UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

R	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2012
	For the quarterly period ended June 30, 2012
	or
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-54202

JWC ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

Delaware	27-3092187
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

~~111~~Bay ~~Huntington~~Colony ~~Avenue,~~Corporate ~~Suite~~Center ~~2900,~~– ~~Boston, Massachusetts 02199~~North Entrance

1000 Winter Street – Suite 4300

Waltham, Massachusetts 02451

(617) 753-1100

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes R No £¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes R No £¨

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

Large accelerated filer £¨ Accelerated filer R Non-accelerated filer £¨ Smaller reporting company £¨ (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes R No £¨

As of ~~May~~July 923, 2012, the registrant ~~had~~ had 14,534,884 shares of its common stock, par value $0.0001 per share, outstanding.

JWC ACQUISITION CORP.

TABLE OF CONTENT

PART I. FINANCIAL INFORMATION 1 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statement of Operations 2 Condensed Consolidated Statement of Stockholders’ Equity 3 Condensed Consolidated Statement of Cash Flows 4 Notes to Condensed Consolidated Interim Financial Statements 5 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1314 Special Note Regarding Forward-Looking Statements 1314 Overview 1314 Results of Operations 1316 Liquidity and Capital Resources 1416 Critical Accounting Policies and Estimates 1417 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 1517 ITEM 4. CONTROLS AND PROCEDURES 1518 PART II. OTHER INFORMATION 18 ITEM 1. LEGAL PROCEEDINGS 1618 ITEM 1A. RISK FACTORS 1618 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 1624 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 1724 ITEM 4. MINE SAFETY DISCLOSURES 1724 ITEM 5. OTHER INFORMATION 1724 ITEM 6. EXHIBITS 1724

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JWC ACQUISITION CORP. AND SUBSIDIARY

(A Corporation in the Development Stage)

Condensed Consolidated Balance Sheets

	March 31, 2012 (Unaudited)			December 31, 2011 (Audited)
	June 30, 2012 (Unaudited)			December 31, 2011 (Audited)
Assets:
Current assets:
Cash	$	~~359~~90,~~686~~466		$	416,255
Cash equivalents held in trust		125,021,283			125,123,670
Prepaid insurance		20,453			81,817
Prepaid insurance		51,135			81,817
Other current assets		2,591			340
Other current assets		340			340
Total current assets		113,510			498,412
Total assets	$	125,432,444		$	125,622,082
Restricted cash equivalents held in trust		124,950,000			125,123,670
Total assets	$	125,063,510		$	125,622,082
Liabilities and Stockholders' Equity:
Current liabilities:
Loan payable to related party	$	30,049		$	30,049
Franchise tax payable		4518,000			161,902
Accounts payable and other liabilities		~~228~~536,~~635~~201			129,351
Total current liabilities		~~303~~584,~~684~~250			321,302
Deferred offering costs		4,375,000			4,375,000
Total liabilities		4,~~678~~959,~~684~~250			4,696,302
Commitment and contingencies
Common stock subject to possible redemption: 11,575,375 shares (at redemption value) at March 31, 2012 and 11,592,577 shares (at redemption value) at December 31, 2011		115,753,750			115,925,770
Common stock subject to possible redemption: 11,510,425 shares (at redemption value) at June 30, 2012 and 11,592,577 shares (at redemption value) at December 31, 2011		115,104,250			115,925,770
Stockholders' equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized;
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		-			-
none issued and outstanding		-			-
Common stock, $0.0001 par value; 400,000,000 shares authorized; 14,534,884 shares issued and outstanding at June 30, 2012 and December 31, 2011 (includes 11,510,425 and 11,592,577 shares subject to possible redemption, respectively)		1,453			1,453
Common stock, $0.0001 par value; 400,000,000 shares authorized; 14,534,884 shares issued and outstanding at March 31, 2012 and December 31, 2011		1,453			1,453
Additional paid-in capital		6,333,474			5,511,954
Additional paid-in capital		5,683,974			5,511,954
Accumulated deficit during the development stage		(1,334,917	)		(513,397	)
Accumulated deficit during the development stage		(685,417	)		(513,397	)
Total stockholders' equity, net		5,000,010			5,000,010
Total liabilities and stockholders' equity	$	125,~~432~~063,~~444~~510		$	125,622,082

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

JWC ACQUISITION CORP. AND SUBSIDIARY

(A Corporation in the Development Stage)

Condensed Consolidated ~~Statement~~Statements of Operations

(Unaudited)

	Three Months Ended March 31, 2012			Three Months Ended March 31, 2011			July 22, 2010 (date of inception) to March 31, 2012
	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011			Six Months Ended June 30, 2012			Six Months Ended June 30, 2011			July 22, 2010 (date of inception) to June 30, 2012
Revenue	$	-		$	-		$	-		$	-		$	-
General and administrative expenses		232,582			196,873			919,649
General, administrative and transaction expenses		708,683			100,682			941,264			297,555			1,628,332
Loss from operations		(~~232~~708,~~582~~683	)		(~~196~~100,~~873~~682	)		(~~919~~941,~~649~~264	)		(297,555	)		(1,628,332	)
Interest income		6059,~~562~~182			4123,~~587~~383			~~234~~119,~~232~~744			64,970			293,415
Loss before provision for income taxes	$	(~~172~~649,~~020~~501	)		(~~155~~77,~~286~~299	)		(~~685~~821,~~417~~520	)		(232,585	)		(1,334,917	)
Provision for income taxes		-			-			-			-			-
Net loss attributable to common shares outstanding	$	(~~172~~649,~~020~~501	)	$	(~~155~~77,~~286~~299	)	$	(~~685~~821,~~417~~520	)	$	(232,585	)	$	(1,334,917	)
Net loss	$	(~~172~~649,~~020~~501	)	$	(~~155~~77,~~286~~299	)	$	(~~685~~821,~~417~~520	)	$	(232,585	)	$	(1,334,917	)
Interest earned in Trust Account, attributable to common stock subject to possible redemption, net of tax		-			-			-			-			-
Net loss applicable to common shareholders	$	(~~172~~649,~~020~~501	)	$	(~~155~~77,~~286~~299	)	$	(~~685~~821,~~417~~520	)	$	(232,585	)	$	(1,334,917	)
Weighted average number of common shares outstanding - basic and diluted		14,534,884			14,558,891			12,377,945
Two Class Method
Net loss per common share outstanding, basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.06	)
Weighted average number of common shares outstanding subject to possible redemption		11,510,425			12,500,000			11,510,425			12,500,000			10,331,453
Two Class Method
Net loss per common share outstanding for shares subject to possible redemption - basic and diluted	$	-		$	-		$	-		$	-		$	-
Weighted average number of common shares outstanding subject to possible redemption		11,575,375			11,622,228			10,244,205
Weighted average number of common shares, excluding shares subject to possible redemption		3,024,459			2,034,884			3,024,459			2,046,689			2,078,919
Net loss per common share for shares subject to possible redemption	$	0.01		$	0.00		$	0.02
Net loss per common share, excluding shares subject to possible redemption - basic and diluted	$	(0.21	)	$	(0.04	)	$	(0.27	)	$	(0.11	)	$	(0.64	)
Weighted average number of common shares, excluding shares subject to possible redemption		2,959,509			2,936,663			2,133,740
Net loss per common share, excluding shares subject to possible redemption - basic and diluted	$	(0.06	)	$	(0.05	)	$	(0.32	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

JWC ACQUISITION CORP. AND SUBSIDIARY

(A Corporation in the Development Stage)

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

	Common Stock						Additional Paid-in			Accumulated Deficit During the Development			Total Stockholders’
	Shares			Amount			Capital			Stage			Equity
Issuance of founder shares to Sponsor at $0.010 per founder share		2,464,286		$	246		$	24,754			-		$	25,000
Return and cancellation on October 25, 2010 of 124,170 of founder shares		(124,170	)		(12	)		12			-			-
Sale on November 23, 2010 of 12,500,000 units, net of offering expenses (including 11,659,490 shares subject to possible redemption		12,500,000			1,250			124,998,750			-			125,000,000
Underwriters' discount and offering expenses		-			-			(7,585,823	)		-			(7,585,823	)
Proceeds from private placement of 5,333,333 warrants		-			-			4,000,000			-			4,000,000
Proceeds subject to possible redemption of 11,659,490 shares at November 23, 2010		-			-			(116,594,900	)		-			(116,594,900	)
Decrease in carrying amount of redeemable shares to 11,640,520 shares subject to possible redemption at December 31, 2010		-			-			189,700			-			189,700
Net loss		-			-			-			(33,968	)		(33,968	)

Balances as of December 31, 2010		14,840,116		$	1,484		$	5,032,493		$	(33,968	)	$	5,000,009

Forfeiture of common stock issued to initial stockholders on January 8, 2011		(305,232	)		(31	)		31			-			-
Decrease in carrying amount of redeemable shares to 11,592,577 shares subject to possible redemption at December 31, 2011		-			-			479,430			-			479,430
Net loss		-			-			-			(479,429	)		(479,429	)

Balances as of December 31, 2011		14,534,884		$	1,453		$	5,511,954		$	(513,397	)	$	5,000,010

Decrease in carrying amount of redeemable shares to 11,510,425 shares subject to possible redemption at June 30, 2012 (Unaudited)		-			-			821,520			-			821,520
Net loss (Unaudited)		-			-			-			(821,520	)		(821,520	)
Balances as of June 30, 2012 (Unaudited)		14,534,884		$	1,453		$	6,333,474		$	(1,334,917	)	$	5,000,010

	Common Stock						Additional Paid-in			Accumulated Deficit During the Development			Total Stockholders’
	Shares			Amount			Capital			Stage			Equity
Issuance of founder shares to Sponsor at $0.010 per founder share		2,464,286		$	246		$	24,754			-		$	25,000
Return and cancellation on October 25, 2010 of 124,170 of founder shares		(124,170	)		(12	)		12			-			-
Sale on November 23, 2010 of 12,500,000 units, net of offering expenses (including 11,659,490 shares subject to possible redemption		12,500,000			1,250			124,998,750			-			125,000,000
Underwriters' discount and offering expenses		-			-			(7,585,823	)		-			(7,585,823	)
Proceeds from private placement of 5,333,333 warrants		-			-			4,000,000			-			4,000,000
Proceeds subject to possible redemption of 11,659,490 shares at November 23, 2010		-			-			(116,594,900	)		-			(116,594,900	)
Decrease in carrying amount of redeemable shares to 11,640,520 shares subject to possible redemption at December 31, 2010		-			-			189,700			-			189,700
Net loss		-			-			-			(33,968	)		(33,968	)
Balances as of December 31, 2010		14,840,116		$	1,484		$	5,032,493		$	(33,968	)	$	5,000,009
Forfeiture of common stock issued to initial stockholders on January 8, 2011		(305,232	)		(31	)		31			-			-
Decrease in carrying amount of redeemable shares to 11,592,577 shares subject to possible redemption at December 31, 2011		-			-			479,430			-			479,430
Net loss		-			-			-			(479,429	)		(479,429	)
Balances as of December 31, 2011		14,534,884		$	1,453		$	5,511,954		$	(513,397	)	$	5,000,010
Decrease in carrying amount of redeemable shares to 11,575,375 shares subject to possible redemption at March 31, 2012		-			-			172,020			-			172,020
Net loss		-			-			-			(172,020	)		(172,020	)
Balances as of March 31, 2012		14,534,884		$	1,453		$	5,683,974		$	(685,417	)	$	5,000,010

At June 30, 2012 (unaudited), December 31, 2011 and December 31, 2010 there are 11,510,425, 11,592,577 and 11,640,520, respectively, of common shares subject to possible redemption that are included in the above presentation of common shares issued and outstanding.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

JWC ACQUISITION CORP. AND SUBSIDIARY

(A Corporation in the Development Stage)

Condensed Consolidated ~~Statement~~Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31, 2012			Three Months Ended March 31, 2011			July 22, 2010 (date of inception) to March 31, 2012
	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011			July 22, 2010 (date of inception) to June 30, 2012
Cash Flows From Operating Activities:
Net loss	$	(~~172~~821,~~020~~520	)	$	(~~155~~232,~~286~~585	)	$	(~~685~~1,~~417~~334,917	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets & liabilities:
Prepaid insurance		3061,~~682~~364			3061,~~682~~364			(5120,~~135~~453	)
Other current assets		-(2,251	)		~~(42~~13	)		(~~340~~2,591	)
Franchise tax payable		(~~116~~143,902	)		2561,~~200~~151			4518,000
Accounts payable and other liabilities		99406,~~284~~850			(~~135~~157,~~213~~627	)		~~228~~536,~~635~~201
Proceeds from loan payable to related party		-			-			30,049
Net cash used in operating activities		(~~158~~499,~~956~~459	)		(~~234~~267,~~659~~684	)		(~~433~~773,~~208~~711	)
Cash Flows from Investing Activities:
Proceeds from sale of cash equivalents held in trust		~~162~~293,~~949~~414			-			~~162~~293,~~949~~414
Cash equivalents held in trust account		-			-			(124,950,000	)
Interest earned on cash equivalents held in trust		(60119,~~562~~744	)		(4164,~~587~~970	)		(~~234~~293,~~232~~414	)
Cash provided by (used in) investing activities		~~102~~173,~~387~~670			(4164,~~587~~970	)		(~~125~~124,~~021~~950,~~283~~000	)
Cash Flows from Financing Activities:
Proceeds from note payable to related party		-			-			25,000
Payment of note payable to related party		-			-			(25,000	)
Proceeds from sale of shares to Sponsor		-			-			25,000
Proceeds from public offering		-			-			125,000,000
Proceeds from private placement		-			-			4,000,000
Payment of offering costs		-			-			(3,210,823	)
Net cash provided by financing activities		-			-			125,814,177
Increase (decrease) in cash		(56325,~~569~~789	)		(~~276~~332,~~246~~654	)		~~359~~90,~~686~~466
Cash at beginning of period		416,255			865,355			-
Cash at end of period	$	~~359~~90,~~686~~466		$	~~589~~532,~~109~~701		$	~~359~~90,~~686~~466
Supplemental Disclosure of Non-Cash Financing Activities:
Deferred offering costs included in accrued expenses	$	-		$	-		$	-
Deferred offering costs	$	-		$	-		$	4,375,000

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.	Organization and Business Operations and Going Concern Consideration

Incorporation

JWC Acquisition Corp. (the “Company”) was incorporated in Delaware on July 22, 2010.

Sponsor

The company’s sponsor is JWC Acquisition, LLC, a Delaware limited liability company (the “Sponsor”). Members of the Sponsor owning a majority of the Sponsor’s equity interests are affiliated with J.W. Childs Associates, L.P. (“Associates”), a private equity firm founded in 1995 by John W. Childs, the Company’s Chairman and Chief Executive Officer, and Adam L. Suttin, the Company’s President.

Business Purpose

The Company was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “Initial Business Combination”). As more fully described in Note 8 – Proposed Business Combination, the Company has entered into a Contribution and Merger Agreement dated as of June 27, 2012, by and among the Company, The Tile Shop, LLC, a Delaware limited liability company (“The Tile Shop”), ILTS, LLC, a Delaware limited liability company (“ILTS”), The Tile Shop, Inc., a Minnesota corporation (“TS Inc”), JWTS, Inc., a Delaware corporation (“JWTS”), and each of the other members of The Tile Shop (together with TS Inc, JWTS and ILTS, the “Members”), Nabron International Inc., a Bahamas corporation (“Nabron” and, together with the Members other that ILTS, the “Sellers”), Tile Shop Holdings, Inc., a Delaware corporation (“TS Holdings”), Tile Shop Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of TS Holdings (“Merger Sub”) and Peter Jacullo, in his capacity as Sellers’ representative, pursuant to which (i) the Sellers will contribute, directly or indirectly, all of the membership interests in The Tile Shop to TS Holdings in exchange for cash and common stock and promissory notes of TS Holdings, and (ii) the Company will merge with and into Merger Sub, with the Company surviving, and each share of common stock of the Company will be exchanged for one share of TS Holdings common stock, the result of which TS Holdings will hold all of the outstanding equity of The Tile Shop and the Company.

Financing

The registration statement for the Company’s initial public offering (the “Public Offering”) (as described in Note 3) was declared effective November 17, 2010. The Company consummated the Public Offering on November 23, 2010, and simultaneously with the closing of the Public Offering, the Sponsor purchased $4,000,000 of warrants in a private placement (Note 4).

On November 23, 2010, $124,950,000 from the Public Offering and private placement was placed in the Trust Account (discussed below).

Trust Account

The trust account (the “Trust Account”) can either be invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. The funds in the Trust Account are held in the name of JWC Acquisition Security Corporation, a wholly-owned subsidiary of the Company qualified as a Massachusetts security corporation (See Note 2).

Except for a portion of interest ~~income~~ income earned on the Trust Account balance that may be released to the Company to pay any franchise and income taxes and up to $1.25 million to fund working capital requirements, and any amounts necessary for the Company to purchase up to 15% of the Company’s public shares if the Company seeks stockholder approval of the Initial Business Combination, none of the funds held in the Trust Account will be released until the earlier of: (i) the consummation of the Initial Business Combination (less deferred offering costs payable to the underwriters); or (ii) the redemption of 100% of the shares of common stock included in the units sold in the Public Offering if the Company is unable to consummate an Initial Business ~~Combination~~ Combination within 21 months from the closing of the Public Offering (subject to the requirements of law).

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Business Combination

An Initial Business Combination is subject to the following size, focus and stockholder approval provisions:

Size — The prospective target business will not have a limitation to size; however, the Company will not consummate an Initial Business Combination unless it acquires a controlling interest in a target company or is otherwise not required to register as an investment company under the Investment Company Act.

Focus — The Company’s efforts in identifying prospective target businesses will initially be focused on businesses in the consumer products and specialty retail sectors but the Company may pursue opportunities in other business sectors.

Tender Offer/Stockholder Approval — The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable, or (ii) provide stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable. The decision as to whether the Company will seek stockholder approval of the Initial Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will consummate its Initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business Combination. However, in no event will the Company honor the redemption for any of its public shares if such requested redemptions would cause the Company’s net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.

JWC ACQUISITION CORP. AND SUBSIDIARY (A Corporation in the Development Stage) NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Tender Offer/Stockholder Approval — The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable, or (ii) provide stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable. The decision as to whether the Company will seek stockholder approval of the Initial Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will consummate its Initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business Combination. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.

Regardless of whether the Company holds a stockholder vote or a tender offer in connection with an Initial Business Combination, a public stockholder will have the right to redeem their shares for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable upon the closing of the Initial Business Combination. As a result, such shares of common stock were recorded at conversion/tender value and classified as temporary equity in accordance with Financial Accounting Standards Board, or FASB, ASC Topic 480, “Distinguishing Liabilities from Equity.”

Permitted Purchase of Public Shares — If the Company seeks stockholder approval prior to the Initial Business Combination and does not conduct redemptions pursuant to the tender offer rules, prior to the Initial Business Combination, the Company’s Amended and Restated Certificate of Incorporation permits the release to the Company from the Trust Account amounts necessary to purchase up to 15% of the shares sold in the Public Offering. All shares so purchased by the Company will be immediately cancelled.

Liquidation

If the Company does not consummate an Initial Business Combination by August 23, 2012, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the common stock sold as part of the units in the Public Offering, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest but net of franchise and income taxes payable (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and subject to the requirement that any refund of income taxes that were paid from the Trust Account which is received after such redemption shall be distributed to the former public stockholders, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

In the event of liquidation, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per share in the Public Offering (assuming no value is attributed to the warrants contained in the units to be offered in the Public Offering discussed in Note 3).

Going Concern

In the event that the Company does not consummate an Initial Business Combination by August 23, 2012, the proceeds held in the Trust Account will be distributed to the Company’s public stockholders. The potential mandatory liquidation raises substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

JWC ACQUISITION CORP. AND SUBSIDIARY (A Corporation in the Development Stage) NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

2.	Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements as of ~~March~~June 3130, 2012 and the results of operations and cash flows for the periods presented, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements of the Company. In the opinion of management, all adjustments necessary for a fair presentation have been included and are of a normal recurring nature. Interim results are not necessarily indicative of the results that may be expected for any other interim period or for the full year.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the period ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2012. The December 31, 2011 balance sheet included herein has been derived from those audited consolidated financial statements. The accounting policies used in preparing these unaudited condensed consolidated interim financial statements are consistent with those used in preparing the December 31, 2011 audited consolidated financial statements.

The condensed consolidated interim financial statements include the accounts of JWC Acquisition Corp. and its wholly-owned subsidiary, JWC Acquisition Security Corporation. All significant intercompany transactions and balances have been eliminated in consolidation.

Development Stage Company

The Company is considered to be in the development stage as defined by FASB ASC 915, “Development Stage Entities,” and is subject to the risks associated with activities of development stage companies. The Company has neither engaged in any operations nor generated any income to date. All activity through the date the condensed consolidated interim financial statements were issued relates to the Company’s organizational activities, activities relating to the Public Offering, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. The Company will not generate any operating revenues until after completion of an Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on the Trust Account after the Public Offering.

Restricted Cash Equivalents Held in Trust

A total of $124,950,000, which includes $120,950,000 of the net proceeds from the Public Offering and $4,000,000 from the private placement, was placed in the Trust Account. As of ~~March~~June 3130, 2012, the restricted cash equivalents held in trust were $~~125~~124,~~021~~950,~~283 included in current assets~~000. ~~Cash~~Restricted cash equivalents held in trust are with Citibank, N.A., and Continental Stock Transfer & Trust Company serves as the trustee. The restricted cash equivalents held in trust at ~~March~~June 3130, 2012 are invested in the Western Assets Institutional Liquid Reserves Money Market Fund, which meets the requirements of Rule 2a-7 under the Investment Company Act.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period in accordance with FASB ASC 260, “Earnings Per Share”. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding, plus to the extent dilutive, the incremental number of shares of common stock to settle warrants issued in the Public Offering and private placement, as calculated using the treasury stock method. As the Company reported a net loss for the three and six months ended ~~March~~June 3130, 2012, the effect of the 17,833,333 warrants (including 5,333,333 warrants issued to the members of the Sponsor in the private placement), have not been considered in the diluted loss per common share because their effect would be anti-dilutive. As a result, dilutive loss per common share is equal to basic loss per common share.

The Company’s condensed ~~consolidated~~ consolidated statement of operations includes a presentation of income per share for common stock in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted, for the number of shares subject to possible redemption is calculated by dividing the interest earned in the Trust Account, net of applicable income taxes and franchise taxes and net of up to $1.25 million of interest earned which may be released for working capital purposes, attributable to to common shares subject to possible redemption, by the weighted average number of common shares subject to possible redemption.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times may exceed the federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Income Taxes

The Company complies with GAAP which requires an asset and liability approach to financial reporting for income taxes. Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company evaluates the uncertainty in tax positions taken or expected to be taken in the course of preparing the Company’s condensed consolidated interim financial statements to determine whether the tax positions are “more likely than not” of being sustained by the applicable tax authority. Tax positions deemed not to meet the “more likely than not” threshold would be recorded as a tax expense in the current period. The Company has no uncertain tax positions at ~~March~~June 3130, 2012 and December 31, 2011.

The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized as of and for the three and six months ended ~~March~~June 3130, 2012 ~~and 2011~~, and for the period from July 22, 2010 (inception) through ~~March~~June 3130, 2012.

The Company files a U.S. federal income tax return and may file income tax returns in various U.S. states and foreign jurisdictions. Generally, the Company is subject to income tax examinations by major taxing authorities since inception.

The Company may be subject to potential examination by U.S. federal, U.S. states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

The Company is incorporated in the State of Delaware and is therefore required to pay franchise taxes to the State of Delaware on an annual basis.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Transaction Costs

Transaction costs are amounts incurred by the Company in connection with advisory and due diligence on target acquisitions. Such costs are expensed as incurred. During the six months ended June 30, 2012, approximately $569,000 of transaction costs were expensed.

Deferred Offering Costs

Deferred offering costs consist principally of legal, accounting, and underwriting fees incurred through the balance sheet date that are related to the Public Offering and that were charged to stockholders’ equity upon the receipt of the capital at the closing of the Public Offering on November 23, 2010.

Redeemable Common Stock

As discussed in Note 1, all of the 12,500,000 common shares sold as part of units in the Public Offering contain a redemption feature which allows for the redemption of common shares under the Company’s Liquidation or Tender Offer/Stockholder Approval provisions. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although the Company does not specify a maximum redemption threshold, its Amended and Restated Certificate of Incorporation provides that in no event will the Company redeem its public shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $5,000,001.

The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock shall be affected by charges against paid-in capital.

Accordingly, at ~~March 31~~June 30, 2012 and December 31, 2011, 11,~~575~~510,~~375~~425 and 11,592,577, respectively, of the 12,500,000 public shares are classified outside of permanent equity at the redemption value. The redemption value is equal to the pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less franchise and income taxes payable (approximately $10.8000 at ~~March 31~~June 30, 2012).

Fair Value of Financial Instruments

Unless otherwise disclosed, the fair value of the Company’s assets and liabilities, including the cash equivalents held in trust, approximate their carrying amount due primarily to their short-term nature.

Recent Accounting Pronouncements

Management does not believe that any ~~other~~ recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated interim financial statements.

3.	Public Offering

Public Units

On November 23, 2010, the Company sold 12,500,000 units at a price of $10.00 per unit in the Public Offering. Each unit consists of one share of the Company’s common stock, $0.0001 par value, and one warrant (the “Public Warrants”). The Company granted the underwriters a 45-day option to purchase up to 1,875,000 additional units solely to cover over-allotments, if any. This option was not exercised.

Public Warrant Terms and Conditions:

Exercise Conditions — Each Public Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $11.50 per share commencing on the later of: (i) the consummation of an Initial Business Combination, or (ii) 12 months from the date of the prospectus for the offering, provided that the Company has an effective registration statement covering the shares of common stock issuable upon exercise of the Public Warrants (or the Public Warrants are exercisable on a cashless basis) and such shares are registered or qualified under the securities laws of the state of the exercising holder. The Public Warrants expire five years from the date of the completion of an Initial Business Combination, unless earlier redeemed. The Public Warrants are redeemable in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days notice after the warrants become exercisable, only in the event that the last sale price of the common stock exceeds $18.00 per share for any 20 trading days within a 30-trading day period. If the Public Warrants are redeemed by the Company, management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Registration Risk — In accordance with the warrant agreement relating to the Public Warrants, the Company will be required to use its best efforts to maintain the effectiveness of a registration statement relating to common stock which would be issued upon exercise of the Public Warrants. In the event that a registration is not effective at the time of exercise, the holders of Public Warrants shall not be entitled to exercise such Public Warrants (except on a cashless basis under certain circumstances) and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle or cash settle the Public Warrants or be subjected to any other contractual penalty for failure to permit such exercise. Consequently, the Public Warrants may expire unexercised, unredeemed and worthless, and an investor in the Public Offering may effectively pay the full unit price solely for the shares of common stock included in the units.

Accounting — Since the Company is not required to net cash settle the Public Warrants, the Public Warrants will be recorded at fair value and classified within stockholders’ equity as “Additional paid-in capital” upon their issuance in accordance with FASB ASC 815-40.

Underwriting Agreement

The Company paid an underwriting discount of 2.0% of the public unit offering price to the underwriters at the closing of the Public Offering, with an additional fee of 3.5% of the gross offering proceeds payable upon the Company’s consummation of an Initial Business Combination. Such amount is reflected as deferred offering costs of $4,375,000 on the consolidated balance sheet. The underwriters will not be entitled to any interest accrued on the deferred discount. This deferred offering cost will be paid from the amounts held in the Trust Account. If the Company does not consummate an Initial Business Combination, the underwriters will forfeit any rights or claims to their deferred underwriting discounts and commissions including any accrued interest thereon, then in the Trust Account, and the deferred underwriters’ discounts and commissions will be distributed on a pro rata basis, together with any accrued interest thereon and net of franchise and income taxes payable income taxes on such interest, to the public stockholders.

4.	Related Party Transactions

Founder Shares — In August 2010, the Sponsor purchased 2,464,286 shares of common stock (the “Founder Shares”) for $25,000, or $0.01 per share. Subsequently, on October 25, 2010, the Sponsor returned an aggregate of 124,170 of the Founder Shares to the Company, which the Company cancelled. Thereafter, on October 25, 2010, the Sponsor transferred an aggregate of 23,400 of the Founder Shares to John K. Haley and Sonny King, each of whom agreed to serve on the Company’s board of directors following the closing of the Public Offering. The fair value of the securities transferred was nominal.

On November 23, 2010, members of the Sponsor purchased an aggregate of 5,333,333 warrants (the “Sponsor Warrants”) at $0.75 per warrant (for an aggregate purchase price of $4,000,000) from the Company on a private placement basis simultaneously with the closing of the Public Offering.

Forfeiture — As a result of the underwriters’ over-allotment option not being exercised for the Public Offering, the Sponsor and the Company’s independent directors, John K. Haley and Sonny King (collectively, the “Initial Stockholders”), forfeited an aggregate of 305,232 Founder Shares on January 8, 2011. After giving effect to the forfeitures, the Initial Stockholders own 14% of the Company’s issued and outstanding shares.

In addition, 290,697 of the Founder Shares in an amount equal to 2.0% of the Company’s issued and outstanding shares after the Public Offering (“Earnout Shares”), will be subject to forfeiture by the Initial Stockholders in the event the last sales price of the Company’s stock does not equal or exceed $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period within 24 months following the closing of the Company’s Initial Business Combination.

Rights — The Founder Shares are identical to the shares of common stock included in the units sold in the Public Offering except that (i) the Founder Shares are subject to certain transfer restrictions, as described in more detail below, and (ii) the Initial Stockholders have agreed to waive their redemption rights with respect to the Founder Shares and public shares they purchase in connection with the Initial Business Combination and will also waive their redemption rights with respect to the Founder Shares if the Company fails to consummate an Initial Business Combination by August 23, 2012.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Rights — The Founder Shares are identical to the shares of common stock included in the units sold in the Public Offering except that (i) the Founder Shares are subject to certain transfer restrictions, as described in more detail below, and (ii) the Initial Stockholders have agreed to waive their redemption rights with respect to the Founder Shares and public shares they purchase in connection with the Initial Business Combination and will also waive their redemption rights with respect to the Founder Shares if the Company fails to consummate an Initial Business Combination by August 23, 2012.

Voting — If the Company seeks stockholder approval of its Initial Business Combination, the Initial Stockholders have agreed to vote the Founder Shares in accordance with the majority of the votes cast by the public stockholders and to vote any public shares purchased during or after the Public Offering in favor of the Initial Business Combination.

Liquidation — Although the Initial Stockholders and their permitted transferees waived their redemption rights with respect to the Founder Shares if the Company fails to consummate an Initial Business Combination by August 23, 2012, they will be entitled to redemption rights with respect to any public shares they may own.

Sponsor Warrants — Each Sponsor Warrant is exercisable into one share of common stock at $11.50 per share. The proceeds from the sale of the Sponsor Warrants were added to the proceeds from the Public Offering held in the Trust Account. The Sponsor Warrants are identical to the warrants included in the units sold in the Public Offering except that the Sponsor Warrants (i) are not redeemable by the Company as long as they are held by members of the Sponsor or any of their permitted transferees, (ii) are subject to certain transfer restrictions described in more detail below and (iii) may be exercised for cash or on a cashless basis. Since the Company is not required to net-cash settle the Sponsor Warrants, management has determined that the Sponsor Warrants are recorded at fair value and classified within stockholders’ equity as “Additional paid-in capital” upon their issuance in accordance with FASB ASC 815-40.

Transfer Restrictions

The Initial Stockholders have agreed not to transfer, assign or sell any of their Founder Shares until one year after the completion of the Initial Business Combination or earlier if the last sales price of the Company’s common stock exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days from the date of consummation of an Initial Business Combination. The members of the Sponsor have agreed not to transfer, assign or sell any of the Sponsor Warrants, including the common stock issuable upon exercise of the Sponsor Warrants, until 30 days after the completion of an Initial Business Combination.

Registration Rights

The holders of the Founder Shares, Sponsor Warrants and warrants that may be issued upon conversion of working capital loans will have registration rights to require the Company to register a sale of any of the securities held by them pursuant to the registration rights agreement. These security holders will be entitled to make up to three demands, excluding short form demands, that the Company register such securities for sale under the Securities Act of 1933, as amended (the “Securities Act”). In addition, these security holders have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, (A) one year after the completion of the Initial Business Combination or earlier if, subsequent to the Initial Business Combination, the last sales price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Initial Business Combination or (B) when the Company consummates a liquidation, merger, stock exchange or other similar transaction after the Company’s Initial Business Combination which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property, and (ii) in the case of the Sponsor Warrants and the respective common stock underlying such warrants, 30 days after the completion of the Company’s Initial Business Combination. The Company will bear the costs and expenses of filing any such registration statements.

JWC ACQUISITION CORP. AND SUBSIDIARY (A Corporation in the Development Stage) NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

5.	Other Related Party Transactions

Administrative Services

The Company has agreed to pay $5,000 a month in total for office space and general and administrative services to Associates. Services commenced promptly after the date the Company’s securities were first quoted on the OTCBB and will terminate upon the earlier of (i) ~~the~~ the consummation of an Initial Business Combination or (ii) the liquidation of the Company. No payments have been made under this agreement, and as of ~~March~~June 3130, 2012 and December 31, 2011, $85100,000 and $70,000, respectively, is due to Associates and is included in accounts payable and other liabilities.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Loan Payable

During the period from July 22, 2010 (date of inception) to ~~March~~June 3130, 2012, Associates paid vendor bills on behalf of the Company in the aggregate amount of $30,049. This amount is payable on demand without interest. Such amount is outstanding at both ~~March 31~~June 30, 2012 and December 31, 2011.

6.	Income Taxes

Components of the Company’s deferred tax assets are as follows:

~~March~~June 3130, 2012

Net operating loss carryforwards	$	83182,000
Amortizable start-up costs		~~149~~272,000
Less, valuation allowance		(~~232~~454,000	)
	$	—

December 31, 2011

Net operating loss carryforwards	$	62,000
Amortizable start-up costs		101,000

Less, valuation allowance		(163,000	)

	$	—

Management has recorded a full valuation allowance against its deferred tax assets because it does not believe it is more likely than not that sufficient taxable income will be generated. The effective tax rate differs from the statutory rate of 34% due to the establishment of the valuation allowance. The net operating loss carry-forward expires in ~~2031~~2032.

7.	Stockholders’ Equity

Common Stock — The authorized common stock of the Company includes up to 400,000,000 shares. Holders of the Company’s common stock are entitled to one vote for each share of common stock. At ~~March~~June 3130, 2012 and December 31, 2011, there were 14,534,884 shares of common stock outstanding.

Preferred Shares — The Company is authorized to issue 1,000,000 preferred shares with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At ~~March~~June 3130, 2012 and December 31, 2011, there were no shares of preferred stock outstanding.

8.	Proposed Business Combination

On June 27, 2012, the Company entered into the Contribution and Merger Agreement. The transactions contemplated by the Contribution and Merger Agreement are collectively referred to as the “Proposed Business Combination”.

JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS — (Continued)

Pursuant to the terms of the Contribution and Merger Agreement, the Sellers (other than Nabron) will contribute their membership interests in The Tile Shop to TS Holdings, constituting all of the membership interests of The Tile Shop other than the membership interests held by ILTS, and Nabron will contribute its membership interests in ILTS to TS Holdings (collectively, the “Contribution”), resulting in The Tile Shop becoming wholly owned by TS Holdings, in exchange for (i) a cash payment of $100,000,000, (ii) 29,500,000 shares of TS Holdings common stock and (iii) unsecured and subordinated promissory notes issued by TS Holdings in an aggregate principal amount of $80,000,000 less the amount of indebtedness (including capital lease obligations) of The Tile Shop and its subsidiary at closing and cash payments due to certain current and former employees under an equity incentive plan of The Tile Shop.

Concurrently with the Contribution, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving, and (i) each outstanding share of the Company’s common stock will be exchanged for one share of TS Holdings common stock, (ii) each outstanding warrant which is currently exercisable for one share of the Company’s common stock will be exercisable for one share of TS Holdings common stock and (iii) each outstanding share of common stock of Merger Sub will be exchanged for one share of the Company with the Company becoming a wholly owned subsidiary of TS Holdings. Prior to the Merger, each outstanding unit of the Company will be separated into its component common stock and warrant, each of which will be treated as described above.

After the completion of the Proposed Business Combination, TS Holdings will hold directly or indirectly all of the outstanding equity of The Tile Shop and the Company, and the former members of The Tile Shop and the former stockholders of the Company will own approximately 67% and 33%, respectively, of the issued and outstanding shares of TS Holdings common stock, assuming that none of the Company’s stockholders exercise their redemption rights in connection with the Proposed Business Combination.

The board of directors of the Company and the board of managers of The Tile Shop have unanimously approved the Proposed Business Combination. The Contribution and Merger Agreement is subject to the approval of the Company’s stockholders, in accordance with the Company’s second amended and restated certificate of incorporation and the Delaware General Corporation Law. If approved, the Proposed Business Combination is expected to be consummated promptly following the receipt of approval from the Company’s stockholders and the satisfaction or waiver of the other conditions contained in the Contribution and Merger Agreement.

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

References to the “Company,” “us” or “we” refer to JWC Acquisition Corp. The following discussion and analysis of the Company’s consolidated financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto contained elsewhere in this report and in the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2011. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Overview

We are a blank check company formed on July 22, 2010 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “Initial Business Combination”). We ~~will~~have ~~seek~~sought to ~~capitalize~~ capitalize on the substantial deal sourcing, investing and operating expertise of our management team to identify, acquire and operate a middle-market business in the consumer products or specialty retail sectors operating primarily in North America, although we ~~may~~considered ~~pursue~~ acquisition opportunities in other sectors or in other geographic regions. ~~In addition, we will not effect a business combination with another blank check company or a similar company with nominal operations.~~

Proposed Business Combination

We have entered into a Contribution and Merger Agreement, dated as of June 27, 2012 (the “Contribution and Merger Agreement”), by and among, the Company, The Tile Shop, LLC, a Delaware limited liability company (“The Tile Shop”) ILTS, LLC, a Delaware limited liability company (“ILTS”), The Tile Shop, Inc., a Minnesota corporation (“TS Inc”), JWTS, Inc., a Delaware corporation (“JWTS”), and each of the other members of The Tile Shop (together with TS Inc, JWTS and ILTS, the “Members”), Nabron International Inc., a Bahamas corporation (“Nabron” and, together with the Members other than ILTS, the “Sellers”), Tile Shop Holdings, Inc., a Delaware corporation (“TS Holdings”), Tile Shop Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of TS Holdings (“Merger Sub”) and Peter Jacullo, in his capacity as Sellers’ representative (the “Sellers’ Representative”). The transactions contemplated by the Contribution and Merger Agreement are collectively referred to as the “Proposed Business Combination.

Pursuant to the terms of the Contribution and Merger Agreement, the Sellers (other than Nabron) will contribute their membership interests in The Tile Shop to TS Holdings, constituting all of the membership interests of The Tile Shop other than the membership interests held by ILTS, and Nabron will contribute its membership interests in ILTS to TS Holdings resulting in The Tile Shop becoming wholly owned by TS Holdings (collectively, the “Contribution”), in exchange for (i) a cash payment of $100,000,000 (the “Cash Consideration”), (ii) 29,500,000 shares of TS Holdings common stock (the “Stock Consideration”) and (iii) unsecured and subordinated promissory notes (“Promissory Notes”) issued by TS Holdings in an aggregate principal amount of $80,000,000 less the amount of indebtedness (including capital lease obligations) of The Tile Shop and its subsidiary and cash payments due to certain current and former employees under an equity incentive plan of The Tile Shop (collectively, the “Contribution Consideration”).

The Contribution Consideration is subject to the following adjustments at the closing of the Proposed Business Combination:

If the Company’s stockholders exercise their rights to redeem greater than 1,500,000 shares of our common stock for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account, then (a) the Stock Consideration will be increased by the number of shares of TS Holdings common stock equal to the number of shares of our common stock that were redeemed in excess of 1,500,000, up to a maximum increase of an additional 2,500,000 shares of TS Holdings common stock and (b) the Cash Consideration will be reduced by the number of each such additional share of Stock Consideration multiplied by $10.

In the event that certain specified transaction expenses of the Company are less than $3,575,000, then the Stock Consideration will be increased by the number of shares of TS Holdings common stock equal to the amount of such deficiency divided by 10.

In the event that the Company has entered into agreements to purchase a portion of our public warrants (the “Public Warrants”) with the consent of the Sellers’ Representative, then (i) the Stock Consideration will be increased by the number of shares equal to the amount paid for such warrants (the “Warrant Purchase Amount”) divided by 10, and (ii) the Cash Consideration will be reduced by an amount equal to the Warrant Purchase Amount.

The Promissory Notes will mature three years from the consummation of the Proposed Business Combination, be prepayable at any time by TS Holdings without premium or penalty, and have an annual interest rate of 4% payable quarterly. Upon the issuance of senior indebtedness and the use of proceeds from such issuance to repay not less than 50% of the principal amount of the Promissory Notes, the term of the Promissory Notes will extend to 180 days after the term of such senior indebtedness and the interest rate on the Promissory Notes will be increased to 10% per annum. If the Promissory Notes have not been repaid in full within three years after the consummation of the Proposed Business Combination, the holders of the Promissory Notes will have the right to convert their pro rata portion of up to an aggregate of $20,000,000 of the then-outstanding aggregate principal amount of the Promissory Notes into common stock of TS Holdings at a conversion price of $10 per share.

After the completion of the Proposed Business Combination, TS Holdings will hold directly or indirectly all of the outstanding equity of The Tile Shop and the Company, and the former members of The Tile Shop and our former stockholders will own approximately 67% and 33%, respectively, of the issued and outstanding shares of TS Holdings common stock, assuming that none of our stockholders exercise their redemption rights in connection with the Proposed Business Combination.

Our board of directors and the board of managers of The Tile Shop have unanimously approved the Proposed Business Combination. The Contribution and Merger Agreement is subject to the approval of our stockholders in accordance with our second amended and restated certificate of incorporation and the Delaware General Corporation Law. If approved, we expect the Proposed Business Combination to be consummated promptly following the receipt of approval from our stockholders and the satisfaction or waiver of the other conditions contained in the Contribution and Merger Agreement.

In connection with the Proposed Business Combination, the holders of shares of our common stock included in the units sold in the Public Offering will have the opportunity to redeem such shares upon the consummation of the Proposed Business Combination for cash in an amount equal to their pro rata share of the aggregate amount on deposit in the Trust Account.

The Company, TS Holdings, the Sellers and the members of our Sponsor, JWC Acquisition, LLC (the “Sponsor”) have also entered into a registration rights agreement pursuant to which the Sellers and members of the Sponsor will be entitled to registration rights, subject to certain limitations, with respect to TS Holdings common stock they receive in the Proposed Business Combination.

TS Holdings has filed with the SEC a registration statement on Form S-4 (File No. 333-182482) in connection with the registration of the shares of TS Holdings to be issued to our stockholders pursuant to the Contribution and Merger Agreement, which registration statement includes our preliminary proxy statement/prospectus relating to the Proposed Business Combination.

Results of Operations

Through ~~March 31~~June 30, 2012, our efforts have been limited to organizational activities, activities relating to our Public Offering, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We have not generated any revenues, other than interest income earned on the proceeds held in the Trust Account. As of ~~March~~June 3130, 2012, approximately $~~125~~124.095 million was held in the Trust Account (including $4.38 million of deferred underwriting discounts and commissions, and $4.0 million from the sale of the Sponsor Warrants (defined below) and approximately $~~71,283~~0 in accrued interest) and we had cash outside of trust of $~~359~~90,~~686~~ 466 and $~~228~~536,~~635~~ 201 in accounts payable and ~~accrued~~other ~~expenses~~liabilities. Up to $1.25 million in interest income on the balance of the Trust Account (net of franchise and income taxes payable) may be available to us to fund our working capital requirements. Through ~~March 31,~~June 30, 2012, the Company has withdrawn $~~162~~293,~~949~~414 from interest earned on the trust proceeds. Other than the deferred underwriting discounts and commissions, no amounts are payable to the underwriters of our Public Offering in the event of a business combination.

For the period from January 1, 2012 through ~~March~~June 3130, 2012, we had a net loss of $~~172~~821,~~020~~520 and earned $60119,~~562~~744 in interest income. All of our funds in the Trust Account are invested in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act.

We have agreed to pay Associates, an entity controlled by John W. Childs, our Chairman and Chief Executive Officer, a total of $5,000 per month for office space, administrative services and secretarial support. For the period from January 1, 2012 through ~~March~~June 3130, 2012, the Company accrued a payable of $1530,000 for these costs.

Liquidity and Capital Resources

On November 23, 2010, we consummated ~~our~~ our Public Offering of 12,500,000 units at a price of $10.00 per unit. Simultaneously with the consummation of our Public Offering, we consummated the private sale of 5,333,333 warrants (the “Sponsor Warrants”) to members of our Sponsor for $4.0 million. We received net proceeds from our Public Offering and the sale of the Sponsor Warrants of approximately $125.75 million, net of the non-deferred portion of the underwriting commissions of $2.5 million (none of which were incurred from January 1, 2012 through June ~~March 31~~30, 2012) and offering costs and other expenses of approximately $750,000 (none of which were incurred from January 1, 2012 through ~~March~~June 3130, 2012). For a description of the proceeds generated in our Public Offering and a discussion of the use of such proceeds, we refer you to Note 3 of the unaudited condensed ~~consolidated~~ consolidated interim financial statements included in Part I, Item 1 of this Report. As of ~~March~~June 3130, 2012, we had cash of $~~359~~90,~~686~~466.

We will depend on sufficient interest being earned on the proceeds held in the Trust Account to provide us with up to $1,250,000 of additional working capital we may need to identify one or more target businesses, conduct due diligence and complete our initial business combination, as well as to pay any franchise and income taxes that we may owe. As described elsewhere in this Report, the amounts in the Trust Account may be invested only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act. The current low interest rate environment may make it more difficult for such investments to generate sufficient funds, together with the amounts available outside the Trust Account, to locate, conduct due diligence, structure, negotiate and close our Initial Business Combination. If we are required to seek additional capital, we would need to borrow funds from our Sponsor or management team to operate or may be forced to liquidate. Neither our Sponsor nor our management team is under any obligation to advance funds to us in such circumstances. Any such loans would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our Initial Business Combination. If we are unable to complete our Initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.

For the period from January 1, 2012 through ~~March~~June 3130, 2012, we disbursed an aggregate of approximately $56327,~~403~~186 out of the proceeds of our Public Offering not held in trust, for expenses in legal, accounting and filing fees relating to our SEC reporting obligations, general corporate matters, and miscellaneous expenses.

Off-balance sheet financing arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than a monthly fee of $5,000 for office space and general and administrative services payable to Associates, an entity controlled by our Chairman and Chief Executive Officer. We began incurring this fee on November 23, 2010 and will continue to incur this fee monthly until the earlier of the completion of our Initial Business Combination and our liquidation.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:

Restricted Cash Equivalents Held in Trust

A total of $124,950,000, which includes $120,950,000 of the net proceeds from the Public Offering and $4,000,000 from the private placement, was placed in the Trust Account. As of ~~March~~June 3130, 2012, the restricted cash equivalents held in trust were $~~125~~124,~~021~~950,~~283 included in current assets~~000. ~~Cash~~Restricted cash equivalents held in trust are with Citibank, N.A., and Continental Stock Transfer & Trust Company serves as the trustee. The restricted cash equivalents held in trust at ~~March 31~~June 30, 2012 are invested in the Western Assets Institutional Liquid Reserves Money Market Fund, which meets ~~the~~ the requirements of Rule 2a-7 under the Investment Company Act~~, as amended~~.

14Loss per common share (excluding shares subject to possible redemption)

Loss per share (excluding shares subject to possible redemption) is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. The weighted average number of common shares, excluding shares subject to possible redemption, at June 30, 2012 of 3,024,459 shares excludes the weighted average of 11,510,425 shares subject to possible redemption. The aggregate weighted average common shares issued and outstanding of 14,534,884 for the period from January 1, 2012 to June 30, 2012 takes into effect the 305,232 Founder Shares forfeited on January 8, 2011 by the Initial Stockholders due to the underwriters’ over-allotment option not being exercised. The 17,833,333 warrants related to our Public Offering and the private placement of the Sponsor Warrants are contingently issuable shares and are excluded from the calculation of diluted earnings per share because they are anti-dilutive.

Loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. The weighted average common shares issued and outstanding of 14,534,884 for the period from January 1, 2012 to March 31, 2012 takes into effect the 305,232 Founder Shares forfeited on January 8, 2011 by the Initial Stockholders due to the underwriters’ over-allotment option not being exercised. The 17,833,333 warrants related to our Public Offering and the private placement of the Sponsor Warrants are contingently issuable shares and are excluded from the calculation of diluted earnings per share because they are anti-dilutive.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Income taxes

Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Recent accounting pronouncements

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We were incorporated in Delaware on July 22, 2010 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more operating businesses. We were considered in the development stage at ~~March 31~~June 30, 2012 and had not yet commenced any operations. Through ~~March~~June 3130, 2012, our efforts have been limited to organizational activities, activities relating to our Public Offering, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We did not have any financial instruments that were exposed to market risks at ~~March~~June 3130, 2012.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~March~~June 3130, 2012. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

~~Our~~Other ~~operations~~than ~~and~~the ~~financial~~additional ~~results~~risk ~~are~~factors set ~~subject~~forth tobelow, ~~various risks~~ and ~~uncertainties~~the ~~any~~risk offactors ~~which~~disclosed ~~could~~in ~~result~~the inpreliminary aproxy ~~significant~~statement/prospectus, orwhich ~~material~~we ~~adverse~~refer ~~effect~~to onas ~~our~~the ~~results~~Preliminary ofProxy ~~operations~~Statement, orincluded ~~financial~~in ~~condition.~~the ~~Part~~registration I,statement ~~Item~~on 1AForm S-4, ~~“Risk~~which ~~Factors”~~we ofrefer ~~our~~to ~~Annual~~as ~~Report~~the onRegistration ~~Form~~Statement, ~~10-K~~filed ~~for~~ with the ~~year ended~~SEC ~~December~~by ~~31,~~Tile ~~2011~~Shop ~~includes~~Holdings, aInc. ~~detailed~~on ~~discussion~~July of2, ~~these~~2012, ~~factors~~which ~~and~~are ~~these~~incorporated ~~factors~~herein ~~have~~by ~~not~~reference, ~~changed~~there ~~materially~~have ~~from~~been ~~those~~no material ~~included~~changes in ~~the~~our ~~Form 10-K. Additional~~ risk factors ~~not~~disclosed ~~presently~~in ~~known~~our toAnnual usReport oron ~~that~~Form we10-K ~~currently~~for ~~deem~~the ~~immaterial~~year ~~may~~ended ~~also~~December ~~impair our~~31, ~~business or results of operations~~2011.

If the Proposed Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of our securities and, following the Proposed Business Combination, TS Holdings’ securities, may decline.

If the Proposed Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of our securities prior to the closing of the Proposed Business Combination may decline. Our stockholders will receive a fixed number of shares of TS Holdings’ common stock in the Proposed Business Combination, rather than a number of shares with a particular fixed market value. The market values of our securities at the time of the Proposed Business Combination may vary significantly from their prices on the date the Contribution and Merger Agreement was executed, the date of the definitive proxy statement/prospectus or the date on which our stockholders vote on the Proposed Business Combination. Because the share exchange ratios will not be adjusted to reflect any changes in the market prices of our common stock, the market value of the TS Holdings common stock issued in the Proposed Business Combination and our common stock surrendered in the Merger may be higher or lower than the values of these shares on earlier dates. 100% of the consideration to be received by our stockholders in the Merger will be TS Holdings’ common stock.

In addition, following the Proposed Business Combination, fluctuations in the price of TS Holdings’ common stock could contribute to the loss of all or part of your investment. Prior to the Proposed Business Combination, there has not been a public market for TS Holdings’ or The Tile Shop’s common stock, and trading in the shares of our common stock has not been active. Accordingly, the valuation ascribed to The Tile Shop and the shares of our common stock in the Proposed Business Combination may not be indicative of the price that will prevail in the trading market following the Proposed Business Combination. If an active market for TS Holdings’ common stock develops and continues, the trading price of TS Holdings’ common stock following the Proposed Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our or TS Holdings’ control. Any of the factors listed below could have a material adverse effect on your investment and TS Holdings’ common stock may trade at prices significantly below the price you paid for our common stock. In such circumstances, the trading price of TS Holdings’ common stock may not recover and may experience a further decline.

Factors affecting the trading price of TS Holdings’ common stock may include:

	•	actual or anticipated fluctuations in TS Holdings’ quarterly financial results or the quarterly financial results of companies perceived to be similar to it;

	•	changes in the market’s expectations about TS Holdings’ operating results;

	•	the effects of seasonality on TS Holdings’ business cycle;

	•	success of competitive retailers;

	•	the failure of TS Holdings’ operating results to meet the expectation of securities analysts or investors in a particular period;

	•	changes in financial estimates and recommendations by securities analysts concerning TS Holdings, the housing market, the retail specialty tile market or the retail market in general;

	•	operating and stock price performance of other companies that investors deem comparable to TS Holdings;

	•	the ability of TS Holdings to market new and enhanced products on a timely basis;

	•	changes in laws and regulations affecting TS Holdings’ business;

	•	commencement of, or involvement in, litigation involving TS Holdings;

	•	changes in TS Holdings’ capital structure, such as future issuances of securities or the incurrence of additional debt;

	•	the volume of shares of TS Holdings’ common stock available for public sale;

	•	any major change in TS Holdings’ board or management;

	•	sales of substantial amounts of common stock by TS Holdings’ directors, executive officers or significant stockholders or the perception that such sales could occur; and

	•	general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of TS Holdings’ common stock irrespective of TS Holdings’ operating performance. The stock market in general, and the Nasdaq Stock Market, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of TS Holdings’, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to TS Holdings could depress TS Holdings’ stock price regardless of TS Holdings’ business, prospects, financial conditions or results of operations. A decline in the market price of TS Holdings’ securities could also adversely affect its ability to issue additional securities and its ability to obtain additional financing in the future.

Our board of directors did not obtain a third party valuation in determining whether or not to proceed with the Proposed Business Combination.

Our board of directors did not obtain a third party valuation in connection with its decision to approve the Proposed Business Combination. In analyzing the Proposed Business Combination, our board and management conducted due diligence on The Tile Shop, researched the industries in which The Tile Shop operates, reviewed comparisons of comparable companies, developed a long-range financial model and concluded that the Proposed Business Combination was in the best interest of our stockholders.

There may be tax consequences of the Business Combination that may adversely affect our stockholders.

We expect that the Business Combination can be effected such that our stockholders do not recognize gain or loss pursuant to Section 351 of the Internal Revenue Code. To the extent the Business Combination does not so qualify, it could result in the imposition of substantial taxes on our stockholders.

TS Holdings may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 that will be applicable to it as a result of the Proposed Business Combination.

The Tile Shop is not currently subject to Section 404 of the Sarbanes-Oxley Act of 2002. However, following the Proposed Business Combination, TS Holdings will be subject to Section 404. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those required of The Tile Shop as a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to TS Holdings. If management is not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, management may not be able to assess whether TS Holdings’ internal controls over financial reporting are effective, which may subject TS Holdings to adverse regulatory consequences and could harm investor confidence and the market price of TS Holdings common stock.

The Company and The Tile Shop will be subject to business uncertainties and contractual restrictions while the Proposed Business Combination is pending.

Uncertainty about the effect of the Proposed Business Combination on employees and customers may have an adverse effect on the Company or The Tile Shop and, consequently, on TS Holdings. These uncertainties may impair The Tile Shop’s ability to retain and motivate key personnel and could cause customers and others that deal with The Tile Shop to defer entering into contracts with The Tile Shop or making other decisions concerning The Tile Shop, or to seek to change existing business relationships with The Tile Shop. If key employees depart because of uncertainty about their future roles and the potential complexities of the Proposed Business Combination, The Tile Shop’s business could be harmed.

Our founders, directors and executive officers have certain interests in consummating the Proposed Business Combination that may have influenced their decision to approve the Proposed Business Combination.

Certain of our founders, directors and entities affiliated with certain of our directors and executive officers, own shares of our common stock that were issued prior the Public Offering. Such purchasers have waived their right to receive distributions with respect to the Founder Shares in the event of our liquidation in accordance with our Amended and Restated Certificate of Incorporation. Accordingly, the Founder Shares will be worthless if we are forced to liquidate. In addition, in the event of our liquidation, our warrants, including the Sponsor Warrants held by certain of our directors and executive officers, will expire worthless.

Additionally, the Contribution and Merger Agreement provides that each of Messrs. Suttin and Watts will be a director of TS Holdings following the Proposed Business Combination. As such, in the future, they may receive any cash fees, stock options or stock awards that TS Holdings’ board of directors determines to pay to its non-executive directors, provided, that Mr. Suttin has agreed to initially waive his right to receive any such cash fees, stock options or stock awards.

Our stockholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the Proposed Business Combination. Having a minority share position may reduce the influence that our current stockholders have on the management of TS Holdings.

TS Holdings will issue 29,500,000 shares of common stock at the closing of the Proposed Business Combination to the Sellers, subject to adjustment pursuant to the terms of the Contribution and Merger Agreement. Upon consummation of the Merger, holders of our common stock will receive one share of common stock of TS Holdings for each share of our common stock that they own. As a result, holders of our common stock will receive 14,534,884 shares of TS Holdings common stock, or approximately 33% of the issued and outstanding shares of TS Holdings (assuming no stockholder elects to redeem their shares of our common stock for a portion of the Trust Account). Consequently, the ability of our former stockholders following the Proposed Business Combination to influence management of TS Holdings through the election of directors will be substantially reduced.

The Company and TS Holdings will incur significant transaction and transition costs in connection with the Proposed Business Combination.

The Company and TS Holdings expect to incur significant, non-recurring costs in connection with consummating the Proposed Business Combination and integrating the operations of the Company and The Tile Shop. TS Holdings may incur additional costs to maintain employee morale and to retain key employees. We will also incur significant fees and expenses relating to financing arrangements and legal, accounting and other transaction fees and costs associated with the Proposed Business Combination. Some of these costs are payable regardless of whether the Proposed Business Combination is completed.

The unaudited pro forma financial information included in the Preliminary Proxy Statement may not be indicative of what TS Holdings’ actual financial position or results of operations would have been.

The unaudited pro forma financial information in the Preliminary Proxy Statement is presented for illustrative purposes only and is not necessarily indicative of what TS Holdings’ actual financial position or results of operations would have been had the Proposed Business Combination been completed on the dates indicated. See the section of the Registration Statement entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

TS Holdings’ working capital will be reduced if our stockholders exercise their redemption rights in connection with the Proposed Business Combination, which may adversely affect TS Holdings’ business and future operations.

Pursuant to our amended and restated certificate of incorporation, holders of Public Shares may demand that we redeem their shares for a pro rata share of the cash held in the Trust Account, less franchise taxes and income tax payable, calculated as of two business days prior to the closing of the Proposed Business Combination.

If the Proposed Business Combination is consummated, the funds held in the Trust Account will be released (i) to pay our stockholders who properly exercise their redemption rights, (ii) to make a cash payment to the Sellers in partial consideration of their contribution to TS Holdings, (iii) to pay $5.0 million in deferred underwriting compensation to the underwriters of our initial public offering and advisory fees to other persons, (iv) to pay J.W. Childs Associates L.P. amounts owed for unpaid rent and unreimbursed administrative expenses incurred on our behalf in connection with the Proposed Business Combination and general administrative expenses, not to exceed $500,000, (v) to pay third parties (e.g., professional advisors, printers and consultants) who have rendered services to us, the Sellers, The Tile Shop, its subsidiaries and TS Holdings in connection with the Proposed Business Combination (but as to the expenses of the Sellers, The Tile Shop and TS Holdings, only if the Proposed Business Combination is consummated) and (vi) to pay the aggregate purchase price payable by us for Public Warrants we may purchase under the terms of the Contribution and Merger Agreement, with the balance to be used for working capital purposes.

Pursuant to the Contribution and Merger Agreement, we will use up to $55,000,000 of the $125,021,283 in the Trust Account as of March 31, 2012 to pay our stockholders who properly exercise their redemption rights. The first $15,000,000 of these payments will result in a corresponding decrease in funds available for TS Holdings’ working capital. If the remaining amount is insufficient to fund TS Holdings’ working capital requirements, it would need to borrow funds necessary to satisfy such requirements or sell additional shares of its common stock, which would result in the dilution of the ownership interest of the holders of such common stock. There is no assurance that such funds would be available to TS Holdings on terms favorable to it or at all. If such funds were not available, TS Holdings’ operations and profitability may be adversely affected.

Our warrants will become exercisable for TS Holdings’ common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to TS Holdings’ stockholders.

Outstanding warrants to purchase an aggregate of 17,833,333 shares of our common stock will become exercisable for a like number of shares of TS Holdings’ common stock upon consummation of the Business Combination. To the extent such warrants are exercised, additional shares of TS Holdings’ common stock will be issued, which will result in dilution to the holders of common stock of TS Holdings and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of TS Holdings’ common stock.

If our stockholders fail to comply with the redemption requirements specified in the Preliminary Proxy Statement, they will not be entitled to redeem their shares of common stock for a pro rata portion of the Trust Account.

Holders of Public Shares are not required to affirmatively vote against the Proposed Business Combination Proposal in order to exercise their rights to redeem their shares for a pro rata portion of the Trust Account. In order to exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent at least two business days prior to the special meeting of stockholders. Stockholders electing to redeem their shares will receive their pro rata portion of the Trust Account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Proposed Business Combination. See the section of the Registration Statement entitled “Special Meeting of JWCAC Stockholders — Redemption Rights” for additional information on how to exercise your redemption rights.

Although TS Holdings intends to list its securities on the Nasdaq Stock Market, there can be no assurance that its securities will be so listed or, if listed, that TS Holdings will be able to comply with the continued listing standards.

TS Holdings intends to list its common stock on the Nasdaq Stock Market upon consummation of the Proposed Business Combination. As part of the listing process, TS Holdings will be required to provide evidence that it is able to meet the initial listing requirements. There can be no assurance that TS Holdings will be able to meet the initial listing standards of the Nasdaq Stock Market or any other exchange or, if its securities are listed, that TS Holdings will be able to maintain such listing.

In addition, if, after listing, the Nasdaq Stock Market delists TS Holdings’ securities from trading on its exchange for failure to meet the continued listing standards, TS Holdings and its securityholders could face significant material adverse consequences including:

	•	a limited availability of market quotations for its securities;

	•	a determination that its common stock is a “penny stock,” which will require brokers trading in its common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for its common stock;

	•	a limited amount of analyst coverage; and

	•	a decreased ability to issue additional securities or obtain additional financing in the future.

If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about TS Holdings, its business, or its market, or if they change their recommendations regarding TS Holdings common stock adversely, the price and trading volume of TS Holdings common stock could decline. The trading market for TS Holdings common stock will be influenced by the research and reports that industry or securities analysts may publish about it, its business, its market, or its competitors. Securities and industry analysts do not currently, and may never, publish research on TS Holdings. If no securities or industry analysts commence coverage of TS Holdings, its stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover TS Holdings change their recommendation regarding its stock adversely, or provide more favorable relative recommendations about its competitors, the price of TS Holdings common stock would likely decline. If any analyst who may cover TS Holdings were to cease coverage of TS Holdings or fail to regularly publish reports on it, TS Holdings could lose visibility in the financial markets, which in turn could cause its stock price or trading volume to decline.

The exercise of discretion by our directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Contribution and Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Contribution and Merger Agreement or waivers of conditions are appropriate and in our securityholders’ best interest.

In the period leading up to the closing of the Proposed Business Combination, events may occur that, pursuant to the Contribution and Merger Agreement, would require us to agree to amend the Contribution and Merger Agreement, to consent to certain actions taken by Sellers or to waive rights that we are entitled to under the Contribution and Merger Agreement. Such events could arise because of changes in the course of The Tile Shop’s business, a request by Sellers to undertake actions that would otherwise be prohibited by the terms of the Contribution and Merger Agreement or the occurrence of other events that would have a material adverse effect on The Tile Shop’s business and would entitle us to terminate the Contribution and Merger Agreement. In any of such circumstances, it would be in our discretion, acting through our board of directors, to grant our consent or waive our rights. The existence of the financial and personal interests of the directors described herein and in the Preliminary Proxy Statement may result in a conflict of interest on the part of one or more of the directors between what he may believe is best for us and our securityholders and what he may believe is best for himself or his affiliates in determining whether or not to take the requested action. As of the date of this report, we do not believe that there will be any changes or waivers that our directors and officers would be likely to make after stockholder approval of the Proposed Business Combination has been obtained. While certain changes could be made without further stockholder approval, if there is a change to the terms of the transaction that would have a material impact on the stockholders, we will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of our stockholders with respect to the Proposed Business Combination.

TS Holdings may apply the net proceeds released from the Trust Account in a manner that does not improve its results of operations or increase the value of your investment.

If the Proposed Business Combination is consummated, the funds held in the Trust Account will be released (i) to pay our stockholders who properly exercise their redemption rights, (ii) to make a cash payment to the Sellers in partial consideration of their contribution to TS Holdings, (iii) to pay $5.0 million in deferred underwriting compensation to the underwriters of our initial public offering and advisory fees to other persons, (iv) to pay J.W. Childs Associates L.P. amounts owed for unpaid rent and unreimbursed administrative expenses incurred on our behalf in connection with the Proposed Business Combination and general administrative expenses, not to exceed $500,000, (v) to pay third parties (e.g., professional advisors, printers and consultants) who have rendered services to us, the Sellers, The Tile Shop, and TS Holdings in connection with the Proposed Business Combination (but, as to the expenses of the Sellers, The Tile Shop, and TS Holdings, only if the Proposed Business Combination is consummated), (vi) to pay the aggregate purchase price payable by us for Public Warrants we may purchase under the terms of the Contribution and Merger Agreement and (vii) with the balance to be used for working capital purposes and general corporate purposes. Other than these uses, TS Holdings does not have specific plans for the funds and will have broad discretion regarding how it uses such funds. These funds could be used in a manner with which you may not agree or applied in ways that do not improve TS Holdings’ results of operations or increase the value of your investment.

After the closing of the Proposed Business Combination, there are significant limitations on our recourse against the Sellers for breach of any representations and warranties made in the Contribution and Merger Agreement.

Other than with respect to the limited matters described below, the representations and warranties in the Contribution and Merger Agreement expire as of the closing of the Proposed Business Combination, and, thereafter, we will not have recourse against the Sellers for breaches thereof. Furthermore, to the extent that the Sellers provide notice of a breach of a representation and warranty that occurs after the date of the Contribution and Merger Agreement to us and, unless we have the right to terminate the Contribution and Merger Agreement with respect thereto and exercise such right prior to the closing in accordance with the terms of the Contribution and Merger Agreement, such notice shall cure any such breach, and we will not have any recourse against the Sellers with respect thereto. Notwithstanding the foregoing, our stockholders may have limited recourse against the Sellers with respect to (i) certain unpaid taxes of the Company and ILTS relating to the period prior to the closing of the Proposed Business Combination, (ii) certain pre-closing liabilities of ILTS and (iii) breach of representations and warranties of the Sellers relating to ownership of the membership interests transferred to us and certain limited matters related to ILTS, each as set forth in the Contribution and Merger Agreement.

As a result of the Jumpstart Our Business Startups Act recently signed into law, if the Proposed Business Combination is completed, TS Holdings could be subject to reduced reporting requirements relative to other public companies.

On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. If the Proposed Business Combination is completed, TS Holdings may, subject to certain conditions set forth under the JOBS Act, qualify as an “emerging growth company,” which would provide TS Holdings a grace period of the first five years following completion of the Proposed Business Combination before TS Holdings would be required to (i) provide an auditor’s attestation report on its system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) comply with new accounting pronouncements applicable to public companies before such pronouncements are also applicable to private companies and (iii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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

Use of Proceeds from our Public Offering

On November 23, 2010, we consummated our Public Offering of 12,500,000 units, with each unit consisting of one share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $11.50 per share. The warrants will become exercisable on the later of (i) 30 days after the completion of the Initial Business Combination and (ii) 12 months from the closing of the Public Offering. The warrants expire five years after the completion of our Initial Business Combination or earlier upon redemption or liquidation. Once the warrants become exercisable, the warrants will be redeemable in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’ notice if, and only if, the last sale price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending on the third business day before we send the notice of redemption. The units in the ~~public~~Public ~~offering~~Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $125,000,000. Citigroup Global Markets Inc., acted as sole bookrunning manager and as representative of I-Bankers Securities, Inc., Ladenburg Thalmann & Co. Inc. and Maxim Group LLC. (together, the “Underwriters”). The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-168798). The SEC declared the registration statement effective on November 17, 2010.

We paid a total of $2.5 million in underwriting discounts and commissions (none of which were incurred from January 1, 2012 through ~~March~~June 3130, 2012) and approximately $750,000 for other costs and expenses related to the offering (none of which were incurred from January 1, 2012 through ~~March~~June 3130, 2012). In addition, the Underwriters agreed to defer $4.375 million in underwriting discounts and commissions, which amount will be payable upon consummation of our Initial Business Combination if consummated. We also repaid Associates in satisfaction of an outstanding promissory note after the closing of our Public Offering.

We also consummated the simultaneous private sale of 5,333,333 Sponsor Warrants to members of our Sponsor at a price of $0.75 per warrant (for an aggregate purchase price of $4,000,000). The Sponsor Warrants (including the common stock issuable upon exercise of the Sponsor Warrants) are not transferable, assignable or salable until 30 days after the completion of our Initial Business Combination (except, among certain other limited exceptions, to our officers and directors and other persons or entities affiliated with the members of our Sponsor) and they will not be redeemable by the Company so long as they are held by members of our Sponsor or their permitted transferees. Otherwise, the Sponsor Warrants have terms and provisions that are identical to those of the Public Warrants, except that the Sponsor Warrants may be exercised by the holders on a cashless basis. The sale of the Sponsor Warrants was made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act.

After deducting the underwriting discounts and commissions (excluding the deferred portion of $4.375 million in underwriting discounts and commissions, which amount will be payable upon consummation of our Initial Business Combination if consummated) and the estimated offering expenses, the total net proceeds from our Public Offering and the private placement of Sponsor Warrants was $125,750,000 of which $124,950,000 (or approximately $10.00 per unit sold in the Public Offering) was placed in the Trust Account.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number	~~Description~~	Description
31.1	~~Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).~~	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2	~~Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).~~	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1	~~Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.~~	Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2	~~Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.~~	Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

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* In accordance with Rule 406T under Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed “furnished” and not “filed.”

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

JWC ACQUISITION CORP. Date: ~~May~~July 930, 2012 /s/ John W. Childs Name: John W. Childs Title: Chief Executive Officer (principal executive officer) /s/ David A. Fiorentino Name: David A. Fiorentino Title: Chief Financial Officer (principal financial officer)

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