Business Context and Reporting Period
This Form 8-K is filed by Hydra Industries Acquisition Corp. (not Inspired Entertainment, Inc.) on March 22, 2016, reporting events occurring on March 16, 2016. The registrant is a special purpose acquisition company (SPAC) incorporated in Delaware, currently in the process of investigating and selecting a target business for an initial business combination.
Key Financial Metrics
The filing details the creation of a direct financial obligation rather than reporting operational revenue or profit metrics.
- Debt Issued: Two non-interest bearing convertible promissory notes totaling $500,000 ($250,000 each).
- Counterparties: Hydra Industries Sponsor LLC and MIHI LLC (collectively, the "Sponsors").
- Purpose: Funding expenses related to investigating target businesses and working capital requirements.
- Repayment Source: Funds in the Company's trust account will not be used to repay the notes unless a Business Combination is consummated.
Material Changes and Terms
The primary material change is the issuance of the notes under an Expense Advancement Agreement dated October 24, 2014. Key terms include:
- Interest: Non-interest bearing.
- Maturity: Due upon the consummation of the initial Business Combination.
- Conversion: Convertible at the payee's election into warrants at $0.50 per warrant upon the Business Combination.
- Warrant Terms: Each warrant is exercisable for one-half of one share of common stock at an exercise price of $5.75 per half share.
- Equity Impact: If converted, an aggregate of 500,000 warrants would be issued to each Sponsor.
Guidance, Risks, and Contingencies
The filing does not provide forward-looking financial guidance or management commentary on future performance. The issuance relies on Section 4(a)(2) of the Securities Act of 1933 as an exemption for sales to sophisticated investors without general solicitation. The primary contingency is the consummation of a Business Combination, which triggers the repayment or conversion of the notes.
Investor Verification Checklist
- Verify the identity of the registrant (Hydra Industries Acquisition Corp.) versus the requested company name (Inspired Entertainment, Inc.).
- Confirm the total outstanding amount of expense advancement notes ($500,000).
- Review the conversion mechanics: $0.50 per warrant and the resulting equity dilution (500,000 warrants per sponsor).
- Check the status of the initial business combination to determine if the notes are due for repayment or conversion.
- Examine Exhibits 10.1 and 10.2 for the full legal text of the promissory notes.