**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,DC 20549**

**FORM 10-Q**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**Forthe quarterly period ended March  31,2007**

**or**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**Commissionfile number:  001-32688**

**HARBOR ACQUISITION CORPORATION**

(Exact name of registrantas specified in its charter)
| **Delaware**                              | ** ** | **56-2518836**       |
|-------------------------------------------|------------|----------------------|
| (State or other  jurisdiction of          |       | (I.R.S. Employer     |
| incorporation or  organization)           |       | Identification  No.) |
| **One Boston Place, Suite 3630**          |       |                 |
| **Boston,  Massachusetts**                | ** ** | **02108**            |
| (Address of  principal executive offices) |       | (Zip Code)           |

 

**(617) 624-8409**(Registrant’s telephone number, including areacode)

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (orfor such shorter period that the Registrant was required to file such reports),and (2) has been subject to such filing requirements for the past90 days. Yes x   No o

Indicate by check mark whether the registrant is largeaccelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 ofthe Exchange Act. (Check one):

| Large accelerated filer   o |   | Accelerated  filer   o |   | Non-accelerated  filer x |
|---------------------------------------|--------|----------------------------------|--------|-------------------------------|

 

Indicate by check mark whether the Registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes xNo o

Asof May 14, 2007, 16,800,000 shares of the registrant’s common stock, par value$0.001 per share, were outstanding.

 

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**HARBORACQUISITION CORPORATIONTable of Contents**
| PART I — FINANCIAL  INFORMATION                                                                     |   | 3      |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Item 1. Financial Statements                                                                        |   | 3      |   |
| Condensed  Balance Sheets                                                                                |   | 3      |   |
| Condensed Statement of Operations                                                                        |   | 4      |   |
| Condensed Statement of Stockholders’ Equity                                                         |   | 5      |   |
| Condensed Statement of Cash Flows                                                                        |   | 6      |   |
| Notes to Condensed Financial Statements                                                                  |   | 7      |   |
| Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations |   | 10     |   |
| Item 3. Quantitative and Qualitative Disclosures  about Market Risk                                 |   | 13     |   |
| Item 4. Controls and Procedures                                                                     |   | 13     |   |
| PART  II — OTHER INFORMATION                                                                        |   | 13     |   |
| Item 1.  Legal Proceedings                                                                          |   | 13     |   |
| Item 1A.  Risk Factors                                                                              |   | 13     |   |
| Item 2. Unregistered Sales of Equity Securities  and Use of Proceeds                                |   | 13     |   |
| Item 3.  Defaults upon Senior Securities                                                            |   | 14     |   |
| Item 4.  Submission of Matters to a Vote of Security Holders                                        |   | 14     |   |
| Item 5.  Other Information                                                                          |   | 14     |   |
| Item 6.  Exhibits                                                                                   |   | 15     |   |
| SIGNATURES                                                                                               |   | 16     |   |
| INDEX TO  EXHIBITS                                                                                       |   | 17     |   |
| Certification by  Principal Executive Officer Pursuant to Section 302                                    |   |   |   |
| Certification by  Principal Financial Officer Pursuant to Section 302                                    |   |   |   |
| Certification by Principal Executive Officer and  Principal Financial Officer Pursuant to Section 906    |   |   |   |

 

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**PART I—FINANCIALINFORMATION**

**Item 1.Financial Statements**

**HarborAcquisition Corporation and Subsidiary**

**(ADevelopment Stage Company)**

**Condensed Balance Sheets**
| **Assets**                                                                                                                                                                                                                                    | ** ** | **March 31, 2007** | ** ** | **December 31, 2006** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ***Current:***                                                                                                                                                                                                                                | ** ** | **(Unaudited)**              | ** ** | ** **                      | ** ** |
| Cash                                                                                                                                                                                                                                          |       | $                            | 375,477    |                            | $          | 534,970 |   |
| Investments held in  trust                                                                                                                                                                                                                    |       | 78,479,583                   |       | 77,840,000                      |       |
| Investments held in  trust from Underwriter                                                                                                                                                                                                   |       | 1,620,000                    |       | 1,620,000                       |       |
| Investment income not  subject to trust                                                                                                                                                                                                       |       | —                       |       | 213,364                         |       |
| Prepaid Expense                                                                                                                                                                                                                               |       | 45,000                       |       | 66,000                          |       |
| ***Total  current assets***                                                                                                                                                                                                                   |       | 80,520,060                   |       | 80,274,334                      |       |
| Deferred acquisition  costs                                                                                                                                                                                                                   |       | 951,614                      |       | 643,592                         |       |
| Deferred tax asset                                                                                                                                                                                                                            |       | 187,428                      |       | 146,362                         |       |
| **Total Assets**                                                                                                                                                                                                                              |       | $                            | 81,659,102 |                            | $          | 81,064,288 |   |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                                                                                |       |                         |       |                            |       |
| **Current  Liabilities**                                                                                                                                                                                                                      |       |                         |       |                            |       |
| Accrued Expenses                                                                                                                                                                                                                              |       | $                            | 259,703    |                            | $          | 305,434 |   |
| Notes Payable,  Stockholders                                                                                                                                                                                                                  |       | —                       |       | —                          |       |
| Due to Underwriter                                                                                                                                                                                                                            |       | 1,620,000                    |       | 1,620,000                       |       |
| Income Taxes Payable                                                                                                                                                                                                                          |       | 200,921                      |       | 111,043                         |       |
| **Total Liabilities**                                                                                                                                                                                                                         |       | 2,080,624                    |       | 2,036,477                       |       |
| Common stock subject to  possible conversion, 2,758,620 shares at conversion value                                                                                                                                                            |       | 15,560,216                   |       | 15,560,216                      |       |
| Commitments                                                                                                                                                                                                                                   |       |                         |       |                            |       |
| **Stockholders’  Equity**                                                                                                                                                                                                                |       |                         |       |                            |       |
| Preferred Stock, $.0001  par value, 1,000,000 shares authorized; none issued or outstanding                                                                                                                                                   |       | —                       |       | —                          |       |
| Common Stock, $.0001  par value, 70,000,000 shares authorized; 16,800,000 shares (which includes  2,758,620 subject to possible conversion) and 3,000,000 shares issued and  outstanding at March 31, 2007 and December 31, 2006 respectively |       | 1,680                        |       | 1,680                           |       |
| Additional Paid in  Capital                                                                                                                                                                                                                   |       | 62,104,087                   |       | 62,104,087                      |       |
| Earnings accumulated  during the development stage                                                                                                                                                                                            |       | 1,912,495                    |       | 1,361,828                       |       |
| **Total Stockholders’ Equity**                                                                                                                                                                                                           |       | 64,018,262                   |       | 63,467,595                      |       |
| **Total Liabilities and Stockholders’ Equity**                                                                                                                                                                                           |       | $                            | 81,659,102 |                            | $          | 81,064,288 |   |

 

See notes tocondensed financial statements

3

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**HarborAcquisition Corporation and Subsidiary**

**(ADevelopment Stage Company)**

**Condensed  Statementsof Operations**

**(Unaudited)**
| ** **                                                                   | ** ** | ** **                              | ** ** | ** **                              | ** ** | **For the period from**   | ** ** |
|------------------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                   | ** ** | ** **                              | ** ** | ** **                              | ** ** | **June 20, 2005  (inception)** | ** ** |
| ** **                                                                   | ** ** | **For the three months** | ** ** | **For the three months** | ** ** | **to March 31, 2007**     | ** ** |
| ** **                                                                   | ** ** | **ended March 31, 2007** | ** ** | **ended March 31, 2006** | ** ** | **(cumulative)**                         | ** ** |
| Interest income                                                              |       | $                                       | 970,664    |                                    | $          | 25                                       |       | $ | 3,570,648 |   |
| **Operating  Expenses**                                                      |       |                                    |       |                                    |       |                                     |       |
| General &  Administrative                                                |       | 120,784                                 |       | 1,516                                   |       | 614,259                                  |       |
| Net Income  (Loss) before income taxes                                       |       | 849,880                                 |       | (1,491                                  | )          | 2,956,389                                |       |
| Income tax  expense                                                          |       | 299,213                                 |       | —                                  |       | 1,043,894                                |       |
| **Net  Income (Loss)**                                                       |       | $                                       | 550,667    |                                    | $          | (1,491                                   | )          | $ | 1,912,495 |   |
| Weighted Average  number of common shares outstanding—basic and diluted |       | 16,800,000                              |       | 3,000,000                               |       | 10,262,037                               |       |
| **Income (Loss) per Share—basic  and diluted**                          |       | $                                       | 0.03       |                                    | $          | (0.00                                    | )          | $ | 0.19 |   |

 

See notes tocondensed financial statements

 

4

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**HarborAcquisition Corporation and Subsidiary**

**(ADevelopment Stage Company)**

**CondensedStatement of Stockholders’ Equity**
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **                                    | ** ** | **Earnings (Deficit)** | ** ** | ** **  | ** **    |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|----------------|------------|-----------------------------------------------|------------|-----------------------------|------------|-------------|---------------|
| ** **                                                                                                                                     | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **Accumulated  During the  Development** | ** ** | ** **                  | ** ** |
| ** **                                                                                                                                     | ** ** | **Shares**            | ** ** | **Amount**     | ** ** | **Paid-in-Capital**                           | ** ** | **Stage**                   | ** ** | **Total**   | ** **    |
| Stock issued June 22,  2005 at $.008 per share                                                                                                 |       | 3,000,000             |       | $              | 300        |                                          | $          | 24,700                      |       | $           | —        |   | $ | 25,000 |   |
| Net Loss                                                                                                                                       |       |                  |       |           |       |                                          |       | (4,837                      | )          | (4,837      | )             |
| **Balance  at December 31, 2005**                                                                                                              | ** ** | **3,000,000**         | ** ** | **$**          | **300**    | ** **                                    | **$**      | **24,700**                  | ** ** | **($4,837** | **)**         | **$** | **20,163** | ** ** |
| ** **                                                                                                                                     |       |                  |       |           |       |                                          |       |                        |       |        |          |
| Sale of Private  Placement Warrants                                                                                                            |       | —                |       | —         |       | 1,300,000                                     |       | —                      |       | 1,300,000   |          |
| Sale of  13,800,000 Units net of underwriter’s discount and offering expenses  (includes 2,758,620 shares subject to possible conversion) |       | 13,800,000            |       | 1,380          |       | 76,339,503                                    |       | —                      |       | 76,340,883  |          |
| Proceeds subject  to possible conversion of 2,758,620 shares                                                                                   |       | —                |       | —         |       | (15,560,216                                   | )          | —                      |       | (15,560,216 | )             |
| Sale of  underwriter option                                                                                                                    |       | —                |       | —         |       | 100                                           |       | —                      |       | 100         |          |
| Net Income                                                                                                                                     |       | —                |       | —         |       | —                                        |       | 1,366,665                   |       | 1,366,665   |          |
| **Balance  at December 31, 2006**                                                                                                              | ** ** | **16,800,000**        | ** ** | **$**          | **1,680**  | ** **                                    | **$**      | **62,104,087**              | ** ** | **$**       | **1,361,828** | ** ** | **$** | **63,467,595** | ** ** |
| **Unaudited:**                                                                                                                                 |       |                  |       |           |       |                                          |       |                        |       |        |          |
| Net Income                                                                                                                                     |       | —                |       | —         |       | —                                        |       | 550,667                     |       | 550,667     |          |
| **Balance at March 31, 2007**                                                                                                                  | ** ** | **16,800,000**        | ** ** | **$**          | **1,680**  | ** **                                    | **$**      | **62,104,087**              | ** ** | **$**       | **1,912,495** | ** ** | **$** | **64,018,262** | ** ** |

 

See notes tocondensed financial statements

5

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** **

**HarborAcquisition Corporation and Subsidiary**

**(ADevelopment Stage Company)**

**Condensed Statements of Cash Flows**

**(Unaudited)**
| ** **                                                                        | ** ** | ** **                              | ** **  | ** **                              | ** ** | **For the period from**   | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------------------------|-------------|-----------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                        | ** ** | ** **                              | ** **  | ** **                              | ** ** | **June 20, 2005  (inception)** | ** ** |
| ** **                                                                        | ** ** | **For the three months** | ** **  | **For the three months** | ** ** | **to March 31, 2007**     | ** ** |
| ** **                                                                        | ** ** | **ended March 31, 2007** | ** **  | **ended March 31, 2006** | ** ** | **(cumulative)**                         | ** ** |
| ***Cash  Flows From Operating Activities***                                       |       |                                    |        |                                    |       |                                     |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| Net Income (Loss)                                                                 |       | $                                       | 550,667     |                                    | $          | (1,491                                   | )          | $ | 1,912,495 |   |
| Adjustment to reconcile  net income to net cash provided by operating activities: |       |                                    |        |                                    |       |                                     |       |
| Changes in operating  assets and liabilities:                                     |       |                                    |        |                                    |       |                                     |       |
| (Increase) Decrease in  Prepaid expenses                                          |       | 21,000                                  |        | —                                  |       | (45,000                                  | )          |
| Increase in value of  investments held in trust                                   |       | (968,120                                | )           | —                                  |       | (3,560,984                               | )          |
| Increase in Deferred  tax asset                                                   |       | (41,066                                 | )           | —                                  |       | (187,428                                 | )          |
| Increase in Income  taxes payable                                                 |       | 89,878                                  |        | —                                  |       | 200,921                                  |       |
| Increase in Accrued  expenses                                                     |       | 21,209                                  |        | —                                  |       | 122,069                                  |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| **Net Cash provided by (used in)  Operating Activities**                          |       | (326,432                                | )           | (1,491                                  | )          | (1,557,927                               | )          |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| ***Cash  Flows From Investing Activities***                                       |       |                                    |        |                                    |       |                                     |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| Payment of deferred  acquisition costs                                            |       | $                                       | (374,962    | )                                       | —     |                                     | $          | (813,980 | ) |
| Disbursements from  Trust                                                         |       | 541,901                                 |        |                                    |       | 2,921,401                                |       |
| Cash held in Trust  Account                                                       |       | —                                  |        | —                                  |       | (79,460,000                              | )          |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| **Net Cash provided by (used in)  Investing Activities**                          |       | 166,939                                 |        | —                                  |       | (77,352,579                              | )          |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| ***Cash  Flows From Financing Activities***                                       |       |                                    |        |                                    |       |                                     |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| Proceeds from public  offering                                                    |       | —                                  |        | —                                  |       | 82,800,000                               |       |
| Proceeds from private  placement of warrants                                      |       | —                                  |        | —                                  |       | 1,300,000                                |       |
| Proceeds from issuance  of underwriting option                                    |       | —                                  |        | —                                  |       | 100                                      |       |
| Proceeds from sale of  stock                                                      |       | —                                  |        | —                                  |       | 25,000                                   |       |
| Proceeds from notes  payable, Stockholders                                        |       | —                                  |        | —                                  |       | 225,000                                  |       |
| Payments of notes  payable, Stockholders                                          |       | —                                  |        | —                                  |       | (225,000                                 | )          |
| Payment of advances due  to Stockholders                                          |       | —                                  |        | —                                  |       | (5,000                                   | )          |
| Payment of offering  costs                                                        |       | —                                  |        | (2,339                                  | )          | (4,834,117                               | )          |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| **Net Cash provided by Financing  Activities**                                    |       | 0                                       |        | (2,339                                  | )          | 79,285,983                               |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| Net increase in Cash                                                              |       | (159,493                                | )           | (3,830                                  | )          | 375,477                                  |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| Cash at beginning of  period                                                      |       | 534,970                                 |        | 6,654                                   |       | —                                   |       |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| **Cash at end of period**                                                         | ** ** | **$**                                   | **375,477** | ** **                              | **$**      | **2,824**                                | ** ** | **$** | **375,477** | ** ** |
| ** **                                                                        | ** ** | ** **                              | ** **  | ** **                              | ** ** | ** **                               | ** ** |
| Supplemental schedule  of non-cash financing activities:                          |       |                                    |        |                                    |       |                                     |       |
| Advance due to  Stockholder for Public Offering costs                             |       | $                                       | —      |                                    | $          | 5,000                                    |       | $ | 5,000 |   |
| Accrual of deferred  underwriting fees                                            |       | $                                       | 1,620,000   |                                    | —     |                                     | $          | 1,620,000 |   |
| Accrual of public  offering costs                                                 |       | —                                  |        | $                                       | 320,000    |                                     | —     |   |
|                                                                              |       |                                    |        |                                    |       |                                     |       |
| Supplemental schedule  of non-cash investing activities:                          |       |                                    |        |                                    |       |                                     |       |
| Accrual of deferred acquisition costs                                             |       | $                                       | 137,633     |                                    | —     |                                     | $          | 137,633 |   |

 

See notes tocondensed financial statements

6

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**Harbor Acquisition Corporation andSubsidiary(A Development Stage Company)**

**Notes to CondensedFinancial Statements**

**1.Basis of Presentation**

The financial statements at March 31, 2007 and for the periods endedMarch 31, 2007 and 2006 are unaudited. The condensed financial statementsinclude the accounts of Harbor Acquisition Corporation and its wholly ownedsubsidiary Harbor Acquisition Security Corporation (collectively referred to asthe “Company”). All significant intercompany transactions and balances havebeen eliminated. In the opinion of management, all adjustments (consisting ofnormal accruals) have been made that are necessary to present fairly thefinancial position of the Company as of March 31, 2007 and the results of itsoperations and its cash flows for the three months ended March 31, 2007 and2006 and for the period from June 20, 2005 (inception) through March 31,2007.  Operating results for the interimperiod presented are not necessarily indicative of the results to be expectedfor a full year.

The statements and related notes have beenprepared pursuant to the rules and regulations of the U.S. Securities andExchange Commission. Accordingly, certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles have been omitted pursuant to such rules andregulations.  Audited financialstatements as of and for the year ended December 31, 2006, prepared inaccordance with generally accepted accounting principles, are contained in theCompany’s 2006 annual report on Form 10-K filed with the Securities andExchange Commission. The December 31, 2006 balance sheet included in thisreport has been derived from the audited financial statements included in saidannual report.

**2.Organization and Business Operations**

The Company wasincorporated in Delaware on June 20, 2005 as a blank check company whoseobjective is to acquire an operating business. At March 31, 2007 the Companyhad neither engaged in any operations nor generated significant operatingrevenue to date. The Company is considered to be in the development stage andis subject to the risks associated with activities of development stagecompanies.

All activitythrough March 31, 2007 relates to the Company’s formation, its initial publicoffering described below, and thereafter, pursuing potential acquisitions oftarget businesses.

The registrationstatement for the Company’s initial public offering (the “Public Offering”) (asdescribed in Note 4) was declared effective April 25, 2006. The Companyconsummated the Public Offering on May 1, 2006, and preceding theconsummation of the Public Offering on May 1, 2006, certain officers,directors, and initial shareholders of the Company purchased an aggregate of2,000,000 warrants at $.65 per warrant from the Company in a private placement(the “Private Placement”). The warrants sold in the Private Placement wereidentical to the warrants sold in the Public Offering. The Company received netproceeds from the Private Placement and the Public Offering of approximately$77,640,883 (Note 3).

The Company’smanagement has broad discretion with respect to the specific application of thenet proceeds of the Public Offering, although substantially all of the netproceeds of this Public Offering are intended to be generally applied towardconsummating a business combination with an operating business (“BusinessCombination”), which may not constitute a business combination for accountingpurposes.

Furthermore, thereis no assurance that the Company will be able to successfully effect a BusinessCombination. Upon the closing of the Public Offering, $79,460,000, including$1,620,000 of deferred underwriting fees described in Note 3, is being held ina trust account (“Trust Fund”) and, commencing May 2, 2006, is invested ingovernment securities until the earlier of (i) the consummation of itsfirst Business Combination and (ii) the distribution of the Trust Fund asdescribed below.  The placing of funds inthe Trust Fund may not protect those funds from third party claims against theCompany. Although the Company will seek to have all vendors, prospective targetbusinesses or other persons it engages, execute agreements with the Companywaiving any right, title, interest or claim of any kind in or to any moniesheld in the Trust Fund, there is no guarantee that they will execute suchagreements. Certain of the Company’s directors have severally agreed that theywill be personally liable under certain circumstances to ensure that theproceeds in the Trust Fund are not reduced by the claims of target businessesor vendors or other persons that are owed money by the Company for servicesrendered, contracted for or products sold to the Company. However, there can beno assurance that the directors will be able to satisfy those obligations. Theremaining  proceeds (not held in the Trust Fund), along with interestearned on the Trust Fund, may be used to pay for business, legal and accountingdue diligence on prospective acquisitions and continuing general andadministrative expenses. The Company, after signing a definitive agreement forthe acquisition of a target business, will submit such transaction forstockholder approval. Under the Company’s Certificate of Incorporation, theBusiness Combination must be approved by a majority of the votes cast at thestockholders meeting by holders of record of the Company’s common stock on therecord date. All of the Company’s stockholders prior to the Public Offering,including all of the officers and directors of the Company (“Initial

7

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Stockholders”),have agreed to vote their 3,000,000 founding shares of common stock, as well asany shares of common stock acquired in connection with or following the PublicOffering, in accordance with the vote of the majority in interest of all otherstockholders of the Company (“Public Stockholders”) with respect to anyBusiness Combination. After consummation of a Business Combination, thesevoting provisions will no longer be applicable. In addition, in the event thatstockholders owning 20% or more of the shares issued in the Public Offeringvote against the Business Combination and exercise their conversion rightsdescribed below, the Business Combination will not be consummated.

With respect to aBusiness Combination which is approved and consummated, any Public Stockholderwho voted against the Business Combination may demand that the Company converthis or her shares. The per share conversion price will equal the amount in theTrust Fund, calculated as of two business days prior to the consummation of theproposed Business Combination, divided by the number of shares of common stocksold in the Public Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate numberof shares owned by all Public Stockholders may seek conversion of their sharesin the event of a Business Combination. Such Public Stockholders are entitledto receive their per share interest in the Trust Fund computed without regardto the shares held by Initial Stockholders. Accordingly, a portion of the netproceeds from the Public Offering (19.99% of the amount held in the Trust Fund,excluding the deferred portion of the underwriters’ non-accountable expenseallowance) has been classified as common stock subject to possible conversionon the accompanying March 31, 2007 balance sheet. In addition, suchstockholders would also be entitled to a portion of the deferred portion of theunderwriters’ non-accountable expense allowance held in trust (seeNote 3).  As of March 31, 2007, theestimated per share conversion price is $5.79.

The Company’s Certificate of Incorporation provides for mandatoryliquidation of the Company in the event that the Company does not consummate aBusiness Combination within 18 months from the date of the consummation of thePublic Offering, or 24 months from the consummation of the Public Offering ifcertain extension criteria have been satisfied.  There is no assurance that the Company will beable to successfully effect a Business Combination during this period. Thisfactor raises substantial doubt about the Company’s ability to continue as agoing concern. The accompanying financial statements assume the Company willcontinue as a going concern. The financial statements do not include anyadjustments that may result from the outcome of this uncertainty.  In the event of liquidation, it is likelythat the per share value of the residual assets remaining available fordistribution (including Trust Fund assets) will be less than the initialoffering price per share in the Public Offering (assuming no value isattributed to the Warrants contained in the Units sold in the Public Offeringdiscussed in Note 3).

On May 1, 2006,the Company formed a wholly owned subsidiary, Harbor Acquisition SecurityCorporation, for tax planning purposes.  The Company assigned the rightsto the investments in the Trust Fund to this subsidiary.

On October 17,2006, the Company entered into a Stock Purchase Agreement with ElmetTechnologies, Inc (“Elmet”) and the holders of all of the outstanding sharesand warrants of Elmet.  Subject to the terms and conditions of the StockPurchase Agreement, the Company has agreed to acquire all of the outstandingElmet shares and all of its outstanding warrants.  The acquisition isexpected to be consummated during the second quarter of 2007, after therequired approval by the Company’s stockholders and the fulfillment of certainother conditions.  The pending transaction is further described in theCompany’s current report filed with the U.S. Securities and Exchange Commissionon Form 8-K on October 17, 2006.

**3.Initial Public Offering**

On May 1,2006, the Company sold 13,800,000 units (“Units”), including 1,800,000 Units inconnection with the underwriters’ over-allotment option, in the Public Offeringat a price of $6.00 per Unit. Each Unit consists of one share of the Company’scommon stock, $.0001 par value, and two Redeemable Common Stock PurchaseWarrants (“Warrants”). Each Warrant entitles the holder to purchase from theCompany one share of common stock at an exercise price of $5.00 commencing thelater of the completion of a Business Combination or one year from theeffective date of the Public Offering and expiring five years from theeffective date of the Public Offering. The Company may redeem the Warrants at aprice of $.01 per Warrant upon 30 days’ notice after the Warrants becomeexercisable, only in the event that the last sale price of the common stock isat least $8.50 per share for any 20 trading days within a 30 trading day periodending on the third day prior to the date on which notice of redemption isgiven. If the Company calls the Warrants, the holder will either have toexercise the Warrants by purchasing the common stock from the Company for $5.00per share or allow the Company to redeem the Warrants at a price of $.01 per Warrant.

In connection withthe Public Offering, the Company paid the underwriters of the Public Offering(collectively, the “Underwriters”) an underwriting discount of 5.0% of the grossproceeds of the Public Offering ($4,140,000). In addition, a non-accountableexpense allowance of 2.25% of the gross proceeds of the Public Offering,excluding the over-allotment option, is due to the Underwriter, who has agreedto deposit the non-accountable expense allowance ($1,620,000) into the TrustFund until the earlier of the completion of a Business Combination or theliquidation of the Trust Fund. The Underwriters have further agreed to forfeitany rights to or claims against such proceeds unless the Company successfullycompletes a Business Combination. If a Business Combination is approved andcompleted, public stockholders who voted against the combination and haveexercised their conversion rights will be entitled to their pro rata share ofthe deferred non-accountable expense allowance.

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Preceding theconsummation of the Public Offering on May 1, 2006, certain of the InitialStockholders purchased 2,000,000 warrants at a purchase price of $.65 perwarrant in a private placement. The proceeds of $1,300,000 were deposited intothe Trust Fund, and the Initial Stockholders will not have any claim on thisamount if the Trust Fund is liquidated.

The InitialStockholders are entitled to registration rights with respect to their foundingshares and private placement warrants pursuant to agreements dated April 25,2006. The holders of the majority of these shares and warrants are entitled tomake up to two demands that the Company register these shares. In addition, theInitial Stockholders have “piggy-back” registration rights on certainregistration statements filed subsequent to the consummation of a BusinessCombination.

In connection withthe Public Offering, the Company issued an option, for $100, to the Underwriterto purchase 600,000 Units at an exercise price of $7.50 per Unit, exercisableon the later of April 25, 2007 or the consummation of a BusinessCombination. The option has a life of five years from the effective date. TheUnits that would be issued upon exercise of this option are identical to thoseoffered in the Public Offering, except that each of the warrants underlying theoption entitles the holder to purchase one share of the Company’s common stockat a price of $6.25 and will have a cashless exercise provision. The Company hasaccounted for the fair value of the option, inclusive of the receipt of the$100 cash payment, as an expense of the Public Offering resulting in a chargedirectly to stockholders’ equity. The Company estimated, using theBlack-Scholes method, the fair value of the option granted to the Underwriters asof the date of grant was approximately $1,516,000 using the followingassumptions: (1) expected volatility of 49.3%, (2) risk-free interestrate of 4.635% and (3) expected life of five years.  In order toestimate the volatility, the Company considered the historic volatilities of 22publicly traded companies that operate within the consumer and industrialproducts sectors.

**4.Limited Distributions of Income from Trust Fund**

Upon writtenrequest from the Company, which may be given not more than once in any calendarmonth, the trustee shall distribute to the Company by wire transfer from theTrust Fund an amount computed and certified by the Company to be equal to thecollected and undistributed income earned on the original amount deposited inthe Trust Fund for the preceding month. The maximum amount of distributions, net of taxes, that the Company mayrequest and the trustee shall distribute is $1,850,000.  The Company has received distributions, netof taxes, of $1,850,000 through March 31, 2007. These funds will be used for working capital purposes associated withidentifying and consummating a Business Combination.

If there is anyincome tax obligation relating to the income of the property in the Trust Fund,then, at the written instruction of the Company, the trustee shall disburse tothe Company by wire transfer, out of the property in the Trust Fund, the amountindicated by the Company as required to pay income taxes.  Such disbursements amounted to $1,030,401through March 31, 2007.

**5.Deferred Offering Costs**

Deferred offeringcosts consisted of legal, accounting, printing, and other fees incurred priorto the Public Offering which were directly related to the Public Offering.These costs were charged to stockholders’ equity upon completion of the PublicOffering.

**6.Deferred Acquisition Costs**

Deferredacquisition costs consist principally of legal fees directly associated withthe negotiation and execution of the Stock Purchase Agreement with Elmet. Thesecosts will be treated as part of the purchase price upon the closing of thetransaction.

**7.Note Payable, Stockholders**

The Company issuedan aggregate of $75,000 in unsecured promissory notes to two of its InitialStockholders on June 22, 2005. The notes were non-interest bearing andwere payable on the earlier of June 15, 2006 or the consummation of thePublic Offering. Accordingly, the Company paid off the notes on May 1,2006. Separately, upon the consummation of the Public Offering, a shareholderloaned the Company $150,000.  The loanand all  related interest was paid infull on July 5, 2006.  The loan bore interestat 4% per annum and was paid from the interest earned on the amounts in theTrust Fund.  Due to the short term nature of the notes, the fair value ofthe notes approximated their carrying amount.

**8.Commitments and Related Party Transactions**

The Companypresently occupies office space provided by an affiliate of two of the InitialStockholders. Such affiliate has agreed that, until the Company consummates aBusiness Combination, it will make such office space, as well as certain officeand secretarial services, available to the Company, as may be required by theCompany from time to time. The Company has agreed to pay such affiliate $7,500per month for such services commencing on the effective date of the PublicOffering.  The statement of operations includes $22,500 for the threemonths ended March 31, 2007.

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Pursuant to letter agreements dated June 22, 2005with the Company and the representative of the Underwriters, the InitialStockholders have waived their right to receive distributions with respect totheir founding shares upon the Company’s liquidation.

**9.Common Stock**

On April 14,2006, the Company’s stockholders approved an amendment to the Company’sCertificate of Incorporation to increase the number of authorized shares ofcommon stock to 70,000,000. All references in the accompanying financialstatements to the number of shares of stock have been retroactively restated toreflect this transaction.

On April 20,2006, the Company’s Board of Directors approved a stock split to be effected asa stock dividend immediately prior to the closing of the Public Offering. Thestock split was executed, and a stock dividend of one share for every 5 shareswas issued to the Initial Stockholders.

**10.Preferred Stock**

The Company isauthorized to issue 1,000,000 shares of preferred stock with such designations,voting and other rights and preferences as may be determined from time to timeby its Board of Directors.

**11.Reserved Common Stock**

At March 31, 2007,30,800,000 shares of common stock were reserved for issuance upon exercise ofredeemable warrants and the Underwriters’ purchase option.

**12.Trust Fund**

For tax planningpurposes, the Company assigned its rights to the cash in the Trust Fund toHarbor Acquisition Security Corporation, a wholly-owned Massachusettssubsidiary qualifying as a “security corporation” entitled to a reduced statecorporate tax rate.

**13. Recent Accounting Pronouncements**

 

In January 2007, the Companyadopted FIN 48, *Accounting for Uncertainty in IncomeTaxes—an Interpretation of FASB Statement No. 109*, which providescriteria for the recognition, measurement, presentation and disclosure of uncertaintax positions.  A tax benefit from anuncertain position may be recognized only if it is “more likely than not” thatthe position is sustainable based on its technical merits.  The adoption of FIN 48 did not have amaterial effect on the Company’s results of operations or financialcondition.  The Company was incorporatedon June 20, 2005.  Accordingly, the taxperiods ending December 31, 2005 and December 31, 2006 are open for examinationas of March 31, 2007.

**Item 2.**                          Management’sDiscussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis ofFinancial Condition and Results of Operations should be read in conjunctionwith our financial statements and the related notes and schedules thereto.

We area “blank check” company organized under the laws of the State of Delaware onJune 20, 2005 for the purpose of acquiring, through a merger, capitalstock exchange, asset acquisition, stock purchase or other similar businesscombination with an operating business in the consumer and industrial productssectors. Our initial business combination must be with a target business whosefair market value is at least equal to 80% of our net assets (excluding thedeferred non-accountable expense allowance of the underwriters held in trust)at the time of such acquisition. We intend to use cash derived from the netproceeds of our public offering which was completed on May 1, 2006 and ourconcurrent private placement of warrants, together with borrowings under ourproposed senior secured credit facilities, to effect such business combination.

OnMay 1, 2006, we consummated our initial public offering of 13,800,000units, including 1,800,000 units attributable to the full exercise of theunderwriters’ over-allotment option (see “Liquidity and Capital Resources”below). Since our initial public offering, we have been actively searching fora suitable business combination candidate. We have met with target companies,service professionals and other intermediaries to discuss our company, thebackground of our management and our combination preferences. In the course ofthese discussions, we have also spent time explaining the capital structure ofthe initial public offering, the combination approval process and the timelinewithin which we must either enter into a letter of intent or definitiveagreement for a business combination or return the net proceeds of the offeringheld in trust to investors. On October 17, 2006, we entered into adefinitive stock purchase agreement to acquire Elmet, and we currentlyanticipate we will close such acquisition during the second quarter of 2007. The transaction is described in our current report filed with theSecurities and Exchange Commission on Form 8-K on October 17, 2006.However, we cannot assure investors that we will be able to close the Elmetacquisition or, in the event we do not complete such acquisition, find andclose a suitable alternative business combination in the time permitted by ourcertificate of incorporation.

**Resultsof Operations**

*Net Income and Loss*

Wehave neither engaged in any business operations nor generated any operatingrevenues to date. Our only activities since inception have been organizationalactivities and those necessary to prepare for our public offering, andthereafter, pursuing potential acquisitions of target businesses. We will notgenerate any operating revenues until after completion of a businesscombination. We 

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have generatednon-operating income in the form of interest income on our cash and cashequivalents and short-term investments which are held in the trust account weestablished upon completion of our initial public offering.

Netincome of $550,667 for the three months ended March 31, 2007 consists ofinterest income primarily on the trust fund investment of $968,120 along with$2,544 of other interest income, reduced by $120,784 of general andadministrative expenses and an income tax expense of $299,213.

Netloss of $1,491 for the three months ended March 31, 2006 consists of interestincome of $25, reduced by $1,516 of general and administrative expenses.

Netincome of $1,912,495 for the period from June 20, 2005 (inception) toMarch 31, 2007 (cumulative) consists of interest income primarily on the trustfund investment of $3,560,984 along with $9,664 of other interest income,reduced by $614,259 of general and administrative expenses and an income taxexpense of $1,043,894.

**Liquidityand Capital Resources**

OnApril 25, 2006, we entered into an agreement with certain of our initialstockholders for the sale of 2,000,000 warrants in a private placement. Eachwarrant entitles the holder to purchase from us one share of our common stockat an exercise price of $5.00. The warrants were sold at a price of $0.65 perwarrant, generating net proceeds of $1,300,000.

OnMay 1, 2006, we consummated our initial public offering of 13,800,000units, including 1,800,000 units attributable to the full exercise of theunderwriters’ over-allotment option. Each unit consists of one share of commonstock and two warrants. Each warrant entitles the holder to purchase from usone share of our common stock at an exercise price of $5.00.

Thenet proceeds from the private placement of warrants and the public offering ofour units, including the exercise of the underwriters’ over-allotment option,after deducting certain offering expenses of approximately $690,000,underwriting discounts of $4,140,000 and an underwriters’ non-accountableexpense allowance of $1,620,000, were approximately $77,650,000. The netproceeds (including an additional $40,000, representing the difference betweenestimated offering expenses of $650,000 and actual offering expenses of$690,000) are being held in a trust account at JPMorgan Chase Bank, N.A.maintained by Continental Stock Transfer & Trust Company, as trustee.In addition, we deposited into the trust account the proceeds from a $150,000loan to us from an affiliate of two of our directors (which we repaid onJuly 5, 2006, with interest at an annual rate of 4%, from interest earned,net of taxes, on the trust account), and the underwriters’ non-accountableexpense allowance of $1,620,000. In total, we deposited $79,460,000 into thetrust account.  As of March 31, 2007,there was a total of $80,099,583 held in the trust account, which includesinterest earned in excess of the $1,850,000 which we were permitted to withdrawfrom the trust account to pay our expenses. The underwriters have agreed to defer payment of the allowance until theconsummation of a business combination and to forfeit the allowance if we donot consummate a business combination. Upon the consummation of a businesscombination, we will pay the deferred non-accountable expense allowance to theunderwriters, provided that to the extent fewer than 20% of our publicstockholders elect to convert their shares to cash upon such consummation, a *pro rata* portion of such allowance will bepaid to such stockholders rather than to the underwriters. We will have noright to the deferred non-accountable expense allowance.

OnOctober 17, 2006, we entered into a commitment letter for proposed newsenior secured credit facilities consisting of a $50 million term loanfacility and a $20 million revolving loan facility. Subject to negotiationof a credit agreement satisfactory to us and our prospective lenders, weanticipate such facilities will become effective upon the closing of ouracquisition of Elmet. In addition to the funds now in the trust account andcertain of the interest earned thereon, we anticipate that we will use between$35 and $50 million of the $50 million term loan we will borrow underour proposed new senior secured credit facilities to complete the acquisition(depending upon the extent to which public stockholders vote against the businesscombination and elect to exercise their conversion rights).

We will use up to $1,850,000 of the interest earned onthe trust account to repay the $150,000 loan described above (which we repaidin full, with interest at an annual rate of 4%, on July 5, 2006) and tofinance our expenses prior to consummating a business combination. During theperiod from the completion of our initial public offering on May 1, 2006through March 31, 2007, we incurred a total of $1,560,873 of such expenses. Wecurrently anticipate that, by the closing of the Elmet acquisition (assumingthe acquisition is closed in the second quarter of 2007), we will have incurredapproximately $1,800,000 of expenses for the following purposes:

·       costs incurred to identify the Elmet acquisitionand other potential target companies for which negotiations were abandoned;

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·       due diligence and investigation of Elmet andother prospective target businesses;

·       legal and accounting fees relating to our SECreporting obligations and general corporate matters;

·       structuring and preparing documentation for theElmet acquisition (including, among other documents, the stock purchase        agreement and the proxy statement);

·       payment of $105,000 in administrative fees dueto an affiliate of two of our directors;

·       repayment of the $150,000 loan (with interest atan annual rate of 4%) as described above from an affiliate of two of our       directors; and

·       miscellaneous expenses.

Beginningon May 1, 2006 and ending upon the acquisition of a target business, webegan incurring a fee of $7,500 per month for office space and certainadministrative, technical and secretarial services from Grand Cru Management,LLC, an affiliate of Robert J. Hanks, our chief executive officer andtreasurer, and David A. R. Dullum, our president and secretary. In addition, in2005, Messrs. Hanks and Dullum advanced an aggregate of $75,000 to us forpayment of offering expenses on our behalf. These advances were repaid from theproceeds of the initial public offering that were allocated to pay offeringexpenses.

If weare unable to close the Elmet acquisition and thereafter fail to find andacquire another suitable  target business by October 31, 2007 (orApril 30, 2008 if a letter of intent, agreement in principle or adefinitive agreement has been executed by October 31, 2007), we will beforced to liquidate. If we are forced to liquidate, the per share liquidationamount will be less than the initial per unit public offering price because ofthe underwriting commissions and expenses related to our initial publicoffering and because of the value of the warrants in the per unit offeringprice. Additionally, if third parties make claims against us, the offeringproceeds held in the trust account could be subject to those claims, resultingin a further reduction to the per share liquidation price. Under Delaware law,our stockholders who have received distributions from us may be held liable forclaims by third parties to the extent such claims have not been paid by us.Furthermore, our warrants will expire worthless if we liquidate before thecompletion of a business combination.

It ispossible that, if we are unable to close the Elmet acquisition, we could use aportion of the interest on the funds in the trust account which we havereceived to make a deposit, down payment or fund a “no-shop” provision withrespect to a particular other proposed business combination. In the event wewere ultimately required to forfeit such funds (whether as a result of ourbreach of agreement relating to such payment or otherwise), we may not have asufficient amount of working capital available to pay expenses related tofinding another suitable business combination without securing additionalfinancing. If we were unable to secure additional financing, we would mostlikely fail to consummate a business combination in the permitted time andwould be forced to liquidate.

*Off-BalanceSheet Arrangements*

Otherthan contractual obligations incurred in the normal course of business, we donot have any off-balance sheet financing arrangements or liabilities, guaranteecontracts, retained or contingent interests in transferred assets or anyobligation arising out of a material variable interest in an unconsolidatedentity. The securities held in the trust account are in the name of ourwholly-owned subsidiary, Harbor Acquisition Security Corporation, which wasformed on May 1, 2006 specifically for such purpose.

*ContractualObligations*

Inconnection with our initial public offering, we agreed to pay the underwritersa deferred non-accountable expense allowance of $1,620,000 upon theconsummation of our initial business combination (which amount is subject toreduction in proportion to the percentage of our public stockholders who voteagainst the combination and exercise their conversion rights). We expect thatsuch allowance will be paid out of the funds in the trust account. Other thancontractual obligations incurred in the ordinary course of business, we do nothave any other long-term contractual obligations.

**ForwardLooking Statements**

This Quarterly Report on Form 10-Q includesforward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended (the “Securities Act”), and Section 21Eof the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Wehave based these forward-looking statements on our current expectations andprojections about future events, and we assume no obligation to update any suchforward-looking statements. These forward-looking statements are subject to knownand unknown risks, uncertainties and assumptions about us that may cause ouractual results to be materially different from any future results expressed orimplied by such forward-looking statements. In some cases, you can identifyforward-looking statements by terminology such as “may,” “should,” “could,” “would,”“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or thenegative of such terms or other similar expressions. Factors that might causeour future results to differ from those statements include, but are not limitedto, those described in the section entitled “Risk Factors” of the prospectusfiled with the Securities and Exchange Commission (the “SEC”) in connectionwith our initial public offering. The following discussion should be read inconjunction with 

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our condensedfinancial statements and related notes thereto included elsewhere in thisreport and with the section entitled “Risk Factors” contained in our 2006Annual Report on Form 10-K filed with the SEC on April 2, 2007.

**Item 3.**                          Quantitativeand Qualitative Disclosures About Market Risk.

Market risk is a broad term for the risk of economicloss due to adverse changes in the fair value of a financial instrument. Thesechanges may be the result of various factors, including interest rates, foreignexchange rates, commodity prices and/or equity prices. Our exposure to marketrisk is limited to interest income sensitivity with respect to the funds placedin the trust account. However, the funds held in our trust account have beeninvested only in U.S. “government securities,” defined as any Treasury Billissued by the United States having a maturity of one hundred and eighty days orless or in money market funds meeting certain conditions under Rule 2a-7under the Investment Company Act of 1940, so we are not deemed to be aninvestment company under the Investment Company Act. Thus, we are subject tomarket risk primarily through the effect of changes in interest rates ongovernment securities. The effect of other changes, such as foreign exchangerates, commodity prices and/or equity prices, does not pose significant marketrisk to us.

**Item 4.**                          Controlsand Procedures.

Based on their evaluation as of the end of the periodcovered by this Quarterly Report on Form 10-Q, our principal executive officerand principal financial and accounting officer have concluded that ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act) were effective as of the end of the periodcovered by this report.

There were no changes in our internal controls overfinancial reporting in connection with the evaluation required byRule 13a-15(d) under the Exchange Act that occurred during the periodcovered by this Quarterly Report on Form 10-Q that have materially affected, orare reasonably likely to materially affect, our internal controls overfinancial reporting.

We believe that a control system, no matter how welldesigned and operated, cannot provide absolute assurance that the objectives ofthe control system are met, and no evaluation of controls can provide absoluteassurance that all control issues and instances of fraud, if any, within acompany have been detected. Our disclosure controls and procedures are designedto provide reasonable assurance of achieving their objectives, and ourprincipal executive officer and our principal financial officer have concludedthat these controls and procedures are effective at the reasonable assurancelevel.

**PART II — OTHERINFORMATION**

**Item 1.**                       LegalProceedings

We are not currently subject to any material legalproceedings, nor, to our knowledge, is any material legal proceeding threatenedagainst us. From time to time, we may be a party to certain legal proceedingsincidental to the normal course of our business. While the outcome of theselegal proceedings cannot be predicted with certainty, we do not expect thatthese proceedings will have a material effect upon our financial condition orresults of operations.

**Item 1A.**                  Risk Factors

An investment in our securities involves a high degreeof risk. There have been no material changes to the risk factors previouslydisclosed in our 2006 Annual Report on Form 10-K filed with the SEC on April 2,2007.  You should consider carefully allof the material risks described in such report, before making a decision toinvest in our securities. If any of the events described therein occur, ourbusiness, financial conditions and results of operations may be materiallyadversely affected. In that event, the trading price of our securities coulddecline, and you could lose all or part of your investment*.*

**Item 2.**                       UnregisteredSales of Equity Securities and Use of Proceeds.

On April 25, 2006, we entered into a warrantplacement agreement with certain of our initial stockholders for the sale of2,000,000 warrants at a price of $0.65 per warrant, generating total grossproceeds of $1,300,000.  Each warrantentitles the holder to purchase from us one share of our common stock at anexercise price of $5.00. The warrants sold were exempt from registration underregulations promulgated by the SEC under Section 4(2) of the SecuritiesAct. The exemption was available on the basis that there was no generalsolicitation in connection with the placement and sales were only made to accreditedinvestors.

On May 1, 2006, we consummated our initial publicoffering of 13,800,000 units, including 1,800,000 units that were attributableto the full exercise of the underwriters’ over-allotment option. Each unitconsists of one share of common stock and two warrants. Each warrant entitlesthe holder to purchase from us one share of our common stock at an exerciseprice of $5.00 (or, with respect to the warrants held by the underwriters,$6.25). Our common stock and warrants started trading separately onMay 30, 2006.

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The securitiessold in the offering were registered under the Securities Act on registrationstatements on Form S-1 (File No. 333-126300 and File No. 333-133589).

We paid a total of $4,140,000 in underwritingdiscounts and approximately $650,000 for costs and expenses related to theoffering. The underwriters agreed to defer their non-accountable expenseallowance of $1,620,000 until we complete a business combination. Afterdeducting the underwriting discounts and the offering expenses, the total netproceeds to us from the offering were approximately $76,390,000, which wasdeposited into a trust account. In addition, the trust account includes thedeferred non-accountable expense allowance, the proceeds from the privateplacement of $1,300,000 and a loan from an initial stockholder of $150,000. Wehave also agreed to pay the underwriters the deferred non-accountable expenseallowance upon the consummation of our initial business combination, less anyportion payable to stockholders who convert their shares to cash.

On May 1, 2006, we consummated the sale to Ferris,Baker Watts, Incorporated, for $100, of an option to purchase up to a total of600,000 units. The units issuable upon exercise of this option are identical tothose sold in our initial public offering except that the warrants included inthe units have an exercise price of $6.25 (125% of the exercise price of thewarrants included in the units sold in the offering and have a cashlessexercise provision). This option is exercisable at $7.50 per unit commencing onthe later of the consummation of a business combination and April 25,2007, and expiring on April 25, 2011. The purchase option is exercisableon a cashless basis. The purchase option, as well as the units issuable upon exerciseof the purchase option, the shares of common stock and warrants underlying theunits, and the shares of common stock issuable upon exercise of the warrantsincluded in the units were registered under the Securities Act on the sameregistration statement on Form S-1 (File No. 333-126300).

For a more detailed description of the use of proceedsfrom our initial public offering and private placement, see Part I,Item 2 of this Quarterly Report on Form 10-Q.

**Item 3.**                          Defaultsupon Senior Securities

Not applicable.

**Item 4.**                          Submission of Matters to a Vote of the Security Holders

Not applicable.

**Item 5.**                          OtherInformation

On May 30, 2006, Ferris, Baker Watts, Incorporated,the lead underwriter in our initial public offering, allowed holders of theCompany’s units to separately trade the common stock and warrants included insuch units as of such date. The common stock, units and warrants are quoted onthe American Stock Exchange under the symbols HAC, HAC.U and HAC.WS,respectively.

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**Item 6.    Exhibits.**
| Number | ** ** | **Description** | ** ** |
|--------|------------|-----------------|------------|
|   | 31.1       |            |       | Certification by Principal Executive Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 |
|   |       |            |       |   |
|   | 31.2       |            |       | Certification by Principal Financial Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 |
|   |       |            |       |   |
|   | 32.1       |            |       | Certification by Principal Executive Officer and Principal Financial  Officer pursuant to 18 U.S.C. Section 1350, |
|   |       |            |       | as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of  2002 |

 

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**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.
|                    | **HARBOR ACQUISITION CORPORATION** |
|--------------------|------------------------------------|
|               |                               |   |
| Date: May 14, 2007 | By:                                | /s/ Robert J. Hanks |
|               | * *                           | *Chief Executive Officer and Treasurer* |
| * *           | * *                           | *(Principal Executive Officer)* |
|               |                               |   |
|               | By:                                | /s/ Todd A. Fitzpatrick |
|               | * *                           | *Vice President* |
|               | * *                           | *(Principal Financial and Accounting Officer)* |
|               |                               |   |

 

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**INDEX TO EXHIBITS**
| Number | ** ** | **Description** |
|--------|------------|-----------------|
|   |       |            |   |   |
|   | 31.1       |            |   | Certification by Principal Executive Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 |
|   |       |            |   |   |
|   | 31.2       |            |   | Certification by Principal Financial Officer pursuant to Section 302  of the Sarbanes-Oxley Act of 2002 |
|   |       |            |   |   |
|   | 32.1       |            |   | Certification by Principal Executive Officer and Principal Financial  Officer pursuant to 18 U.S.C. Section 1350, |
|   |       |            |   | as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |

 

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