Table of Contents

 

 

 

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

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**FORM 10-Q**

 

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**(Mark One)**

**x****                        ****QUARTERLY REPORT UNDERSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended September 30, 2008**

 

**o****                           ****TRANSITION REPORT UNDERSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the transition periodfrom                      to                      **

 

**Commission File Number 000-52642**

 

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**ShermenWSC Acquisition Corp.**

(Exact Name of Registrant as Specified in Its Charter)

 

| **Delaware**                    | ** ** | **20-4755936**      |
|---------------------------------|------------|---------------------|
| (State or other Jurisdiction of |       | (I.R.S. Employer    |
| Incorporation or Organization)  |       | Identification No.) |

 

| **c/o The Shermen Group, 1251 Avenue of the Americas,** |   |       |
|---------------------------------------------------------|--------|------------|
| **Suite 900, New York, NY**                        |   | **10020**  |
| (Address of Principal Executive Offices)                |   | (Zip Code) |

 

**(212) 300-0020**

(Registrant’s Telephone Number, Including Area Code)

 

**Not Applicable**

(Former Name, Former Address and Former Fiscal Year, if Changed SinceLast Report)

 

Indicate by check mark whether the registrant:(1) filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes x No o

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See definitions of “large accelerated filer,”“accelerated filer” and “smaller reporting company” in Rule 12b-2 of theExchange Act (Check one).

 

| Large  accelerated filer o                                              |   | Accelerated  filer o         |
|-------------------------------------------------------------------------|--------|------------------------------|
|                                                                    |   |                         |
| Non-accelerated  filer x (Do not check if a smaller reporting  company) |   | Smaller  reporting company o |

 

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

 

As of November 10, 2008, 28,750,000 shares ofcommon stock, par value $0.0001 per share, were issued and outstanding.

 

 

 

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Table of Contents

 

**TABLE OF CONTENTS**

 

**SHERMEN WSC ACQUISITION CORP.** (a development stage enterprise)

 

**Contents**

 
| **PART I – FINANCIAL INFORMATION**                                                        |   | 2      |
|-----------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                |   |   |
| ITEM 1. FINANCIAL STATEMENTS                                                                        |   | 2      |
|                                                                                                |   |   |
| CONDENSED BALANCE SHEETS                                                                            |   | 2      |
|                                                                                                |   |   |
| CONDENSED  STATEMENTS OF OPERATIONS (UNAUDITED)                                                     |   | 3      |
|                                                                                                |   |   |
| CONDENSED  STATEMENTS OF STOCKHOLDERS’ EQUITY ((UNAUDITED)                                     |   | 4      |
|                                                                                                |   |   |
| CONDENSED  STATEMENTS OF CASH FLOWS (UNAUDITED)                                                     |   | 5      |
|                                                                                                |   |   |
| NOTES TO CONDENSED INTERIM FINANCIAL  STATEMENTS (UNAUDITED)                                        |   | 6      |
|                                                                                                |   |   |
| ITEM 2. MANAGEMENT’S DISCUSSION AND  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |   | 14     |
|                                                                                                |   |   |
| ITEM 3. QUANTITATIVE AND QUALITATIVE  DISCLOSURES ABOUT MARKET RISK                                 |   | 17     |
|                                                                                                |   |   |
| ITEM 4. CONTROLS AND PROCEDURES                                                                     |   | 17     |
|                                                                                                |   |   |
| **PART II – OTHER INFORMATION**                                                           |   | 18     |
|                                                                                                |   |   |
| ITEM 1. LEGAL PROCEEDINGS                                                                           |   | 18     |
|                                                                                                |   |   |
| ITEM 2. UNREGISTERED SALES OF EQUITY  SECURITIES AND USE OF PROCEEDS                                |   | 18     |
|                                                                                                |   |   |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                             |   | 18     |
|                                                                                                |   |   |
| ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF  SECURITY HOLDERS                                        |   | 18     |
|                                                                                                |   |   |
| ITEM 5. OTHER INFORMATION                                                                           |   | 18     |
|                                                                                                |   |   |
| ITEM 6. EXHIBITS                                                                                    |   | 18     |
|                                                                                                |   |   |
| SIGNATURES                                                                                          |   | 19     |

 

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Table of Contents

 

**PART I – FINANCIAL INFORMATION**

 

**ITEM 1.     FINANCIALSTATEMENTS**

 

**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

 

**CONDENSED BALANCE SHEETS**

 
| ** **                                                                                                                                                                                                                                    | ** ** | **September 30, 2008** | ** **  | **December 31, 2007** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|-------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                    | ** ** | **(Unaudited)**                  | ** **  | ** **                      | ** ** |
| **ASSETS**                                                                                                                                                                                                                                    | ** ** | ** **                       | ** **  | ** **                      | ** ** |
| **Current assets**                                                                                                                                                                                                                            |       |                             |        |                            |       |
| Cash                                                                                                                                                                                                                                          |       | $                                | —      |                            | $          | 160,949 |   |
| Prepaid expenses                                                                                                                                                                                                                              |       | 46,938                           |        | 30,286                          |       |
| **Total current assets**                                                                                                                                                                                                                      |       | 46,938                           |        | 191,235                         |       |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **Other assets**                                                                                                                                                                                                                              |       |                             |        |                            |       |
| Deferred taxes                                                                                                                                                                                                                                |       | 709,836                          |        | 401,120                         |       |
| Cash and cash equivalent held in Trust  Account                                                                                                                                                                                               |       | 138,557,249                      |        | 138,589,757                     |       |
| **Total assets**                                                                                                                                                                                                                              |       | $                                | 139,314,023 |                            | $          | 139,182,112 |   |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                |       |                             |        |                            |       |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **Current liabilities**                                                                                                                                                                                                                       |       |                             |        |                            |       |
| Accounts payable and accrued expenses                                                                                                                                                                                                         |       | $                                | 135,685     |                            | $          | 86,817 |   |
| Income tax payable                                                                                                                                                                                                                            |       | 196,344                          |        | 945,000                         |       |
| **Total current liabilities**                                                                                                                                                                                                                 |       | 332,029                          |        | 1,031,817                       |       |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **Long-term liabilities**                                                                                                                                                                                                                     |       |                             |        |                            |       |
| Deferred underwriters’ fee                                                                                                                                                                                                               |       | 3,312,000                        |        | 3,312,000                       |       |
| **Total liabilities**                                                                                                                                                                                                                         |       | 3,644,029                        |        | 4,343,817                       |       |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **Commitments**                                                                                                                                                                                                                               |       |                             |        |                            |       |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **Common stock subject to redemption,****9,199,999 shares at redemption value**                                                                                                                                                               |       | 54,743,994                       |        | 54,743,994                      |       |
| **Deferred interest related to common stock  subject to possible redemption, net of taxes**                                                                                                                                                   |       | 345,840                          |        | 352,985                         |       |
| ** **                                                                                                                                                                                                                                    |       |                             |        |                            |       |
| **Stockholders’ equity**                                                                                                                                                                                                                 |       |                             |        |                            |       |
| Preferred stock, $.0001 par value;  1,000,000 shares authorized; none issued                                                                                                                                                                  |       |                             |        |                            |       |
| Common stock, $.0001 par value; 100,000,000  shares authorized; 28,750,000 shares issued and outstanding as of  September 30, 2008 and December 31, 2007 (including 9,199,999  shares subject to possible redemption), respectively |       | 2,875                            |        | 2,875                           |       |
| Additional paid-in capital                                                                                                                                                                                                                    |       | 78,941,231                       |        | 78,941,231                      |       |
| Retained earnings                                                                                                                                                                                                                             |       | 1,636,054                        |        | 797,210                         |       |
| **Total stockholders’ equity**                                                                                                                                                                                                           |       | 80,580,160                       |        | 79,741,316                      |       |
| **Total liabilities and stockholders’ equity**                                                                                                                                                                                           |       | $                                | 139,314,023 |                            | $          | 139,182,112 |   |

 

Theaccompanying notes are an integral part of these condensed financialstatements.

 

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**SHERMEN WSC ACQUISITION CORP.(a corporation in the development stage)**

 

**CONDENSEDSTATEMENTS OF OPERATIONS**

**(unaudited)**

 
| ** **                                                                 | ** ** | **Three  Months Ended  September 30, 2008** | ** ** | **Three  Months Ended  September 30, 2007** | ** ** | **Nine  Months Ended  September 30, 2008** | ** ** | **Nine  Months Ended  September 30, 2007** | ** ** | **Period from  April 18, 2006  (inception) to  September 30, 2008** | ** ** |
|----------------------------------------------------------------------------|------------|------------------------------------------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|-----------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|
| ** **                                                                 | ** ** | ** **                                                 | ** ** | ** **                                                 | ** ** | ** **                                                | ** ** | ** **                                                | ** ** | ** **                                                                                        | ** ** |
| Revenue                                                                    |       | $                                                          | —     |                                                       | $          | —                                                    |       | $                                                         | —     |                                                                                              | $          | — |   | $ | — |   |
| Formation and operating costs                                              |       | (294,520                                                   | )          | (84,927                                                    | )          | (685,538                                                  | )          | (547,191                                                  | )          | (1,572,089                                                                                        | )          |
| Loss from  operations                                                      |       | (294,520                                                   | )          | (84,927                                                    | )          | (685,538                                                  | )          | (547,191                                                  | )          | (1,572,089                                                                                        | )          |
| Other income                                                               |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Interest income                                                            |       | 885,478                                                    |       | 1,358,295                                                  |       | 2,207,632                                                 |       | 1,899,572                                                 |       | 5,195,689                                                                                         |       |
| Income before provision for income taxes                                   |       | 590,958                                                    |       | 1,273,368                                                  |       | 1,522,094                                                 |       | 1,352,381                                                 |       | 3,623,600                                                                                         |       |
| Income taxes                                                               |       | (248,868                                                   | )          | (520,000                                                   | )          | (690,396                                                  | )          | (556,000                                                  | )          | (1,641,707                                                                                        | )          |
| Net income                                                                 |       | $                                                          | 342,090    |                                                       | $          | 753,368                                                   |       | $                                                         | 831,698    |                                                                                              | $          | 796,381 |   | $ | 1,981,893 |   |
|                                                                       |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Number of shares subject to possible  redemption, basic & diluted |       | 9,199,999                                                  |       | 9,199,999                                                  |       | 9,199,999                                                 |       | 5,444,383                                                 |       | 5,025,640                                                                                         |       |
|                                                                       |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Income per share subject to possible  redemption, basic & diluted |       | $                                                          | 0.013      |                                                       | $          | 0.082                                                     |       | $                                                         | 0.000      |                                                                                              | $          | (0.150 | ) | $ | 0.069 |   |
|                                                                       |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Weighted average number of common shares  outstanding, basic               |       | 19,550,001                                                 |       | 19,550,001                                                 |       | 19,550,001                                                |       | 12,018,132                                                |       | 13,288,462                                                                                        |       |
|                                                                       |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Net income per common share, basic                                         |       | $                                                          | 0.017      |                                                       | $          | 0.039                                                     |       | $                                                         | 0.043      |                                                                                              | $          | 0.066 |   | $ | 0.149 |   |
|                                                                       |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Weighted average number of common shares  outstanding, diluted             |       | 23,746,816                                                 |       | 23,273,047                                                 |       | 23,508,138                                                |       | 13,657,868                                                |       | 15,363,505                                                                                        |       |
|                                                                       |       |                                                       |       |                                                       |       |                                                      |       |                                                      |       |                                                                                              |       |
| Net income per common share, diluted                                       |       | $                                                          | 0.014      |                                                       | $          | 0.032                                                     |       | $                                                         | 0.035      |                                                                                              | $          | 0.058 |   | $ | 0.129 |   |

 

Theaccompanying notes are an integral part of these condensed financialstatements.

 

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**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

** **

**CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY**

**For the period from April 18, 2006 (date of inception)to September 30, 2008**

 
| ** **                                                                                                                         | ** ** | **Common  Shares** | ** ** | **Amount** | ** ** | **Additional Paid-in  Capital** | ** ** | **(Deficit  Accumulated  During the  Development  Stage) Retained  earnings** | ** ** | **Total  Stockholders’  Equity** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|------------|------------|--------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| Sale of units issued to Founders on  May 1, 2006 at $0.005 per unit                                                           |       | 5,750,000          |       | $          | 575        |                                 | $          | 24,425                                                                                  |       | $                                     |       | $ | 25,000 |   |
| Net loss applicable to common stockholders                                                                                         |       |               |       |       |       |                                 |       | (16,031                                                                                 | )          | (16,031                               | )          |
| Balances as of December 31, 2006                                                                                              |       | 5,750,000          |       | $          | 575        |                                 | $          | 24,425                                                                                  |       | $                                     | (16,031    | ) | $ | 8,969 |   |
| Sale of 23,000,000 units on May 30,  2007 at $6 per unit in the public offering                                               |       | 23,000,000         |       | 2,300      |       | 137,997,700                          |       |                                                                                    |       | 138,000,000                           |       |
| Sale of warrants issued to Founders on  May 30, 2007 at $0.70 per warrant                                                     |       |               |       |       |       | 3,650,000                            |       |                                                                                    |       | 3,650,000                             |       |
| Underwriting and offering fees and expenses                                                                                        |       |               |       |       |       | (4,790,000                           | )          |                                                                                    |       | (4,790,000                            | )          |
| Proceeds from public offering of common  stock subject to possible redemption (9,199,999 shares common stock at  redemption value) |       |               |       |       |       | (54,743,994                          | )          |                                                                                    |       | (54,743,994                           | )          |
| Underwriters’ discount and offering costs  related to public offering and over-allotment option                               |       |               |       |       |       | (3,196,900                           | )          |                                                                                    |       | (3,196,900                            | )          |
| Accretion of Trust Account relating to  common stock subject to possible redemption, net of tax                                    |       |               |       |       |       |                                 |       | (352,985                                                                                | )          | (352,985                              | )          |
| Net income applicable to common stockholders                                                                                       |       |               |       |       |       |                                 |       | 1,166,226                                                                               |       | 1,166,226                             |       |
| Balances at December 31, 2007                                                                                                 |       | 28,750,000         |       | $          | 2,875      |                                 | $          | 78,941,231                                                                              |       | $                                     | 797,210    |   | $ | 79,741,316 |   |
| Accretion of Trust Account relating to  common stock subject to possible redemption, net of tax                                    |       |               |       |       |       |                                 |       | 7,146                                                                                   |       | 7,146                                 |       |
| Net income applicable to common stockholders                                                                                       |       |               |       |       |       |                                 |       | 831,698                                                                                 |       | 831,698                               |       |
| Balances at September 30, 2008                                                                                                |       | 28,750,000         |       | $          | 2,875      |                                 | $          | 78,941,231                                                                              |       | $                                     | 1,636,054  |   | $ | 80,580,160 |   |

 

Theaccompanying notes are an integral part of these condensed financialstatements.

 

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**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

 

**CONDENSED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

 
| ** **                                                                     | ** ** | **Nine  Months Ended  September 30, 2008** | ** ** | **Nine  Months Ended  September 30, 2007** | ** ** | **April 18, 2006  (date of inception)  through  September 30, 2008** | ** ** |
|--------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|-----------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|
| ** **                                                                     | ** ** | ** **                                                | ** ** | ** **                                                | ** ** | ** **                                                                                         | ** ** |
| **Cash flows from operating activities**                                       |       |                                                      |       |                                                      |       |                                                                                               |       |
| Net income                                                                     |       | $                                                         | 831,698    |                                                      | $          | 796,381                                                                                            |       | $ | 1,981,893 |   |
| Deferred tax benefit                                                           |       | (308,716                                                  | )          | (276,000                                                  | )          | (709,836                                                                                           | )          |
| Adjustments to reconcile net income to net  cash used in operating activities: |       |                                                      |       |                                                      |       |                                                                                               |       |
| Changes in operating assets and  liabilities:                                  |       |                                                      |       |                                                      |       |                                                                                               |       |
| Prepaid expenses                                                               |       | (16,652                                                   | )          | (55,786                                                   | )          | (46,938                                                                                            | )          |
| Accounts payable and accrued expenses                                          |       | 48,868                                                    |       | (27,667                                                   | )          | 135,685                                                                                            |       |
| Income tax payable                                                             |       | (748,656                                                  | )          | 832,000                                                   |       | 196,344                                                                                            |       |
| **Cash provided by (used in) operating  activities**                           |       | (193,458                                                  | )          | 1,268,928                                                 |       | 1,557,148                                                                                          |       |
| ** **                                                                     |       |                                                      |       |                                                      |       |                                                                                               |       |
| **Cash provided by (used in) investing  activities**                           | ** ** | ** **                                                | ** ** | ** **                                                | ** ** | ** **                                                                                         | ** ** |
| Changes in cash held in Trust Account                                          |       | 32,509                                                    |       | (137,908,307                                              | )          | (138,557,248                                                                                       | )          |
|                                                                           |       |                                                      |       |                                                      |       |                                                                                               |       |
| **Cash flows from financing activities:**                                      | ** ** | ** **                                                | ** ** | ** **                                                | ** ** | ** **                                                                                         | ** ** |
| Proceeds from note payable, stockholder                                        |       | —                                                    |       |                                                      |       | 150,000                                                                                            |       |
| Payments for note payable, stockholder                                         |       | —                                                    |       | (75,000                                                   | )          | (150,000                                                                                           | )          |
| Payments of offering costs                                                     |       | —                                                    |       | (4,480,256                                                | )          | (4,675,000                                                                                         | )          |
| Proceeds from sale of stock options from  the offering                         |       | —                                                    |       | 100                                                       |       | 100                                                                                                |       |
| Proceeds from issuance of common stock from  the offering                      |       | —                                                    |       | 141,650,000                                               |       | 141,675,000                                                                                        |       |
| **Net cash provided by financing activities**                                  |       | —                                                    |       | 137,094,844                                               |       | 137,000,100                                                                                        |       |
| ** **                                                                     |       |                                                      |       |                                                      |       |                                                                                               |       |
| **Net increase (decrease) in cash**                                            |       | (160,949                                                  | )          | 455,465                                                   |       | —                                                                                             |       |
| ** **                                                                     |       |                                                      |       |                                                      |       |                                                                                               |       |
| **Cash****,** beginning of the period                                          |       | 160,949                                                   |       | 21,354                                                    |       | —                                                                                             |       |
| ** **                                                                     |       |                                                      |       |                                                      |       |                                                                                               |       |
| **Cash****,** end of the period                                                |       | $                                                         | —     |                                                      | $          | 476,819                                                                                            |       | $ | — |   |
| ** **                                                                     |       |                                                      |       |                                                      |       |                                                                                               |       |
| **Supplemental schedule of non-cash financing  activities:**                   |       |                                                      |       |                                                      |       |                                                                                               |       |
| Deferred underwriters’ fees                                               |       | $                                                         | —     |                                                      | $          | 3,312,000                                                                                          |       | $ | 3,312,000 |   |
|                                                                           |       |                                                      |       |                                                      |       |                                                                                               |       |
| Taxes paid                                                                     |       | $                                                         | 1,747,768  |                                                      | $          | 431                                                                                                |       | $ | 2,155,199 |   |

 

Theaccompanying notes are an integral part of these condensed financialstatements.

 

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**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

 

**NOTES TOCONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE A—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS**

 

ShermenWSC Acquisition Corp. (a corporation in the development stage) (the “Company”)was incorporated in Delaware on April 18, 2006. The Company was formed toacquire an operating business in the agriculture industry through a merger,capital stock exchange, asset acquisition, stock purchase or other similarbusiness combination (“Business Combination”). The Company has neither engagedin any operations nor generated significant revenue to date, with the exceptionof interest income earned on cash held in the trust account as described below.The Company is considered to be in the development stage as defined inStatement of Financial Accounting Standards (“SFAS”) No. 7, “Accountingand Reporting By Development Stage Enterprises,” and is subject to the risksassociated with activities of development stage companies. The Company hasselected December 31 as its fiscal year end.

 

TheCompany’s management has broad discretion with respect to the specificapplication of the net proceeds of the Offering (as defined in Note D below) ofUnits (as defined in Note D below), although substantially all of the netproceeds of the Offering are intended to be generally applied towardconsummating a Business Combination. Furthermore, there is no assurance thatthe Company will be able to successfully effect a Business Combination. Sincethe closing of the Offering, at least 99.5% of the gross proceeds, after thepayment of certain amounts to the underwriters for the Offering, are held in atrust account (“Trust Account”) and invested in U.S. “government debtsecurities,” defined as any Treasury Bill issued by the United Statesgovernment having a maturity of one hundred and eighty (180) days or less orany open ended investment company registered under the Investment Company Actof 1940, as amended, that holds itself out as a money market fund and bears thehighest credit rating issued by a United States nationally recognized ratingagency, until the earlier of (i) the consummation of its first BusinessCombination or (ii) the distribution of the Trust Account as describedbelow. The remaining proceeds will be used to pay for business, legal andaccounting due diligence on prospective acquisitions and continuing general andadministrative expenses. The Company, after signing a definitive agreement fora Business Combination, will submit such transaction for stockholder approval.In the event that 40% or more of the outstanding common stock of the Company(excluding, for this purpose, those shares of common stock of the Companyissued prior to the Offering) vote against the Business Combination andexercise their conversion rights described below, the Business Combination willnot be consummated. The stockholders who purchased Units in the Offering (the“Public Stockholders”) and vote against a Business Combination will be entitledto convert their common stock into a pro rata share of the Trust Account(including the additional 4% fee of the gross proceeds of the Offering payableto the underwriters for the Offering upon the Company’s consummation of aBusiness Combination), including any interest earned (net of taxes payable andthe amount distributed to the Company to fund its working capital requirements)on their pro rata share, if the Business Combination is approved andconsummated. However, voting against the Business Combination alone will notresult in an election to exercise a Public Stockholder’s conversion rights. APublic Stockholder must also affirmatively exercise such conversion rights ator prior to the time the Business Combination is voted upon by thestockholders. If holders of no more than approximately 39.99% of the shares ofcommon stock of the Company sold in the Offering vote against a BusinessCombination and seek to exercise their conversion rights and such BusinessCombination is consummated, the stockholders who held shares of common stock ofthe Company (the “Founding Stockholders”) have agreed to forfeit and return tothe Company for cancellation a number of shares of common stock of the Companyso that they will collectively own no more than 23.0% of the Company’soutstanding common stock upon consummation of such Business Combination(without giving effect to any shares that may be issued in such BusinessCombination). If the Company is unable to effect a Business Combination andliquidates, none of the Founding Stockholders will receive any portion of theproceeds of the Offering held in the Trust Account to be distributed to theCompany’s stockholders with respect to the common stock of the Company owned bythem immediately before the Offering. As of September 30, 2008, aftergiving effect to a 1.15 for 1 stock split which was effected immediately priorto the Offering, all of the Founding Stockholders, including all of thedirectors and officers of the Company, have agreed to vote all of the shares ofcommon stock of the Company held by them in accordance with the vote of themajority in interest of all other stockholders of the Company.

 

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**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE A—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS(continued)**

 

Inthe event that the Company does not consummate a Business Combination within 18months from the date of the consummation of the Offering (November 30,2008), or 24 months from the consummation of the Offering (May 31, 2009)if certain extension criteria have been satisfied, the proceeds held in theTrust Account will be distributed to the Public Stockholders, excluding theFounding Stockholders to the extent of their initial stock holdings. In theevent of such distribution, it is likely that the per share value of theresidual assets remaining available for distribution (including Trust Accountassets) will be less than the initial public offering price per Unit in theOffering (assuming no value is attributed to the Warrants (as defined in Note Dbelow) contained in the Units offered in the Offering discussed in Note D).

 

**NOTE B – BASIS OF PRESENTATION**

 

Theaccompanying condensed interim financial statements have been prepared by theCompany and reflect all adjustments, consisting only of normal recurringadjustments, which are, in the opinion of management, necessary for a fairpresentation of the financial position as of September 30, 2008 and thefinancial results for the three and nine months ended September 30, 2008and September 30, 2007 and from April 18, 2006 (date of inception) toSeptember 30, 2008, in accordance with accounting principles generallyaccepted in the United States of America for interim financial statements andpursuant to the instructions to the Quarterly Report on Form 10-Q andArticle 8 of Regulation S-X of the U.S. Securities and Exchange Commission(“SEC”). Certain information and footnote disclosures normally included in theCompany’s annual audited financial statements have been condensed or omittedpursuant to such rules and regulations.

 

Theresults of operations for the three months and nine ended September 30,2008 are not necessarily indicative of the results of operations to be expectedfor a full fiscal year. These unaudited condensed interim financial statementsshould be read in conjunction with the audited financial statements for thefiscal year ended December 31, 2007, which are included in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2007 filedwith the SEC.

 

**NOTE C—SUMMARY OF SIGNIFICANTACCOUNTING POLICIES**

 

**Development stage company:**

 

TheCompany complies with the reporting requirements of SFAS No. 7,“Accounting and Reporting by Development Stage Enterprises.”

 

**Earnings per common share:**

 

TheCompany complies with the accounting and disclosure provision of SFASNo. 128, “Earnings Per Share.” SFAS No. 128 requires dualpresentation of basic and diluted income per common share for all periodspresented. Basic income per common share excludes dilution and is computed bydividing net income by the weighted average number of common shares outstandingfor the period. Diluted income per common share reflects the potential dilutionthat could occur if securities or other contracts to issue common stock wereexercised or converted into common stock or resulted in the issuance of commonstock that then share in the income of the Company. The difference between thenumber of common shares used to compute basic income per common share and dilutedincome per common share relates to additional common shares to be issued uponthe assumed exercise of stock options and warrants, net of common shareshypothetically repurchased at the average market price with the proceeds ofexercise.

 

The Company’s statement of operations includes apresentation of earnings per share for common stock subject to possibleredemption in a manner similar to the two-class method of earnings per share.Basic and diluted net income per common share amount for the maximum number ofcommon shares subject to possible redemption is calculated by dividing the netinterest attributable to common shares subject to possible redemption by theweighted average number of common shares subject to possible redemption.

 

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**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS(UNAUDITED)**

 

**NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)**

 

**Concentration of credit risk:**

 

Financialinstruments that potentially subject the Company to concentrations of creditrisk consist of cash accounts in a financial institution, which potentiallymay, in the future, exceed the Federal depository insurance coverage of$250,000. The Company has not experienced losses on these accounts andmanagement believes the Company is not exposed to significant risks on suchaccounts.

 

**Income taxes:**

 

TheCompany complies with SFAS 109, “Accounting for Income Taxes,” which requiresan asset and liability approach to financial accounting and reporting forincome taxes. Deferred income tax assets and liabilities are computed fordifferences between the financial statement and tax bases of assets andliabilities that will result in future taxable or deductible amounts, based onenacted tax laws and rates applicable to the periods in which the differencesare expected to affect taxable income. Valuation allowances are established,when necessary, to reduce deferred tax assets to the amount expected to berealized.

 

EffectiveJanuary 1, 2007, the Company adopted the provisions of the FinancialAccounting Standards Board (“FASB”) Interpretation No. 48, “Accounting forUncertainty in Income Taxes – an interpretation of FASB Statement No. 109”(“FIN 48”). There were no unrecognized tax benefits as of September 30,2008. FIN 48 prescribes a recognition threshold and a measurement attribute forthe financial statement recognition and measurement of tax positions taken orexpected to be taken in a tax return. For those benefits to be recognized, atax position must be more-likely-than-not to be sustained upon examination bytaxing authorities. The Company recognizes accrued interest and penaltiesrelated to unrecognized tax benefits as income tax expense. No amounts wereaccrued for the payment of interest and penalties at September 30, 2008.Management is currently unaware of any issues under review that could result insignificant payments, accruals or material deviation from the Company’sposition. The adoption of the provisions of FIN 48 did not have a materialimpact on the Company’s financial position and results of operation and cashflow.

 

Incometax expense for the three and nine months ended September 30, 2008 wasapproximately $249,000 and $690,000, respectively. The effective tax rate of42% for the three months ended September 30, 2008 and 45% for the ninemonths ended September 30, 2008, differs from the federal statutory rateof approximately 35% as a result of state and city income taxes.

 

Deferredincome taxes are provided for the differences between the bases of assets andliabilities for financial reporting and income tax purposes. As ofSeptember 30, 2008 the Company has a deferred tax asset of approximately$710,000, primarily attributable to deferred formation and operation costs thatare not currently tax deductible.

 

**Recently issued accounting pronouncements:**

 

InDecember 2007, the FASB issued SFAS 141(R), “Business Combinations” (“SFAS141(R)”). SFAS 141(R) provides companies with principles and requirementson how an acquirer recognizes and measures in its financial statements theidentifiable assets acquired, liabilities assumed, and any non-controllinginterest in the acquiree as well as the recognition and measurement of goodwillacquired in a business combination. SFAS 141(R) also requires certaindisclosures to enable users of the financial statements to evaluate the natureand financial effects of the business combination. Acquisition costs associatedwith the business combination will generally be expensed as incurred. SFAS141(R) is effective for business combinations occurring in fiscal yearsbeginning after December 15, 2008, which will require the Company to adoptthese provisions for business combinations occurring in fiscal 2009 andthereafter. Early adoption of SFAS 141(R) is not permitted.

 

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**SHERMEN WSC ACQUISITION CORP.****(a corporation inthe development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 

InDecember 2007, the FASB issued SFAS No. 160, “*Noncontrolling Interests in Consolidated Financialstatements – An Amendment of ARB No. 51*” (“SFAS 160”). SFAS 160requires reporting entities to present noncontrolling (minority) interests asequity as opposed to as a liability or mezzanine equity and provides guidanceon the accounting for transactions between an entity and noncontrollinginterests. SFAS 160 is effective for the financial statements issued for fiscalyears beginning after December 15, 2008 and interim periods within suchfiscal years. SFAS 160 applies prospectively as of the beginning of the fiscalyear SFAS 160 is initially applied, except for the presentation and disclosurerequirements which are applied retrospectively for all periods presentedsubsequent to adoption. The adoption of SFAS 160 will not have a materialimpact on the Company’s results of operations or financial position; however,it could impact future transactions entered into by the Company.

 

In March 2008, the FASB issued SFAS No. 161, “Disclosuresabout Derivative Instruments and Hedging Activities – an amendment to FASBStatement No. 133”. SFAS No. 161 is intended to improve financialstandards for derivative instruments and hedging activities by requiringenhanced disclosures to enable investors to better understand their effects onan entity’s financial position, financial performance, and cash flows. Entitiesare required to provide enhanced disclosures about: (a) how and why anentity uses derivative instruments; (b) how derivative instruments andrelated hedged items are accounted for under FASB Statement No. 133 andits related interpretations; and (c) how derivative instruments andrelated hedged items affect an entity’s financial position, financialperformance, and cashflows. It is effective for financial statements issued forthe first interim period beginning after November 15, 2008, with earlyadoption encouraged. The adoption of this statement is not expected to have amaterial effect on the Company’s financial statements.

 

InMay 2008, the FASB issued SFAS No. 162, “The Hierarchy of GenerallyAccepted Accounting Principles”. SFAS 162 identifies the sources of accountingprinciples and the framework for selecting the principles to be used in thepreparation of financial statements of nongovernmental entities that arepresented in conformity with generally accepted accounting principles in theUnited States. It is effective 60 days following the SEC’s approval of thePublic Company Accounting Oversight Board amendments to AU Section 411,“The Meaning of Present Fairly in Conformity With Generally Accepted AccountingPrinciples”. The adoption of this statement is not expected to have a materialeffect on the Company’s financial statements.

 

Management does not believe that any other recentlyissued, but not yet effective, accounting pronouncements, if currently adopted,would have a material effect on the Company’s financial statements.

 

**Recently adopted accounting standards:**

 

In September 2006, the FASB issuedStatement of Financial Accounting Standards No. 157, “*Fair ValueMeasurements*” (“SFAS 157”). SFAS 157 defines fair value, establishesa framework for measuring fair value and expands disclosures about fair valuemeasurements.  SFAS 157 applies to otheraccounting pronouncements where the FASB requires or permits fair valuemeasurements but does not require any new fair value measurements.  In February 2008, FASB issued FASB StaffPosition No. 157-2, “*Effective Date of FASBStatement No. 157*” (“FSP No. 157-2”), which delayed the effectivedate of SFAS 157 for certain non-financial assets and non-financial liabilitiesto fiscal years beginning after November 15, 2008, and interim periodswithin those fiscal years. The Company adopted SFAS 157 for financial assetsand liabilities on January 1, 2008. On October 10, 2008, the FASB issued FSP FAS No. 157-3, “FairValue Measurements” (FSP FAS 157-3), which clarifies the application of SFAS No. 157in an inactive market and provides an example to demonstrate how the fair valueof a financial asset is determined when the market for that financial asset isinactive.  FSP FAS 157-3 was effectiveupon issuance, including prior periods for which financial statements had notbeen issued.  The adoption of thisstandard did not have a material impact on the company’s results of operations,cash flows or financial positions.

 

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**SHERMEN WSC ACQUISITION CORP.(a corporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 

InFebruary 2007, the FASB issued SFAS No. 159, “*The Fair Value Option for Financial Assets andFinancial Liabilities- Including an amendment of FASB Statement No. 155*”(“SFAS 159”). This statement permits entities to choose to measure selectedassets and liabilities at fair value. The Company adopted SFAS 159 onJanuary 1, 2008, and such adoption did not have any impact on theCompany’s financial condition, results of operations or cash flows.

 

InDecember 2007, the SEC issued SAB No. 110, “Share-Based Payment”(“SAB 110”). SAB 110 establishes the continued use of the simplified method forestimating the expected term of equity-based compensation. The simplifiedmethod was intended to be eliminated for any equity-based compensationarrangements granted after December 31, 2007. SAB 110 is being publishedto help companies that may not have adequate exercise history to estimateexpected terms for future grants. The Company does not expect the adoption ofSAB 110 to have a material effect on its financial statements.

 

InMay 2008, the FASB issued SFAS No. 163, “Accounting for FinancialGuarantee Insurance Contracts – An interpretation of FASB StatementNo. 60”. SFAS 163 requires that an insurance enterprise recognize a claimliability prior to an event of default when there is evidence that creditdeterioration has occurred in an insured financial obligation. It alsoclarifies how FASB Statement No. 60 applies to financial guaranteeinsurance contracts, including the recognition and measurement to be used toaccount for premium revenue and claim liabilities, and requires expandeddisclosures about financial guarantee insurance contracts. It is effective forfinancial statements issued for fiscal years beginning after December 15,2008, except for some disclosures about the insurance enterprise’srisk-management activities. SFAS 163 requires that disclosures about therisk-management activities of the insurance enterprise be effective for thefirst period beginning after issuance. Except for those disclosures, earlierapplication is not permitted. The adoption of this statement is not expected tohave a material effect on the Company’s financial statements.

 

**NOTE D—OFFERING AND OVER-ALLOTMENT**

 

TheCompany offered 20,000,000 units (“Units”) for public sale (the “Offering”) inMay 2007. Each Unit consists of one share of the Company’s common stock,$0.0001 par value (“Common Stock”), and two redeemable common stock purchasewarrants (“Warrants”). Each Warrant entitles the holder to purchase from theCompany one share of Common Stock at an exercise price of $5.00 commencing onthe later of (a) one year from the date of the final prospectus for theOffering or (b) the completion of a Business Combination or thedistribution of the Trust Account, and will expire four years from the date ofsuch final prospectus. The Warrants will be redeemable at a price of $0.01 perWarrant upon 30 days prior notice after the Warrants become exercisable, onlyin the event that the last sale price of Common Stock is at least $8.50 pershare for any 20 trading days within a 30 trading day period ending on thethird business day prior to the date on which notice of redemption is given.

 

NoWarrants will be exercisable and the Company will not be obligated to issueshares of Common Stock unless at the time a holder seeks to exercise suchWarrant, a prospectus relating to Common Stock issuable upon exercise of theWarrants is current and Common Stock has been registered or qualified or deemedto be exempt under the securities laws of the state of residence of the holderof the Warrants. Under the terms of the warrant agreement, the Company hasagreed to use its best efforts to meet these conditions and to maintain acurrent prospectus relating to Common Stock issuable upon exercise of theWarrants until the expiration of the Warrants. However, if the Company does notmaintain a current prospectus relating to Common Stock issuable upon exerciseof the Warrants, holders will be unable to exercise their Warrants. In nocircumstance will the Company be required to settle any such Warrant exercisefor cash. If the prospectus relating to Common Stock issuable upon the exerciseof the Warrants is not current or if Common Stock is not qualified or exemptfrom qualification in the jurisdiction in which the holders of the Warrantsreside, the Warrants may have no value, the market for the Warrants may belimited and the Warrants may expire worthless.

 

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**SHERMEN WSC ACQUISITION CORP.(a corporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE D—OFFERING AND OVER-ALLOTMENT (continued)**

 

ShermenWSC Holding LLC (“Shermen WSC Holding”) has purchased 5,214,286 Warrants(“Founder Warrants”) at $0.70 per Founder Warrant (for an aggregate purchaseprice of approximately $3,650,000) from the Company in a private placementexempt from registration under Securities Act of 1933, as amended. Thesepurchases took place simultaneously with the consummation of the Offering. Allof the proceeds received from these purchases were placed in the Trust Account.The Founder Warrants purchased by Shermen WSC Holding are identical to theWarrants underlying the Units sold in the Offering except that (i) theCompany has no obligation to register the sale of the Warrants and theunderlying shares of Common Stock and their exercise is not limited by theabsence of an effective registration statement and current prospectus relatingto the resale of the underlying shares of Common Stock and (ii) theFounder Warrants may be exercisable on a “cashless basis” if the Company callsthe Warrants for redemption. Shermen WSC Holding agreed that the FounderWarrants would not be transferable or salable by it or such directors orofficers or their respective affiliates until after the Company completed aBusiness Combination, except it may distribute them to its members. Immediatelyafter the purchase of the Founder Warrants, Shermen WSC Holding distributedthem to its members.

 

Allshares of Common Stock owned by the Founding Stockholders prior to the closingof the Offering (the “Initial Shares”) were placed into an escrow accountmaintained by Continental Stock Transfer & Trust Company, acting asescrow agent. The Initial Shares will not be released from escrow until sixmonths following the completion of a Business Combination.

 

Theforegoing restriction is subject to certain limited exceptions such astransfers to family members and trusts for estate planning purposes, upon deathof an escrow depositor, transfers to an estate or beneficiaries, or otherspecified transfers. Even if transferred under these circumstances, the InitialShares will remain in the escrow account.

 

OnMay 30, 2007, the underwriters’ for the Offering exercised the fullover-allotment of 3,000,000 units. As a result, the deferred underwriters’ feewas increased approximately $432,000.

 

**NOTE E**—**COMMON STOCK**

 

OnMay 23, 2007, the Company effected a 1.15 for 1 forward stock split of theInitial Shares and issued 750,000 shares of Common Stock to the FoundingStockholders prior to the closing of both the Offering and the over-allotment.All transaction and disclosures in the financial statements relating to CommonStock, have been adjusted to reflect the effects of the stock split.

 

**NOTE F—RELATED PARTY TRANSACTIONS**

 

TheCompany presently occupies office space provided by an affiliate of a certainstockholder of the Company. Such affiliate has agreed that, until theconsummation of a Business Combination, it will make such office space, as wellas certain office and secretarial services, available to the Company, as may berequired by the Company from time to time. The Company has agreed to pay suchaffiliate $9,950 per month for such services.

 

Certainof the directors and officers of the Company have purchased through Shermen WSCHolding, in a private placement, 5,214,286 Founder Warrants immediately priorto the Offering at a price of $0.70 per Founder Warrant (an aggregate purchaseprice of approximately $3,650,000) from the Company and not as part of theOffering. They have also agreed that these Founder Warrants purchased by themwill not be sold or transferred until the completion of a Business Combination.

 

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**SHERMEN WSC ACQUISITION CORP.(a corporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS(UNAUDITED)**

 

**NOTE G—FAIR VALUE MEASUREMENTS**

 

EffectiveJanuary 1, 2008, the Company adopted Statement of Financial AccountingStandard No. 157, Fair Value Measurement, or SFAS 157, for its financialassets and liabilities that are re-measured and reported at fair value at eachreporting period, and non-financial assets and liabilities that are re-measuredand reported at fair value at least annually. In accordance with the provisionsof FSP No. FAS 157-2, Effective Date of FASB Statement No. 157, theCompany has elected to defer implementation of SFAS 157 as it relates to its non-financialassets and non-financial liabilities that are recognized and disclosed at fairvalue in the financial statements on a nonrecurring basis until January 1,2009. The Company is evaluating the impact, if any, this standard will have onits non-financial assets and liabilities. The adoption of SFAS 157 to theCompany’s financial assets and liabilities and non-financial assets andliabilities that are re-measured and reported at fair value at least annuallydid not have an impact on the Company’s financial results.

 

Thefollowing table presents information about the Company’s assets and liabilitiesthat are measured at fair value on a recurring basis as of September 30,2008, and indicates the fair value hierarchy of the valuation techniques theCompany utilized to determine such fair value. In general, fair valuesdetermined by Level 1 inputs utilize quoted prices (unadjusted) in activemarkets for identical assets or liabilities. Fair values determined by Level 2inputs utilize data points that are observable such as quoted prices, interestrates and yield curves. Fair values determined by Level 3 inputs utilizeunobservable data points for the asset or liability, and includes situationswhere there is little, if any, market activity for the asset or liability (inmillions):

 
| ** **                                      | ** ** | ** **                   | ** ** | ** **                              | ** ** | **Significant**            | ** ** | ** **                    | ** ** |
|-------------------------------------------------|------------|------------------------------|------------|-----------------------------------------|------------|----------------------------|------------|-------------------------------|------------|
| ** **                                      | ** ** | ** **                   | ** ** | **Quoted Prices  in**              | ** ** | **Other  Observable**      | ** ** | **Significant  Unobservable** | ** ** |
| **Description**                                 | ** ** | **September 30,  2008** | ** ** | **Active Markets  (Level 1)** | ** ** | **Inputs  (Level 2)** | ** ** | **Inputs  (Level 3)**    | ** ** |
| Assets:                                         |       |                         |       |                                    |       |                       |       |                          |       |
| Cash and cash equivalent held  in Trust Account |       | $                            | 138.56     |                                    | $          | 138.56                     |       | $                             | —     |   | $ | — |   |
| Total                                           |       | $                            | 138.56     |                                    | $          | 138.56                     |       | $                             | —     |   | $ | — |   |

 

Thefair values of the Company’s cash and cash equivalent held in the Trust Accountis determined through market, observable and corroborated sources. The carryingamounts reflected in the condensed balance sheets for other current assets andaccrued expenses approximate fair value due to their short-term maturities.

 

**NOTE H—COMMITMENTS**

 

TheCompany is committed to paying an underwriting discount of 4% of the UnitOffering price to the underwriters for the Offering (less $0.21 for each shareof common stock converted to cash in connection with a Business Combination)payable upon the Company’s consummation of a Business Combination.

 

The Company has sold to the underwriters, for $100, as additionalcompensation, an option to purchase up to a total of 700,000 Units in theaggregate (350,000 Units to each underwriter) at a per-unit price of $7.50. TheUnits issuable upon exercise of this option are also identical to those offeredin the Offering, except that each Warrant underlying such Units entitles theholder to purchase one share of Common Stock at a price of $6.25. In nocircumstance will the Company be required to settle any such option exercisefor cash.

 

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**SHERMEN WSC ACQUISITION CORP.**

**(a corporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE H—COMMITMENTS (continued)**

 

The sale of this option was accounted for as an equitytransaction.  Accordingly, there was nonet impact on the Company’s financial position or results of operations, exceptfor the recording of the $100 proceeds from the sale of such option.

 

The Company determined, based upon a Black-Scholes model, that the fairvalue of this option on the date of sale was approximately $0.60 per unit, or$420,000 in total, using an expected life of four years, volatility of 52.13%and a risk-free interest rate of 4.92%.

 

The volatility calculation of 52.13% is based on the average 90-dayBloomberg volatility of a portfolio of nine publicly traded U.S. agriculturalcompanies with market capitalizations between $50,000,000 and $500,000,000.Because the Company does not have a trading history, the Company needed toestimate the potential volatility of Common Stock price, which will depend on anumber of factors which cannot be ascertained at this time.  The Company referred to the Index becausemanagement believes that the average volatility is a reasonable benchmark touse in estimating the expected volatility of Common Stock post-businesscombination.  Although an expected lifeof four years was taken into account for purposes of assigning a fair value tothe option, if the Company does not consummate a Business Combination withinthe prescribed time period and liquidates, this option would becomeworthless.  Although this option and itsunderlying securities have been registered under the registration statement ofwhich the prospectus forms a part of, this option will provide for registrationrights that will permit the holder of this option to demand that a registrationstatement will be filed with respect to all or any part of the securitiesunderlying this option within five years of the completion of theOffering.  Further, the holders of thisoption will be entitled to piggy-back registration rights in the event theCompany undertakes a subsequent registered offering within seven years of thecompletion of the Offering.

 

**NOTE I—PREFERRED STOCK**

 

The Company is authorized to issue 1,000,000 shares of preferred stockwith such designations, voting and other rights and preferences as may bedetermined from time to time by the Board of Directors of the Company.  As of September 30, 2008, the Companyhas not issued any shares of its preferred stock.

 

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| **ITEM 2.** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|-------------------------------------------------------------------------------------------------|

 

Thefollowing discussion should be read in conjunction with our Condensed UnauditedInterim Financial Statements and notes thereto contained in this QuarterlyReport on Form 10-Q.

 

**Forward Looking Statements**

 

ThisQuarterly Report on Form 10-Q includes forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended.  We have based these forward-lookingstatements on our current expectations and projections about futureevents.  These forward-looking statementsare subject to known and unknown risks, uncertainties and assumptions about usthat may cause our actual results, levels of activity, performance orachievements to be materially different from any future results, levels ofactivity, performance or achievements expressed or implied by suchforward-looking statements.  In somecases, you can identify forward-looking statements by terminology such as “may,”“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”“continue,” or the negative of such terms or other similar expressions.  Factors that might cause or contribute tosuch a discrepancy include, but are not limited to, those described in ourother Securities and Exchange Commission (“SEC”) filings.

 

**Overview**

 

Wewere formed on April 18, 2006 for the purpose of acquiring, through amerger, capital stock exchange, asset acquisition, stock purchase or othersimilar business combination, an operating business in the agricultureindustry.

 

On May 30,2007, we completed our initial public offering (“IPO”) of 23,000,000 units (“Units”).  Each Unit consists of one share of our commonstock, $0.0001 par value per share (“Common Stock”), and two warrants (“Warrants”),each to purchase one share of Common Stock at $5.00 per share.  The public offering price of each Unit was$6.00, and we generated gross proceeds of $138,000,000 in the IPO (includingproceeds from the exercise of the underwriters’ over-allotment option).  Of the gross proceeds: (i) we deposited$133,210,000 into a trust account (the “Trust Account”) at JP Morgan Chase NYBank, maintained by Continental Stock Transfer & Trust Company astrustee, which included $5,520,000 of deferred underwriting fees; (ii) theunderwriters received $4,140,000 as underwriting fees (excluding the deferredunderwriting fees); and (iii) we retained $607,900 for offeringexpenses.  In addition, we deposited intothe Trust Account $3,650,000.20 that we received from the issuance and sale of5,214,286 warrants (the “Founder Warrants”) to Shermen WSC Holding LLC, whosemanaging member is Shermen Capital Partners, LLC, an entity controlled byFrancis P. Jenkins, Jr., our chairman and chief executive officer, on May 30,2007 in a private placement exempt from registration under Securities Act of1933, as amended.

 

Aftercompletion of the IPO, we began contacting investment bankers, private equityfirms and other business contacts in order to generate ideas about a suitablebusiness combination. We also received unsolicited inquiries from severalinvestment banking firms, private equity firms and other businessintermediaries. We informed these contacts that we were seeking an operatingbusiness for our initial business combination. We did not retain an investment banking firm or fairness or valuationadvisor to conduct a formal search for a business combination. Criteria forsuitability included our management’s assessment of the competitive strengthsand weaknesses of the potential business targets, the strength of themanagement team, and the quality of the assets to be acquired.  Certain targets were considered by managementto have too great a level of business risk due to poor asset quality or poor orerratic financial results.

 

Weintend to utilize cash derived from the proceeds of the IPO, our capital stock,debt or a combination of such cash, capital stock and debt, in effecting abusiness combination.  The issuance ofadditional shares of our capital stock:

 

·                                          may significantly reduce the equity interestof our stockholders;

 

·                                          may subordinate the rights of holders ofCommon Stock if we issue preferred stock with rights senior to those affordedto Common Stock;

 

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·                                          will likely cause a change in control if asubstantial number of shares of Common Stock are issued, which may affect,among other things, our ability to use our net operating loss carry forwards,if any, and most likely will also result in the resignation or removal of ourpresent officers and directors; and

 

·                                          may adversely affect prevailing market pricesfor Common Stock.

 

Similarly,if we issue debt securities, it could result in:

 

·                                          default and foreclosure on our assets if ouroperating revenues after a business combination are insufficient to pay ourdebt obligations;

 

·                                          acceleration of our obligations to repay theindebtedness even if we have made all principal and interest payments when dueif the debt security contains covenants that required the maintenance ofcertain financial ratios or reserves and we breach any such covenant without awaiver or renegotiation of that covenant;

 

·                                          our immediate payment of all principal andaccrued interest, if any, if the debt security is payable on demand; and

 

·                                          our inability to obtain additional financing,if necessary, if the debt security contains covenants restricting our abilityto obtain additional financing while such security is outstanding.

 

Weintend to use substantially all of the net proceeds of the IPO and the issuanceand sale of the Founder Warrants, including the funds held in the Trust Account(excluding deferred underwriting discounts and commissions), to acquire atarget business.  To the extent that ourcapital stock is used in whole or in part as consideration to effect a businesscombination, the remaining proceeds held in the Trust Account as well as anyother net proceeds not expended will be used as working capital to finance theoperations of the target business.  Suchworking capital funds could be used in a variety of ways including continuingor expanding the target business operations, for strategic acquisitions and formarketing, research and development of existing or new products.  Such funds could also be used to repay anyoperating expenses or finders’ fees which we had incurred prior to thecompletion of our business combination if the funds available to us outside ofthe Trust Account were insufficient to cover such expenses.

 

**Results of Operations, Financial Condition and Liquidity**

 

ThroughSeptember 30, 2008, our efforts have been limited to organizationalactivities, activities relating to the IPO, activities relating to identifying andevaluating prospective acquisition candidates, and activities relating togeneral corporate matters; we have neither engaged in any operations norgenerated any revenues, other than interest income earned on the proceeds ofthe IPO and our private placement of the Founder Warrants.

 

Netincome totaled $342,090, which consisted of $885,478 of interest income fromthe Trust Account offset by $294,520 of formation and operating expenses and$248,868 of provision for income taxes, and $753,368, which consisted of$1,358,295 of interest income from the Trust Account offset by $84,927 offormation and operating expenses and $520,000 of provision for income taxes,for the three months ended September 30, 2008 and September 30, 2007,respectively.  Net income totaled$831,698, which consisted of $2,207,632 of interest income from the TrustAccount offset by $685,538 of formation and operating expenses and $690,396 ofprovision for income taxes, and $796,381, which consisted of $1,899,572 ofinterest income from the Trust Account offset by $547,191 of formation andoperating expenses and $556,000 of provision for income taxes, for the ninemonths ended September 30, 2008 and September 30, 2007,respectively.  Net income for the periodfrom inception (April 18, 2006) to September 30, 2008, totaled$1,981,893, which consisted of $5,195,689 of interest income from the TrustAccount offset by $1,572,089 of formation and operating expenses and $1,641,707of provision for income taxes.

 

Interestincome from the Trust Account excludes earnings on funds held in the TrustAccount associated with Common Stock subject to possible conversion, and,except for amounts equal to any taxes payable by us relating to such interestearned and one half of such interest earned, net of taxes, up to $1,500,000which may be released to us 

 

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on amonthly basis to cover our operating expenses, will not be released to us fromthe Trust Account until the earlier of the completion of a business combinationor the expiration of the time period during which we may complete a businesscombination (November 30, 2008).

 

Wehave provided for an effective tax rate of slightly over 46% on a year andinception-to-date basis since all of the funds deposited in the Trust Accountare subject to federal, state and local taxes. For the nine months ended September 30, 2008 and for the periodfrom inception to September 30, 2008, our income tax expense wasapproximately $690,000 and $1,642,000, respectively.

 

As of September 30,2008, we had approximately no unrestricted cash available to us for ouractivities in connection with identifying and conducting due diligence of asuitable business combination, and for general corporate matters.  The following table shows the total fundsheld in the Trust Account through September 30, 2008:

 
| Gross proceeds from our initial public  offering of common stock and financing transaction                                                                                                                            |       | $           | 138,000,000     |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|-----------------|------------|
| Gross proceeds from private placement  warrant holders                                                                                                                                                                |       | 3,650,000   |            |
| Underwriters’ fee                                                                                                                                                                                                |       | (4,140,000  | )               |
| Blue Sky fees                                                                                                                                                                                                         |       | (25,000     | )               |
| Custodial fees                                                                                                                                                                                                        |       | (17,100     | )               |
| Funds not placed in trust                                                                                                                                                                                             |       | (607,900    | )               |
|                                                                                                                                                                                                                  |       |        |            |
| Cash placed in trust on May 31, 2007                                                                                                                                                                             |       | 136,860,000 |            |
| Total investment income earned on assets  held in trust, May 31, 2007 through September 30, 2008                                                                                                            |       | 5,195,689   |            |
| Subtotal                                                                                                                                                                                                              |       | 142,055,689 |            |
|                                                                                                                                                                                                                  |       |        |            |
| Withdrawals from the trust during the  period May 31, 2007 through September 30, 2008:                                                                                                                      |       |        |            |
| Payments for income taxes                                                                                                                                                                                             |       | (2,155,199  | )               |
| Transfers to the Company’s operating  account for payment of additional offering costs, general and administrative  expenses and for working capital purposes (latter being limited to a maximum  of $1,500,000) |       | (1,342,961  | )               |
| Custodial transfer fees                                                                                                                                                                                               |       | (280        | )               |
| Total transfers from custodial accounting  to checking                                                                                                                                                                |       | (3,498,440  | )               |
| Total assets held in trust account as of  September 30, 2008                                                                                                                                                     | ** ** | **$**       | **138,557,249** | ** ** |

 

Webelieve that we will have sufficient funds to allow us to operate through May 24,2009, assuming that a business combination is not consummated during thattime.  Approximately $1,500,000 ofworking capital over this time period will be funded from the interest earnedfrom the funds held in the Trust Account. Over this time period, we anticipate incurring expenses for thefollowing purposes:

 

·                                          payment of premiums associated with ourdirector’s and officer’s insurance;

 

·                                          payment of estimated taxes incurred as aresult of interest income earned on funds currently held in the Trust Account;

 

·                                          due diligence and investigation ofprospective target businesses;

 

·                                          legal and accounting fees relating to our SECreporting obligations and general corporate matters;

 

·                                          structuring and negotiating a businesscombination, including the making of a down payment or the payment ofexclusivity or similar fees and expenses; and

 

·                                          other miscellaneous expenses including the$9,950 per month to Shermen Capital Partners, LLC.

 

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## **ITEM 3.**                             QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Marketrisk is the sensitivity of income to changes in interest rates, foreignexchanges, commodity prices, equity prices, and other market-driven rates orprices.  We are not presently engaged inand, if we do not consummate a suitable business combination prior to theprescribed liquidation date of the Trust Account (November 30, 2008 or May 31,2009 if certain extension criteria have been satisfied), we may not engage in,any substantive commercial business. Accordingly, we are not and, until suchtime as we consummate a business combination, we will not be, exposed to risksassociated with foreign exchange rates, commodity prices, equity prices orother market-driven rates or prices.  Thenet proceeds of the IPO held in the Trust Account may be invested by thetrustee only in U.S. “government securities,” defined as any Treasury Billissued by the United States government having a maturity of one hundred andeighty days or less, or any open ended investment company registered under theInvestment Company Act of 1940, as amended, that holds itself out as a moneymarket fund and bears the highest credit rating issued by a United Statesnationally recognized rating agency. Given our limited risk in our exposure to government securities andmoney market funds, we do not view the interest rate risk to be significant.

 

## **ITEM 4.**                             CONTROLS AND PROCEDURES

##  

Wemaintain disclosure controls and procedures that are designed to ensure thatinformation required to be disclosed in our reports filed pursuant to theSecurities Exchange Act of 1934, as amended, is recorded, processed,summarized, and reported within the time periods specified in the SEC’s rules andforms, and that such information is accumulated and communicated to ourmanagement, including our chief executive officer and chief financial officer,as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosurecontrols and procedures, management recognized that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and managementnecessarily was required to apply its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.

 

Wecarried out an evaluation, under the supervision and with the participation ofour management, including our chief executive officer and chief financialofficer, of the effectiveness of the design and operation of our disclosurecontrols and procedures.  Based on theforegoing, our chief executive officer and chief financial officer concludedthat our disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended) wereeffective as of the end of the fiscal quarter ended September 30, 2008.

 

Therehave been no changes in our internal control over financial reporting duringthe fiscal quarter ended September 30, 2008 that have materially affected,or are reasonably likely to materially affect, our internal control overfinancial reporting.

 

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# **PART II – OTHER INFORMATION**

#  

## **ITEM 1.**                             LEGAL PROCEEDINGS

 

None.

 

**ITEM 1A.               RISKFACTORS**

 

Therehave been no material changes to the risk factors disclosed under the caption “RiskFactors” beginning on page 14 of our Annual Report on Form 10-K filedwith the SEC on March 31, 2008.

 

## **ITEM 2.**                             UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

##  

Concurrentlywith the consummation of the IPO, on May 30, 2007, we consummated aprivate sale of the Founder Warrants at a purchase price of $0.70 per FounderWarrant, generating total proceeds of $3,650,000.20.  The Founder Warrants were purchased bycertain of our directors and officers through Shermen WSC Holding LLC whosemanaging member is Shermen Capital Partners, LLC, an entity controlled byFrancis P. Jenkins, Jr., our chairman and chief executive officer.  The Founder Warrants are identical to theWarrants except that (i) if we call the Warrants for redemption, theFounder Warrants will be exercisable on a cashless basis; (ii) the FounderWarrants will not be transferable or salable by Shermen WSC Holding LLC or suchdirectors or officers or their respective affiliates until after we havecompleted our initial business combination, except Sherman WSC Holding LLC maydistribute them to its members; and (iii) the holders of the FounderWarrants and the Common Stock underlying such Founder Warrants are entitled toregistration rights with respect to such securities under an agreement signedon May 30, 2007.  Immediately afterthe purchase of the Founder Warrants, Shermen WSC Holding LLC distributed themto its members.

 

For adescription of the use of the proceeds of the private sale of the FounderWarrants, see Part I, Item 2 of this Quarterly Report on Form 10-Q.

 

## **ITEM 3.**                             DEFAULTS UPON SENIOR SECURITIES

##  

None.

 

## **ITEM 4.**                             SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

##  

None.

 

## **ITEM 5.**                             OTHER INFORMATION

##  

None.

 

## **ITEM 6.**                             EXHIBITS

 
| **Exhibit********Number** | ** ** | **Exhibit Description**                                                                               |
|---------------------------|------------|------------------------------------------------------------------------------------------------------------|
|                      |       |                                                                                                       |
| 31.1                      |       | Certification  of Chief Executive Officer, pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 |
| 31.2                      |       | Certification  of Chief Financial Officer, pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 |
| 32.1                      |       | Certification  of Chief Executive Officer, pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |
| 32.2                      |       | Certification  of Chief Financial Officer, pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |

 

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**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrantcaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 
| ** **                     | **SHERMEN WSC ACQUISITION CORP.**       |
|--------------------------------|-----------------------------------------|
|                           |                                    |
|                           |                                    |
|                           |  /s/  Francis P. Jenkins, Jr. |
|                           |  Name:                             | Francis  P. Jenkins, Jr. |
|                           |  Title:                            | Chairman,  Chief Executive Officer and |
|                           |                                    | Director  (Principal Executive Officer) |
|                           |                                    |
|                           |                                    |
|                           |  /s/  John E. Toffolon, Jr.   |
|                           |  Name:                             | John  E. Toffolon, Jr. |
|                           |  Title:                            | Chief  Financial Officer and |
|                           |                                    | Director  (Principal Financial and |
|                           |                                    | Accounting  Officer) |
|                           |                                    |
| Dated:  November 14, 2008 |                                    |

 

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