Target’s expansion into new markets may present competitive, distribution and regulatory challenges that differ from current ones. Target may be less familiar with new product categories and may face different or additional risks, as well as increased or unexpected costs, compared to existing operations.

Risk Factors Relating to Hydra Industries and the Business Combination

Following the consummation of the Business Combination, our only significant asset will be ownership of 100% of Target Parent’s capital stock, and we do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

Following the consummation of the Business Combination, we will have no direct operations and no significant assets other than the ownership of 100% of Target Parent’s capital stock through a subsidiary. We will depend on Target Parent and its subsidiaries for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company, and to pay any dividends with respect to our common stock. Legal and contractual restrictions in agreements governing the current indebtedness of Target and future indebtedness we intend to incur in connection with the Business Combination, as well as the financial condition and operating requirements of Target, may limit our ability to obtain cash from Target Parent. Thus, we do not expect to pay cash dividends on our common stock. Any future dividend payments are within the absolute discretion of our board of directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect to payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.

We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 that will be applicable to us after the Business Combination.

Neither we nor Target are currently subject to Section 404 of the Sarbanes-Oxley Act of 2002. However, following the Business Combination, the combined company will be required to provide management’s attestation on internal controls commencing with the Company’s annual report for the year ending December 31, 2016. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those required of Target as a privately held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the regulatory compliance and reporting requirements that will be applicable to the Company after the Business Combination. If we are not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our common stock.

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Certain material weaknesses in the Target’s internal control over financial reporting were identified in connection with the audits of the consolidated financial statements of the Target presented in accordance with US GAAP as of the periods ended September 26, 2015, September 27, 2014 and September 28, 2013. Material weaknesses in the Target’s internal control over financial reporting could result in a failure to prevent, or to detect or correct on a timely basis, material misstatements in the financial statements of the Target or, following the Business Combination, the Company, and could have a material adverse effect on the price of our common stock.

The Target enters into transactions that are complex and whose accounting treatment under US GAAP requires extensive knowledge of US GAAP and financial reporting disclosure requirements. In connection with the audits of the consolidated financial statements of the Target in accordance with US GAAP, adjustments to the Target’s accounts and the disclosures in the notes to the financial statements were identified and proposed, and recorded by the Target, which were necessary in order for the Target’s financial statements to be in conformity with US GAAP. The Target had not previously had the occasion to prepare its financial statements in accordance with US GAAP. The identification, in connection with the recent US GAAP audit process, of certain adjustments required in order to present those financial statements in accordance with US GAAP suggested less complete internal technical knowledge of US GAAP which was characterized as a material weakness in internal control over financial reporting from a US GAAP perspective. The Company and the Target are considering the retention of a person with the requisite technical accounting knowledge of US GAAP in order to address the identified material weaknesses and assist in compliance with US GAAP on an ongoing basis. However, no assurance can be given that internal control will be sufficient to prevent potential material weaknesses from occurring in future periods. If additional material weaknesses are discovered in the future following the Business Combination, we may fail to meet our future reporting obligations in a timely and reliable manner and our financial statements may contain material misstatements. Any such failure could also adversely affect the results of our periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting. Further, it could cause our investors to have less confidence in the financial information we report, which could adversely affect the price of our common stock.

Subsequent to the consummation of the Business Combination, we may be required to recognize impairment charges related to goodwill, identified intangible assets and property and equipment or to take writedowns or write-offs, restructuring or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could have an adverse effect on your investment.

Following the consummation of the Business Combination, we expect to have substantial balances of goodwill and identified intangible assets. We are required to test goodwill and any other intangible asset with an indefinite life for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment. We are also required to evaluate amortizable intangible assets and property and equipment for impairment if there are indicators of a possible impairment. There is significant judgment required in the analysis of a potential impairment of goodwill, identified intangible assets and property and equipment. If, as a result of a general economic slowdown, deterioration in one or more of the markets in which we operate or impairment in Target’s financial performance and/or future outlook, the estimated fair value of its long-lived assets decreases, we may determine that one or more of Target’s long-lived assets is impaired. An impairment charge would be determined based on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on combined company’s financial condition and results of operations.

Although we have conducted due diligence on Target, we cannot assure you that this diligence revealed all material issues that may be present in Target’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our and Target’s control will not later arise. As a result, we may be forced to later write down or write-off assets, restructure its operations, or incur other charges that could result in losses. Even if our due diligence successfully identifies certain risks, unexpected events may occur and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

Even though these charges may be non-cash items and would not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the combined company or its securities. In addition, charges of this nature may cause us to be unable to obtain future financing on favorable terms or at all.

Our initial stockholders have agreed to vote in favor of our initial business combination, regardless of how our public stockholders vote.

Unlike many other blank check companies in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders have agreed to vote any shares of Hydra Industries common stock owned by them, and purchased prior to our IPO, in favor of our initial business combination. As of the date hereof, our initial stockholders and affiliates own shares equal to approximately 30% of our issued and outstanding shares of common stock. Accordingly, it is more likely that the necessary stockholder approval will be received for the Business Combination than would be the case if our initial stockholders agreed to vote any shares of Hydra Industries common stock owned by them in accordance with the majority of the votes cast by our public stockholders.

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We will incur significant transaction and transition costs in connection with the Business Combination. If we fail to consummate the Business Combination, we may not have sufficient cash available to pay such costs.

We expect to incur significant, non-recurring costs in connection with consummating the Business Combination. Some of these costs are payable regardless of whether the Business Combination is completed. Hydra Industries’ transaction expenses as a result of the Business Combination are currently estimated at approximately $8.2 million, which are comprised of (i) approximately $6.0 million in fees to our financial advisors and for deferred underwriting commissions payable to the underwriters from our IPO, (iii) an estimated $2.0 million in legal fees and expenses and (iv) approximately $0.2 million relating to other fees and expenses incurred in connection with the Business Combination. Additionally, this amount includes the expenses incurred in connection with the filing, printing and mailing of this proxy statement and the solicitation of the approval of our stockholders, and all filing and other fees paid to the SEC, which are estimated at approximately $75,000. If Hydra Industries and Target do not consummate the Business Combination, each party will be required to pay its own fees and expenses, and Hydra Industries likely will not have sufficient cash available to pay its fees and expenses unless and until it completes a subsequent business combination transaction. Going forward, the combined company will incur transition costs and costs relating to being part of a public company.

The unaudited pro forma financial information included in this document may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

We may have limited rights of recourse in the event of a breach of Warranties.

Warranties relating to the business affairs and tax liabilities of Target are being given by certain key members of Target's management team (the "Management Warrantors") to Hydra Industries under the terms of a management warranty deed. In addition, a Warranty & Indemnity Insurance Policy (the "W&I Policy") has been entered into by Hydra Industries with AIG Europe Limited ("AIG") which should provide a level of additional protection in the event of a breach of certain of the warranties being given by the Management Warrantors.

Other than in the event of fraud, the aggregate liability of the Management Warrantors is capped at £500,000. The liability of the Management Warrantors is also subject to certain customary limitations on liability, including individual and basket de minimis thresholds and time limits on the bringing of claims. The liability of AIG under the W&I Policy is capped at £40 million, and is subject to a variety of conditions and limitations under the terms of the W&I Policy.

Each member of the Selling Group is providing warranties confirming (i) its title to the shares and/or shareholder loan notes in the Target which it is selling to Hydra Industries and (ii) its capacity to enter into the Sale Agreement. Such warranties are given on a several basis, such that each member of the Selling Group is liable only for a breach of the warranties that it has given (and is not liable for a breach of warranty by any other member of the Selling Group) and its liability in the event of breach is capped at the amount of consideration received by it under the Sale Agreement.

Hydra Industries believes that the level of warranty protection which it has obtained (including the W&I Policy) should be reasonable under the circumstances of the Business Combination, including the fact that the Selling Group consists principally of certain institutional investors. However, the level of warranty protection relating to the business affairs and tax liabilities of the Target is substantially less than the Purchase Price payable by Hydra Industries in connection with the Business Combination, and might not be sufficient to compensate Hydra Industries in the event of any breach.

We may be unable to obtain Debt Financing if necessary to fund the operations and growth of Target.

If we consummate the Business Combination, we may require additional financing to fund the operations or growth of Target. The failure to secure additional financing could have a material adverse effect on the continued development or growth of Target. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after the Business Combination.

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We may waive one or more of the conditions to the Business Combination.

We may agree to waive, in whole or in part, some of the conditions to our obligations to complete the Business Combination, to the extent permitted by our amended and restated certificate of incorporation and applicable laws. For example, it is a condition to our obligations to close the Business Combination that Target’s representations and warranties are true and correct in all respects as of the closing date, except for such inaccuracies that, individually or in the aggregate, would not result in a Material Adverse Effect (as defined in the Sale Agreement). However, if our board of directors determines that it is in our stockholders’ best interest to waive any such breach, then the board may elect to waive that condition and close the Business Combination. We are not able to waive the condition that our stockholders approve the Business Combination.

Even if we consummate the Business Combination, there is no guarantee that the public warrants will ever be in the money, and they may expire worthless and the terms of our warrants may be amended.

The exercise price for our warrants is $5.75 per one-half of one share ($11.50 per whole share), subject to adjustment. Warrants may be exercised only for a whole number of shares of Hydra Industries’ common stock. No fractional shares will be issued upon exercise of the warrants. There is no guarantee that the public warrants will ever be in the money prior to their expiration and they may expire worthless.

In addition, the warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.

Our Sponsors, directors and officers have a conflict of interest in determining to pursue the merger with Target, since certain of their interests, and certain interests of their affiliates and associates, are different from or in addition to (and which may conflict with) the interests of our stockholders.

Our initial stockholders, including our officers and directors, have interests in and arising from the Business Combination that are different from or in addition to (and which may conflict with) the interests of our public stockholders, which may result in a conflict of interest. These interests include:

the fact that our Sponsors, our independent directors and officers paid an aggregate of approximately $3,775,000 for their founder shares and placement warrants and such securities should have a significantly higher value at the time of the Business Combination;

the fact that certain directors and officers may enter into employment agreements with the Company after the consummation of the Business Combination;

the Macquarie Forward Purchase;

the advisory services fee payable to Macquarie Capital upon consummation of the Business Combination;

the fact that A. Lorne Weil, our Chairman and Chief Executive Officer and the managing member of our Hydra Sponsor, has agreed that he will be liable to us, and our Macquarie Sponsor has agreed to indemnify Mr. Weil for 50% of any such liability, if and to the extent any claims by a vendor for services rendered or products sold to us, or the Target, reduce the amount of funds in the Trust Account to below $10.00 per public share or such lesser amount per public share held in the Trust Account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act;

the fact that our directors and officers will lose their entire investment in the Company if the Business Combination is not completed;

the fact that our Sponsors will lose the Contribution and additional funds loaned to the Company if the Business Combination is not completed;

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the continuation of one of our five existing directors as a director of the combined company; and

the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may have influenced our directors in making their recommendation that you vote in favor of the Business Combination Proposal and the other transactions contemplated by the Sale Agreement collectively.

The exercise of our directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in our stockholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Sale Agreement, would require Hydra Industries to agree to amend the Sale Agreement, to consent to certain actions taken by Target or to waive rights that Hydra Industries is entitled to under the Sale Agreement. Such events could arise because of changes in the course of Target’s business, a request by Target to undertake actions that would otherwise be prohibited by the terms of the Sale Agreement or the occurrence of other events that would have a material adverse effect on Target’s business and would entitle Hydra Industries to terminate the Sale Agreement. In any of such circumstances, it would be at Hydra Industries’ discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of our officers and directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is best for Hydra Industries and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement, Hydra Industries does not believe there will be any changes or waivers that Hydra Industries’ directors and officers would be likely to make after stockholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further stockholder approval, Hydra Industries will circulate a new or amended proxy statement and re-solicit Hydra Industries’ stockholders if changes to the terms of the transaction that would have a material impact on its stockholders are required prior to the vote on the Business Combination Proposal.

Concentration of ownership after the Business Combination may have the effect of delaying or preventing a change in control.

It is anticipated that, following the completion of the Business Combination and if there are no redemptions, the existing common stockholders of Target will own 52% of the post-combination company. The ownership percentage with respect to Target existing common stockholders following the Business Combination does not take into account (i) the issuance of any shares upon completion of the Business Combination under the Company’s proposed 2016 Long-Term Incentive Plan or (ii) any or all of the 17,500,000 warrants to purchase up to a total of 8,750,000 shares of Hydra Industries common stock that will remain outstanding following the Business Combination. If the actual facts are different than these assumptions, the percentage ownership of the existing common stockholders of Target may be different. As a result, the existing common stockholders of Target may have the ability to strongly influence the outcome of corporate actions of the Company requiring stockholder approval. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock.

Our ability to successfully effect the Business Combination and successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel, including the key personnel of Target, all of whom we expect to stay with Target following the Business Combination. The loss of such key personnel could negatively impact the operations and profitability of the post-combination business.

Our ability to successfully effect the Business Combination and successfully operate the business is dependent upon the efforts of certain key personnel, including the key personnel of Target. Although we expect all of such key personnel to remain with Target following the Business Combination, it is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of our post-combination business. Furthermore, while we have scrutinized individuals we intend to engage to stay with Target following the Business Combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.

If the results of the Business Combination do not meet expectations, a market for our securities may not continue, which would adversely affect the liquidity and price of our securities.

Following the Business Combination, the price of our securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for our securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of our securities after the Business Combination can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities are not listed on, or become delisted from, NASDAQ for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on NASDAQ or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

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Our initial stockholders and/or their affiliates may enter into agreements concerning our securities prior to the special meeting, which may have the effect of increasing the likelihood of consummation of the Business Combination, decreasing the value of our common stock or reducing the public “float” of our common stock.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding the Company or its securities, the initial stockholders and/or their affiliates may enter into a written plan to purchase the Company’s securities pursuant to Rule 10b5-1 of the Exchange Act, and may engage in other public market purchases, as well as private purchases, of securities. In addition, at any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding the Company or its securities, the initial stockholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire shares of the Company’s common stock or vote their shares in favor of the Business Combination Proposal. Such an agreement may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our initial stockholders or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the public shares present and entitled to vote at the special meeting to approve the Business Combination Proposal vote in its favor, that the cash requirements of the transaction are met and that the Company will have at least $5,000,001 in net tangible assets upon closing of the business combination after taking into account holders of public shares that properly demanded redemption of their public shares into cash, when it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or warrants owned by the initial stockholders for nominal value.

Entering into any such arrangements may have a depressive effect on the Company’s common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the special meeting. In addition, if such arrangements are made, the public “float” of our common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

As of the date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. The Company will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal and the Charter Proposals or the redemption threshold.

Although we expect our common stock and warrants will remain listed on NASDAQ after the Business Combination, there can be no assurance that our common stock and warrants will continue to be so listed or, if listed, that we will be able to comply with the continued listing standards of NASDAQ.

We will apply to continue listing our securities on NASDAQ subsequent to the closing of the Business Combination. To continue listing our securities on NASDAQ subsequent to the closing of the Business Combination, we will be required to demonstrate compliance with NASDAQ’s initial listing standards, which are more rigorous than NASDAQ’s continued listing requirements. For instance, we must maintain a minimum number of holders (300 round-lot holders). We cannot assure you that we will be able to meet those initial listing standards at that time.

If, after the Business Combination, NASDAQ delists our common stock or warrants from trading on its exchange due to our failure to meet NASDAQ’s initial and/or continued listing standards, we and our securityholders could face significant material adverse consequences including:

a limited availability of market quotations for our securities;

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a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

a limited amount of analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we are an “emerging growth company.”

Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting, and generally requires in the same report a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. Following the Business Combination, the combined company will be required to provide management’s attestation on internal controls effective with respect to the year ending December 31, 2016. However, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 until we are no longer an “emerging growth company.” We could be an “emerging growth company” until the earlier of (1) the last day of the fiscal year (a) following October 29, 2019, the fifth anniversary of our IPO, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An “emerging growth company” can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

If the results of the Business Combination do not meet the expectations of investors, stockholders or financial analysts, the market price of our securities may decline.

If the results of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Company’s securities prior to the closing of the Business Combination may decline. The market values of our securities at the time of the Business Combination may vary significantly from their prices on the date the Sale Agreement was executed, the date of this proxy statement, or the date on which our stockholders vote on the Business Combination.

In addition, following the Business Combination, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for Target’s stock and trading in the shares of the Company’s common stock has not been active. Accordingly, the valuation ascribed to Target and our common stock in the Business Combination may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for our securities develops and continues, the trading price of our securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of the Company’s securities following the Business Combination may include:

market conditions affecting the gaming industry;

quarterly variations in our results of operations;

changes in government regulations;

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the announcement of acquisitions by us or our competitors;

changes in general economic and political conditions;

volatility in the financial markets;

results of our operations and the operations of others in our industry;

changes in interest rates;

threatened or actual litigation and government investigations;

the addition or departure of key personnel;

actions taken by our stockholders, including the sale or disposition of their shares of our common stock; and

differences between our actual financial and operating results and those expected by investors and analysts and changes in analysts’ recommendations or projections.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and NASDAQ in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Following the Business Combination, the Company’s business and stock price may suffer as a result of its lack of public company operating experience and if securities or industry analysts do not publish or cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.

Prior to the completion of the Business Combination, we have been a blank check company. The Company’s lack of public company operating experience may make it difficult to forecast and evaluate its future prospects. If the Company is unable to execute its business strategy, either as a result of its inability to manage effectively its business in a public company environment or for any other reason, the Company’s business, prospects, financial condition and operating results may be harmed.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on the Company. If no securities or industry analysts commence coverage of the Company, our stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover the Company change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst who may cover the Company were to cease coverage of the Company or fail to regularly publish reports on it, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

We have not registered the shares of our common stock issuable upon exercise of the rights and warrants under the Securities Act or state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.

We have not registered the public shares issuable upon exercise of the rights and warrants under the Securities Act or any state securities laws at this time. We have agreed to use our best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the common stock issuable upon exercise of the warrants as soon as practicable after the closing of the Business Combination (but in no event later than fifteen (15) business days thereafter) and cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the warrants expire or are redeemed. Until such time as the shares issuable upon exercise of public warrants are registered under the Securities Act, we will be required, commencing on the 61st day following the closing of the Business Combination, to permit holders to exercise their warrants on a cashless basis under certain circumstances specified in the warrant agreement. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. In no event will we be required to issue cash, securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of common stock and the rights included in the units.

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The future exercise of registration rights may adversely affect the market price of our common stock.

Our common stock is subject to registration rights agreements. We are obligated to register founder shares, placement warrants and shares issuable upon exercise of placement warrants pursuant to a registration rights agreement signed in connection with our IPO and we are obligated to register the shares purchased in the Macquarie Forward Purchase pursuant to a registration rights agreement signed in connection with the private placement. In addition, pursuant to the Sale Agreement, we are obligated to promptly file a resale “shelf” registration statement to register the shares of our common stock being issued to existing Target equity holders and loan note holders in the Business Combination. Sales of restricted securities pursuant to these agreements may substantially depress the market price of our common stock.

Warrants will become exercisable for our common stock and, upon the closing of the Business Combination, the rights will be automatically converted, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

Outstanding public warrants to purchase an aggregate of 4,000,000 shares of our common stock and outstanding placement warrants to purchase an aggregate of 3,750,000 shares of our common stock will become exercisable 30 days after the completion of the Business Combination, along with warrants to purchase an additional 1,000,000 shares of our common stock issuable pursuant to the Macquarie Forward Purchase. Each warrant entitles the holder thereof to purchase one-half of one share of Hydra Industries’ common stock at a price of $5.75 per half share ($11.50 per whole share), subject to adjustment. Warrants may be exercised only for a whole number of shares of Hydra Industries’ common stock. No fractional shares will be issued upon exercise of the warrants. To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the then existing holders of common stock of the Company and increase the number of shares eligible for resale in the public market. In addition, our outstanding public rights and the rights subject to the Macquarie Forward Purchase will convert into an aggregate of 1,000,000 shares of our common stock upon consummation of the Business Combination. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock.

Our public stockholders may experience dilution as a consequence of certain transactions. Having a minority share position may reduce the influence that our current stockholders have on the management of the Company.

It is anticipated that, assuming completion of the Business Combination as of September 24, 2016 and if there are no redemptions, Hydra Industries’ public stockholders will retain an ownership interest of approximately 26% in Hydra Industries and our initial stockholders and affiliates will retain an ownership interest of approximately 23% in Hydra Industries. In addition, if any of Hydra Industries’ stockholders exercise their redemption rights, the ownership interest in Hydra Industries of Hydra Industries’ public stockholders will decrease. The ownership percentage with respect to Hydra Industries following the Business Combination does not take into account (i) the issuance of any shares upon completion of the Business Combination under the Company’s proposed 2016 Long-Term Incentive Plan or (ii) any or all of the 17,500,000 warrants to purchase up to a total of 8,750,000 shares of Hydra Industries common stock that will remain outstanding following the Business Combination. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Hydra Industries’ existing stockholders in Hydra Industries will be different. See “Unaudited Pro Forma Condensed Combined Financial Information” for further information. To the extent that any of the warrants are converted into Hydra Industries common stock or any shares of Hydra Industries common stock are issued pursuant to the proposed 2016 Long-Term Incentive Plan, current stockholders may experience substantial dilution. Such dilution could, among other things, limit the ability of our current stockholders to influence management of the Company through the election of directors following the Business Combination.

We may redeem any public warrants prior to their exercise at a time that is disadvantageous to warrantholders, thereby making their warrants worthless.

We will have the ability to redeem the public warrants at any time after they become exercisable and prior to their expiration at a price of $0.01 per warrant, provided that (i) the last reported sale price of our common stock equals or exceeds $24.00 per share for any 20 trading days within the 30 trading-day period ending on the third business day before we send the notice of such redemption (on November 17, 2016, (ii) the last reported sale price for shares of our common stock was $9.85) and (iii) on the date we give notice of redemption and during the entire period thereafter until the time the warrants are redeemed, there is an effective registration statement under the Securities Act covering the shares of our common stock issuable upon exercise of the public warrants and a current prospectus relating to them is available unless warrants are exercised on a cashless basis. Redemption of the outstanding public warrants could force holders of public warrants:

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to exercise their warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so;

to sell their warrants at the then-current market price when they might otherwise wish to hold their warrants; or

to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of their warrants.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

The Company’s certificate of incorporation (as proposed to be amended) and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director with or without cause by stockholders, which prevents stockholders from being able to fill vacancies on our board of directors;

the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

limiting the liability of, and providing indemnification to, our directors and officers;

controlling the procedures for the conduct and scheduling of stockholder meetings; and

advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.

These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our board of directors and management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of Hydra Industries’ outstanding common stock. Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

Our directors and key personnel are subject to the approval of certain regulatory authorities, which, if withheld, will require us to sever our relationship with non-approved individuals, which could adversely impact our operations.

Our members, managers, directors, officers and key employees must also be approved by certain government and state regulatory authorities. If such regulatory authorities were to find a person occupying any such position unsuitable, we would be required to sever our relationship with that person. We may thereby lose key personnel which would have a negative effect on our operations. Certain public and private issuances of securities and certain other transactions by us also require the approval of certain state regulatory authorities. Further, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators. For a summary of some of the significant gaming regulations that affect our business, see ‘‘Regulation and Licensing.” The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. In addition, we are subject to various gaming taxes, which are subject to increase at any time.

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Target is subject to extensive regulation at various levels, and licensing and gaming authorities have significant control over its operations, which could have a negative effect on our business and could cause us to redeem certain shareholders on potentially disadvantageous terms.

The operations of Target’s business are contingent upon obtaining and maintaining all necessary licenses, permits, approvals, registrations, findings of suitability, orders and authorizations. The laws, regulations and ordinances requiring these licenses, permits and other approvals generally relate to the responsibility, financial stability and character of the owners and managers of gaming operations, as well as persons financially interested or involved in gaming operations. The scope of the approvals required to operate Target’s business is extensive.

Regulatory authorities have broad powers to request detailed financial and other information, to limit, condition, suspend or revoke a registration, gaming license or related approval and to approve changes in our operations. Substantial fines or forfeiture of assets for violations of gaming laws or regulations may be levied. The suspension or revocation of any license which may be granted to us or the levy of substantial fines or forfeiture of assets could significantly harm our business, financial condition and results of operations. Furthermore, compliance costs associated with gaming laws, regulations and licenses are significant. Any change in the laws, regulations or licenses applicable to our business or a violation of any current or future laws or regulations applicable to our business or gaming licenses could require us to make substantial expenditures or could otherwise negatively affect our gaming operations and results of operations.

Our certificate of incorporation is proposed to be amended to provide that, to the extent required by the gaming authority making the determination of unsuitability or to the extent the board of directors determines, in its sole discretion, that a person is likely to jeopardize the Company’s or any affiliate’s application for, receipt of, approval for, right to the use of, or entitlement to, any gaming license, shares of our capital stock that are owned or controlled by an unsuitable person or its affiliates are subject to mandatory redemption by us. The redemption price may be paid in cash, by promissory note, or both, as required, and pursuant to the terms established by, the applicable gaming authority and, if not, as we elect. Such a redemption could occur on terms that a shareholder believes to be disadvantageous.

If we are unable to effect the Business Combination and fail to complete an alternative initial business combination by December 29, 2016, we will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of our remaining stockholders and our board of directors, dissolving and liquidating. In such event, the warrants will expire worthless and third parties may bring claims against Hydra Industries and, as a result, the proceeds held in trust could be reduced and the per share liquidation price received by stockholders could be less than $10.00 per share.

If we do not consummate the Business Combination and fail to complete an alternative initial business combination by December 29, 2016 (subject to the requirements of law), the existing charter provides that we will (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Holders of our founder shares have waived any right to any liquidation distribution with respect to those shares. In the event of liquidation, there will be no distribution with respect to our outstanding warrants. Accordingly, the warrants will expire worthless.

In addition, third parties may bring claims against Hydra Industries. Although Hydra Industries has obtained waiver agreements from certain Selling Group and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other Selling Group who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of Hydra Industries’ public stockholders. A. Lorne Weil, our Chairman and Chief Executive Officer and the managing member of our Hydra Sponsor, has agreed that he will be liable to us, and our Macquarie Sponsor has agreed to indemnify Mr. Weil for 50% of any such liability, if and to the extent any claims by a vendor for services rendered or products sold to us, or the Target, reduce the amount of funds in the Trust Account to below $10.00 per public share or such lesser amount per public share held in the Trust Account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then Mr. Weil will not be responsible to the extent of any liability for such third-party claims. We cannot assure you, however, that Mr. Weil would be able to satisfy those obligations. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

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In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share or (ii) other than due to the failure to obtain such waiver, such lesser amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and Mr. Weil asserts that he is unable to satisfy his obligations or that he has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against Mr. Weil to enforce his indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against Mr. Weil to enforce his indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.

Hydra Industries’ stockholders may be held liable for claims by third parties against Hydra Industries to the extent of distributions received by them.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not consummate an initial business combination by December 29, 2016 may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90- day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, we intend to redeem our public shares as soon as reasonably possible following December 29, 2016 in the event we do not consummate an initial business combination and, therefore, we do not intend to comply with those procedures.

Because we will not be complying with Section 280 of the DGCL, Section 281(b) of the DGCL requires the Company to adopt a plan, based on facts known to us at such time that will provide for the payment of all existing and pending claims or claims that may be potentially brought against the Company within the 10 years following dissolution. However, because we are a blank check company, rather than an operating company, and our operations have been limited to searching for prospective target businesses, the only likely claims to arise would be from the Selling Group (such as lawyers, investment bankers, and consultants) or prospective target businesses. If the Company’s plan of distribution complies with Section 281(b) of the DGCL, any liability of our stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. There can be no assurance that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of the trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not consummate an initial business combination within the required timeframe is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after December 29, 2016 in the event we do not consummate an initial business combination, this may be viewed or interpreted as giving preference to our stockholders over any potential creditors with respect to access to or distributions from the Company’s assets. Furthermore, our board of directors may be viewed as having breached its fiduciary duties to the Company’s creditors and/or may have acted in bad faith, thereby exposing itself and the Company to claims of punitive damages, by paying our stockholders from the trust account prior to addressing the claims of creditors. There can be no assurance that claims will not be brought against the Company for these reasons.

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Activities taken by affiliates of the Company to purchase, directly or indirectly, public shares will increase the likelihood of approval of the Business Combination Proposal and other proposals and may affect the market price of the Company’s securities during the buyback period.

Our initial stockholders, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the consummation of the Business Combination. None of our initial stockholders or their affiliates will make any such purchases when such parties are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although none of our initial stockholders, directors, officers, advisors or their affiliates currently anticipate paying any premium purchase price for such public shares, in the event such parties do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. There is no limit on the number of shares that could be acquired by our initial stockholders or their affiliates, or the price such parties may pay.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such proposals would be approved. If the market does not view the Business Combination positively, purchases of public shares may have the effect of counteracting the market’s view, which would otherwise be reflected in a decline in the market price of our securities. In addition, the termination of the support provided by these purchases may materially adversely affect the market price of our securities.

As of the date of this proxy statement, no agreements with respect to the private purchase of public shares by the Company or the persons described above have been entered into with any such investor or holder. We will file a Current Report on Form 8-K with the SEC to disclose private arrangements entered into or significant private purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or other proposals.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments, including non-U.S. governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.

We are dependent upon our executive officers and directors and their departure could adversely affect our ability to complete the Business Combination.

Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our executive officers and directors, at least until we have completed the Business Combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities, including assessing the potential Business Combination and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could adversely impact our ability to complete the Business Combination.

Since our Sponsors, executive officers and directors will lose their entire investment in us if the Business Combination is not completed, a conflict of interest may arise in determining whether Target is appropriate for our initial business combination.

In July 2014, our Sponsors purchased 2,875,000 founder shares for a purchase price of $25,000, or approximately $0.01 per share. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20.0% of the outstanding shares upon completion of the IPO. In July 2014, our Hydra Sponsor transferred 389,942 founder shares to members of Hydra Industries’ management and consultants. Three hundred thousand (300,000) founder shares were forfeited as a result of the underwriters’ determination not to exercise their over-allotment option, and 575,000 founder shares were returned to the Company and subsequently cancelled prior to the IPO. The founder shares will be worthless if we do not complete an initial business combination. In addition, our Sponsors and Hydra Industries’ officer, Martin E. Schloss, purchased an aggregate of 7.5 million placement warrants, each exercisable for one-half of one share of our common stock at $5.75 per half share ($11.50 per whole share), for a purchase price of $3,750,000, or $0.50 per warrant, that will also be worthless if we do not complete a business combination. In addition, our Sponsors loaned us the amount for the Contribution and have provided us with working capital loans in the aggregate amount of $700,000, which loans are expected to be repaid upon closing of the Business Combination and may not be repaid if we fail to consummate a transaction.

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The personal and financial interests of our executive officers and directors may have influenced their motivation in identifying and selecting Target for its target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination.

Since our Sponsors, executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if the Business Combination is not completed, a conflict of interest may arise in determining whether Target is appropriate for our initial business combination.

At the closing of the Business Combination, our Sponsors, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf. These financial interests of our Sponsors, executive officers and directors may have influenced their motivation in identifying and selecting Target for the Business Combination. As of November 17, 2016, no such out-of-pocket expenses had been incurred by our Sponsors, executive officers and directors, or any of their respective affiliates

Certain of our executive officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us after the Business Combination and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented to our company or to another entity.

Following the completion of the Business Combination, we intend to identify and combine with one or more businesses. Our executive officers and directors are, or may in the future become, affiliated with entities that are engaged in similar businesses.

Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented — to our company or to another entity. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our proposed second amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.

Members of our management team may directly or indirectly own common stock, rights, warrants and stock options following the Business Combination, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to combine. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to a particular business combination.

For a complete discussion of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Certain Relationships and Related Party Transactions.”

We will be a holding company and will conduct all of our operations through our subsidiaries.

Upon consummation of the Business Combination, we will be a holding company and will derive all of our operating income from Target and its subsidiaries. Other than any cash we may retain, all of our assets will be held by our direct and indirect subsidiaries. We will rely on the earnings and cash flows of Target and its subsidiaries, which will be paid to us by our subsidiaries, if and only to the extent available, in the form of dividends and other payments or distributions, to meet our debt service obligations. The ability of our subsidiaries to pay dividends or make other payments or distributions to us will depend on their respective operating results and may be restricted by, among other things, the laws of their jurisdiction of organization (which may limit the amount of funds available for the payment of dividends and other distributions to us), the terms of existing and future indebtedness and other agreements of our subsidiaries and the covenants of any future outstanding indebtedness we or our subsidiaries incur.

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RISK FACTORS RELATING TO THE REDEMPTION

Unlike many blank check companies, we do not have a specified maximum percentage redemption threshold, but Target may elect to not consummate the Business Combination if, after redemptions, the Company’s available cash at closing is insufficient to pay all liabilities and obligations of the Company and Target due and required to be paid at closing or by reason of closing. Each redemption of shares of Hydra Industries common stock by our public stockholders will decrease the amount in our trust account. Accordingly, unless this right is waived by Target, we may be unable to consummate the Business Combination if there are substantial redemptions by our public stockholders.

Since we have no specified percentage threshold for redemption in our amended and restated certificate of incorporation other than the 25% threshold referred to below, our structure is different in this respect from the structure that has been used by many blank check companies. Many blank check companies would not be able to consummate a business combination if the holders of the company’s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company’s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. The absence of such a redemption threshold makes it easier for us to consummate a business combination with which a substantial number of our stockholders may not agree. Each redemption of public shares by our public stockholders will decrease the amount in our trust account, which holds approximately $46 million as of November 17, 2016.

In addition, we are limited by the need to have at least $5,000,001 in net tangible assets. This condition effectively requires that holders of no more than 3,381,305 shares as of September 30, 2016 redeem their public shares, after giving pro forma effect to the redemption of 3,415,392 shares in connection with the extension amendment which extended the time available for us to consummate a Business Combination to December 29, 2016. Accordingly, holders of no more than 51.4% of the 6,584,608 shares outstanding as of November 17, 2016 may redeem their shares in connection with the Business Combination if the Business Combination were consummated as of that date. As a result, we may be able to consummate the Business Combination even though holders of a majority of our public shares have chosen to redeem their shares.

If you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of 25% or more of our common stock issued in the IPO, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares of 25% or more of our common stock issued in the IPO.

A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, of 25% or more of the shares of common stock issued in the IPO. We refer to such shares aggregating 25% or more of the shares issued in the IPO as “Excess Shares”. In order to determine whether a stockholder is acting in concert or as a group with another stockholder, the Company will require each public stockholder seeking to exercise redemption rights to certify to the Company whether such stockholder is acting in concert or as a group with any other stockholder. Such certifications, together with other public information relating to stock ownership available to the Company at that time, such as Section 13D, Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which the Company makes the above-referenced determination. A public stockholder’s inability to redeem any Excess Shares will reduce that stockholder’s influence over our ability to consummate the Business Combination. A stockholder could suffer a material loss on its investment in us if it sold Excess Shares in open market transactions. Additionally, a stockholder will not receive redemption distributions with respect to its Excess Shares if we consummate the Business Combination. As a result, any such stockholder will continue to hold that number of shares equal to its Excess Shares and, in order to dispose of such shares, would be required to sell its stock in open market transactions, potentially at a loss. Notwithstanding the foregoing, stockholders may challenge the Company’s determination as to whether a stockholder is acting in concert or as a group with another stockholder in a court of competent jurisdiction.

There is no guarantee that a stockholder’s decision whether to redeem its shares for a pro rata portion of the trust account will put the stockholder in a better future economic position.

We can give no assurance as to the price at which a stockholder may be able to sell its public shares in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any business combination, including the Business Combination, may cause an increase in our share price, and may result in a lower value realized now than a stockholder of Hydra Industries might realize in the future had the stockholder not elected to redeem such stockholder’s shares. Similarly, if a stockholder does not redeem its shares, the stockholder will bear the risk of ownership of the public shares after the consummation of any business combination, and there can be no assurance that a stockholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement. A stockholder should consult the stockholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

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If our stockholders fail to comply with the redemption requirements specified in this proxy statement, they will not be entitled to redeem their shares of our common stock for a pro rata portion of the funds held in our trust account.

Holders of public shares are required to affirmatively vote either for or against the Business Combination Proposal in order to exercise their rights to redeem their shares for a pro rata portion of the trust account. In addition, in order to exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent at least two business days prior to the special meeting. Stockholders electing to redeem their shares will receive their pro rata portion of the trust account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Business Combination. See the section entitled “Special Meeting of Hydra Industries Stockholders — Redemption Rights” for additional information on how to exercise your redemption rights.

RISK FACTORS RELATING TO GLOBAL ECONOMIC CONDITIONS

Volatility or disruption in the financial markets could materially adversely affect our business and the trading price of our common stock.

Target’s business has relied, and we and Target following the Business Combination will continue to rely, on stable and efficient financial markets. Any disruption in the credit and capital markets could adversely impact our ability to obtain financing on acceptable terms. Volatility in the financial markets could also result in difficulties for financial institutions and other parties that we and Target do business with, which could potentially affect the ability to access financing under existing arrangements. We are exposed to the impact of any global or domestic economic disruption, including any potential impact of the recent vote by the United Kingdom to exit the European Union (commonly referred to as "Brexit") and the sovereign debt crises in certain Eurozone countries where Target does business. Our ability to continue to fund operating expenses, capital expenditures and other cash requirements over the long term may require access to additional sources of funds, including equity and debt capital markets, and market volatility and general economic conditions may adversely affect our ability to access capital markets. In addition, the inability of our vendors to access capital and liquidity with which to maintain their inventory, production levels and product quality and to operate their businesses, or the insolvency of our vendors, could lead to their failure to deliver merchandise. If we are unable to purchase products when needed, our sales could be materially adversely impacted. Accordingly, volatility or disruption in the financial markets could impair our ability to execute our growth strategy and could have a material adverse effect on the trading price of our common stock.

Currency exchange rate fluctuations could result in lower revenues, higher costs and decreased margins and earnings.

We will conduct purchase and sale transactions in various currencies, which increases our exposure to fluctuations in foreign currency exchange rates globally. Additionally, there has been, and may continue to be, volatility in currency exchange rates as a result of the United Kingdom's June 23, 2016 referendum in which voters approved the United Kingdom's exit from the European Union, commonly referred to as “Brexit.” It is possible that sovereign debt crises in certain Eurozone countries could lead to the abandonment of the Euro and the reintroduction of national currencies in those countries. International revenues and expenses generally are derived from sales and operations in various foreign currencies, and these revenues and expenses could be affected by currency fluctuations, specifically amounts recorded in foreign currencies and translated into U.S. Dollars for consolidated financial reporting, as weakening of foreign currencies relative to the U.S. Dollar will adversely affect the U.S. Dollar value of the Company's foreign currency-denominated sales and earnings. Currency exchange rate fluctuations could also disrupt the business of the independent manufacturers that produce our products by making their purchases of raw materials more expensive and more difficult to finance. Foreign currency fluctuations could have an adverse effect on our results of operations and financial condition.

We may hedge certain foreign currency exposures to lessen and delay, but not to completely eliminate, the effects of foreign currency fluctuations on our financial results. Since the hedging activities are designed to lessen volatility, they not only reduce the negative impact of a stronger U.S. Dollar or other trading currency, but they also reduce the positive impact of a weaker U.S. Dollar or other trading currency. Our future financial results could be significantly affected by the value of the U.S. Dollar in relation to the foreign currencies in which we conduct business. The degree to which our financial results are affected for any given time period will depend in part upon our hedging activities.

Global economic conditions could have a material adverse effect on our business, operating results and financial condition.

The uncertain state of the global economy continues to impact businesses around the world, most acutely in emerging markets and developing economies. If global economic and financial market conditions do not improve or deteriorate, the following factors could have a material adverse effect on our business, operating results and financial condition:

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Slower consumer spending may result in reduced demand for our products, reduced orders from retailers for our products, order cancellations, lower revenues, higher discounts, increased inventories and lower gross margins;

In the future, we may be unable to access financing in the credit and capital markets at reasonable rates in the event we find it desirable to do so;

We will conduct transactions in various currencies, which increases our exposure to fluctuations in foreign currency exchange rates relative to the U.S. Dollar. Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies could have a significant impact on our reported operating results and financial condition;

Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain could have a material adverse effect on our costs, gross margins and profitability;

If operators or distributors of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense;

If operators or distributors of our products experience severe financial difficulty, some may become insolvent and cease business operations, which could negatively impact the sale of our products to consumers; and

If contract manufacturers of our products or other participants in our supply chain experience difficulty obtaining financing in the capital and credit markets to purchase raw materials or to finance capital equipment and other general working capital needs, it may result in delays or non-delivery of shipments of our products.

Risk Relating to the Referendum on the U.K.’s Membership in the European Union

The announcement of the U.K.’s advisory referendum vote to exit from the European Union (“Brexit”) could cause disruptions to and create uncertainty surrounding Target’s business, including affecting Target’s relationships with existing and potential customers, suppliers and employees. The referendum is non-binding; however, if the U.K’s government initiates the process for the U.K. to leave the E.U., negotiations would then commence to determine the terms of the U.K’s future relationship with the E.U., including the terms of trade between the U.K. and the E.U. The effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently. The measures could potentially disrupt some of Target’s markets and jurisdictions in which it operates, and adversely change tax benefits or liabilities in these or other jurisdictions. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. In addition, the announcement of Brexit has caused significant volatility in global stock markets and currency exchange rate fluctuations, including the strengthening of the U.S. dollar against some foreign currencies and the weakening of the U.K. pound against some foreign currencies. The announcement of Brexit also may create global economic uncertainty, which may cause customers and potential customers to monitor their costs and reduce their budgets for products and services. Any of these effects of Brexit, among others, could materially adversely affect the business, business opportunities, results of operations, financial condition and cash flows of each of Target and us following the Business Combination.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Hydra is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination.

The following unaudited pro forma condensed combined balance sheet as of September 30, 2016 combines the unaudited historical condensed consolidated balance sheet of Target as of July 2, 2016 with the unaudited historical condensed balance sheet of Hydra as of September 30, 2016, giving effect to the Business Combination as if it had been consummated as of that date.

The following unaudited pro forma condensed combined income statement for the nine months ended September 30, 2016 combines the unaudited historical condensed consolidated statement of operations of Target for the forty week period ended July 2, 2016 with the unaudited historical condensed statement of operations of Hydra for the nine months ended September 30, 2016, giving effect to the Business Combination as if it had occurred on January 1, 2015.

The following unaudited pro forma condensed combined income statement for the year ended December 31, 2015 combines the audited historical consolidated statement of operations of Target for the fiscal period ended September 26, 2015 with the audited historical statement of operations of Hydra for the year ended December 31, 2015, giving effect to the Business Combination as if it had occurred on January 1, 2015.

The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination, are factually supportable and are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Business Combination.

The historical financial information of Target was derived from the audited consolidated financial statements of Target as of September 26, 2015 and September 27, 2014 and for the fiscal periods ended September 26, 2015, September 27, 2014 and September 28, 2013 included elsewhere in this proxy statement. The historical financial information for Target as of July 2, 2016 and for the forty week period ended July 2, 2016 has been derived from Target’s unaudited financial statements. The historical financial information of Hydra was derived from the audited financial statements of Hydra for the years ended December 31, 2015 and 2014 and the unaudited condensed financial statements of Hydra for the nine months ended September 30, 2016 and 2015 included elsewhere in this proxy statement. This information should be read together with Target’s and Hydra’s audited and unaudited financial statements and related notes, “ Target’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” “Hydra’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and other financial information included elsewhere in this proxy statement.

The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. Target and Hydra have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The Business Combination will be accounted for as a reverse merger in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, Hydra will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Target stockholders having a majority of the voting power of the combined company, Target comprising the ongoing operations of the combined entity, Target comprising a majority of the governing

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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