**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

** **

**FORM10-Q******

 
| **x**                                            | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE   SECURITIES EXCHANGE ACT OF 1934**  |
|--------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|
| ** **                                       | ** ** | ** **                                                                                      |
| **For the quarterly period ended June 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 ACQUISITION CORPORATION**

(Exact name 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’s telephone number, including area code

 

Indicateby check mark whether the Registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Exchange Act during the past12 months (or for such shorter period that the Registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes x No o

 

Indicateby check mark whether the registrant is large accelerated filer, an acceleratedfiler, or a non-accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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

 

Indicateby check mark whether the Registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes x No o

 

Asof August 10, 2006, 16,800,000 shares of the registrant’s common stock, parvalue $0.001 per share, were outstanding.

 

 

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**HARBOR ACQUISITION CORP.Table 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                                 | 14     |
| Item 4. Controls and  Procedures                                                                    | 14     |
| PART II — OTHER INFORMATION                                                                         | 14     |
| Item 1. Legal Proceedings                                                                           | 14     |
| Item 1A. Risk Factors                                                                               | 14     |
| Item 2. Unregistered  Sales of Equity Securities and Use of Proceeds                                | 14     |
| Item 5. Other Information                                                                           | 15     |
| Item 6. Exhibits                                                                                    | 16     |
| SIGNATURES                                                                                               | 17     |
| 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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**PART I – FINANCIAL INFORMATION**

 

**Item 1. Financial Statements**

 

**Harbor Acquisition Corporation and Subsidiary**

 

**(A Development Stage Company)**

 

**CondensedBalance Sheets**

 
| ** **                                                                                                                                                                                                                                   | ** ** | **June 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                   | ** ** | **(unaudited)**             | ** ** | ** **                      | ** ** |
| **Assets**                                                                                                                                                                                                                                   | ** ** | ** **                  | ** ** | ** **                      | ** ** |
| ***Current:***                                                                                                                                                                                                                               | ** ** | ** **                  | ** ** | ** **                      | ** ** |
| Cash                                                                                                                                                                                                                                         |       | $                           | 557,658    |                            | $          | 6,654 |   |
| Investments held in trust                                                                                                                                                                                                                    |       | 77,840,000                  |       | —                          |       |
| Investments held in trust from Underwriter                                                                                                                                                                                                   |       | 1,620,000                   |       | —                          |       |
| Investment income not subject to trust                                                                                                                                                                                                       |       | 58,835                      |       | —                          |       |
| Prepaid Expense                                                                                                                                                                                                                              |       | 16,600                      |       | —                          |       |
| ***Total current assets***                                                                                                                                                                                                                   |       | 80,093,093                  |       | 6,654                           |       |
| Deferred offering costs                                                                                                                                                                                                                      |       | —                      |       | 303,509                         |       |
| **Total Assets**                                                                                                                                                                                                                             |       | $                           | 80,093,093 |                            | $          | 310,163 |   |
|                                                                                                                                                                                                                                         |       |                        |       |                            |       |
| **Liabilities And Stockholders’ Equity**                                                                                                                                                                                                |       |                        |       |                            |       |
|                                                                                                                                                                                                                                         |       |                        |       |                            |       |
| **Current Liabilities**                                                                                                                                                                                                                      |       |                        |       |                            |       |
| Accrued Offering Expenses                                                                                                                                                                                                                    |       | $                           | 124,825    |                            | $          | 210,000 |   |
| Accrued Expenses                                                                                                                                                                                                                             |       | 77,536                      |       | 5,000                           |       |
| Notes Payable, Stockholders                                                                                                                                                                                                                  |       | 150,000                     |       | 75,000                          |       |
| Advance due to stockholder                                                                                                                                                                                                                   |       | 5,000                       |       | —                          |       |
| Due to Underwriter                                                                                                                                                                                                                           |       | 1,620,000                   |       | —                          |       |
| Income Taxes Payable                                                                                                                                                                                                                         |       | 200,000                     |       | —                          |       |
| **Total Liabilites**                                                                                                                                                                                                                         |       | 2,177,361                   |       | 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                                                                                                                                                                                                                   |       | 62,020,071                  |       | 24,700                          |       |
| Earnings (Deficit) Accumulated during the  development stage                                                                                                                                                                                 |       | 333,765                     |       | (4,837                          | )          |
| **Total Stockholders’ Equity**                                                                                                                                                                                                          |       | 62,355,516                  |       | 20,163                          |       |
|                                                                                                                                                                                                                                         |       |                        |       |                            |       |
| **Total Liabilities and Stockholders’ Equity**                                                                                                                                                                                          |       | $                           | 80,093,093 |                            | $          | 310,163 |   |

 

Seenotes to condensed financial statements

 

3

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**Harbor Acquisition Corporation and Subsidiary**

 

**(A Development Stage Company)**

 

**CondensedStatements of Operations**

 

**(Unaudited)**

 
| ** **                                      | ** ** | ** **                              | ** ** | ** **                             | ** ** | ** **                                                       | ** ** | **For the period from**       | ** ** |
|-------------------------------------------------|------------|-----------------------------------------|------------|----------------------------------------|------------|------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                      | ** ** | ** **                              | ** ** | ** **                             | ** ** | ** **                                                       | ** ** | **June 20, 2005 (inception)** | ** ** |
| ** **                                      | ** ** | **For the three months** | ** ** | **For the six months**  | ** ** | **For the period from**                           | ** ** | **to June 30, 2006**          | ** ** |
| ** **                                      | ** ** | **ended June 30, 2006**  | ** ** | **ended June 30, 2006** | ** ** | **June 20, 2005 to June 30, 2005** | ** ** | **(cumulative)**                             | ** ** |
| ** **                                      | ** ** | ** **                              | ** ** | ** **                             | ** ** | ** **                                                       | ** ** | ** **                                   | ** ** |
| Interest income                                 |       | $                                       | 638,959    |                                   | $          | 638,984                                                          |       | $                                            | 27         |   | $ | 639,147 |   |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| **Operating Expenses**                          |       |                                    |       |                                   |       |                                                             |       |                                         |       |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| General & Administrative                    |       | 98,866                                  |       | 100,382                                |       | 5,000                                                            |       | 105,382                                      |       |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| Net Income (Loss) before income taxes           |       | 540,093                                 |       | 538,602                                |       | (4,973                                                           | )          | 533,765                                      |       |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| Income tax expense                              |       | 200,000                                 |       | 200,000                                |       | —                                                           |       | 200,000                                      |       |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| **Net Income (Loss)**                           |       | $                                       | 340,093    |                                   | $          | 338,602                                                          |       | $                                            | (4,973     | ) | $ | 333,765 |   |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| Weighted Average number of common shares        |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| outstanding - basic and diluted                 |       | 13,008,791                              |       | 8,032,044                              |       | 3,000,000                                                        |       | 5,422,340                                    |       |
|                                            |       |                                    |       |                                   |       |                                                             |       |                                         |       |
| **Income (Loss) per Share - basic and diluted** |       | $                                       | 0.03       |                                   | $          | 0.04                                                             |       | $                                            | (0.00      | ) | $ | 0.06 |   |

 

See notes to condensed financial statements

 

4

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**Harbor Acquisition Corporation and Subsidiary**

 

**(A Development Stage Company)**

 

**CondensedStatements of Stockholders’ Equity**

 
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **                           | ** ** | **Earnings (Deficit)** | ** ** | ** **  | ** **  |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|----------------|------------|--------------------------------------|------------|-----------------------------|------------|-------------|-------------|
| ** **                                                                                                                                     | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **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**                                                                                                               | ** ** | **3,000,000**         | ** ** | **$**          | **300**    | ** **                           | **$**      | **24,700**                  | ** ** | **$**       | **(4,837**  | **)** | **$** | **20,163** | ** ** |
| **Unaudited:**                                                                                                                                 | ** ** | ** **            | ** ** | ** **     | ** ** | ** **                           | ** ** | ** **                  | ** ** | ** **  | ** **  |
|                                                                                                                                           |       |                  |       |           |       |                                 |       |                        |       |        |        |
| 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          |       | 76,255,487                           |       | —                      |       | 76,256,867  |        |
|                                                                                                                                           |       |                  |       |           |       |                                 |       |                        |       |        |        |
| Proceeds subject to possible conversion of 2,758,620  shares                                                                                   |       | —                |       | —         |       | (15,560,216                          | )          | —                      |       | (15,560,216 | )           |
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **                           | ** ** | ** **                  | ** ** | ** **  | ** **  |
| Sale of underwriter option                                                                                                                     |       | —                |       | —         |       | 100                                  |       | —                      |       | 100         |        |
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **                           | ** ** | ** **                  | ** ** | ** **  | ** **  |
| Net Income                                                                                                                                     |       | —                |       | —         |       | —                               |       | 338,602                     |       | 338,602     |        |
|                                                                                                                                           |       |                  |       |           |       |                                 |       |                        |       |        |        |
| **Balance at June 30, 2006**                                                                                                                   | ** ** | **16,800,000**        | ** ** | **$**          | **1,680**  | ** **                           | **$**      | **62,020,071**              | ** ** | **$**       | **333,765** | ** ** | **$** | **62,355,516** | ** ** |

** **

See notes to condensed financial statements

 

5

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**Harbor Acquisition Corporation and Subsidiary**

** **

**(A Development Stage Company)**

 

**CondensedStatements of Cash Flows**

**(Unaudited)**

 
| ** **                                                                        | ** ** | ** **                             | ** **  | ** **                                   | ** ** | **For the period from**       | ** ** |
|-----------------------------------------------------------------------------------|------------|----------------------------------------|-------------|----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                        | ** ** | ** **                             | ** **  | **For the period from**       | ** ** | **June 22, 2005 (inception)** | ** ** |
| ** **                                                                        | ** ** | **For the six months**  | ** **  | **June 22, 2005 (inception)** | ** ** | **to June 30, 2006**          | ** ** |
| ** **                                                                        | ** ** | **ended June 30, 2006** | ** **  | **to June 30, 2005**          | ** ** | **(cumulative)**                             | ** ** |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| ***Cash Flows From Operating Activities***                                        |       |                                   |        |                                         |       |                                         |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| Net Income (Loss)                                                                 |       | $                                      | 338,602     |                                         | $          | (4,973                                       | )          | $ | 333,765 |   |
| Adjustment to reconcile net income to net  cash provided by operating activities: |       |                                   |        |                                         |       |                                         |       |
| Income taxes payable                                                              |       | 200,000                                |        | —                                       |       | 200,000                                      |       |
| Changes in operating assets and  liabilities:                                     |       |                                   |        |                                         |       |                                         |       |
| Prepaid expenses                                                                  |       | (3,000                                 | )           | —                                       |       | (3,000                                       | )          |
| Investment income not subject to trust                                            |       | (58,835                                | )           | —                                       |       | (58,835                                      | )          |
| Accrued expenses                                                                  |       | 58,936                                 |        | 5,000                                        |       | 63,936                                       |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| **Net Cash provided by Operating Activities**                                     |       | 535,703                                |        | 27                                           |       | 535,866                                      |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| ***Cash Flows From Investing Activites***                                         |       |                                   |        |                                         |       |                                         |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| Cash held in Trust Account                                                        |       | (79,460,000                            | )           | —                                       |       | (79,460,000                                  | )          |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| **Net Cash used in Investing Activities**                                         |       | (79,460,000                            | )           | —                                       |       | (79,460,000                                  | )          |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| ***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                                           |       | (75,000                                | )           | —                                       |       | (75,000                                      | )          |
| Payment of offering costs                                                         |       | (4,699,799                             | )           | (22,834                                      | )          | (4,793,308                                   | )          |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| **Net Cash provided by Financing Activities**                                     |       | 79,475,301                             |        | 77,166                                       |       | 79,481,792                                   |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| Net increase in Cash                                                              |       | 551,004                                |        | 77,193                                       |       | 557,658                                      |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| Cash at beginning of period                                                       |       | 6,654                                  |        | —                                       |       | —                                       |       |
|                                                                              |       |                                   |        |                                         |       |                                         |       |
| **Cash at end of period**                                                         | ** ** | **$**                                  | **557,658** | ** **                                   | **$**      | **77,193**                                   | ** ** | **$** | **557,658** | ** ** |
| ** **                                                                        | ** ** | ** **                             | ** **  | ** **                                   | ** ** | ** **                                   | ** ** |
| Supplemental schedule of non-cash financing  activities:                          |       |                                   |        |                                         |       |                                         |       |
| Accrual of Public Offering costs                                                  |       | $                                      | 124,825     |                                         | —     |                                         | $          | 124,825 |   |
| Advance due to Stockholder for Public Offering  costs                             |       | $                                      | 5,000       |                                         | —     |                                         | $          | 5,000 |   |
| Accrual of deferred underwriting fees                                             |       | $                                      | 1,620,000   |                                         | —     |                                         | $          | 1,620,000 |   |

 

See notes to condensed financial statements

 

6

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**Harbor Acquisition Corporation and Subsidiary(A Development Stage Company)**

 

**Notes to Condensed Financial Statements**

 

**1. Basis ofPresentation**

 

Thefinancial statements at June 30, 2006 and for the periods ended June 30, 2006are unaudited. The condensed financial statements include the accounts of HarborAcquisition Corporation and its wholly owned subsidiary Harbor AcquisitionSecurity Corporation (collectively referred to as the “Company”). Allsignificant intercompany transactions and balances have been eliminated. In theopinion of management, all adjustments (consisting of normal accruals) havebeen made that are necessary to present fairly the financial position of theCompany as of June 30, 2006 and the results of its operations and its cashflows for the three months and six months then ended, and for the period fromJune 20, 2005 (inception) through June 30, 2006. Operating results for theinterim period presented are not necessarily indicative of the results to beexpected for a full year. The December 31, 2005 balance sheet has been derivedfrom the audited financial statements included in the Company’s RegistrationStatement on Form S-1.

 

Thestatements and related notes have been prepared pursuant to the rules andregulations 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 was incorporatedin Delaware on June 20, 2005 as a blank check company whose objective isto acquire an operating business. At June 30, 2006 the Company had neitherengaged in any operations nor generated significant revenue to date. The Companyis considered to be in the development stage and is subject to the risksassociated with activities of development stage companies.

 

All activity throughJune 30, 2006 relates to the Company’s formation and initial publicoffering described below. The Company has selected December 31 as itsfiscal year-end.

 

The registration statementfor the Company’s initial public offering (the “Public Offering”) (as describedin Note 3) was declared effective April 25, 2006. The Company consummatedthe Public Offering on May 1, 2006, and preceding the consummation of thePublic Offering on May 1, 2006 certain officers, directors, and initialshareholders of the Company purchased an aggregate of 2,000,000 warrants 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 management hasbroad discretion with respect to the specific application of the net proceedsof this Public Offering, although substantially all of the net proceeds of thisPublic Offering are intended to be generally applied toward consummating abusiness combination with an operating business (“Business Combination”), whichmay not constitute a business combination for accounting purposes.

 

Furthermore, there is noassurance that the Company will be able to successfully effect a BusinessCombination. Upon the closing of the Offering, $79,460,000 is being held in atrust account (“Trust Fund”) and, commencing 

 

7

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May 2, 2006, isinvested in government securities until the earlier of (i) theconsummation of its first Business Combination and (ii) the distributionof the Trust Fund as described below. The placing of funds in the Trust Fundmay not protect those funds from third party claims against the Company.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 interest earned onthe Trust Fund, may be used to pay for business, legal and accounting duediligence on prospective acquisitions and continuing general and administrativeexpenses. The Company, after signing a definitive agreement for the acquisitionof a target business, will submit such transaction for stockholder approval. Inthe event that stockholders owning 20% or more of the shares issued in theOffering vote against the Business Combination and exercise their conversionrights described below, the Business Combination will not be consummated. Allof the Company’s stockholders prior to the Offering, including all of theofficers and directors of the Company (“Initial Stockholders”), have agreed tovote their 3,000,000 founding shares of common stock, as well as any shares ofcommon stock acquired in connection with or following the Offering, inaccordance with the vote of the majority in interest of all other stockholdersof the Company (“Public Stockholders”) with respect to any BusinessCombination. After consummation of a Business Combination, these votingsafeguards will no longer be applicable.

 

With respect to a BusinessCombination which is approved and consummated, any Public Stockholder who votedagainst the Business Combination may demand that the Company convert his or hershares. The per share conversion price will equal the amount in the TrustAccount, 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 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 June 30, 2006 balancesheet. In addition, such stockholders would also be entitled to a portion ofthe deferred portion of the underwriters’ non-accountable expense allowanceheld in trust (see Note 3).

 

The Company’s Certificate ofIncorporation provides for mandatory liquidation of the Company in the eventthat the Company does not consummate a Business Combination within 18 monthsfrom the date of the consummation of the Offering, or 24 months from theconsummation of the Offering if certain extension criteria have been satisfied.In the event of liquidation, it is likely that the per share value of theresidual 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 Companyformed a wholly owned subsidiary, Harbor Acquisition Security Corporation, fortax planning purposes. The Company assigned the rights to the investments inthe Trust Fund to this subsidiary.

 

**3. InitialPublic Offering**

 

On May 1, 2006, theCompany sold 13,800,000 units (“Units”) in the Public Offering at a price of$6.00 per Unit. Each Unit consists of one share of the Company’s common stock,$.0001 par value, and two Redeemable Common Stock Purchase Warrants (“Warrants”).Each Warrant entitles the holder to purchase from the Company one share ofcommon stock at an exercise price of $5.00 commencing the later of thecompletion of a Business Combination or one year from the effective date of thePublic Offering and expiring five years from the effective date of the PublicOffering. The Company may redeem the Warrants at a price of $.01 per Warrantupon 30 days’ notice after the Warrants become exercisable, only in the eventthat the last sale price of the common stock is at least $8.50 per share forany 20 trading days within a 30 trading day period ending on the third dayprior to the date on which notice of redemption is given. If the Company callsthe Warrants, the holder will either have to redeem the Warrants by

 

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purchasing the common stockfrom the Company for $5.00 per share or allow the Company to redeem theWarrants at a price of $.01 per warrant.

 

 In connection with theOffering, 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.

 

On May 30, 2006, thewarrants separated from the Units and began to trade.

 

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 the consummationof the Public Offering on May 1, 2006, certain of the initial stockholderspurchased 2,000,000 warrants at a purchase price of $.65 per warrant in aprivate placement. The proceeds of $1,300,000 were deposited into the TrustFund, and the initial stockholders will not have any claim on this amount ifthe Trust Fund is liquidated.

 

The Initial Stockholders areentitled to registration rights with respect to their founding shares pursuantto an agreement signed on May 1, 2006. The holders of the majority ofthese shares are entitled to make up to two demands that the Company registerthese shares at any time commencing three months prior to the third anniversaryof the effective date of the Proposed Offering. In addition, the InitialStockholders have certain “piggy-back” registration rights on registrationstatements filed subsequent to the third anniversary of the effective date ofthe Public Offering.

 

In connection with thisOffering, the Company issued an option, for $100, to the Underwriter topurchase 600,000 Units at an exercise price of $7.50 per Unit, exercisable onthe later of April 25, 2007 or the consummation of a Business Combination.The option has a life of five years from the effective date. The Units thatwould be issued upon exercise of this option are identical to those offered inthe Public 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 to estimatethe volatility, the Company considered the historic volatilities of 22 publiclytraded companies that operate within the consumer and industrial productssectors.

 

**4. DeferredOffering Costs**

 

Deferred offering costsconsisted principally of legal, accounting, and printing fees incurred prior tothe Offering which were directly related the Offering. These costs were chargedto Stockholders’ equity upon completion of the Offering.

 

**5. NotePayable, Stockholders**

 

The Company issued anaggregate 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 

 

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4% per annum and will bepaid from the interest earned on the amounts in the Trust Fund. Due to theshort term nature of the notes, the fair value of the notes approximates itscarrying amount. Subsequent to June 30, 2006, the loan with related interestwas paid.

 

**6.Commitments and Related Party Transactions**

 

The Company presentlyoccupies office space provided by an affiliate of several 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 $16,700 for the three monthsended June 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.

 

The initial stockholderswill be entitled to registration rights with respect to their 3,000,000 sharesof common stock pursuant to an agreement signed in connection with the Offering.The holders of the majority of these shares are entitled to make up to twodemands that the Company register these shares at any time after the date onwhich these shares of common stock are released from escrow. In addition, thefounding stockholders have certain “piggy-back” registration rights onregistration statements filed subsequent to the date on which these shares ofcommon stock are released from escrow.

 

**7. CommonStock**

 

On April 14, 2006, theCompany’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, theBoard of Directors approved a stock split to be effected as a stock dividendimmediately prior to the closing of the Public Offering. The stock split wasexecuted, and a stock dividend of one share for every 5 shares was issued tothe initial stockholders.

 

**8.Preferred Stock**

 

The Company is authorized toissue 1,000,000 shares of preferred stock with such designations, voting andother rights and preferences as may be determined from time to time by theBoard of Directors.

 

**9. ReservedCommon Stock**

 

At June 30, 2006, 30,200,000shares of common stock were reserved for issuance upon exercise of redeemablewarrants and the underwriter’s purchase option.

 

**10. TrustFund**

 

For tax planning purposes,the Company assigned its rights to the cash in the Trust Fund to HarborAcquisition Security Corporation, a wholly-owned Massachusetts subsidiaryqualifying as a “security corporation” entitled to a reduced state corporatetax rate.

 

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**Item 2.Management’s Discussion and Analysis of Financial Condition and Results ofOperations.**

 

Thefollowing Management’s Discussion and Analysis of Financial Condition andResults of Operations should be read in conjunction with our financialstatements and the related notes and schedules thereto.

 

Wewere formed on June 20, 2005, for the purpose of acquiring, through amerger, capital stock exchange, asset acquisition or other similar businesscombination, an operating business in the consumer or 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 theproceeds of our recently completed public offering and concurrent privateplacement, our capital stock, debt or a combination of cash, capital stock anddebt, to effect such business combination.

 

OnMay 1, 2006, we consummated our initial public offering of 13,800,000 units,including 1,800,000 units attributable to the full exercise of the underwriters’over-allotment option (see “Liquidity and Capital Resources” below).

 

Sinceour initial public offering, we have been actively searching for a suitablebusiness combination candidate. We have met with target companies, serviceprofessionals and other intermediaries to discuss our company, the backgroundof our management and our combination preferences. In the course of thesediscussions, we have also spent time explaining the capital structure of theinitial 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 proceeds of the offeringheld in trust to investors. Consistent with the disclosures in our prospectus,we have focused our search on companies in the consumer and industrial productssectors, which include companies engaged in the manufacture, distribution orsale of products or the provision of services for personal, family, householdor business use. We cannot assure investors that we will find a suitablebusiness combination in the allotted time.

 

**RESULTS OFOPERATIONS**

 

*Net Incomeand Loss*

 

Wehave neither engaged in any operations nor generated any revenues to date. Ouronly activities since inception have been organizational activities and thosenecessary to prepare for our Offering, and thereafter, certain expenses relatedto pursuing acquisitions of target businesses. We will not generate anyoperating revenues until after completion of a Business Combination. We havegenerated non-operating income in the form of interest income on the cash andcash equivalents and short term investments.

 

Netincome of $340,093 for the three months ended June 30, 2006 consists ofinterest income primarily on the trust fund investment of $638,335 along with $624of other interest income reduced by $98,866 of general and administrativeexpenses and an income tax expense of $200,000. This compares to a net loss of$4,973 for the stub period from June 20, 2005 (inception) to June 30, 2005.

 

Netincome of $338,602 for the six months ended June 30, 2006 consists of interestincome primarily on the trust fund investment of $638,335 along with $649 ofother interest income reduced by $100,382 of general and administrative expensesand an income tax expense of $200,000.

 

Netincome of $333,765 for the period from June 20, 2005 (inception) to June 30,2006 (cumulative) consists of interest income primarily on the trust fundinvestment of $638,335 along with $812 of other interest income reduced by $105,382of general and administrative expenses and an income tax expense of $200,000.

 

**CHANGES INFINANCIAL CONDITION**

 

*Liquidityand Capital Resources*

 

On April 25, 2006 weentered into an agreement with certain of our initial stockholders for the saleof 2,000,000 warrants in a private placement. Each warrant entitles the holderto purchase from us one share of our common stock at an exercise price of$5.00. The warrants were sold at a price of $0.65 per warrant, generating netproceeds of $1,300,000.

 

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

 

Thenet proceeds from the private placement and the sale of our units, includingthe exercise of the underwriters’ over-allotment option, after deductingcertain offering expenses of approximately $650,000 and underwriting discountsof $4,140,000 and an underwriters non-accountable expense allowance of$1,620,000, were approximately $76,390,000, which is being held in a trustaccount at JPMorgan Chase Bank, N.A. maintained by Continental StockTransfer & Trust Company, as trustee. In addition, the trust includesthe proceeds from the private placement, described above, a $150,000 loan fromone of our initial stockholders that will be repaid from interest earned on thetrust, and the underwriters’ non-accountable expense allowance of $1,620,000,which they have agreed to defer until the consummation of a businesscombination and to forfeit if we do not consummate a business combination. Uponthe consummation of a business combination, we will pay the deferrednon-accountable expense allowance to the underwriters, provided that to theextent fewer that 20% of our public stockholders elect to convert their sharesto cash upon a consummation of a business combination, a pro rata portion ofthe deferred non-accountable expense allowance will be paid to such stockholders.We will have no right to the deferred non-accountable expense allowance. Intotal, we deposited $79,460,000 into the trust account.

 

Wewill receive up to $1,850,000 from interest earned on the trust account tofinance our operations prior to consummating a business combination. We do notbelieve we will need to raise additional funds in order to meet theexpenditures required to consummate a business combination beforeApril 30, 2008. However, we cannot assure you that this will be the case.Over this time period, we currently anticipate incurring expenses for thefollowing purposes:

 

•           costsincurred to identify one or more potential target businesses;

 

•           duediligence and investigation of prospective target businesses;

 

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

 

•           structuringand negotiating a business combination, including the making of a down paymentor the payment of exclusivity or similar fees and expenses.

 

•           paymentof $180,000 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;

 

•           miscellaneousexpenses.

 

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, technology and secretarial services from Grand Cru Management,LLC, an affiliate of Robert J. Hanks, our Chief Executive Officer andTreasurer, and David Dullum, our President and Secretary. In addition, in 2005,Messrs. Hanks and Dullum advanced us 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.

 

Wemay use all or substantially all of the proceeds held in trust other than thedeferred portion of the underwriters’ non-accountable expense allowance andamounts used for working capital and for taxes to acquire one or more targetbusinesses. We may not use all of the proceeds held in the trust account inconnection with a business combination, either because the consideration forthe business combination is less than the proceeds in trust or because wefinance a portion of the consideration with capital stock or debt securitiesthat we can issue. In that event, the proceeds held in the trust account aswell as any other net proceeds not expended will be used to finance theoperations of the target business or businesses. The operating businesses thatwe acquire in such business combination must have, individually orcollectively, a fair market value equal to at least 80% of the 

 

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balance in the trust account (excluding deferred underwriter’snon-accountable expense allowance of $1,620,000) at the time of suchacquisition. If we consummate multiple business combinations that collectivelyhave a fair market value of 80% of our net assets, then we would require thatsuch transactions are consummated simultaneously.

 

Wemay issue additional capital stock or debt securities to finance a businesscombination. The issuance of additional capital stock, including uponconversion of any convertible debt securities we may issue, or the incurrenceof debt, could have material consequences on our business and financialcondition. We anticipate that we would only consummate such a financingsimultaneously with the consummation of a business combination.

 

Ifwe are unable to find a 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 may 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 are not been paid by us.Furthermore, our warrants will expire worthless if we liquidate before thecompletion of a business combination.

 

Itis possible that we could use a portion of the funds not in the trust accountto make a deposit, down payment or fund a “no-shop” provision with respect to aparticular proposed Business Combination. In the event we were ultimatelyrequired to forfeit such funds (whether as a result of our breach of agreementrelating to such payment or otherwise), we may not have a sufficient amount ofworking capital available outside of the trust account to pay expenses relatedto finding suitable Business Combination without securing additional financing.If we were unable to secure additional financing, we would most likely fail toconsummate a Business Combination in the allotted time and would be forced toliquidate.

 

*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 our whollyowned subsidiary, Harbor Acquisition Security Corporation, which was formed onMay 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. We expect that such allowancewill be paid out of the proceeds in the trust account. Other than contractualobligations incurred in the ordinary course of business, we do not have anyother long-term contractual obligations.

 

**ForwardLooking Statements**

 

ThisQuarterly Report on Form 10-Q includes forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933, as amended (the “SecuritiesAct”), and Section 21E of the Securities Exchange Act of 1934, as amended(the “Exchange Act”). We have based these forward-looking statements on ourcurrent expectations and projections about future events, and we assume noobligation to update any such forward-looking statements. These forward-lookingstatements are subject to known and unknown risks, uncertainties andassumptions about us that may cause our actual results to be materially differentfrom any future results expressed or implied by such forward-lookingstatements. In some cases, you can identify forward-looking statements byterminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,”“believe,” “estimate,” “continue,” or the negative of such terms or othersimilar expressions. Factors that might cause our future results to differ fromthose statements include, but are not limited to, those described in thesection entitled “Risk Factors” of 

 

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the prospectus filed withthe Securities and Exchange Commission (the “SEC”) in connection with ourinitial public offering. The following discussion should be read in conjunctionwith our condensed financial statements and related notes thereto includedelsewhere in this report and with the section entitled “Risk Factors” of theprospectus filed with the SEC in connection with our initial public offering.

 

**Item 3. Quantitative and Qualitative DisclosuresAbout Market Risk.**

 

Market risk is a broad term for the risk of economic loss due toadverse changes in the fair value of a financial instrument. These changes maybe the result of various factors, including interest rates, foreign exchangerates, commodity prices and/or equity prices. Our exposure to market risk islimited to interest income sensitivity with respect to the funds placed in thetrust account. However, the funds held in our trust account have been investedonly in U.S. “government securities,” defined as any Treasury Bill issued bythe United States having a maturity of one hundred and eighty days or less orin money market funds meeting certain conditions under Rule 2a-7 under theInvestment Company Act of 1940, so we are not deemed to be an investmentcompany under the Investment Company Act. Thus, we are subject to market riskprimarily through the effect of changes in interest rates on governmentsecurities. The effect of other changes, such as foreign exchange rates,commodity prices and/or equity prices, does not pose significant market risk tous.

 

**Item 4. Controls and Procedures.**

 

Basedon their evaluation as of the end of the period covered by this QuarterlyReport on Form 10-Q, our principal executive officer and principal financialand accounting officer have concluded that our disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) under the ExchangeAct) were effective as of the end of the period covered by this report.

 

Therewere no changes in our internal controls over financial reporting in connectionwith the evaluation required by Rule 13a-15(d) under the Exchange Act thatoccurred during the period covered by this Quarterly Report on Form 10-Q thathave materially affected, or are reasonably likely to materially affect, ourinternal controls over financial reporting.

 

We believe that a control system, no matter how well designed andoperated, cannot provide absolute assurance that the objectives of the controlsystem are met, and no evaluation of controls can provide absolute assurancethat all control issues and instances of fraud, if any, within a company havebeen detected. Our disclosure controls and procedures are designed to providereasonable assurance of achieving their objectives, and our principal executiveofficer and our principal financial officer have concluded that these controlsand procedures are effective at the reasonable assurance level.

 

**PART II — OTHER INFORMATION**

 

**Item 1 — Legal Proceedings**

 

Weare not currently subject to any material legal proceedings, nor, to ourknowledge, is any material legal proceeding threatened against us. From time totime, we may be a party to certain legal proceedings incidental to the normalcourse of our business. While the outcome of these legal proceedings cannot bepredicted with certainty, we do not expect that these proceedings will have amaterial effect upon our financial condition or results of operations.

 

**Item 1A – Risk Factors**

 

Aninvestment in our securities involves a high degree of risk. There have been nomaterial changes to the risk factors previously disclosed in the registrationstatements on Form S-1 (File Nos. 333-126300 and 333-133589)  filed in connection with our initial publicoffering. You should consider carefully all of the material risks described insuch registration statements, before making a decision to invest in oursecurities. If any of the events described therein occur, our business,financial conditions and results of operations may be materially adverselyaffected. In that event, the trading price of our securities could decline, andyou could lose all or part of your investment*.*

 

**Item 2. Unregistered Sales of Equity Securitiesand Use of Proceeds.**

 

OnApril 25, 2006, we entered into a warrant placement agreement with certainof our initial stockholders for the sale of 2,000,000 warrants at a price of$0.65 per warrant, generating total gross proceeds of $1,300,000.

 

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Each warrant entitles the holder to purchasefrom us one share of our common stock at an exercise price of $5.00. Thewarrants sold were exempt from registration under regulations promulgated bythe 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.

 

OnMay 1, 2006, we consummated our initial public offering of 13,800,000 units,including 1,800,000 units that were 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 (or, with respectto the warrants held by the underwriters, $6.25). Our common stock and warrantsstarted trading separately on May 30, 2006. The securities sold in theoffering were registered under the Securities Act on registration statements onForm S-1 (File No. 333-126300 and File No. 333-133589).

 

Wepaid a total of $4,140,000 in underwriting discounts and approximately $650,000for costs and expenses related to the offering. The underwriters agreed todefer their non-accountable expense allowance of $1,620,000 until we complete abusiness combination. After deducting the underwriting discounts and theoffering expenses, the total net proceeds to us from the offering wereapproximately $76,390,000, which was deposited into a trust fund. In addition,the trust fund includes the deferred non-accountable expense allowance, theproceeds from the private placement of $1,300,000 and a loan from an initialstockholder of $150,000. We have also agreed to pay the underwriters thedeferred non-accountable expense allowance upon the consummation of our initialbusiness combination, less any portion payable to stockholders who converttheir shares to cash.

 

OnMay 1, 2006, we consummated the sale to Ferris, Baker Watts, Incorporated, for$100, of an option to purchase up to a total of 600,000 units. The units issuableupon exercise of this option are identical to those sold in our initial publicoffering except that the warrants included in the units have an exercise priceof $6.25 (125% of the exercise price of the warrants included in the units soldin the offering and have a cashless exercise provision). This option isexercisable at $7.50 per unit commencing on the later of the consummation of abusiness combination and April 25, 2007, and expiring on April 25,2011. The purchase option is exercisable on a cashless basis. The purchaseoption, as well as the units issuable upon exercise of the purchase option, theshares of common stock and warrants underlying the units, and the shares ofcommon stock issuable upon exercise of the warrants included in the units wereregistered under the Securities Act on the same registration statement on FormS-1 (File No. 333-126300).

 

Fora more detailed description of the use of proceeds from our initial publicoffering and private placement, see Part I, Item 2 of this QuarterlyReport on Form 10-Q.

 

**Item 3 — Defaults upon Senior Securities**

 

Notapplicable.

 

**Item 4 — Submission of Matters to a Vote of theSecurity Holders**

 

Notapplicable.

 

**Item 5 — Other Information**

 

OnMay 30, 2006, Ferris, Baker Watts, Incorporated, the lead underwriter in ourinitial public offering, allowed holders of the Company’s units to separatelytrade the common stock and warrants included in such units as of such date. Thecommon stock, units and warrants are quoted on the American Stock Exchangeunder 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 |

##### ** **

##### **16**

##### ****

##### ** **

**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized. 

 
|                   | **HARBOR ACQUISITION CORPORATION** |
|------------------------|------------------------------------|
|                   |                               |
| Date:  August 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 TOEXHIBITS**

 
| **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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