Results of Limited Scope Review at Harbor Homes, Inc.

Based on our review of Harbor Homes, Inc's (HHI's) audited financial statements ended June 30, 2009, we found that HHI would not have been considered financially viable. Specifically, its current asset to current liability ratio was less than one, and it had a negative working capital ratio. Although HHI has provided us with unaudited financial statements as of March 31, 2010, that demonstrate that HHI has improved its short-term liquidity, HHI has only slightly improved its long-term stability. Under the American Recovery and Reinvestment Act of 2009, the Health Resources and Services Administration (HRSA) received $2 billion to expand the Health Center Program.

We recommend that HRSA consider the information presented in this report in assessing HHI's capability as a recipient of HRSA funds.