PART III—NARRATIVE
State below in
reasonable detail why Forms
10-K,
20-F,
11-K,
10-Q,
10-D,
N-SAR,
N-CSR,
or the transition report or portion thereof, could not be filed within the prescribed time period.
WageWorks, Inc. (the “Company”) is unable to file its quarterly report on Form
10-Q
for the quarter ended
September 30, 2018 within the prescribed time period without unreasonable effort or expense.
The Company has not yet completed its final
determination and review of its financial statements and internal controls over financial reporting for the fiscal year ended December 31, 2017. As previously announced, Company’s Board of Directors (the “Board”) concluded that
certain financial statements for periods in 2016 and 2017 should be restated and should no longer be relied upon. The determination was made upon the recommendation of the audit committee (the “Audit Committee”) of the Board, as a result
of its independent investigation of the Company’s accounting practices, financial statement reporting and internal control over financial reporting for fiscal 2016 and 2017, and after consultation with the Company’s independent auditors
and management team. As part of the restatement process, the Company is continuing to assess the adjustments to its financial statements.
As previously
reported, the Company expects to report material weaknesses in its internal control over financial reporting as of December 31, 2017 related to managing change and assessing risk in the areas of
non-routine
and complex transactions, tone at the top, and commitment to competencies in the areas of
non-routine
and complex transactions. As a result of the material
weaknesses, the Board, upon recommendation of the Audit Committee, concluded that the Company’s internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2017. Additional material
weaknesses may be identified and the scope of financial items or periods required to be restated may be broadened.
As previously reported in the
Company’s Current Report on Form
8-K
filed with the Securities and Exchange Commission on November 6, 2018, the Board formed a Special Committee of directors to carry out an independent investigation
and review the procedures, scope and findings of the Audit Committee’s investigation. The Special Committee investigation is ongoing and there may be other actions taken based, at least in part, on information from the investigation and may
ultimately identify other accounting issues, further material weaknesses, and/or require the restatement of other Company financial statements for previous periods. The Company also engaged BDO USA, LLP to serve as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2018, as well as with respect to the preparation of the Form
10-K
for the year ended December 31, 2017, including the
restatement of the Company’s financial statements for the quarterly and
year-to-date
periods ended March 31, June 30 and September 30, 2017. The
Company engaged Macias, Gini & O’Connell LLP to serve as the Company’s auditor with respect to the restatement of the Company’s financial statements for the quarterly and
year-to-date
periods ended June 30 and September 30, 2016 and the year ended December 31, 2016.
As a result of these events and related matters, as previously disclosed, the Company has experienced a delay in the completion of its financial statements,
Management’s Discussion and Analysis of Financial Condition and Results of Operations and other related components of the Third Quarter Quarterly Report and does not currently expect to file its quarterly report on Form
10-Q
by the prescribed due date allowed pursuant to Rule
12b-25.
The Company is working to complete the preparation of its financial statements for the fiscal quarters ended
September 30, 2018, June 30, 2018 and March 31, 2018, as well as its Annual Report on Form
10-K
for the fiscal year ended December 31, 2017, including the restated 2016 financial
statements, as soon as practicable.