**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,DC 20549**

**FORM 10-Q**
| **x**                                                  | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE   SECURITIES EXCHANGE ACT OF 1934**  |
|--------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|
| ** **                                             | ** ** | ** **                                                                                      |
| **For  the quarterly period ended September 30, 2006** |
| ** **                                             | ** ** | ** **                                                                                      |
| **or**                                                 |
| ** **                                             | ** ** | ** **                                                                                      |
| **o**                                                  | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE   SECURITIES EXCHANGE ACT OF 1934** |

 

**Commission file number:  001-32688**

**HARBOR ACQUISITIONCORPORATION**

**(Exactname of registrant as specified in its charter)**

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

 

**(617) 624-8409**

**Registrant’stelephone number, including area code**

**Indicate by check mark whether theRegistrant (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 theregistrant is large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):**
| Large accelerated filer o | ** ** | **Accelerated  filer**o | ** ** | **Non-accelerated  filer**x |
|---------------------------|------------|-------------------------|------------|-----------------------------|

 

**Indicate by check mark whether theRegistrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). Yes**x No o

**Asof November 13, 2006, 16,800,000 shares of the registrant’s common stock, parvalue $0.001 per share, were outstanding.**

 

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**HARBOR ACQUISITIONCORP.Table of Contents**
| PART I — FINANCIAL INFORMATION                                                                       |   |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|
| Item 1. Financial Statements                                                                         |   |   |
| Condensed Balance Sheets                                                                                  |   |   |
| Condensed  Statement of Operations                                                                        |   |   |
| Condensed  Statement of Stockholders’ Equity                                                         |   |   |
| Condensed  Statement of Cash Flows                                                                        |   |   |
| Notes to  Condensed Financial Statements                                                                  |   |   |
| Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of  Operations |   |   |
| Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                  |   |   |
| Item 4.  Controls and Procedures                                                                     |   |   |
| PART II — OTHER  INFORMATION                                                                         |   |   |
| Item 1.  Legal Proceedings                                                                           |   |   |
| Item 1A.  Risk Factors                                                                               |   |   |
| Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |   |
| Item 5.  Other Information                                                                           |   |   |
| Item 6.  Exhibits                                                                                    |   |   |
| SIGNATURES                                                                                                |   |   |
| INDEX  TO EXHIBITS                                                                                        |   |   |
|                                                                                                      |   |   |
| 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    |   |   |

 

 

2

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** **

**HarborAcquisition Corporation and Subsidiary(A Development Stage Company)Condensed Balance Sheets**
| ** **                                                                                                                                                                                                                                   | ** ** | **September 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                   | ** ** | **(unaudited)**                  | ** ** | ** **                      | ** ** |
| **Assets**                                                                                                                                                                                                                                   |       |                             |       |                            |       |
| **Current:**                                                                                                                                                                                                                                 |       |                             |       |                            |       |
| Cash                                                                                                                                                                                                                                         |       | $                                | 912,709    |                            | $          | 6,654 |   |
| Investments held in  trust                                                                                                                                                                                                                   |       | 77,490,000                       |       | —                          |       |
| Investments held in  trust from Underwriter                                                                                                                                                                                                  |       | 1,620,000                        |       | —                          |       |
| Investment income not  subject to trust                                                                                                                                                                                                      |       | 113,694                          |       | —                          |       |
| Prepaid Expense                                                                                                                                                                                                                              |       | 100,600                          |       | —                          |       |
| ***Total  current assets***                                                                                                                                                                                                                  |       | 80,237,003                       |       | 6,654                           |       |
| Deferred offering costs                                                                                                                                                                                                                      |       | —                           |       | 303,509                         |       |
| Deferred acquisition  costs                                                                                                                                                                                                                  |       | 305,909                          |       | —                          |       |
| Deferred tax asset                                                                                                                                                                                                                           |       | 76,483                           |       | —                          |       |
| **Total Assets**                                                                                                                                                                                                                             |       | $                                | 80,619,395 |                            | $          | 310,163 |   |
|                                                                                                                                                                                                                                         |       |                             |       |                            |       |
| **Liabilities And Stockholders'  Equity**                                                                                                                                                                                                    |       |                             |       |                            |       |
|                                                                                                                                                                                                                                         |       |                             |       |                            |       |
| **Current Liabilities**                                                                                                                                                                                                                      | ** ** | ** **                       | ** ** | ** **                      | ** ** |
| Accrued Offering  Expenses                                                                                                                                                                                                                   |       | $                                | —     |                            | $          | 210,000 |   |
| Accrued Expenses                                                                                                                                                                                                                             |       | 339,502                          |       | 5,000                           |       |
| Notes Payable,  Stockholders                                                                                                                                                                                                                 |       | —                           |       | 75,000                          |       |
| Advance due to  stockholder                                                                                                                                                                                                                  |       | 5,000                            |       | —                          |       |
| Due to Underwriter                                                                                                                                                                                                                           |       | 1,620,000                        |       | —                          |       |
| Income Taxes Payable                                                                                                                                                                                                                         |       | 205,725                          |       | —                          |       |
| **Total Liabilites**                                                                                                                                                                                                                         |       | 2,170,227                        |       | 290,000                         |       |
| ** **                                                                                                                                                                                                                                   | ** ** | ** **                       | ** ** | ** **                      | ** ** |
| Common stock subject to  possible conversion, 2,758,620 shares at conversion value                                                                                                                                                           |       | 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 June 30, 2006 and December 31, 2005 respectively |       | 1,680                            |       | 300                             |       |
| Additional Paid in  Capital                                                                                                                                                                                                                  |       | 62,116,896                       |       | 24,700                          |       |
| Earnings (Deficit)  Accumulated during the development stage                                                                                                                                                                                 |       | 770,376                          |       | (4,837                          | )          |
| **Total Stockholders' Equity**                                                                                                                                                                                                               |       | 62,888,952                       |       | 20,163                          |       |
|                                                                                                                                                                                                                                         |       |                             |       |                            |       |
| **Total Liabilities and Stockholders' Equity**                                                                                                                                                                                               |       | $                                | 80,619,395 |                            | $          | 310,163 |   |

 

See notes to condensed financial statements 

** **

3

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** **

**HarborAcquisition Corporation and Subsidiary(A Development Stage Company)Condensed Statements of Operations(Unaudited)**
| ** **                                                                | ** ** | ** **                                                                       | ** ** | ** **                                                                      | ** ** | ** **                                                        | ** ** | **For the period from**                 | ** ** |
|---------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                                                | ** ** | ** **                                                                       | ** ** | ** **                                                                      | ** ** | **For the period from**                            | ** ** | **June 20, 2005 (inception)**           | ** ** |
| ** **                                                                | ** ** | **For the three months  ended September 30, 2006** | ** ** | **For the nine months  ended September 30, 2006** | ** ** | **June 20, 2005 to  September 30, 2005** | ** ** | **to September 30, 2006  (cumulative)** | ** ** |
| ** **                                                                | ** ** | ** **                                                                       | ** ** | ** **                                                                      | ** ** | ** **                                                        | ** ** | ** **                                             | ** ** |
| Interest income                                                           |       | $                                                                                | 958,422    |                                                                            | $          | 1,597,406                                                         |       | $                                                      | 120        |   | $ | 1,597,569 |   |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| **Operating  Expenses**                                                   | ** ** | ** **                                                                       | ** ** | ** **                                                                      | ** ** | ** **                                                        | ** ** | ** **                                             | ** ** |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| General &  Administrative                                             |       | 242,569                                                                          |       | 342,951                                                                         |       | 5,000                                                             |       | 347,951                                                |       |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| Net Income  (Loss) before income taxes                                    |       | 715,853                                                                          |       | 1,254,455                                                                       |       | (4,880                                                            | )          | 1,249,618                                              |       |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| Income tax  expense                                                       |       | 279,242                                                                          |       | 479,242                                                                         |       | **—**                                                        |       | 479,242                                                |       |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| **Net  Income (Loss)**                                                    |       | $                                                                                | 436,611    |                                                                            | $          | 775,213                                                           |       | ($4,880                                                | )          | $ | 770,376 |   |
| ** **                                                                | ** ** | ** **                                                                       | ** ** | ** **                                                                      | ** ** | ** **                                                        | ** ** | ** **                                             | ** ** |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| Weighted Average  number of common shares outstanding - basic and diluted |       | 16,800,000                                                                       |       | 11,016,177                                                                      |       | 3,000,000                                                         |       | 7,689,032                                              |       |
|                                                                      |       |                                                                             |       |                                                                            |       |                                                              |       |                                                   |       |
| **Income (Loss) per Share - basic  and diluted**                          |       | $                                                                                | 0.03       |                                                                            | $          | 0.07                                                              |       | ($0.00                                                 | )          | $ | 0.10 |   |
|                                                                           |            |                                                                                  |            |                                                                                 |            |                                                                   |            |                                                        |            |  |  |  |  |

 

See notes to condensed financial statements

** **

4

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** **

**HarborAcquisition Corporation and Subsidiary(A Development Stage Company)Condensed Statements of Stockholders’ Equity**
| ** **                                                                                                                                     | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **Earnings (Deficit)  Accumulated  During the** | ** ** | ** **                 | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|----------------|------------|-----------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                                                                                                     | ** ** | **Shares**            | ** ** | **Amount**     | ** ** | **Paid-in-Capital**                                       | ** ** | **Development 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 Unaudited:**                                                                                                   | ** ** | **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          |       | 76,352,312                                                |       | —                     |       | 76,353,692 |   |
|                                                                                                                                           | ** ** |                  |       |           |       |                                                      |       |                       |       |   |   |
| Proceeds subject  to possible conversion of 2,758,620 shares                                                                                   | ** ** | —                |       | —         |       | (15,560,216                                               | )          | —                     |       | (15,560,216 | ) |
|                                                                                                                                           | ** ** |                  |       |           |       |                                                      |       |                       |       |   |   |
| Sale of  underwriter option                                                                                                                    | ** ** | —                |       | —         |       | 100                                                       |       | —                     |       | 100 |   |
|                                                                                                                                           | ** ** |                  |       |           |       |                                                      |       |                       |       |   |   |
| Net Income                                                                                                                                     | ** ** | —                |       | —         |       | —                                                    |       | 775,213                    |       | 775,213 |   |
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **                                                | ** ** | ** **                 | ** ** | ** ** | ** ** |
| **Balance at September 30, 2006**                                                                                                              | ** ** | **16,800,000**        | ** ** | **$**          | **1,680**  | ** **                                                | **$**      | **62,116,896**             | ** ** | **$** | **770,376** | ** ** | **$** | **62,888,952** | ** ** |

 

See notes to condensed financial statements

 

5

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**HarborAcquisition Corporation and Subsidiary(A Development Stage Company)Condensed Statements of Cash Flows(Unaudited)**
| ** **                                                                        | ** **   | ** **                                  | ** **   | ** **                                   | ** **   | **For the period from**       | ** **   |
|-----------------------------------------------------------------------------------|--------------|---------------------------------------------|--------------|----------------------------------------------|--------------|----------------------------------------------|--------------|
| ** **                                                                        | ** **   | ** **                                  | ** **   | **For the period from**       | ** **   | **June 22, 2005 (inception)** | ** **   |
| ** **                                                                        | ** **   | **For the nine months**      | ** **   | **June 22, 2005 (inception)** | ** **   | **to September 30, 2006**     | ** **   |
| ** **                                                                        | ** **   | **ended September 30, 2006** | ** **   | **to September 30, 2005**     | ** **   | **(cumulative)**                             | ** **   |
| ***Cash  Flows From Operating Activities***                                       |         |                                        |         |                                         |         |                                         |         |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| Net Income  (Loss)                                                                |         | $                                           | 775,213      |                                         | ($4,880      | )                                            | $            | 770,376 |   |
| Adjustment to  reconcile net income to net cash provided by operating activities: |         |                                        |         |                                         |         |                                         |         |
| Income taxes  payable                                                             |         | 205,725                                     |         | —                                       |         | 205,725                                      |         |
| Changes in  operating assets and liabilities:                                     |         |                                        |         |                                         |         |                                         |         |
| Prepaid expenses                                                                  |         | (100,600                                    | )            | —                                       |         | (100,600                                     | )            |
| Investment  income not subject to trust                                           |         | (113,694                                    | )            | —                                       |         | (113,694                                     | )            |
| Deferred tax  asset                                                               |         | (76,483                                     | )            | —                                       |         | (76,483                                      | )            |
| Accrued expenses                                                                  |         | 121,526                                     |         | 5,000                                        |         | 126,526                                      |         |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| **Net  Cash provided by Operating Activities**                                    |         | 811,687                                     |         | 120                                          |         | 811,850                                      |         |
| ** **                                                                        | ** **   | ** **                                  | ** **   | ** **                                   | ** **   | ** **                                   | ** **   |
| ***Cash  Flows From Investing Activites***                                        | *** *** | *** ***                                | *** *** | *** ***                                 | *** *** | *** ***                                 | *** *** |
| ** **                                                                        | ** **   | ** **                                  | ** **   | ** **                                   | ** **   | ** **                                   | ** **   |
| Payment of  deferred acquisition costs                                            | ** **   | (92,933                                     | )            | —                                       |         | (92,933                                      | )            |
| Estimated tax  payments from Trust Account                                        | ** **   | 350,000                                     |         | —                                       |         | 350,000                                      | ** **   |
| Cash held in  Trust Account                                                       |         | (79,460,000                                 | )            | **—**                                   |         | (79,460,000                                  | )            |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| **Net  Cash used in Investing Activities**                                        |         | (79,202,933                                 | )            | **—**                                   |         | (79,202,933                                  | )            |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| ***Cash  Flows From Financing Activities***                                       | *** *** | *** ***                                | *** *** | *** ***                                 | *** *** | *** ***                                 | *** *** |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| Proceeds from  public offering                                                    |         | 82,800,000                                  |         | **—**                                   |         | 82,800,000                                   |         |
| Proceeds from  private placement of warrants                                      |         | 1,300,000                                   |         | **—**                                   |         | 1,300,000                                    |         |
| Proceeds from  issuance of underwriting option                                    |         | 100                                         |         | **—**                                   |         | 100                                          |         |
| Proceeds from  sale of stock                                                      |         | **—**                                  |         | 25,000                                       |         | 25,000                                       |         |
| Proceeds from  notes payable, Stockholders                                        |         | 150,000                                     |         | 75,000                                       |         | 225,000                                      |         |
| Payments of  notes payable, Stockholders                                          |         | (225,000                                    | )            | **—**                                   |         | (225,000                                     | )            |
| Payment of  offering costs                                                        |         | (4,727,799                                  | )            | (83,509                                      | )            | (4,821,308                                   | )            |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| **Net  Cash provided by Financing Activities**                                    |         | 79,297,301                                  |         | 16,491                                       |         | 79,303,792                                   |         |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| Net increase in  Cash                                                             |         | 906,055                                     |         | 16,611                                       |         | 912,709                                      |         |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| Cash at  beginning of period                                                      |         | 6,654                                       |         | **—**                                   |         | **—**                                   |         |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| **Cash at  end of period**                                                        | ** **   | **$**                                       | **912,709**  | ** **                                   | **$**        | **16,611**                                   | ** **   | **$** | **912,709** | ** ** |
|                                                                              |         |                                        |         |                                         |         |                                         |         |
| 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 |   |
| Supplemental schedule  of non-cash investing activities:                          |         |                                        |         | ** **                                   |         |                                         |         |
| Accrual of deferred  acquisition costs                                            |         | $212,976                                    |         | **—**                                   |         | $212,976                                     |         |
|                                                                                   |              |                                             |              |                                              |              |                                              |              |  |  |  |

 

See notes to condensed financial statements

 

6

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

**Notes toCondensed Financial Statements**

**1.Basis of Presentation**

The financial statements at September 30, 2006 and for the periods endedSeptember 30, 2006 are unaudited. The condensed financial statements includethe accounts of Harbor Acquisition Corporation and its wholly owned subsidiaryHarbor Acquisition Security Corporation (collectively referred to as the “Company”).All significant intercompany transactions and balances have been eliminated. Inthe opinion of management, all adjustments (consisting of normal accruals) havebeen made that are necessary to present fairly the financial position of theCompany as of September 30, 2006 and the results of its operations and its cashflows for the three months and nine months then ended, and for the period fromJune 20, 2005 (inception) through September 30, 2006.  Operating results for the interim periodpresented are not necessarily indicative of the results to be expected for a fullyear. The December 31, 2005 balance sheet has been derived from the auditedfinancial statements included in the Company’s Registration Statement on FormS-1.

The statements and related notes have been prepared pursuant to the rulesand regulations of the U.S. Securities and Exchange Commission. Accordingly,certain information and footnote disclosures normally included in financialstatements prepared in accordance with generally accepted accounting principleshave been omitted pursuant to such rules and regulations.

**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 September 30, 2006 theCompany had 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 September 30, 2006 relates to the Company’s formation and initialpublic offering described below. The Company has selected December 31 asits fiscal year-end.

The registrationstatement for the Company’s initial public offering (the “Public Offering”) (asdescribed in Note 3) 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 of 2,000,000warrants at $.65 per warrant from the Company in a private placement (the “PrivatePlacement”). The warrants sold in the Private Placement were identical to thewarrants sold in the offering, but the purchasers in the Private Placement havewaived their rights to receive any distribution on liquidation in the event theCompany does not complete a business combination (as described below). TheCompany received net proceeds from the Private Placement and the Offering ofapproximately $77,500,000 (Note 3).

The Company’s managementhas broad discretion with respect to the specific application of the netproceeds of this Public Offering, although substantially all of the netproceeds of this Public Offering are intended to be generally applied toward consummatinga business combination with an operating business (“Business Combination”),which may not constitute a business combination for accounting purposes.

Furthermore, there is no assurance that the Company will be able tosuccessfully effect a Business Combination. Upon the closing of the Offering,$79,460,000 is being held in a trust account (“Trust Fund”) and, commencingMay 2, 2006, is invested in government securities until the earlier of(i) the consummation of its first Business Combination and (ii) thedistribution of the Trust Fund as described below. During the quarter endedSeptember 30, 2006, the Trust Account was reduced by $350,000 in order to makeestimated tax payments, leaving a balance of $79,110,000 as of September 30,2006. The placing of funds in the Trust Fund may not protect those funds fromthird party claims against the Company. Although the Company will seek to haveall vendors, prospective target businesses or other persons it engages, executeagreements with the Company waiving any right, title, interest or claim of anykind in or to any monies held in the Trust Fund, there is no guarantee thatthey will execute such agreements. Certain of the Company’s directors haveseverally agreed that they will be personally liable under certaincircumstances to ensure that the proceeds in the Trust Fund are not reduced bythe claims of target businesses or vendors or other persons that are owed moneyby the Company for services rendered, contracted for or products sold to theCompany. However, there can be no assurance that the directors will be able tosatisfy those obligations. The remaining  proceeds (not held in the TrustFund), along with interest earned on the Trust Fund, may be used to pay forbusiness, legal and accounting due diligence on prospective acquisitions andcontinuing general and administrative expenses. The Company, after signing adefinitive agreement for the acquisition of a target business, will submit suchtransaction for stockholder approval. In the event that stockholders owning 20%or more of the shares issued in the Offering vote against the BusinessCombination and exercise their conversion rights described below, the BusinessCombination will not be consummated. All of the Company’s stockholders prior tothe Offering, including all of the officers and directors of the Company (“InitialStockholders”), have agreed to vote their 3,000,000 founding shares of commonstock, as well as any shares of common stock acquired in connection with orfollowing the Offering, in accordance with

 

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the vote of themajority in interest of all other stockholders of the Company (“PublicStockholders”) with respect to any Business Combination. After consummation ofa Business Combination, these voting safeguards will no longer be applicable.

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 Account, calculated as of two business days prior to the consummation ofthe proposed Business Combination, divided by the number of shares of commonstock sold in the Offering. Accordingly, Public Stockholders holding 19.99% of theaggregate number of shares owned by all Public Stockholders may seek conversionof their shares in the event of a Business Combination. Such PublicStockholders are entitled to receive their per share interest in the Trust Fundcomputed without regard to the shares held by Initial Stockholders.Accordingly, a portion of the net proceeds from the Public Offering (19.99% ofthe amount held in the Trust Fund, excluding the deferred portion of theunderwriters’ non-accountable expense allowance) has been classified as commonstock subject to possible conversion on the accompanying September 30, 2006balance sheet. In addition, such stockholders would also be entitled to aportion of the deferred portion of the underwriters’ non-accountable expenseallowance held in trust (see Note 3).

The Company’sCertificate of Incorporation provides for mandatory liquidation of the Companyin the event that the Company does not consummate a Business Combination within18 months from the date of the consummation of the Offering, or 24 months fromthe consummation of the Offering if certain extension criteria have beensatisfied. In the event of liquidation, it is likely that the per share valueof the residual assets remaining available for distribution (including Trust Fundassets) will be less than the initial public offering price per share in theOffering (assuming no value is attributed to the Warrants contained in theUnits sold in the Offering discussed 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 rights to the investments in the Trust Fund tothis subsidiary.

**3.Initial Public Offering**

On May 1,2006, the Company sold 13,800,000 units (“Units”) in the Public Offering at aprice 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 to redeemthe Warrants by purchasing the common stock from the Company for $5.00 pershare or allow the Company to redeem the Warrants at a price of $.01 perwarrant.

In connection withthe Offering, the Company paid the underwriters of the Public Offering(collectively, the “Underwriter”) 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 Underwriter has 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.

Our common stockand warrants started trading separately on May 30, 2006.

The Underwriter’sover-allotment of 1,800,000 Units was exercised and the 13,800,000 units soldat the closing of the Public Offering include the over-allotment.

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 certain registrationstatements filed subsequent to the consumation of a Business Combination.

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In connection withthis Offering, the Company issued an option, for $100, to the Underwriter topurchase 600,000 Units at an exercise price of $7.50 per Unit, exercisable on thelater of April 25, 2007 or the consummation of a Business Combination. Theoption has a life of five years from the effective date. The Units that wouldbe issued upon exercise of this option are identical to those offered in thePublic Offering, except that each of the warrants underlying the optionentitles the holder to purchase one share of the Company’s common stock at aprice 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 stockholder’s equity. The Company estimated, using theBlack-Scholes method, the fair value of the option granted to the underwriteras of 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.Deferred Offering Costs**

Deferred offeringcosts consisted principally of legal, accounting, and printing fees incurredprior to the Offering which were directly related the Offering. These costswere charged to Stockholders’ equity upon completion of the Offering.

**5.Deferred Acquisition Costs**

Deferredacquisition costs consist principally of legal fees directly associated withthe negotiation and execution of the Stock Purchase Agreement with ElmetTechnologies Inc. (see footnote 12). These costs will be treated as part of thepurchase price upon the closing of the transaction.

**6.Note Payable, Stockholders**

The Company issuedan aggregate of $75,000 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 Offering, a shareholder loanedthe Company $150,000. The loan will bear interest at 4% per annum and will bepaid from the interest earned on the amounts in the Trust Fund.  Due tothe short term nature of the notes, the fair value of the notes approximatesits carrying amount.  The loan withrelated interest was paid in full on July 5, 2006.

**7.Commitments and Related Party Transactions**

The Companypresently occupies office space provided by an affiliate of several of theInitial Stockholders. Such affiliate has agreed that, until the Companyconsummates a Business Combination, it will make such office space, as well ascertain office and secretarial services, available to the Company, as may berequired by the Company from time to time. The Company has agreed to pay suchaffiliate $7,500 per month for such services commencing on the effective dateof the Public Offering.  The statement ofoperations includes $39,200 for the nine months ended September 30, 2006.

Pursuant to letteragreements dated June 22, 2005 with the Company and the Representative,the Initial Stockholders have waived their right to receive distributions withrespect to their founding shares upon the Company’s liquidation.

**8.Common Stock**

On April 14,2006, the Company’s majority 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 Board of Directors approved a stock split to be effected as a stockdividend immediately prior to the closing of the Public Offering. The stocksplit was executed, and a stock dividend of one share for every 5 shares wasissued to the initial stockholders.

**9.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 the Board of Directors.

**10.Reserved Common Stock**

At September 30,2006, 30,200,000 shares of common stock were reserved for issuance uponexercise of redeemable warrants and the underwriter’s purchase option.

**11.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.

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**12.Subsequent Events**

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 theterms and conditions of the Stock Purchase Agreement, the Company has agreed toacquire all of the outstanding Elmet shares and all of its outstandingwarrants.  The acquisition is expected tobe consummated during the first quarter of 2007, after the required approval bythe Company’s stockholders and the fulfillment of certain otherconditions.  The pending transaction isfurther described in the Company’s current report filed with the U.S.Securities and Exchange Commission on Form 8-K on October 17, 2006.

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**Item 2. Management’s Discussionand 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 are a “blank check” company organized under thelaws of the State of Delaware on June 20, 2005 for the purpose of acquiring,through a merger, capital stock exchange, asset acquisition, stock purchase orother similar business combination with an operating business in the consumeror industrial products sectors.  Ourinitial business combination must be with a target business whose fair marketvalue is at least equal to 80% of our net assets (excluding the deferrednon-accountable expense allowance of the underwriters held in trust) at thetime of such acquisition.  We intend touse cash derived from the proceeds of our recently completed public offeringand concurrent private placement of warrants, together with borrowings underour proposed senior secured credit facilities, to effect such businesscombination.

On May 1, 2006, we consummated our initial publicoffering of 13,800,000 units, including 1,800,000 units attributable to thefull exercise of the underwriters’ over-allotment option (see “Liquidity andCapital Resources” below).  Since ourinitial public offering, we have been actively searching for a suitablebusiness combination candidate.  We havemet with target companies, service professionals and other intermediaries todiscuss our company, the background of our management and our combinationpreferences. In the course of these discussions, we have also spent timeexplaining the capital structure of the initial public offering, thecombination approval process and the timeline within which we must either enterinto a letter of intent or definitive agreement for a business combination, orreturn the proceeds of the offering held in trust to investors.

On October 17, 2006, we entered into a definitive StockPurchase Agreement with Elmet Technologies, Inc (“Elmet”) and the holders ofall of the outstanding shares and warrants of Elmet.  Subject to the terms and conditions of theStock Purchase Agreement, the Company has agreed to acquire all of the outstandingElmet shares and all of its outstanding warrants.  The acquisition is expected to be consummatedduring the first quarter of 2007, after the required approval by the Company’sstockholders and the fulfillment of certain other conditions.  The 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.  However, we cannot assure investors that we will be able to close theElmet acquisition or, in the event we do not complete such acquisition, findand close a suitable alternative business combination in the allotted time.

Results of Operations

*Net Income and Loss*

We have neither engaged in any business operations norgenerated any operating revenues to date. Our only activities since inceptionhave been organizational activities and those necessary to prepare for ourpublic offering, and thereafter, pursuing potential acquisitions of targetbusinesses. We will not generate any operating revenues until after completionof a business combination. We have generated non-operating income in the formof interest income on our cash and cash equivalents and short-terminvestments.

Net income of $436,611 for the three months endedSeptember 30, 2006 consists of interest income primarily on the trust fundinvestment of $955,609 along with $2,813 of other interest income reduced by $242,569of general and administrative expenses and an income tax expense of $279,242.

Net income of $775,213 for the nine months endedSeptember 30, 2006 consists of interest income primarily on the trust fundinvestment of $1,593,944 along with $3,462 of other interest income reduced by $342,951of general and administrative expenses and an income tax expense of $479,242.

Net income of $770,376 for the period from June 20,2005 (inception) to September 30, 2006 (cumulative) consists of interest incomeprimarily on the trust fund investment of $1,593,944 along with $3,625 of otherinterest income reduced by $347,951 of general and administrative expenses andan income tax expense of $479,242.

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Liquidity and Capital Resources

On April 25, 2006 we entered into an agreementwith certain of our initial stockholders for the sale of 2,000,000 warrants ina private placement. Each warrant entitles the holder to purchase from us oneshare of our common stock at an exercise price of $5.00. The warrants were soldat a price of $0.65 per warrant, generating net proceeds of $1,300,000.

On May 1, 2006 we consummated our initial publicoffering of 13,800,000 units, including 1,800,000 units attributable to thefull exercise of the underwriters’ over-allotment option. Each unit consists ofone share of common stock and two warrants. Each warrant entitles the holder topurchase from us one share of our common stock at an exercise price of $5.00.Our common stock and warrants started trading separately on May 30, 2006.

The net proceeds from the private placement ofwarrants and the sale of our units, including the exercise of the underwriters’over-allotment option, after deducting certain offering expenses ofapproximately $650,000 and underwriting discounts of $4,140,000 and anunderwriters non-accountable expense allowance of $1,620,000, wereapproximately $76,390,000, which is being held in a trust account at JPMorganChase Bank, N.A. maintained by Continental Stock Transfer & TrustCompany, as trustee. In addition, the trust contains the proceeds from theprivate placement of warrants described above, a $150,000 loan from one of ourinitial stockholders that will be repaid from interest earned on the trust, andthe underwriters’ non-accountable expense allowance of $1,620,000, which theyhave agreed to defer until the consummation of a business combination and toforfeit if we do not consummate a business combination. In total, we deposited$79,460,000 into the trust account. During the quarter ended September 30, 2006, the trust account was reducedby $350,000 in order to make estimated tax payments, leaving a balance of$79,110,000 as of September 30, 2006. In addition, the $150,000 loan from our stockholder was repaid frominterest earned on the trust account.

Upon the consummation of a business combination, wewill pay the deferred non-accountable expense allowance to the underwriters,provided that to the extent fewer that 20% of our public stockholders elect toconvert their shares to cash upon a consummation of a business combination, a prorata portion of the deferred non-accountable expense allowance will be paid tosuch stockholders. We will have no right to the deferred non-accountableexpense allowance.

On October 17, 2006, weentered into a commitment letter for proposed new senior secured creditfacilities consisting of a $50.0 million term loan facility and a $20.0 millionrevolving loan facility.  We anticipatesuch facilities will become effective upon the closing of our acquisition ofElmet.

We will receive up to$1,850,000 from interest earned on the trust account to finance our operationsprior to consummating a business combination. In addition to the funds now inthe trust account and such interest, we anticipate that we will borrowapproximately $53 million under our proposed new senior secured creditfacilities to complete the acquisition. However, we cannot assure you that thiswill be the case. In addition to the funds we will expend to complete the Elmetacquisition, we currently anticipate that, by the closing of the Elmetacquisition (assuming the acquisition is closed in the first quarter of 2007),we will have incurred approximately $1.4 million of expenses for the followingpurposes:

·                                          costsincurred to identify the Elmet acquisition and other  potential target companies for whichnegotiations were abandoned;

·                                          duediligence and investigation of Elmet and other prospective target businesses;

·                                          legaland accounting fees relating to our SEC reporting obligations and generalcorporate matters;

·                                          structuringand negotiating the Elmet acquisition;

·                                          paymentof $82,500 in administrative fees due to an affiliate of two of our directors;

·                                          repaymentof the $150,000 loan from an affiliate of two of our directors; and

·                                          miscellaneousexpenses.

Beginning on May 1,2006 and ending upon the acquisition of a target business, we began incurring afee of $7,500 per month for office space and certain administrative, technologyand secretarial services from Grand Cru Management, LLC, an affiliate of RobertJ. Hanks, our chief executive officer and treasurer, and David A. R. Dullum,our president and secretary.  Inaddition, in 2005, Messrs. Hanks and Dullum advanced an aggregate of$75,000 to us for payment of offering expenses on our behalf. These advanceswere repaid from the proceeds of the initial public offering that wereallocated to pay offering expenses.

If we are unable to closethe Elmet acquisition and thereafter fail to find and acquire a suitable othertarget business by October 31, 2007 (or April 30, 2008 if a letter ofintent, agreement in principle or a definitive agreement has been executed byOctober 31, 2007), we will be forced to liquidate. If we are forced toliquidate, the per share liquidation amount may be less than the initial perunit public offering price because of the underwriting commissions and expensesrelated to our initial public offering and because of the value of the warrantsin the per unit offering price. Additionally, if third parties make claimsagainst us, the offering proceeds held in the trust account could be subject tothose claims, resulting in a further reduction to the per 

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shareliquidation price. Under Delaware law, our stockholders who have received distributionsfrom us may be held liable for claims by third parties to the extent suchclaims are not been paid by us. Furthermore, our warrants may expire worthlessif we liquidate before the completion of a business combination.

It is possible that, if weare unable to close the Elmet acquisition, we may not have a sufficient amountof working capital available outside of the trust account to pay expensesrelated to finding another suitable business combination without securingadditional financing.  If we were unableto secure additional financing, we would most likely fail to consummate abusiness combination in the allotted time and would be forced to liquidate.

*Off-BalanceSheet Arrangements*

Other than contractualobligations incurred in the normal course of business, we do not have anyoff-balance sheet financing arrangements or liabilities, guarantee contracts,retained or contingent interests in transferred assets or any obligationarising out of a material variable interest in an unconsolidated entity. The securities held in the trust account are in the name of our whollyowned subsidiary, Harbor Acquisition Security Corporation, which was formed onMay 1, 2006 specifically for such purpose.

*Contractual**Obligations*

In connection with ourinitial public offering, we agreed to pay the underwriters a deferrednon-accountable expense allowance of $1,620,000 upon the consummation of ourinitial business combination. We expect that such allowance will be paid out ofthe proceeds in the trust account. Other than contractual obligations incurredin the ordinary course of business, we do not have any other long-termcontractual obligations.

**Forward LookingStatements**

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 toknown and unknown risks, uncertainties and assumptions about us that may causeour actual results to be materially different from any future results expressedor implied 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

** **

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**the prospectus filed with theSecurities and Exchange Commission (the “SEC”) in connection with our initialpublic offering. The following discussion should be read in conjunction withour condensed financial statements and related notes thereto included elsewherein this report and with the section entitled “Risk Factors” of the prospectusfiled with the SEC in connection with our initial public offering.**

**Item 3.Quantitative and 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.Controls and 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.

**PARTII — OTHER INFORMATION**

**Item 1— Legal Proceedings**

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 that theseproceedings will have a material effect upon our financial condition or resultsof 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 the registration statements on Form S-1 (File Nos. 333-126300and 333-133589)  filed in connection with our initial public offering. Youshould consider carefully all of the material risks described in suchregistration statements, before making a decision to invest in our securities.If any of the events described therein occur, our business, financialconditions and results of operations may be materially adversely affected. Inthat event, the trading price of our securities could decline, and you couldlose all or part of your investment*.*

**Item 2.Unregistered Sales 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.

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**Each warrant entitles the holder topurchase from us one share of our common stock at an exercise price of $5.00.The warrants sold were exempt from registration under regulations promulgatedby the SEC under Section 4(2) of the Securities Act. The exemption wasavailable on the basis that there was no general solicitation in connectionwith the placement and sales were only made to accredited investors.**

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. The securities sold in the offering were registered underthe Securities Act on registration statements on Form S-1 (FileNo. 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 fund. In addition, the trust fund includes the deferrednon-accountable expense allowance, the proceeds from the private placement of$1,300,000 and a loan from an initial stockholder of $150,000. We have alsoagreed to pay the underwriters the deferred non-accountable expense allowanceupon the consummation of our initial business combination, less any portionpayable 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 uponexercise of the purchase option, the shares of common stock and warrantsunderlying the units, and the shares of common stock issuable upon exercise ofthe warrants included in the units were registered under the Securities Act onthe same registration 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— Defaults upon Senior Securities**

**Not applicable.**

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

**Not applicable.**

**Item 5— Other Information**

**On May 30, 2006, Ferris, BakerWatts, Incorporated, the lead underwriter in our initial public offering,allowed holders of the Company’s units to separately trade the common stock andwarrants included in such units as of such date. The common stock, units andwarrants are quoted on the American Stock Exchange under the symbols HAC, HAC.Uand 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 theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.**
| **  **             | **HARBOR ACQUISITION CORPORATION** |
|------------------------------|------------------------------------|
| ** **                   | ** **                         |
| **Date:  November 14, 2006** | **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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