Table of Contents

** **

 

** **

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

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**FORM 10-Q**

 

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**(****Mark One)**

| **x**      | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**                                                                                      |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                                                            |
| ** ** | **For the quarterly period ended June 30, 2008**                                                                                                                                 |
| ** ** | ** **                                                                                                                                                                            |
| **o**      | **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**                                                                                     |
| ** ** | ** **                                                                                                                                                                            |
| ** ** | **For the transition period  from            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)

 

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Indicateby check mark whether the registrant:  (1) filedall reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.    Yes  x    No  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reportingcompany.  See definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange 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 in Rule 12b-2of the Exchange Act).   Yes  x    No  o.

 

Asof August 12, 2008, 28,750,000 shares of common stock, par value $0.0001per share, were issued and outstanding.

 

 

 

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Table of Contents

 

**TABLE OF CONTENTS**

 

**SHERMENWSC ACQUISITION CORP.**

(a developmentstage enterprise)

 

**Contents**

 
| ** **                                                                                                     | **Page   No.** |
|----------------------------------------------------------------------------------------------------------------|---------------------|
| Part I:  FINANCIAL INFORMATION:                                                                           |                |
|                                                                                                           |                |
| Item 1 –  Financial Statements                                                                       | 1                   |
|                                                                                                           |                |
| Condensed  Balance Sheets                                                                                      | 1                   |
|                                                                                                           |                |
| Condensed Statements of Operations (Unaudited)                                                                 | 2                   |
|                                                                                                           |                |
| Condensed Statements of Stockholders’ Equity (Unaudited)                                                  | 3                   |
|                                                                                                           |                |
| Condensed Statements of Cash Flows (unaudited)                                                                 | 4                   |
|                                                                                                           |                |
| Notes to Condensed Interim Financial Statements                                                                | 5                   |
|                                                                                                           |                |
| Item 2 – Management’s Discussion and Analysis of  Financial Condition and Results of Operations | 13                  |
|                                                                                                           |                |
| Item 3 – Quantitative and Qualitative Disclosures  About Market Risk                                 | 15                  |
|                                                                                                           |                |
| Item 4 – Controls and Procedures                                                                     | 15                  |
|                                                                                                           |                |
| Part II.  OTHER INFORMATION                                                                               |                |
|                                                                                                           |                |
| Item 1  – Legal Proceedings                                                                          | 17                  |
|                                                                                                           |                |
| Item 1A  – Risk Factors                                                                              | 17                  |
|                                                                                                           |                |
| Item 2 – Unregistered Sales of Equity Securities  and Use of Proceeds                                | 17                  |
|                                                                                                           |                |
| Item 3 – Defaults Upon Senior Securities                                                             | 17                  |
|                                                                                                           |                |
| Item 4 – Submission of Matters to a Vote of  Security Holders                                        | 17                  |
|                                                                                                           |                |
| Item 5  – Other Information                                                                          | 17                  |
|                                                                                                           |                |
| Item 6  – Exhibits                                                                                   | 17                  |
|                                                                                                           |                |
| Signatures                                                                                                     | 18                  |

 

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Table of Contents

 

**PART I – FINANCIAL INFORMATION**

 

**ITEM 1.****                ****FINANCIALSTATEMENTS**

 

**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**CONDENSED BALANCE SHEETS**

 
| ** **                                                                                                                                                                                                                               | ** ** | **June 30, 2008** | ** **  | **December 31, 2007** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|-------------|----------------------------|------------|
| ** **                                                                                                                                                                                                                               | ** ** | **(Unaudited)**        | ** **  | ** **                 | ** ** |
| **ASSETS**                                                                                                                                                                                                                               | ** ** | ** **             | ** **  | ** **                 | ** ** |
| **Current  assets**                                                                                                                                                                                                                      | ** ** | ** **             | ** **  | ** **                 | ** ** |
| Cash                                                                                                                                                                                                                                     |       | $                      | 12,907      |                       | $          | 160,949 |   |
| Prepaid expenses                                                                                                                                                                                                                         |       | 65,109                 |        | 30,286                     |       |
| Prepaid income  taxes                                                                                                                                                                                                                    |       | 52,907                 |        | —                     |       |
| **Total  current assets**                                                                                                                                                                                                                |       | 130,923                |        | 191,235                    |       |
| ** **                                                                                                                                                                                                                               | ** ** | ** **             | ** **  | ** **                 | ** ** |
| **Other  assets**                                                                                                                                                                                                                        | ** ** | ** **             | ** **  | ** **                 | ** ** |
| Deferred taxes                                                                                                                                                                                                                           |       | 584,453                |        | 401,120                    |       |
| Cash held in  Trust Account                                                                                                                                                                                                              |       | 137,971,806            |        | 138,589,757                |       |
|                                                                                                                                                                                                                                     |       | $                      | 138,687,182 |                       | $          | 139,182,112 |   |
|                                                                                                                                                                                                                                     |       |                   |        |                       |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                            | ** ** | ** **             | ** **  | ** **                 | ** ** |
|                                                                                                                                                                                                                                     |       |                   |        |                       |       |
| **Current  liabilities**                                                                                                                                                                                                                 | ** ** | ** **             | ** **  | ** **                 | ** ** |
| Accounts payable  and accrued expenses                                                                                                                                                                                                   |       | $                      | 47,279      |                       | $          | 86,817 |   |
| Income tax  payable                                                                                                                                                                                                                      |       | —                 |        | 945,000                    |       |
| **Total  current liabilities**                                                                                                                                                                                                           |       | 47,279                 |        | 1,031,817                  |       |
|                                                                                                                                                                                                                                     |       |                   |        |                       |       |
| **Long-term  liabilities**                                                                                                                                                                                                               | ** ** | ** **             | ** **  | ** **                 | ** ** |
| Deferred  underwriters’ fee                                                                                                                                                                                                         |       | 3,312,000              |        | 3,312,000                  |       |
| **Total  liabilities**                                                                                                                                                                                                                   |       | 3,359,279              |        | 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**                                                                                                                                              |       | 226,709                |        | 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 June 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                                                                                                                                                                                                                       |       | 1,413,094              |        | 797,210                    |       |
| **Total  stockholders’ equity**                                                                                                                                                                                                     |       | 80,357,200             |        | 79,741,316                 |       |
| **Total  liabilities and stockholders’ equity**                                                                                                                                                                                     |       | $                      | 138,687,182 |                       | $          | 139,182,112 |   |

 

The accompanyingnotes are an integral part of these condensed financial statements.

 

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Table of Contents

 

**SHERMEN WSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**CONDENSED STATEMENTS OFOPERATIONS**

**(unaudited)**

 
| ** **                                                                 | ** ** | **Three  Months Ended  June 30, 2008** | ** ** | **Three  Months Ended  June 30, 2007** | ** ** | **Six  Months Ended  June 30, 2008** | ** ** | **Six  Months Ended  June 30, 2007** | ** ** | **Period from  April 18, 2006  (inception) to  June 30, 2008** | ** ** |
|----------------------------------------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------------------------------------------|------------|
| Revenue                                                                    |       | $                                           |       | $                                           |       | $                                         |       | $                                         |       | $                                                                             |       |
| Interest income                                                            |       | 305,713                                     |       | 541,278                                     |       | 1,322,154                                 |       | 541,278                                   |       | 4,310,211                                                                     |       |
| Formation and operating  costs                                             |       | (203,829                                    | )          | (457,818                                    | )          | (391,018                                  | )          | (462,264                                  | )          | (1,277,569                                                                    | )          |
| Income before  provision for income taxes                                  |       | 101,884                                     |       | 83,460                                      |       | 931,136                                   |       | 79,014                                    |       | 3,032,642                                                                     |       |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |
| Provision for  income taxes                                                |       | (29,269                                     | )          | (36,000                                     | )          | (441,528                                  | )          | (36,000                                   | )          | (1,392,839                                                                    | )          |
| Net income  applicable to common stockholders                              |       | $                                           | 72,615     |                                        | $          | 47,460                                    |       | $                                         | 489,608    |                                                                          | $          | 43,014 |   | $ | 1,639,803 |   |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |
| Number of shares  subject to possible redemption, basic & diluted |       | 9,199,999                                   |       | 9,199,999                                   |       | 9,199,999                                 |       | 9,199,999                                 |       | 3,955,742                                                                     |       |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |   |   |   |   |   |
| Income per share  subject to possible redemption, basic & diluted |       | $                                           | 0.008      |                                        | $          | 0.005                                     |       | $                                         | 0.053      |                                                                          | $          | 0.005 |   | $ | 0.400 |   |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |
| Weighted average  number of common shares outstanding, basic               |       | 19,550,001                                  |       | 13,351,648                                  |       | 19,550,001                                |       | 9,198,895                                 |       | 12,572,858                                                                    |       |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |
|  Net income per common share, basic                                   |       | $                                           | 0.004      |                                        | $          | 0.0036                                    |       | $                                         | 0.025      |                                                                          | $          | 0.0047 |   | $ | 0.1304 |   |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |
| Weighted average  number of common shares outstanding, diluted             |       | 23,596,464                                  |       | 18,732,494                                  |       | 23,385,967                                |       | 14,579,741                                |       | 16,291,384                                                                    |       |
|                                                                       |       |                                        |       |                                        |       |                                      |       |                                      |       |                                                                          |       |
| Net income per common  share, diluted                                      |       | $                                           | 0.003      |                                        | $          | 0.0025                                    |       | $                                         | 0.021      |                                                                          | $          | 0.0030 |   | $ | 0.101 |   |

 

The accompanyingnotes are an integral part of these condensed financial statements.

 

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Table of Contents

 

**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**CONDENSEDSTATEMENTS OF STOCKHOLDERS’ EQUITY**

**For theperiod from April 18, 2006 (date of inception) to June 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                                 | )          |
| Balance 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 stockholder                                                                                       |       |                |       |       |       |                                |       | 1,166,226                                                                         |       | 1,166,226                               |       |
| Balance 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 (unaudited)                       |       |                |       |       |       |                                |       | 126,276                                                                           |       | 126,276                                 |       |
| Net income  applicable to common stockholder (unaudited)                                                                           |       |                |       |       |       |                                |       | 489,608                                                                           |       | 489,608                                 |       |
| Balance at  June 30, 2008 (unaudited)                                                                                         |       | 28,750,000          |       | $          | 2,875      |                                | $          | 78,941,231                                                                        |       | $                                       | 1,413,094  |   | $ | 80,357,200 |   |

 

The accompanyingnotes are an integral part of these condensed financial statements.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**CONDENSED STATEMENTS OF CASHFLOWS**

**(UNAUDITED)**

 
| ** **                                                                     | ** ** | **Six  Months Ended  June 30, 2008** | ** ** | **Six  Months Ended  June 30, 2007** | ** ** | **April 18, 2006  (date of inception) through  June 30, 2008** | ** ** |
|--------------------------------------------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------|------------|--------------------------------------------------------------------------|------------|
| **Cash  flows from operating activities**                                      | ** ** | ** **                                | ** ** | ** **                                | ** ** | ** **                                                               | ** ** |
| Net income                                                                     |       | $                                         | 489,608    |                                      | $          | 43,014                                                                   |       | $ | 1,639,803 |   |
| Deferred tax  benefit                                                          |       | (183,333                                  | )          | (191,000                                  | )          | (584,453                                                                 | )          |
| Adjustments to  reconcile net income to net cash used in operating activities: |       |                                      |       |                                      |       |                                                                     |       |
| Changes in  operating assets and liabilities:                                  |       |                                      |       |                                      |       |                                                                     |       |
| Prepaid expenses                                                               |       | (87,730                                   | )          | (68,536                                   | )          | (118,016                                                                 | )          |
| Accounts payable  and accrued expenses                                         |       | (39,538                                   | )          | (37,430                                   | )          | 47,279                                                                   |       |
| Income tax  payable                                                            |       | (945,000                                  | )          | 227,000                                   |       | —                                                                   |       |
| **Cash  provided by (used in) operating activities**                           |       | (765,993                                  | )          | (26,952                                   | )          | 984,613                                                                  |       |
|                                                                           |       |                                      |       |                                      |       |                                                                     |       |
| **Cash  provided by (used in) investing activities**                           | ** ** | ** **                                | ** ** | ** **                                | ** ** | ** **                                                               | ** ** |
| Cash held in  Trust Account                                                    |       | 617,951                                   |       | (137,151,278                              | )          | (137,971,806                                                             | )          |
|                                                                           |       |                                      |       |                                      |       |                                                                     |       |
| **Cash  flows from financing activities:**                                     | ** ** | ** **                                | ** ** | ** **                                | ** ** | ** **                                                               | ** ** |
| Proceeds from  note payable, stockholder                                       |       | —                                    |       | —                                    |       | 150,000                                                                  |       |
| Payments for  note payable, stockholder                                        |       | —                                    |       | —                                    |       | (150,000                                                                 | )          |
| Payments of  offering costs                                                    |       | —                                    |       | (4,226,116                                | )          | (4,675,000                                                               | )          |
| Proceeds from  sale of stock options from the offering                         |       | —                                    |       | 100                                       |       | 100                                                                      |       |
| Proceeds from  issuance of warrants                                            |       | —                                    |       | 3,650,000                                 |       | 141,675,000                                                              |       |
| Proceeds from  issuance of common stock                                        |       |  —                              |       |  138,000,000                         |       |  —                                                             |       |
| **Net  cash provided by financing activities**                                 |       | —                                    |       | 137,423,984                               |       | 137,000,100                                                              |       |
|                                                                           |       |                                      |       |                                      |       |                                                                     |       |
| **Net  increase (decrease) in cash**                                           |       | (148,042                                  | )          | 245,754                                   |       | 12,907                                                                   |       |
|                                                                           |       |                                      |       |                                      |       |                                                                     |       |
| **Cash,**beginning of the period                                               |       | 160,949                                   |       | 21,354                                    |       | —                                                                   |       |
|                                                                           |       |                                      |       |                                      |       |                                                                     |       |
| **Cash,**end of the period                                                     |       | $                                         | 12,907     |                                      | $          | 267,108                                                                  |       | $ | 12,907 |   |
|                                                                           |       |                                      |       |                                      |       |                                                                     |       |
| **Supplemental  schedule of non-cash financing activities:**                   |       |                                      |       |                                      |       |                                                                     |       |
| Deferred  underwriters’ fees                                              |       | $                                         | —     |                                      | $          | 3,312,000                                                                |       | $ | 3,312,000 |   |

 

The accompanyingnotes are an integral part of these condensed financial statements.

 

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** **

**SHERMENWSC ACQUISITION CORP.**

**(acorporation in the development stage)**

 

**NOTES TOCONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE A—DESCRIPTION OFORGANIZATION 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. The Company has neither engaged in any operations norgenerated significant revenue to date, with the exception of interest incomeearned on cash held in the trust account as described below. The Company isconsidered to be in the development stage as defined in Statement of FinancialAccounting Standards (“SFAS”) No. 7, “Accounting and Reporting ByDevelopment Stage Enterprises,” and is subject to the risks associated withactivities of development stage companies. The Company has selected December 31stas its fiscal year end.

 

The Company’s managementhas broad discretion with respect to the specific application of the netproceeds of the Offering (as defined in Note D below) of Units (as defined inNote D below), although substantially all of the net proceeds of the Offeringare intended to be generally applied toward consummating a business combinationwith (or acquisition of) an operating business in the agriculture industry (“BusinessCombination”). Furthermore, there is no assurance that the Company will be ableto successfully effect a Business Combination. Since the closing of theOffering, at least 99.5% of the gross proceeds, after the payment of certainamounts to the underwriters for the Offering, are held in a trust account (“TrustAccount”) and invested in U.S. “government debt securities,” defined as anyTreasury Bill issued by the United States government having a maturity of onehundred and eighty  (180) days or less orany open ended investment company registered under the Investment Company Actof 1940 that holds itself out as a money market fund and bears the highestcredit rating issued by a United States nationally recognized rating agency,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 forthe acquisition of a target business, will submit such transaction forstockholder approval. In the event that 40% or more of the outstanding commonstock of the Company (excluding, for this purpose, those shares of common stockof the Company issued prior to the Offering) vote against the BusinessCombination and exercise their conversion rights described below, the BusinessCombination will not be consummated. The stockholders who purchased Units inthe Offering (the “Public Stockholders”) and vote against a BusinessCombination will be entitled to convert their common stock into a pro ratashare of the Trust Account (including the additional 4% fee of the grossproceeds of the Offering payable to the underwriters for the Offering upon theCompany’s consummation of a Business Combination), including any interestearned (net of taxes payable and the amount distributed to the Company to fundits working capital requirements) on their pro rata share, if the BusinessCombination is approved and consummated. However, voting against the BusinessCombination alone will not result in an election to exercise a PublicStockholder’s conversion rights. A Public Stockholder must also affirmativelyexercise such conversion rights at or prior to the time the BusinessCombination is voted upon by the stockholders.  If holders of no more than approximately 39.99% of the shares sold inthe Offering vote against a Business Combination and seek to exercise theirconversion rights and such Business Combination is consummated, thestockholders who held shares of common stock of the Company (the “FoundingStockholders”) have agreed to forfeit and return to the Company forcancellation a number of shares so that they will collectively own no more than23.0% of the Company’s outstanding common stock upon consummation of suchBusiness Combination (without giving effect to any shares that may be issued insuch Business Combination).  If theCompany is unable to effect a Business Combination and liquidates, none of theFounding Stockholders will receive any portion of the proceeds of the Offeringheld in the Trust Account to be distributed to the Company’s stockholders withrespect to common stock owned by them immediately before the Offering.  As of June 30, 2008, after giving effectto a 1.15 for 1 stock split which was effected immediately prior to theOffering, all of the Founding Stockholders, including all of the directors andofficers of the Company, have agreed to vote all of the shares of common stockof the Company held by them in accordance with the vote of the majority ininterest of all other stockholders of the Company.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

** **

**NOTE A—DESCRIPTION OFORGANIZATION AND BUSINESS OPERATIONS (continued)**

** **

In theevent that the Company does not consummate a Business Combination within 18months from the date of the consummation of the Offering, or 24 months from theconsummation of the Offering if certain extension criteria have been satisfied,the proceeds held in the Trust Account will be distributed to the PublicStockholders, excluding the Founding Stockholders to the extent of theirinitial stock holdings. In the event of such distribution, it is likely thatthe per share value of the residual assets remaining available for distribution(including Trust Account assets) will be less than the initial public offeringprice per Unit in the Offering (assuming no value is attributed to the Warrantscontained in the Units offered in the Offering discussed in Note C).

 

**NOTE B — BASIS OFPRESENTATION**

** **

The accompanyingcondensed interim financial statements have been prepared by the Company andreflect all adjustments, consisting only of normal recurring adjustments, whichare, in the opinion of management, necessary for a fair presentation of thefinancial position as of June 30, 2008 and the financial results for thethree and six months ended June 30, 2008 and June 30, 2007 and from April 18,2006 (date of inception) to June 30, 2008, in accordance with accountingprinciples generally accepted in the United States of America for interimfinancial statements and pursuant to the instructions to the Quarterly Reporton Form 10-Q and Article 8 of Regulation S-X of the U.S. Securitiesand Exchange Commission (“SEC”).  Certaininformation and footnote disclosures normally included in the Company’s annualaudited financial statements have been condensed or omitted pursuant to such rules andregulations.

 

Theresults of operations for the three months ended June 30, 2008 are notnecessarily indicative of the results of operations to be expected for a fullfiscal year.  Theseunaudited condensed interim financial statements should be read in conjunctionwith the audited financial statements for the fiscal year ended December 31,2007, which are included in the Company’s Annual Report on Form 10-K forthe year ended December 31, 2007 filed with the SEC.

 

**NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

** **

**Developmentstage company:**

 

The Companycomplies with the reporting requirements of SFAS No. 7, “Accounting andReporting by Development Stage Enterprises.”

 

**Earnings percommon share:**

** **

The Company complies with the accounting and disclosure provision ofSFAS No. 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 shares used to compute basic income per common share and dilutedincome per common share relates to additional shares to be issued upon theassumed exercise of stock options and warrants, net of shares hypotheticallyrepurchased at the average market price with the proceeds of exercise.

 

The Company’s statementof operations includes a presentation of earnings per share for common stocksubject to possible redemption in a manner similar to the two-class method ofearnings per share. Basic and diluted net income per share amount for themaximum number of shares subject to possible redemption is calculated bydividing the net interest attributable to common shares subject to possibleredemption by the weighted average number of shares subject to possibleredemption.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the 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$100,000.  The Company has notexperienced losses on these accounts and management believes the Company is notexposed to significant risks on such accounts.

 

**Income taxes:**

** **

The Company complies withSFAS 109, “Accounting for Income Taxes,” which requires an asset and liabilityapproach to financial accounting and reporting for income taxes. Deferredincome tax assets and liabilities are computed for differences between thefinancial statement and tax bases of assets and liabilities that will result infuture taxable or deductible amounts, based on enacted tax laws and ratesapplicable to the periods in which the differences are expected to affecttaxable income. Valuation allowances are established, when necessary, to reducedeferred tax assets to the amount expected to be realized.

 

Effective January 1,2007, the Company adopted the provisions of the Financial Accounting StandardsBoard (“FASB”) Interpretation No. 48, “Accounting for Uncertainty inIncome Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”).  There were no unrecognized tax benefits as ofJune 30, 2008.  FIN 48 prescribes arecognition threshold and a measurement attribute for the financial statementrecognition and measurement of tax positions taken or expected to be taken in atax return.  For those benefits to berecognized, a tax position must be more-likely-than-not to be sustained uponexamination by taxing authorities.  TheCompany recognizes accrued interest and penalties related to unrecognized taxbenefits as income tax expense.  Noamounts were accrued for the payment of interest and penalties at June 30,2008.  Management is currently unaware ofany issues under review that could result in significant payments, accruals ormaterial deviation from its position. The adoption of the provisions of FIN 48 did not have a material impacton the Company’s financial position and results of operation and cash flow.

 

Income tax expense forthe three and six months ended June 30, 2008 was approximately $29,000 and$442,000, respectively.  The expense iscomprised of current federal, state and city income taxes of $625,000 anddeferred federal, state and city income taxes benefit of $183,000.  The effective tax rate of 49% for the threemonths ended June 30, 2008, differs from the federal statutory rate ofapproximately 35% as a result of state and city income taxes.

 

Deferred income taxes areprovided for the differences between the bases of assets and liabilities forfinancial reporting and income tax purposes. As of June 30, 2008, the Company has a deferred tax asset ofapproximately $584,000 primarily attributable to deferred Offering costs.

 

**Recently issuedaccounting pronouncements:**

** **

In December 2007,the FASB issued SFAS 141(R), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) providescompanies with principles and requirements on how an acquirer recognizes andmeasures in its financial statements the identifiable assets acquired,liabilities assumed, and any non-controlling interest in the acquiree as wellas the recognition and measurement of goodwill acquired in a businesscombination. SFAS 141(R) also requires certain disclosures to enable usersof the financial statements to evaluate the nature and financial effects of thebusiness combination. Acquisition costs associated with the businesscombination will generally be expensed as incurred. SFAS 141(R) iseffective for business combinations occurring in fiscal years beginning after December 15,2008, which will require the Company to adopt these provisions for businesscombinations occurring in fiscal 2009 and thereafter. Early adoption of SFAS141(R) is not permitted.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

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

** **

In December 2007, the FASB issued SFAS No. 160,“*Noncontrolling Interests in ConsolidatedFinancial statements – An Amendment of ARB No. 51*” (“SFAS 160”).SFAS 160 requires reporting entities to present noncontrolling (minority)interests as equity as opposed to as a liability or mezzanine equity andprovides guidance on the accounting for transactions between an entity andnoncontrolling interests. SFAS 160 is effective the first fiscal year beginningafter December 15, 2008, and interim periods within that fiscal year. SFAS160 applies prospectively as of the beginning of the fiscal year SFAS 160 isinitially applied, except for the presentation and disclosure requirementswhich are applied retrospectively for all periods presented subsequent toadoption. The adoption of SFAS 160 will not have a material impact on theCompany’s results of operations or financial position; however, it could impactfuture transactions entered into by the Company.

 

In March 2008, the Financial Accounting StandardsBoard (“FASB”) issued SFAS No. 161, “Disclosures about DerivativeInstruments and Hedging Activities – an amendment to FASB Statement No. 133”.SFAS No. 161 is intended to improve financial standards for derivativeinstruments and hedging activities by requiring enhanced disclosures to enableinvestors to better understand their effects on an entity’s financial position,financial performance, and cash flows. Entities are required to provideenhanced disclosures about: (a) how and why an entity uses derivativeinstruments; (b) how derivative instruments and related hedged items areaccounted for under Statement 133 and its related interpretations; and (c) howderivative instruments and related hedged items affect an entity’s financialposition, financial performance, and cashflows. It is effective for financialstatements issued for fiscal years beginning after November 15, 2008, withearly adoption encouraged. The adoption of this statement is not expected tohave a material effect on the Company’s financial statements.

 

In May 2008,the FASB issued SFAS No. 162, “The Hierarchy of Generally AcceptedAccounting 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, “TheMeaning 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 recently issued, but not yeteffective, accounting pronouncements, if currently adopted, would have amaterial effect on the Company’s financial statements.

 

**Recently adopted accounting standards:**

 

In September 2006,the Financial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standards No. 157, “*Fair Value Measurements*”(“SFAS 157”). SFAS 157 defines fair value, establishes a framework formeasuring fair value and expands disclosures about fair valuemeasurements.  SFAS 157 applies to otheraccounting pronouncements where the FASB requires or permits fair value measurementsbut 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 theeffective date of SFAS 157 for certain non-financial assets and non-financialliabilities to fiscal years beginning after November 15, 2008, and interimperiods within those fiscal years. The Company adopted SFAS 157 for financialassets and liabilities on January 1, 2008.

 

In February 2007,the FASB issued SFAS No. 159, “*The Fair Value Option forFinancial Assets and Financial Liabilities- Including an amendment of FASBStatement No. 155*” (“SFAS 159”). This statement permitsentities to choose to measure selected assets and liabilities at fair value.The Company adopted SFAS 159 on January 1, 2008 resulting in no impact tothe Company’s financial condition, results of operations or cash flows.

 

In December 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 published tohelp companies that may not have adequate exercise history to estimate expectedterms for future grants. The Company does not expect the adoption of SAB 110 tohave a material effect on its financial statements.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

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

** **

In May 2008, the Financial Accounting StandardsBoard (“FASB”) issued SFAS No. 163, “Accounting for Financial GuaranteeInsurance Contracts – An interpretation of FASB Statement No. 60”. SFAS163 requires that an insurance enterprise recognize a claim liability prior toan event of default when there is evidence that credit deterioration hasoccurred in an insured financial obligation. It also clarifies how Statement 60applies to financial guarantee insurance contracts, including the recognitionand measurement to be used to account for premium revenue and claimliabilities, and requires expanded disclosures about financial guaranteeinsurance contracts. It is effective for financial statements issued for fiscalyears beginning after December 15, 2008, except for some disclosures aboutthe insurance enterprise’s risk-management activities. SFAS 163 requires thatdisclosures about the risk-management activities of the insurance enterprise beeffective for the first period beginning after issuance. Except for thosedisclosures, earlier application is not permitted. The adoption of thisstatement is not expected to have a material effect on the Company’s financialstatements.

 

**NOTE D—OFFERING ANDOVER-ALLOTMENT**

** **

The Company offered20,000,000 units (“Units”) for public sale (the “Offering”) in May 2007.Each Unit consists of one share of the Company’s common stock, $0.0001 parvalue (“Common Stock”), and two redeemable common stock purchase warrants (“Warrants”).Each Warrant entitles the holder to purchase from the Company one share ofCommon Stock at an exercise price of $5.00 commencing on the later of (a) oneyear from the date of the final prospectus for the Offering or (b) thecompletion of a Business Combination with a target business or the distributionof the Trust Account, and will expire four years from the date of such finalprospectus. The Warrants will be redeemable at a price of $0.01 per Warrantupon 30 days prior notice after the Warrants become exercisable, only in theevent that the last sale price of Common Stock is at least $8.50 per share forany 20 trading days within a 30 trading day period ending on the third businessday prior to the date on which notice of redemption is given.

 

No Warrants will beexercisable and the Company will not be obligated to issue shares of CommonStock unless at the time a holder seeks to exercise such Warrant, a prospectusrelating to Common Stock issuable upon exercise of the Warrants is current andCommon Stock has been registered or qualified or deemed to be exempt under thesecurities laws of the state of residence of the holder of the Warrants.  Under the terms of the warrant agreement, theCompany has agreed to use its best efforts to meet these conditions and tomaintain a current prospectus relating to Common Stock issuable upon exerciseof the Warrants until the expiration of the Warrants.  However, if the Company does not maintain acurrent prospectus relating to Common Stock issuable upon exercise of theWarrants, holders will be unable to exercise their Warrants.  In no circumstance will the Company berequired to settle any such Warrant exercise for cash.  If the prospectus relating to Common Stockissuable upon the exercise of the Warrants is not current or if Common Stock isnot qualified or exempt from qualification in the jurisdiction in which theholders of the Warrants reside, the Warrants may have no value, the market forthe Warrants may be limited and the Warrants may expire worthless.

 

Shermen WSC Holding (“ShermenWSC Holding”) has purchased 5,214,286 Warrants (“Founder Warrants”) at $0.70per Founder Warrant (for an aggregate purchase price of approximately$3,650,000) from the Company in a private placement exempt from registrationunder Securities Act of 1933, as amended. These purchases took placesimultaneously with the consummation of the Offering. All of the proceedsreceived from these purchases were placed in the Trust Account. The FounderWarrants purchased by Shermen WSC Holding are identical to the Warrantsunderlying the Units sold in the Offering except that (i) the Company hasno obligation to register the sale of the Warrants and the underlying shares ofCommon Stock and their exercise is not limited by the absence of an effectiveregistration statement and current prospectus relating to the resale of theunderlying shares of Common Stock and (ii) the Founder Warrants may beexercisable on a “cashless basis” if the Company calls the Warrants

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE D—OFFERING ANDOVER-ALLOTMENT (continued)**

** **

for redemption. Shermen WSCHolding agreed that the Founder Warrants would not be transferable or salableby it or such directors or officers or their respective affiliates until afterthe Company completed a Business Combination, except it may distribute them toits members.  Immediately after thepurchase of the Founder Warrants, Shermen WSC Holding distributed them to itsmembers.

 

All shares of Common Stock owned by the FoundingStockholders prior to the closing of the Offering (the “Initial Shares”) wereplaced into an escrow account maintained by Continental Stock Transfer &Trust Company, acting as escrow agent. The Initial Shares will not be released from escrow until six monthsfollowing the completion of a Business Combination.

 

The foregoing restriction is subject to certainlimited exceptions such as transfers to family members and trusts for estateplanning purposes, upon death of an escrow depositor, transfers to an estate orbeneficiaries, or other specified transfers. Even if transferred under these circumstances, the Initial Shares willremain in the escrow account.

 

On May 30, 2007, the underwriters’ for theOffering exercised the full over-allotment of 3,000,000 units.  As a result, the deferred underwriters’ feewas increased approximately $432,000.

 

**NOTE E**—**COMMON STOCK**

 

On May 23, 2007, the Company effected a 1.15 for1 forward stock split of the Initial Shares and issued 750,000 shares of CommonStock to the Founding Stockholders prior to the closing of both the Offeringand the over-allotment. All transaction and disclosures in the financialstatements relating to Common Stock, have been adjusted to reflect the effectsof 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.

 

Certain of the directors and officers of the Companyhave purchased through Shermen WSC Holding, in a private placement, 5,214,286Founder Warrants immediately prior to the Offering at a price of $0.70 perFounder Warrant (an aggregate purchase price of approximately $3,650,000) fromthe Company and not as part of the Offering. They have also agreed that theseFounder Warrants purchased by them will not be sold or transferred until thecompletion of a Business Combination.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**NOTES TO CONDENSED INTERIN 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 itsnon-financial assets and non-financial liabilities that are recognized anddisclosed at fair value in the financial statements on a nonrecurring basisuntil January 1, 2009. The Company is evaluating the impact, if any, thisstandard will have on its non-financial assets and liabilities. The adoption ofSFAS 157 to the Company’s financial assets and liabilities and non-financialassets and liabilities that are re-measured and reported at fair value at leastannually did 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 June 30, 2008,and indicates the fair value hierarchy of the valuation techniques the Companyutilized to determine such fair value. In general, fair values determined byLevel 1 inputs utilize quoted prices (unadjusted) in active markets foridentical assets or liabilities. Fair values determined by Level 2 inputs utilizedata points that are observable such as quoted prices, interest rates and yieldcurves. Fair values determined by Level 3 inputs utilize unobservable datapoints for the asset or liability, and includes situations where there islittle, if any, market activity for the asset or liability (in millions):

 
| **Description**             | ** ** | **June 30, 2008** | ** ** | **Quoted Prices   in  Active Markets  (Level 1)** | ** ** | **Significant   Other  Observable   Inputs  (Level 2)** | ** ** | **Significant  Unobservable  Inputs  (Level 3)** | ** ** |
|-----------------------------|------------|------------------------|------------|---------------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------------------------------|------------|
| Assets:                     |       |                   |       |                                              |       |                                                    |       |                                             |       |
| Cash held in  Trust Account |       | $                      | 137.97     |                                              | $          | 137.97                                                  |       | $                                                | —     |   | $ | — |   |
|                        |       |                   |       |                                              |       |                                                    |       |                                             |       |
| Total                       |       | $                      | 137.97     |                                              | $          | 137.97                                                  |       | $                                                | —     |   | $ | — |   |

 

Thefair values of the Company’s cash held in the Trust Account is determinedthrough market, observable and corroborated sources. The carrying amountsreflected in the condensed balance sheets for other current assets and accruedexpenses approximate fair value due to their short-term maturities.

 

**NOTE H—COMMITMENTS**

** **

The Company is committedto paying an underwriting discount of 4% of the Unit Offering price to theunderwriters for the Offering (less $0.21 for each share of common stockconverted to cash in connection with a Business Combination) payable upon theCompany’s consummation of a Business Combination.

 

The Company has sold tothe underwriters, for $100, as additional compensation, an option to purchase upto a total of 700,000 Units in the aggregate (350,000 Units to eachunderwriter) at a per-unit price of $7.50. The Units issuable upon exercise of this option are also identical tothose offered in the Offering, except that each Warrant underlying such Unitsentitles the holder to purchase one share of Common Stock at a price of$6.25.  In no circumstance will theCompany be required to settle any such option exercise for cash.

 

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**SHERMENWSC ACQUISITION CORP**

**(acorporation in the development stage)**

 

**NOTES TO CONDENSED INTERIM  FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

**NOTE H—COMMITMENTS (continued)**

 

The sale of this optionwas accounted for as an equity transaction. Accordingly, there will be no net impact on the Company’s financialposition or results of operations, except for the recording of the $100proceeds from the sale of such option.

 

The Company hasdetermined, based upon a Black-Scholes model, that the fair value of thisoption on the date of sale would be approximately $0.60 per unit, or $420,000in total, using an expected life of four years, volatility of 52.13% and arisk-free interest rate of 4.92%.

 

The volatilitycalculation of 52.13% is based on the average 90-day Bloomberg volatility of aportfolio of nine publicly traded U.S. agricultural companies with marketcapitalizations between $50,000,000 and $500,000,000. Because the Company doesnot have a trading history, the Company needed to estimate the potentialvolatility of Common Stock price, which will depend on a number of factorswhich cannot be ascertained at this time. The Company referred to the Index because management believes that theaverage volatility is a reasonable benchmark to use in estimating the expectedvolatility of Common Stock post-business combination.  Although an expected life of four years was takeninto account for purposes of assigning a fair value to the option, if theCompany does not consummate a Business Combination within the prescribed timeperiod and liquidates, this option would become worthless.  Although this option and its underlyingsecurities have been registered under the registration statement of which theprospectus forms a part of, this option will provide for registration rightsthat 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 authorizedto issue 1,000,000 shares of preferred stock with such designations, voting andother rights and preferences as may be determined from time to time by theBoard of Directors of the Company.  As ofJune 30, 2008, the Company has not issued any shares of its preferredstock.

 

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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 Quarterly Reporton Form 10-Q.

 

**Forward LookingStatements**

** **

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 aninvestment banking firm or fairness or valuation advisor to conduct a formalsearch for a business combination. Criteria for suitability included our management’sassessment of the competitive strengths and weaknesses of the potentialbusiness targets, the strength of the management team, and the quality of theassets to be acquired.  Certain targets were considered by management tohave 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:

 

·                                          maysignificantly reduce the equity interest of our stockholders;

 

·                                          maysubordinate the rights of holders of Common Stock if we issue preferred stockwith rights senior to those afforded to Common Stock;

 

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·                                          willlikely cause a change in control if a substantial number of shares of CommonStock are issued, which may affect, among other things, our ability to use ournet operating loss carry forwards, if any, and most likely will also result inthe resignation or removal of our present officers and directors; and

 

·                                          mayadversely affect prevailing market prices for Common Stock.

 

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

 

·                                          defaultand foreclosure on our assets if our operating revenues after a businesscombination are insufficient to pay our debt obligations;

 

·                                          accelerationof our obligations to repay the indebtedness even if we have made all principaland interest payments when due if the debt security contains covenants thatrequired the maintenance of certain financial ratios or reserves and we breachany such covenant without a waiver or renegotiation of that covenant;

 

·                                          ourimmediate payment of all principal and accrued interest, if any, if the debtsecurity is payable on demand; and

 

·                                          ourinability to obtain additional financing, if necessary, if the debt securitycontains covenants restricting our ability to obtain additional financing whilesuch 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 fund were insufficient to cover such expenses.

 

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

** **

ThroughJune 30, 2008, our efforts have been limited to organizational activities,activities relating to the IPO, activities relating to identifying and evaluatingprospective acquisition candidates, and activities relating to generalcorporate matters; we have neither engaged in any operations nor generated anyrevenues, other than interest income earned on the proceeds of the IPO and ourprivate placement of the Founder Warrants.

 

Netincome totaled $72,615, which consisted of $305,713 of interest income from theTrust Account offset by $203,829 of formation and operating expenses and$29,269 of provision for income taxes, and $47,460, which consisted of $541,278of interest income from the Trust Account offset by $457,818 of formation andoperating expenses and $36,000 of provision for income taxes, for the threemonths ended June 30, 2008 and June 30, 2007, respectively.  Net income totaled $489,608, which consistedof $1,322,154 of interest income from the Trust Account offset by $391,018 offormation and operating expenses and $441,528 of provision for income taxes,and $43,014, which consisted of $541,278 of interest income from the TrustAccount offset by $462,264 of formation and operating expenses and $36,000 ofprovision for income taxes, for the six months ended June 30, 2008 and June 30,2007, respectively.  Net income for theperiod from inception (April 18, 2006) to June 30, 2008, totaled $1,639,803,which consisted of $4,310,211 of interest income from the Trust Account offsetby $1,277,569 of formation and operating expenses and $1,392,839 of provisionfor 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 on a monthly basis to cover our operating expenses,will not be released to us from the Trust Account until the earlier of thecompletion of a business combination or the expiration of the time periodduring which we may complete a business combination.

 

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Wehave provided for only an effective tax rate of slightly over 49% on a year andinception-to-date basis primarily because substantially all of the fundsdeposited in the Trust Account are exempt from federal, state and localtaxes.  For the six months ended June 30,2008 and for the period from inception to June 30, 2008, our income tax liabilitieswere approximately $441,528 and $1,392,839, respectively.

 

As of June 30,2008, we had approximately $12,907 of 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 June 30, 2008:

 
| Net proceeds  from our initial public offering and private placement of the Founder  Warrants placed in trust |       | $               | 136,860,000 |   |
|---------------------------------------------------------------------------------------------------------------|------------|-----------------|-------------|--------|
| Total interest  received to date                                                                              |       | 4,310,211       |        |
| Less: total  interest disbursed to us for working capital through June 30, 2008                          |       | 1,805,566       |        |
| Less: total  taxes paid through June 30, 2008                                                            |       | 1,392,839       |        |
| Total funds held  in trust through June 30, 2008                                                         | ** ** | **137,971,806** |        |

 

We believethat 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:

 

·                                          paymentof premiums associated with our director’s and officer’s insurance;

 

·                                          paymentof estimated taxes incurred as a result of interest income earned on fundscurrently held in the Trust Account;

 

·                                          duediligence and investigation of prospective target businesses;

 

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

 

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

 

·                                          othermiscellaneous expenses including the $9,950 per month to Shermen CapitalPartners, LLC.

 

**ITEM 3.****                ****QUANTITATIVEAND 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, we may not engage in, anysubstantive commercial business. Accordingly, we are not and, until such timeas 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 and eightydays 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.****                ****CONTROLSAND 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, 

 

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summarized, and reported within the time periodsspecified in the SEC’s rules and forms, and that such information isaccumulated and communicated to our management, including our chief executiveofficer and chief financial officer, as appropriate, to allow timely decisionsregarding required disclosure.  Indesigning and evaluating the disclosure controls and procedures, managementrecognized that any controls and procedures, no matter how well designed and operated,can provide only reasonable assurance of achieving the desired controlobjectives, and management necessarily was required to apply its judgment inevaluating the cost-benefit relationship 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) were effective as of the endof the fiscal quarter ended June 30, 2008.

 

Therehave been no changes in our internal control over financial reporting duringthe fiscal quarter ended June 30, 2008 that have materially affected, orare reasonably likely to materially affect our internal control over financialreporting.

 

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** **

**PART II:OTHER INFORMATION**

 

**ITEM 1.  LEGAL PROCEEDINGS**

** **

None.

 

**ITEM 1A.  RISK FACTORS**

** **

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 ANDUSE 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 SECURITYHOLDERS**

** **

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: August 13,  2008 |                               |

 

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