MAIL STOP 3561
September 22, 2005
Robert Hanks, Chief Executive Officer
Harbor Acquisition Corporation
One Boston Place, Ste. 3630
Boston, MA 02108
Re: Harbor Acquisition Corporation
Amendment No. 1 to Registration Statement on
Form S-1
Filed August 16, 2005
File No. 333-126300
Dear Mr. Hanks,
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Risk Factors, page 8
1. We note the revision to risk factor 12. We do not understand
why
the risk would only apply to companies outside of your sector
focus.
Please revise to explain the limitation in the risk.
Forward-Looking Statements, page 18
2. Please revise the disclosure to note that your disclaimer to
updating forward-looking statements is subject to your duties and
obligations under the Federal securities laws to ensure that the
prospectus is current and includes no material misstatements or
material omissions.
Use of Proceeds, page 19
3. We note the revision beginning on page 19 that if you forfeit
any
lock-up payments, you might not have enough funds to continue your
search. Are you implying that if you do not have to forfeit any
lock-up payments that you will have sufficient to carry out the
activities attendant to completing a business combination? If so,
please revise to clarify.
4. We note your response to comment 22 of our letter dated August
5,
2005, that your belief that the funds not held in trust are
sufficient are based on management`s experience in seeking
acquisition targets for private equity funds. Please revise to
elaborate this. Was such experience with companies that are of
equivalent size to 80 percent of the net proceeds held in trust?
Did
management`s experience involve having a pool of money and having
no
company under consideration, no research performed, no list of
possible candidates, and beginning a search from scratch? Was the
previous search of companies in your sector focus?
5. We note that you are not able to determine role of present
management and any remuneration following a business combination.
Please revise to clarify that while you are not able to determine
that now, management has the ability to negotiate and condition
potential combinations on their retention. Also, clarify if
management is able to negotiate a "payout" following any business
combinations.
Proposed Business, page 27
6. Tell us the factors you considered in determining to value this
offering at $60,000,000 and offer the units at $6.00 per unit.
What
factors did you consider when determining that you might need
$53,050,000 in the trust fund to effect the business combination
contemplated by the registration statement? It does not appear as
though the determination to value the offering at this amount is
an
arbitrary decision and we would like to know the specific factors
and
motivations behind the valuation. Please note in particular that
we
are not seeking simply whether or not you have "a specific
business
combination under consideration," but are looking more to the
type,
nature and results to date of any and all diligence, evaluations,
discussions (formal or informal), negotiations and/or other
similar
activities undertaken, whether directly by the company, an
affiliate
thereof, or an unrelated third party, with respect to a business
combination transaction involving the company. This includes the
time period before the company`s corporate existence was
established
on June 20, 2005 and encompasses any and all evaluations and/or
discussions that may have taken place prior to the involvement of
the
principals with the formal entity of Harbor Acquisition
Corporation.
Given management`s extensive and high-level experience in the
focus
industries, the precise nature of their knowledge about their
ability
to effect a combination with a company whose fair market value is
equal to at least 80% of the company`s net assets may be material
information for which appropriate disclosure is required. We may
have further comment.
7. We note that you believe the following:
* "corporate restructurings and divestitures has increased as a
result of large scale mergers and acquisitions," which presents
you
with opportunities.
* "individual owners of privately held middle market companies . .
..
will seek to realize the value of their investments" through a
sale
to you.
* your "focus should prove to be an attractive arena."
* "firms will find the opportunity to sell to us attractive as
well."
Please revise to substantiate the noted beliefs.
8. We note the disclosure in the last bullet point on page 27
discusses expansion opportunities. The noted disclosure regarding
expansion activities appears speculative and should be removed,
especially since management will not participate as executive
officers following a business combination.
9. On page 28, we note that you believe that there are substantial
opportunities to effect "attractive acquisitions." Please revise
to
explain your use of the term "attractive acquisitions."
10. Under the caption "transaction structures" we do not
understand
the inclusion of the statement that "revenue growth is driven, and
operating expenses are leverage, in part via strategic
acquisitions."
This appears to refer to current operating companies abilities to
effect "strategic acquisitions" as a means to achieving "revenue
growth." You currently are not an operating company and have no
revenue. Please revise this disclosure to clarify how the noted
disclosure applies to your business plan.
11. We reissue comment 40. The comment was seeking an affirmation
that existing shareholders will not receive any compensation from
any
other person or entity in connection with any business
combination.
Management, page 38
12. We note that William Mahoney has served on several boards of
directors. Please revise to identify these companies, briefly
discuss their line of business and disclose the time frame he was
associated with these companies.
13. Please revise to fill in the blank left in your biographical
of
Thomas Bullock.
14. For all the entities listed as having been associated with
John
Jellinck, please revise to disclose the time frame he was
associated
with each entity.
Principal Stockholders, page 43
15. We note your response to comment 50. Please revise to explain
how warrant purchases by designees and the underwriters
demonstrate
relevant confidence in your ability to consummate a business
combination since neither would have the ability to influence your
actions.
16. Please address the applicability or inapplicability of
Regulation
M in the context of the warrant repurchase agreements contained
discussed in this section.
17. We note your response to comment 51. Please explain the
disclosure that Ferris, Baker Watts and Latona Associates "have
agreed to purchase approximately 642,000 and 350,000 of these
warrants, respectively, on a pro rata basis." Please revise to
clarify your reference to "these warrants." Are you referring to
the
warrants Messrs. Hanks and Dullum have agreed to purchase? If so,
revise to clarify that this reduced the amount of warrants they
are
obligated to purchase. Also, please explain how the warrants will
be
purchased on a "pro rata basis."
Certain Transactions, page 45
18. Please revise to identify the parties Grand Cru Management
sold
its shares to.
19. We note your response to prior comment 59 and have the
following
additional comments regarding the UPO:
* Please clarify your disclosure regarding the timing of the
issuance
of the UPO, including whether the issuance of the UPO is dependent
on, or in any way related to, the effectiveness of the
registration
statement.
* We note your disclosure of an expected life of three years,
while
the UPO has a five year contractual life. In general, we believe
that equity instruments issued to non-employees should be valued
using the full contractual life as the expected life assumption.
Please revise your disclosure accordingly, or explain in more
detail
your basis for using a shorter expected life. We note that you
are a
recently formed registrant and as such, presumably would not have
relevant experience issuing similar instruments to the underwriter
that may support a shorter expected life assumption.
* We note your disclosure of a volatility assumption of 16.1%.
Please tell us why you believe the use of the volatility of a
diversified index of 2,000 companies, including companies with
market
capitalizations of over $1 billion, provides a reasonable
volatility
estimate for your company. Also, tell us why the volatility for a
180-day period was used rather than a period corresponding to the
expected life. Please refer to paragraph 285 of FAS 123 in your
response. We may have additional comments after reviewing your
response.
Part II
Exhibits
20. We note your response to comment 60 that while the undersigned
are able to exercise discretion as to the time and amounts, it
does
not relieve their obligations. Please direct us to the language
that
outlines this mandatory obligation. Also, please advise if the
undersigned will be in possession of inside information when
exercising their discretion in the purchase of warrants.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Carlton Tartar (202) 551-3387 if you have
questions regarding comments on the financial statements and
related
matters. Questions on other disclosure issues may be directed to
Duc
Dang at (202) 551-3386.
Sincerely,
John Reynolds
Assistant Director
Cc: Andrew Myers
Fax # (617) 523-6215
Robert Hanks, Chief Executive Officer
Harbor Acquisition Corporation
September 22, 2005
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