MAIL STOP 3561
November 8, 2005
Robert Hanks, Chief Executive Officer
Harbor Acquisition Corporation
One Boston Place, Ste. 3630
Boston, MA 02108
Re: Harbor Acquisition Corporation
Amendment No. 2 to Registration Statement on
Form S-1
Filed September 29, 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.
General
1. Please tell us the reason the Rule 434 box was checked on the
registration statement cover and advise us of the prospectus
delivery
intentions of the company concerning the rule. If a term sheet is
to
be used, please furnish a copy.
2. We note the revised disclosure detailing certain changes to the
underwriter`s compensation, including the deposit of a portion of
the
underwriter`s expense allowance and the underwriter`s discount in
the
trust account and the agreement of the underwriter to forfeit its
compensation in the event that the company does not consummate a
business combination or the trust account is liquidated. Please
disclose the reasoning and rationale behind these revisions.
Prospectus Cover Page
3. We note that you have applied for listing on the American Stock
Exchange. Please advise us of the standard you seek to list under
and how you satisfy the criteria under such standard.
4. We note that a substantial portion of the underwriter`s
compensation will be deferred and payable out of the trust funds
upon
the consummation of a business combination. Please discuss the
applicability or inapplicability of Regulation M to the contingent
nature of the underwriter compensation arrangements. Please
address
in your discussion when the distribution of the securities will
end.
5. Because the deferred underwriter`s compensation will be held in
the trust account, please revise your disclosure in the
appropriate
section to clarify if the deferred compensation will be included
as
net tangible assets when calculating the 80 percent fair value
requirement.
Prospectus Summary, page 1
6. We note that you define "middle market" companies as those that
are valued under $300 million. Please revise to clarify if there
is
a lower limit to this term. Is a company worth $10 million a
middle
market company?
7. We note your belief that you will succeed because of the
experience your management team has in "sourcing, negotiating and
consummating acquisitions." Because you could acquire a company
in
any industry, please revise the appropriate section to discuss how
their experience in a specific industry would translate to every
industry as the disclosure indicates.
Risk Factors, page 9
8. We note risk factor 22 discussing the risk associated with
delisting from the American Stock Exchange. If you have already
received provisional approval to be listed, please advise, if not,
please revise this risk factor to clarify that point.
Use of Proceeds, page 20
9. We note your response to comment three of our letter dated
September 22, 2005 that the judgment of management is that you
will
have sufficient funds not held in trust even if you were to pay a
no-
shop, deposit, or similar fee. Please revise to clarify if any
no-
shop fee is limited to a certain amount. Is it limited to just a
percentage of working capital? Are you able to use funds
allocated
to due diligence or other line items to fund a deposit? If a
deposit
consisted of all of working capital, how will you reimburse
officers
or others who will need reimbursements? Considering management
has
not conducted any search or research efforts, please clarify how
management reached this judgement.
10. We note your response to comment four. Of the response from
the
letter, you have only included one sentence in the prospectus.
The
comment was seeking substantiation in the prospectus. Please
revise
or advise. Also, we note that this experience is primarily in the
"consumer and industrial product sectors." Please revise to
clarify
whether this belief applies to companies outside of these sectors.
Substantiate any belief you have that you can adequately estimate
the
cost associated with companies that management does not have
experience in.
11. In the use of proceeds table, in the use of net proceeds not
held
in trust, we note the line item of $500,000 for "[l]egal,
accounting,
and other expenses attendant to the due diligence investigations,
structuring and negotiations of a business combination." We also
note another line item of $340,000 allocated to due diligence of
prospective target businesses. Please explain why there are two
separate amounts for due diligence and another line item for
similar
expenses. Please explain which line item would be allocated to
pay
existing stockholders for reimbursement of their out-of-pocket
expenses for due diligence. Please clearly indicate which line
item
will be allocated to pay fees to market research firms and or
third
party consultants to assist the company`s search for a target
business and whether these fees would include due diligence.
Proposed Business, page 27
12. Please revise to discuss your intended search process in more
detail since you are able to acquire companies outside of
management`s expertise. Please revise to clarify if there is a
time
frame or monetary amount used that will trigger your search of
companies not in the consumer or industrial products sectors.
Revise
to explain how you will evaluate companies that management has no
experience in. Also, discuss the risks associated with
management`s
ability to look outside of their expertise.
13. We do not understand your response to comment 10. Please
revise
to explain how "industry consolidations" would provide you with
transactions to consider. If an industry is consolidating, it
would
appear that the number of existing of businesses are being
reduced.
14. Your discussion of competitive strengths on page 28 would be
moot
if you could acquire a company outside of management`s expertise.
As
such, we do not see how this is a competitive advantage, since the
possibility of you acquiring a company outside your initial focus
is
not ascertainable.
15. We note your response to comment 11. Please advise how the
inclusion of the phrase "directly or indirectly" responds to the
comment. It is not readily apparent that any payment by a third
party or potential target before or after a merger in connection
with
a merger would be encompassed by your use of the term
"indirectly."
16. We note the additional language that management may receive
fees
in the future "subject to their fiduciary obligations under
Delaware
law." Please elaborate in this document so that a reasonable
investor would understand your reference to Delaware law. Are you
implying that there is some monetary limitation on any future
salaries or that a review process required?
Principal Stockholders, page 43
17. We reissue comment 16. It would appear that the agreement to
purchase the warrants would constitute a bid during the restricted
period. Also, please refer to the no-action letter from the
Division
of Market Regulation dated October 12, 2005. See
http://www.sec.gov/divisions/marketreg/mr-
noaction/keyhosp101205.htm.
Certain Transactions, page 45
18. Provide additional disclosure here, and in Part II under Item
15,
concerning the offer and sale of shares by Grand Cru Management to
the enumerated individuals, including the timing of such sales and
the exemption(s) from registration relied upon. We may have
further
comment.
Part II
Exhibits
19. We note your response to comment 20. Please file the exhibit
for
our review. If "the individual" is still the undersigned as in
your
original exhibit, we do not understand how such person will not
have
non public information. Please advise.
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
November 8, 2005
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