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Westaff - Audit raises doubt about future

February 25 2009

Westaff Inc. (NASD: WSTF) said an audit report in the company's annual 10-K filing raised doubt about the company continuing as a going concern. The audit report cited recurring losses, the company being out of compliance with banking agreements and that the firm may not be able to extend its workers compensation policy.

Westaff, a Walnut Creek CA-based commercial staffing firm, posted a loss of $46.3 million in its most recent fiscal year ended Nov. 1. The company was required to announce the audit results under Nasdaq rules.

Separately, Westaff said it reached another forbearance agreement with U.S. Bank National Association and Wells Fargo Bank where the banks agreed to not exercise their rights under Westaff's default until April 7, 2009. Westaff went into default with its banks in April 2008 when it didn't meet requirements under its financing agreements.

The company recently announced it struck a deal to be acquired by Koosharem Corp., which does business as Select Staffing.

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