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FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021
NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
)
SONNY ST. JOHN, Individually and on )
Behalf of All Others Similarly Situated, ) Index No. 652617/2021
)
Plaintiff, ) Hon. Andrew Borrok
)
v. )
)
CLOOPEN GROUP HOLDING LIMITED, )
CHANGXUN SUN, YIPENG LI, KUI )
ZHOU, QINGSHENG ZHENG, )
XIAODONG LIANG, ZI YANG, MING )
LIAO, FENG ZHU, LOK YAN HUI, )
JIANHONG ZHOU, CHING CHIU, )
COGENCY GLOBAL INC., COLLEEN A. )
DEVRIES, GOLDMAN SACHS (ASIA) )
L.L.C., CITIGROUP GLOBAL MARKETS )
INC., CHINA INTERNATIONAL )
CAPITAL CORPORATION HONG KONG )
SECURITIES LIMITED, TIGER BROKERS )
(NZ) LIMITED, and FUTU, INC., )
)
Defendants. )
)
CLOOPEN GROUP HOLDING LIMITED’S ANSWER TO AMENDED COMPLAINT
FOR VIOLATIONS OF THE SECURITIES ACT OF 1933
Sheryl Shapiro Bassin
WILSON SONSINI GOODRICH & ROSATI, P.C.
1301 Avenue of the Americas, 40th Floor
New York, New York 10019
Telephone: (212) 999-5800
Email: sbassin@wsgr.com
Ignacio E. Salceda (admitted pro hac vice)
WILSON SONSINI GOODRICH & ROSATI, P.C.
650 Page Mill Road
Palo Alto, California 94304
Telephone: (650) 493-9300
Email: ISalceda@wsgr.com
Counsel for Defendant Cloopen Group Holding
Limited
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Defendant Cloopen Group Holding Limited (“Cloopen” or the “Company”), by and
through its undersigned counsel, hereby answers the Amended Complaint filed by Plaintiff
Sonny St. John (“Plaintiff”), dated October 4, 2021, NYSCEF No. 23 (the “Complaint”).1
To the extent that the paragraphs in the Complaint are grouped under headings and
subheadings, Cloopen responds generally that the headings and subheadings do not constitute
factual averments, and thus the headings are not included herein. To the extent that a response is
deemed necessary, Cloopen denies each and every heading and subheading in the Complaint.
Further, except as explicitly admitted herein, Cloopen denies each and every allegation of the
Complaint, including, without limitation, any allegations in the unnumbered paragraph on page 1
of the Complaint, headings, subheadings, footnotes, and/or the prayer for relief.
Cloopen further answers the numbered paragraphs in the Complaint as follows:
1. Cloopen admits that it commenced an IPO on February 9, 2021. Cloopen admits
that Plaintiff purports to bring this action as a class action on behalf of persons who purchased,
or otherwise acquired, Cloopen American Depositary Shares (“ADSs”) pursuant or traceable to
the Offering Documents issued in connection with Cloopen’s IPO.2 Except as expressly
admitted herein, Cloopen denies each and every remaining allegation in paragraph 1.
2. Cloopen admits that Plaintiff purports to bring claims under Sections 11, 12(a)(2),
and 15 of the Securities Act of 1933 (“Securities Act”) against Cloopen; certain current and
former Cloopen officers and directors, specifically Changxun Sun, Yipeng Li, Kui Zhou,
1
Unless otherwise indicated, all capitalized terms used, but not defined herein, shall have the
meanings ascribed to them in the Complaint.
2
As used herein, the phrase “Offering Documents” means Cloopen’s Registration Statement
filed on January 19, 2021 (the “Registration Statement”) and declared effective by the U.S.
Securities and Exchange Commission (“SEC”) on February 8, 2021 and its Prospectus on Form
424B4, filed on February 9, 2021 (the “Prospectus”).
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Qingsheng Zheng, Xiaodong Liang, Zi Yang, Ming Liao, Feng Zhu, Lok Yan Hui, Jianhong
Zhou, and Ching Chiu (the “Cloopen Individual Defendants”); Cogency Global, Inc. (“Cogency
Global”); and Goldman Sachs (Asia) L.L.C., Citigroup Global Markets Inc., China International
Capital Corporation Hong Kong Securities Limited, Tiger Brokers (NZ) Limited, and Futu, Inc.
(now known as Moomoo Financial Inc.) (the “Underwriter Defendants”).3 Except as expressly
admitted herein, Cloopen denies each and every remaining allegation in paragraph 2.
3. To the extent that the allegations contained in paragraph 3 purport to quote and/or
characterize disclosures contained in the Offering Documents, the Offering Documents speak for
themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct
contents. Cloopen otherwise admits the allegations contained in paragraph 3.
4. To the extent that the allegations contained in paragraph 4 purport to quote and/or
characterize disclosures contained in the Offering Documents, the Offering Documents speak for
themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct
contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the
Offering Documents is complete or presented with full context, and denies Plaintiff’s
characterization of the disclosures. Cloopen admits that Cloopen conducted its IPO in February
2021 and that, pursuant to the Offering Documents, Cloopen issued 23 million ADSs at an
issuance price of $16 per ADS. Except as expressly admitted herein, Cloopen denies each and
every remaining allegation in paragraph 4.
3
Plaintiff voluntarily dismissed Colleen A. DeVries from the action. See NYSCEF No. 43;
NYSCEF No. 57 at 3-4.
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5. The allegations in paragraph 5 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary, Cloopen denies each and every
allegation in paragraph 5.
6. The allegations in paragraph 6 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary and to the extent that the
allegations contained in paragraph 6 purport to quote and/or characterize disclosures contained in
the Offering Documents, the Offering Documents speak for themselves, and Cloopen
respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies
that Plaintiff’s selective description of disclosures contained in the Offering Documents is
complete or presented with full context, and denies Plaintiff’s characterization of the disclosures.
Cloopen otherwise denies each and every allegation in paragraph 6.
7. To the extent that the allegations contained in paragraph 7 purport to quote and/or
characterize disclosures contained in the Offering Documents, Cloopen’s March 26, 2021 Form
6-K, and/or Cloopen’s FY2020 Annual Report, the documents speak for themselves, and
Cloopen respectfully refers to these documents for their true and correct contents.4 Cloopen
denies that Plaintiff’s selective description of disclosures contained in the Offering Documents,
March 26, 2021 Form 6-K, and/or FY2020 Annual Report is complete or presented with full
context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that the
Offering Documents and/or FY2020 Annual Report disclosed that the Company’s dollar-based
net customer retention rate for solutions that Cloopen offers on a recurring basis for FY 2019, the
4
As used herein, the phrases “March 26, 2021 Form 6-K” and “Form 6-K” mean the Form 6-
K that Cloopen filed with the SEC on March 26, 2021 announcing its unaudited financial results
for the fourth quarter and fiscal year (“FY”) 2020. As used herein,“FY2020 Annual Report” and
“Annual Report” mean the Annual Report for FY 2020 on Form 20-F that Cloopen filed with the
SEC on May 10, 2021.
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first nine months of FY 2020 ended September 30, 2020, and FY 2020 were 102.7%, 94.7%, and
86.8%, respectively. The remaining allegations in paragraph 7 contain Plaintiff’s
characterizations and/or legal conclusions as to which no response is required. To the extent that
a response is deemed necessary, Cloopen denies each and every remaining allegation in
paragraph 7.
8. To the extent that the allegations contained in paragraph 8 purport to quote and/or
characterize disclosures contained in Cloopen’s March 26, 2021 Form 6-K, the Form 6-K speaks
for itself, and Cloopen respectfully refers to the Form 6-K for its true and correct contents.
Cloopen denies that Plaintiff’s selective description of disclosures contained in Cloopen’s March
26, 2021 Form 6-K is complete or presented with full context, and denies Plaintiff’s
characterization of the disclosures. Cloopen admits that the March 26, 2021 Form 6-K disclosed
that for the fourth quarter of 2020 “[n]et loss was RMB305.4 million (US$46.8 million),
representing a 466.9% increase year-over-year.” The remaining allegations in paragraph 8
contain Plaintiff’s characterizations and/or legal conclusions as to which no response is required.
To the extent that a response is deemed necessary, Cloopen denies each and every remaining
allegation in paragraph 8.
9. The allegations in paragraph 9 and its footnote contain legal conclusions as to
which no response is required. To the extent that a response is deemed necessary, Cloopen
denies each and every allegation in paragraph 9.
10. The allegations in paragraph 10 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary, Cloopen denies each and every
allegation in paragraph 10.
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11. Cloopen admits that the Company conducted its IPO and raised approximately
$340.2 million in net proceeds from the IPO. The remaining allegations in paragraph 11 contain
legal conclusions as to which no response is required. To the extent that a response is deemed
necessary, Cloopen denies each and every remaining allegation in paragraph 11.
12. To the extent that paragraph 12 contains allegations concerning Cloopen’s stock
price, Cloopen refers to public records of such stock prices. Cloopen admits that the price of
Cloopen’s ADSs fell 18.5% from $14.42 per ADS at close of March 25, 2021 to $11.75 per ADS
at close of March 26, 2021. The remaining allegations in paragraph 12 contain Plaintiff’s
characterizations and/or legal conclusions as to which no response is required. To the extent that
a response is deemed necessary, Cloopen denies each and every remaining allegation in
paragraph 12.
13. To the extent that the allegations contained in paragraph 13 purport to
characterize disclosures contained in Cloopen’s FY2020 Annual Report, the FY2020 Annual
Report speaks for itself, and Cloopen respectfully refers to the FY2020 Annual Report for its true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the FY2020 Annual Report is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. To the extent that paragraph 13 contains
allegations concerning Cloopen’s stock price, Cloopen refers to public records of such stock
prices. Cloopen admits that the price of Cloopen’s ADSs fell 9.3% from $9.89 per ADS at close
of May 11, 2021 to $8.97 per ADS at close of May 12, 2021. Cloopen further admits that the
price of Cloopen’s ADSs increased by 3.13% following the filing of the FY2020 Annual Report
from $9.59 per ADS at close of May 10, 2021 to $9.89 per ADS at close of May 11, 2021. The
remaining allegations in paragraph 13 contain legal conclusions as to which no response is
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required. To the extent that a response is deemed necessary, Cloopen denies each and every
remaining allegation in paragraph 13.
14. To the extent that paragraph 14 contains allegations concerning Cloopen’s stock
price, Cloopen refers to public records of such stock prices. Cloopen admits that, from the IPO
to the date of the filing of the Complaint on October 4, 2021, the price of Cloopen’s ADSs has
traded as low as $3.98 per ADS and that such price represents a decline of over 75% from the
$16 per ADS IPO offering price.
15. The allegations in paragraph 15 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary, Cloopen denies each and every
allegation in paragraph 15.
16. The allegations in paragraph 16 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary, Cloopen denies the allegations in
paragraph 16, except it admits that Plaintiff purports to base the Court’s jurisdiction over this
action on the bases stated in paragraph 16.
17. The allegations in paragraph 17 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary, Cloopen denies the allegations in
paragraph 17, except it admits that Plaintiff purports to base personal jurisdiction and venue on
the statute cited therein. Cloopen denies that the alleged events or omissions described in the
Complaint give rise to any claims. Except as expressly admitted herein, Cloopen denies each
and every remaining allegation in paragraph 17.
18. The allegations in paragraph 18 contain legal conclusions as to which no response
is required. To the extent that a response is deemed necessary, Cloopen lacks knowledge and
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information sufficient to form a belief as to the truth of the allegations contained in paragraph 18
and, on that basis, denies those allegations.
19. To the extent that the allegations contained in paragraph 19 purport to quote
and/or characterize disclosures contained in the Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen otherwise admits the allegations contained in paragraph 19.
20. Cloopen admits that Cogency Global was Cloopen’s authorized U.S.
representative for purposes of the IPO and that Ms. DeVries signed the Registration Statement
on behalf of Cogency Global. The remaining allegations in paragraph 20 contain legal
conclusions as to which no response is required. To the extent that a response is deemed
necessary, Cloopen lacks knowledge and information sufficient to form a belief as to the truth of
the remaining allegations contained in paragraph 20 as to Cogency Global and Ms. DeVries and,
on that basis, denies each and every remaining allegation in paragraph 20 except those explicitly
admitted herein. Cloopen also notes that Plaintiff voluntarily dismissed Ms. DeVries from the
action and voluntarily dismissed its claims under the Second and Third Causes of Action against
Cogency. See NYSCEF No. 43; NYSCEF No. 57 at 3-4.
21. Cloopen admits that Changxun Sun (“Sun”) founded Cloopen and was, at the time
of the IPO, Cloopen’s CEO and Chairman of the Board. Cloopen admits that Sun signed the
Registration Statement. Cloopen further admits, on information and belief, that Sun reviewed
and contributed to the Registration Statement. Except as expressly admitted herein, Cloopen
denies each and every remaining allegation in paragraph 21.
22. Cloopen admits that Yipeng Li (“Li”) was, at the time of the IPO, Cloopen’s CFO
and a Director on Cloopen’s Board, as his appointment as a Director was effective upon the
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SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Li signed
the Registration Statement. Cloopen further admits, on information and belief, that Li reviewed
and contributed to the Registration Statement. Except as expressly admitted herein, Cloopen
denies each and every remaining allegation in paragraph 22.
23. Cloopen admits that Kui Zhou (“Zou”) was, at the time of the IPO, a Director on
Cloopen’s Board. Cloopen admits that Zhou signed the Registration Statement. Cloopen lacks
knowledge and information sufficient to form a belief as to the truth of the remaining allegations
contained in paragraph 23.
24. Cloopen admits that Qingsheng Zheng (“Zheng”) was, at the time of the IPO, a
Director on Cloopen’s Board. Cloopen admits that Zheng signed the Registration Statement.
Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the
remaining allegations contained in paragraph 24.
25. Cloopen admits that Xiaodong Liang (“Liang”) was a Director on Cloopen’s
Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board
effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen
admits that Liang signed the Registration Statement. Cloopen lacks knowledge and information
sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 25.
26. Cloopen admits that Zi Yang (“Yang”) was a Director on Cloopen’s Board at the
time of the filing of the Registration Statement and resigned from Cloopen’s Board effective
upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that
Yang signed the Registration Statement. Cloopen lacks knowledge and information sufficient to
form a belief as to the truth of the remaining allegations contained in paragraph 26.
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27. Cloopen admits that Ming Liao (“Liao”) was a Director on Cloopen’s Board at
the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective
upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that
Liao signed the Registration Statement. Cloopen further admits, on information and belief, that
Liao reviewed the Registration Statement and/or portions thereof. Except as expressly admitted
herein, Cloopen denies each and every remaining allegation in paragraph 27.
28. Cloopen admits that Feng Zhu (“Zhu”) was a Director on Cloopen’s Board at the
time of the filing of the Registration Statement and resigned from Cloopen’s Board effective
upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that
Zhu signed the Registration Statement. Cloopen lacks knowledge and information sufficient to
form a belief as to the truth of the remaining allegations contained in paragraph 28.
29. Cloopen admits that Lok Yan Hui (“Hui”) was a Director on Cloopen’s Board at
the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective
upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that
Hui signed the Registration Statement. Cloopen lacks knowledge and information sufficient to
form a belief as to the truth of the remaining allegations contained in paragraph 29.
30. Cloopen admits that Jianhong Zhou (“J. Zhou”) was a Director on Cloopen’s
Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board
effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen
admits that J. Zhou signed the Registration Statement. Cloopen lacks knowledge and
information sufficient to form a belief as to the truth of the remaining allegations contained in
paragraph 30.
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31. Cloopen admits that Ching Chiu (“Chiu”) accepted appointment as a Director on
Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration
Statement. Cloopen admits that Chiu signed the Registration Statement. Cloopen lacks
knowledge and information sufficient to form a belief as to the truth of the remaining allegations
contained in paragraph 31.
32. Cloopen understands that because Plaintiff voluntarily dismissed Colleen A.
DeVries from the action (see NYSCEF No. 43), a response is not required to the allegations
contained in paragraph 32. To the extent that a response is deemed necessary, Cloopen admits
that Ms. DeVries signed the Registration Statement on behalf of Cogency and that the title
affixed below her signature is “Senior Vice President.” Cloopen lacks knowledge and
information sufficient to form a belief as to the truth of the remaining allegations contained in
paragraph 32 as to Ms. DeVries and, on that basis, denies each and every remaining allegation in
paragraph 32 except those explicitly admitted herein.
33. Cloopen admits that the Cloopen Individual Defendants and Ms. DeVries each
signed the Registration Statement. Cloopen further admits, on information and belief, that Sun
and Li contributed to the IPO and Registration Statement and attended road shows. The
remaining allegations in paragraph 33 as to the Cloopen Individual Defendants contain Plaintiff’s
defined terms, characterizations, and/or legal conclusions as to which no response is required.
To the extent that a response is deemed necessary, Cloopen denies each and every remaining
allegation in paragraph 33 as to the Cloopen Individual Defendants. With respect to Ms.
DeVries, Cloopen understands that because Plaintiff voluntarily dismissed Ms. DeVries from the
action (see NYSCEF No. 43), a response is not required to the remaining allegations contained in
paragraph 33. To the extent that a response is deemed necessary, Cloopen lacks knowledge and
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information sufficient to form a belief as to the truth of the remaining allegations contained in
paragraph 33 as to Ms. DeVries.
34. Cloopen admits that the Underwriter Defendants acted as underwriters for
Cloopen’s IPO, but certain Underwriter Defendants received no allocation of shares at the time
of the IPO. Except as expressly admitted herein, Cloopen denies each and every remaining
allegation in paragraph 34.
35. To the extent that the allegations contained in paragraph 35 and its subsections
purport to characterize information disclosed in Cloopen’s Offering Documents or the
Underwriting Agreement (filed as Exhibit 1.1 to the Registration Statement), the documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents and
Underwriting Agreement for their true and correct contents. Cloopen denies that Plaintiff’s
selective description of the disclosures contained in the Offering Documents and Underwriting
Agreement is complete or presented with full context, and denies Plaintiff’s characterization of
the disclosures.
Cloopen admits that the Underwriter Defendants served as underwriters of the IPO, that
certain Underwriter Defendants acquired the ADSs with an underwriting discount at the time of
the IPO, and that certain other Underwriter Defendants received no allocation of ADSs at the
time of the IPO. Cloopen further admits that certain Underwriter Defendants arranged a road
show prior to the IPO and that the Underwriter Defendants and Cloopen are parties to an
Underwriting Agreement, which contains an indemnification provision, and refers to the
Underwriting Agreement for its true and correct contents. The remaining allegations in
paragraph 35 contain Plaintiff’s characterizations and/or legal conclusions as to which no
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response is required. To the extent that a response is deemed necessary, Cloopen denies each
and every remaining allegation in paragraph 35 except as otherwise admitted herein.
36. To the extent that the allegations contained in paragraph 36 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. Cloopen admits that it began providing cloud-
based communications solutions in 2014; that the Company primarily operates its business
through Beijing Ronglian Yitong Information Co. Ltd., or Ronglian Yitong; that, as of the IPO,
Ronglian Yitong is owned 71.01% by Sun and 24.46% by J. Zhou. The remaining allegations in
paragraph 36 contain Plaintiff’s characterizations and/or legal conclusions as to which no
response is required. To the extent that a response is deemed necessary, Cloopen denies each
and every remaining allegation in paragraph 36 except as otherwise admitted herein.
37. To the extent that the allegations contained in paragraph 37 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen otherwise admits the allegations in paragraph 37.
38. To the extent that the allegations contained in paragraph 38 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
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Plaintiff’s characterization of the disclosures. Cloopen otherwise admits the allegations in
paragraph 38 to the extent that they speak of Cloopen’s operations and business strategy as of the
time of the IPO. Except as expressly admitted herein, Cloopen denies each and every remaining
allegation in paragraph 38.
39. To the extent that the allegations contained in paragraph 39 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. Cloopen admits that, as it disclosed in the Offering
Documents, in the years leading up to the IPO, Cloopen experienced robust growth. Cloopen
further admits that, as it disclosed in the Offering Documents, as of December 31, 2018 and 2019
and September 30, 2020, Cloopen had an active customer base of over 10,200, 11,500 and
12,000 enterprises, respectively, among which 125, 152 and 173 were large-enterprise
customers, respectively. Cloopen further admits that, in the years leading up to the IPO, there
have been significant changes in how people communicate and collaborate in business scenarios
which affected China’s cloud-based communications industry. Cloopen further admits that, in
the years leading up to the IPO, Cloopen observed that as business communications and
collaboration increasingly take place across scattered locations, via diverse devices, and through
multiple channels, traditional solutions dependent upon on-premise hardware and infrastructure
have become inadequate and inefficient and that cloud-based communications solutions have
emerged and continue to be increasingly widely-adopted. Except as expressly admitted herein,
Cloopen denies each and every remaining allegation in paragraph 39.
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40. To the extent that the allegations contained in paragraph 40 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. Cloopen admits that, as it disclosed in the Offering
Documents, as of September 30, 2020, Cloopen had a sales and marketing team well-versed in
China’s cloud-based communications industry with 471 members; that the sales and marketing
team is generally responsible for contacting prospective customers, renewing existing
subscriptions, and maintaining customer relationships; and that the sales and marketing team had
a strong cross-selling and up-selling track record. Except as expressly admitted herein, Cloopen
denies each and every remaining allegation in paragraph 40.
41. To the extent that the allegations contained in paragraph 41 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. Cloopen admits that, as it disclosed in the Offering
Documents, as of September 30, 2020, Cloopen had established sales representative offices in
over 20 cities distributed across China. Cloopen admits that, as it disclosed in the Offering
Documents, it believed that such offices allowed the Company to stay closer to its potential
customers, to capture and accommodate specific needs and customers in different localities more
effectively, to recruit experienced sales personnel with first-hand customer resources locally, and
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to build collaborative relationships with mobile network operators’ local branches. Except as
expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 41.
42. To the extent that the allegations contained in paragraph 42 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. Cloopen admits, as it disclosed in the Offering
Documents, that Cloopen’s revenues increased by 29.7% from RMB501.5 million in FY 2018 to
RMB650.3 million (US$95.8 million) in FY 2019, and by 19.4% from RMB426.3 million in the
nine months ended September 30, 2019 to RMB509.0 million (US$75.0 million) in the nine
months ended September 30, 2020, of which 72.3%, 75.0%, 74.9%, and 76.5% were recurring
revenues, respectively. Cloopen further admits that, in FY 2018 and FY 2019, and the nine
months ended September 30, 2019 and 2020, Cloopen incurred net loss of RMB155.5 million,
RMB183.5 million (US$27.0 million), RMB129.6 million and RMB203.7 million (US$30.0
million), respectively. Except as expressly admitted herein, Cloopen denies each and every
remaining allegation in paragraph 42.
43. Cloopen admits to the allegations contained in paragraph 43.
44. To the extent that the allegations contained in paragraph 44 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen otherwise admits the allegations in paragraph 44.
15
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NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022
45. To the extent that the allegations contained in paragraph 45 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures
contained in the Offering Documents is complete or presented with full context, and denies
Plaintiff’s characterization of the disclosures. Cloopen otherwise admits that, as it disclosed in
the Offering Documents, in March 2020 and July 2020, Cloopen issued additional warrants to
the Series E warrant holders with rights to purchase an aggregate of 314,274 series E preferred
shares at nominal value for anti-dilution purpose.
46. To the extent that the allegations contained in paragraph 46 purport to
characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents
speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true
and correct contents. Cloopen otherwise admits the allegations in paragraph 46.
Preview
FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ) SONNY ST. JOHN, Individually and on ) Behalf of All Others Similarly Situated, ) Index No. 652617/2021 ) Plaintiff, ) Hon. Andrew Borrok ) v. ) ) CLOOPEN GROUP HOLDING LIMITED, ) CHANGXUN SUN, YIPENG LI, KUI ) ZHOU, QINGSHENG ZHENG, ) XIAODONG LIANG, ZI YANG, MING ) LIAO, FENG ZHU, LOK YAN HUI, ) JIANHONG ZHOU, CHING CHIU, ) COGENCY GLOBAL INC., COLLEEN A. ) DEVRIES, GOLDMAN SACHS (ASIA) ) L.L.C., CITIGROUP GLOBAL MARKETS ) INC., CHINA INTERNATIONAL ) CAPITAL CORPORATION HONG KONG ) SECURITIES LIMITED, TIGER BROKERS ) (NZ) LIMITED, and FUTU, INC., ) ) Defendants. ) ) CLOOPEN GROUP HOLDING LIMITED’S ANSWER TO AMENDED COMPLAINT FOR VIOLATIONS OF THE SECURITIES ACT OF 1933 Sheryl Shapiro Bassin WILSON SONSINI GOODRICH & ROSATI, P.C. 1301 Avenue of the Americas, 40th Floor New York, New York 10019 Telephone: (212) 999-5800 Email: sbassin@wsgr.com Ignacio E. Salceda (admitted pro hac vice) WILSON SONSINI GOODRICH & ROSATI, P.C. 650 Page Mill Road Palo Alto, California 94304 Telephone: (650) 493-9300 Email: ISalceda@wsgr.com Counsel for Defendant Cloopen Group Holding Limited 1 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 Defendant Cloopen Group Holding Limited (“Cloopen” or the “Company”), by and through its undersigned counsel, hereby answers the Amended Complaint filed by Plaintiff Sonny St. John (“Plaintiff”), dated October 4, 2021, NYSCEF No. 23 (the “Complaint”).1 To the extent that the paragraphs in the Complaint are grouped under headings and subheadings, Cloopen responds generally that the headings and subheadings do not constitute factual averments, and thus the headings are not included herein. To the extent that a response is deemed necessary, Cloopen denies each and every heading and subheading in the Complaint. Further, except as explicitly admitted herein, Cloopen denies each and every allegation of the Complaint, including, without limitation, any allegations in the unnumbered paragraph on page 1 of the Complaint, headings, subheadings, footnotes, and/or the prayer for relief. Cloopen further answers the numbered paragraphs in the Complaint as follows: 1. Cloopen admits that it commenced an IPO on February 9, 2021. Cloopen admits that Plaintiff purports to bring this action as a class action on behalf of persons who purchased, or otherwise acquired, Cloopen American Depositary Shares (“ADSs”) pursuant or traceable to the Offering Documents issued in connection with Cloopen’s IPO.2 Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 1. 2. Cloopen admits that Plaintiff purports to bring claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”) against Cloopen; certain current and former Cloopen officers and directors, specifically Changxun Sun, Yipeng Li, Kui Zhou, 1 Unless otherwise indicated, all capitalized terms used, but not defined herein, shall have the meanings ascribed to them in the Complaint. 2 As used herein, the phrase “Offering Documents” means Cloopen’s Registration Statement filed on January 19, 2021 (the “Registration Statement”) and declared effective by the U.S. Securities and Exchange Commission (“SEC”) on February 8, 2021 and its Prospectus on Form 424B4, filed on February 9, 2021 (the “Prospectus”). 1 2 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 Qingsheng Zheng, Xiaodong Liang, Zi Yang, Ming Liao, Feng Zhu, Lok Yan Hui, Jianhong Zhou, and Ching Chiu (the “Cloopen Individual Defendants”); Cogency Global, Inc. (“Cogency Global”); and Goldman Sachs (Asia) L.L.C., Citigroup Global Markets Inc., China International Capital Corporation Hong Kong Securities Limited, Tiger Brokers (NZ) Limited, and Futu, Inc. (now known as Moomoo Financial Inc.) (the “Underwriter Defendants”).3 Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 2. 3. To the extent that the allegations contained in paragraph 3 purport to quote and/or characterize disclosures contained in the Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen otherwise admits the allegations contained in paragraph 3. 4. To the extent that the allegations contained in paragraph 4 purport to quote and/or characterize disclosures contained in the Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that Cloopen conducted its IPO in February 2021 and that, pursuant to the Offering Documents, Cloopen issued 23 million ADSs at an issuance price of $16 per ADS. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 4. 3 Plaintiff voluntarily dismissed Colleen A. DeVries from the action. See NYSCEF No. 43; NYSCEF No. 57 at 3-4. 2 3 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 5. The allegations in paragraph 5 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every allegation in paragraph 5. 6. The allegations in paragraph 6 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary and to the extent that the allegations contained in paragraph 6 purport to quote and/or characterize disclosures contained in the Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen otherwise denies each and every allegation in paragraph 6. 7. To the extent that the allegations contained in paragraph 7 purport to quote and/or characterize disclosures contained in the Offering Documents, Cloopen’s March 26, 2021 Form 6-K, and/or Cloopen’s FY2020 Annual Report, the documents speak for themselves, and Cloopen respectfully refers to these documents for their true and correct contents.4 Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents, March 26, 2021 Form 6-K, and/or FY2020 Annual Report is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that the Offering Documents and/or FY2020 Annual Report disclosed that the Company’s dollar-based net customer retention rate for solutions that Cloopen offers on a recurring basis for FY 2019, the 4 As used herein, the phrases “March 26, 2021 Form 6-K” and “Form 6-K” mean the Form 6- K that Cloopen filed with the SEC on March 26, 2021 announcing its unaudited financial results for the fourth quarter and fiscal year (“FY”) 2020. As used herein,“FY2020 Annual Report” and “Annual Report” mean the Annual Report for FY 2020 on Form 20-F that Cloopen filed with the SEC on May 10, 2021. 3 4 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 first nine months of FY 2020 ended September 30, 2020, and FY 2020 were 102.7%, 94.7%, and 86.8%, respectively. The remaining allegations in paragraph 7 contain Plaintiff’s characterizations and/or legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 7. 8. To the extent that the allegations contained in paragraph 8 purport to quote and/or characterize disclosures contained in Cloopen’s March 26, 2021 Form 6-K, the Form 6-K speaks for itself, and Cloopen respectfully refers to the Form 6-K for its true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in Cloopen’s March 26, 2021 Form 6-K is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that the March 26, 2021 Form 6-K disclosed that for the fourth quarter of 2020 “[n]et loss was RMB305.4 million (US$46.8 million), representing a 466.9% increase year-over-year.” The remaining allegations in paragraph 8 contain Plaintiff’s characterizations and/or legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 8. 9. The allegations in paragraph 9 and its footnote contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every allegation in paragraph 9. 10. The allegations in paragraph 10 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every allegation in paragraph 10. 4 5 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 11. Cloopen admits that the Company conducted its IPO and raised approximately $340.2 million in net proceeds from the IPO. The remaining allegations in paragraph 11 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 11. 12. To the extent that paragraph 12 contains allegations concerning Cloopen’s stock price, Cloopen refers to public records of such stock prices. Cloopen admits that the price of Cloopen’s ADSs fell 18.5% from $14.42 per ADS at close of March 25, 2021 to $11.75 per ADS at close of March 26, 2021. The remaining allegations in paragraph 12 contain Plaintiff’s characterizations and/or legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 12. 13. To the extent that the allegations contained in paragraph 13 purport to characterize disclosures contained in Cloopen’s FY2020 Annual Report, the FY2020 Annual Report speaks for itself, and Cloopen respectfully refers to the FY2020 Annual Report for its true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the FY2020 Annual Report is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. To the extent that paragraph 13 contains allegations concerning Cloopen’s stock price, Cloopen refers to public records of such stock prices. Cloopen admits that the price of Cloopen’s ADSs fell 9.3% from $9.89 per ADS at close of May 11, 2021 to $8.97 per ADS at close of May 12, 2021. Cloopen further admits that the price of Cloopen’s ADSs increased by 3.13% following the filing of the FY2020 Annual Report from $9.59 per ADS at close of May 10, 2021 to $9.89 per ADS at close of May 11, 2021. The remaining allegations in paragraph 13 contain legal conclusions as to which no response is 5 6 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 13. 14. To the extent that paragraph 14 contains allegations concerning Cloopen’s stock price, Cloopen refers to public records of such stock prices. Cloopen admits that, from the IPO to the date of the filing of the Complaint on October 4, 2021, the price of Cloopen’s ADSs has traded as low as $3.98 per ADS and that such price represents a decline of over 75% from the $16 per ADS IPO offering price. 15. The allegations in paragraph 15 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every allegation in paragraph 15. 16. The allegations in paragraph 16 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies the allegations in paragraph 16, except it admits that Plaintiff purports to base the Court’s jurisdiction over this action on the bases stated in paragraph 16. 17. The allegations in paragraph 17 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies the allegations in paragraph 17, except it admits that Plaintiff purports to base personal jurisdiction and venue on the statute cited therein. Cloopen denies that the alleged events or omissions described in the Complaint give rise to any claims. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 17. 18. The allegations in paragraph 18 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen lacks knowledge and 6 7 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 information sufficient to form a belief as to the truth of the allegations contained in paragraph 18 and, on that basis, denies those allegations. 19. To the extent that the allegations contained in paragraph 19 purport to quote and/or characterize disclosures contained in the Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen otherwise admits the allegations contained in paragraph 19. 20. Cloopen admits that Cogency Global was Cloopen’s authorized U.S. representative for purposes of the IPO and that Ms. DeVries signed the Registration Statement on behalf of Cogency Global. The remaining allegations in paragraph 20 contain legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 20 as to Cogency Global and Ms. DeVries and, on that basis, denies each and every remaining allegation in paragraph 20 except those explicitly admitted herein. Cloopen also notes that Plaintiff voluntarily dismissed Ms. DeVries from the action and voluntarily dismissed its claims under the Second and Third Causes of Action against Cogency. See NYSCEF No. 43; NYSCEF No. 57 at 3-4. 21. Cloopen admits that Changxun Sun (“Sun”) founded Cloopen and was, at the time of the IPO, Cloopen’s CEO and Chairman of the Board. Cloopen admits that Sun signed the Registration Statement. Cloopen further admits, on information and belief, that Sun reviewed and contributed to the Registration Statement. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 21. 22. Cloopen admits that Yipeng Li (“Li”) was, at the time of the IPO, Cloopen’s CFO and a Director on Cloopen’s Board, as his appointment as a Director was effective upon the 7 8 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Li signed the Registration Statement. Cloopen further admits, on information and belief, that Li reviewed and contributed to the Registration Statement. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 22. 23. Cloopen admits that Kui Zhou (“Zou”) was, at the time of the IPO, a Director on Cloopen’s Board. Cloopen admits that Zhou signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 23. 24. Cloopen admits that Qingsheng Zheng (“Zheng”) was, at the time of the IPO, a Director on Cloopen’s Board. Cloopen admits that Zheng signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 24. 25. Cloopen admits that Xiaodong Liang (“Liang”) was a Director on Cloopen’s Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Liang signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 25. 26. Cloopen admits that Zi Yang (“Yang”) was a Director on Cloopen’s Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Yang signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 26. 8 9 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 27. Cloopen admits that Ming Liao (“Liao”) was a Director on Cloopen’s Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Liao signed the Registration Statement. Cloopen further admits, on information and belief, that Liao reviewed the Registration Statement and/or portions thereof. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 27. 28. Cloopen admits that Feng Zhu (“Zhu”) was a Director on Cloopen’s Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Zhu signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 28. 29. Cloopen admits that Lok Yan Hui (“Hui”) was a Director on Cloopen’s Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Hui signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 29. 30. Cloopen admits that Jianhong Zhou (“J. Zhou”) was a Director on Cloopen’s Board at the time of the filing of the Registration Statement and resigned from Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that J. Zhou signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 30. 9 10 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 31. Cloopen admits that Ching Chiu (“Chiu”) accepted appointment as a Director on Cloopen’s Board effective upon the SEC’s declaration of effectiveness of the Registration Statement. Cloopen admits that Chiu signed the Registration Statement. Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 31. 32. Cloopen understands that because Plaintiff voluntarily dismissed Colleen A. DeVries from the action (see NYSCEF No. 43), a response is not required to the allegations contained in paragraph 32. To the extent that a response is deemed necessary, Cloopen admits that Ms. DeVries signed the Registration Statement on behalf of Cogency and that the title affixed below her signature is “Senior Vice President.” Cloopen lacks knowledge and information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 32 as to Ms. DeVries and, on that basis, denies each and every remaining allegation in paragraph 32 except those explicitly admitted herein. 33. Cloopen admits that the Cloopen Individual Defendants and Ms. DeVries each signed the Registration Statement. Cloopen further admits, on information and belief, that Sun and Li contributed to the IPO and Registration Statement and attended road shows. The remaining allegations in paragraph 33 as to the Cloopen Individual Defendants contain Plaintiff’s defined terms, characterizations, and/or legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 33 as to the Cloopen Individual Defendants. With respect to Ms. DeVries, Cloopen understands that because Plaintiff voluntarily dismissed Ms. DeVries from the action (see NYSCEF No. 43), a response is not required to the remaining allegations contained in paragraph 33. To the extent that a response is deemed necessary, Cloopen lacks knowledge and 10 11 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 information sufficient to form a belief as to the truth of the remaining allegations contained in paragraph 33 as to Ms. DeVries. 34. Cloopen admits that the Underwriter Defendants acted as underwriters for Cloopen’s IPO, but certain Underwriter Defendants received no allocation of shares at the time of the IPO. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 34. 35. To the extent that the allegations contained in paragraph 35 and its subsections purport to characterize information disclosed in Cloopen’s Offering Documents or the Underwriting Agreement (filed as Exhibit 1.1 to the Registration Statement), the documents speak for themselves, and Cloopen respectfully refers to the Offering Documents and Underwriting Agreement for their true and correct contents. Cloopen denies that Plaintiff’s selective description of the disclosures contained in the Offering Documents and Underwriting Agreement is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that the Underwriter Defendants served as underwriters of the IPO, that certain Underwriter Defendants acquired the ADSs with an underwriting discount at the time of the IPO, and that certain other Underwriter Defendants received no allocation of ADSs at the time of the IPO. Cloopen further admits that certain Underwriter Defendants arranged a road show prior to the IPO and that the Underwriter Defendants and Cloopen are parties to an Underwriting Agreement, which contains an indemnification provision, and refers to the Underwriting Agreement for its true and correct contents. The remaining allegations in paragraph 35 contain Plaintiff’s characterizations and/or legal conclusions as to which no 11 12 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 35 except as otherwise admitted herein. 36. To the extent that the allegations contained in paragraph 36 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that it began providing cloud- based communications solutions in 2014; that the Company primarily operates its business through Beijing Ronglian Yitong Information Co. Ltd., or Ronglian Yitong; that, as of the IPO, Ronglian Yitong is owned 71.01% by Sun and 24.46% by J. Zhou. The remaining allegations in paragraph 36 contain Plaintiff’s characterizations and/or legal conclusions as to which no response is required. To the extent that a response is deemed necessary, Cloopen denies each and every remaining allegation in paragraph 36 except as otherwise admitted herein. 37. To the extent that the allegations contained in paragraph 37 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen otherwise admits the allegations in paragraph 37. 38. To the extent that the allegations contained in paragraph 38 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies 12 13 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 Plaintiff’s characterization of the disclosures. Cloopen otherwise admits the allegations in paragraph 38 to the extent that they speak of Cloopen’s operations and business strategy as of the time of the IPO. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 38. 39. To the extent that the allegations contained in paragraph 39 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that, as it disclosed in the Offering Documents, in the years leading up to the IPO, Cloopen experienced robust growth. Cloopen further admits that, as it disclosed in the Offering Documents, as of December 31, 2018 and 2019 and September 30, 2020, Cloopen had an active customer base of over 10,200, 11,500 and 12,000 enterprises, respectively, among which 125, 152 and 173 were large-enterprise customers, respectively. Cloopen further admits that, in the years leading up to the IPO, there have been significant changes in how people communicate and collaborate in business scenarios which affected China’s cloud-based communications industry. Cloopen further admits that, in the years leading up to the IPO, Cloopen observed that as business communications and collaboration increasingly take place across scattered locations, via diverse devices, and through multiple channels, traditional solutions dependent upon on-premise hardware and infrastructure have become inadequate and inefficient and that cloud-based communications solutions have emerged and continue to be increasingly widely-adopted. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 39. 13 14 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 40. To the extent that the allegations contained in paragraph 40 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that, as it disclosed in the Offering Documents, as of September 30, 2020, Cloopen had a sales and marketing team well-versed in China’s cloud-based communications industry with 471 members; that the sales and marketing team is generally responsible for contacting prospective customers, renewing existing subscriptions, and maintaining customer relationships; and that the sales and marketing team had a strong cross-selling and up-selling track record. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 40. 41. To the extent that the allegations contained in paragraph 41 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits that, as it disclosed in the Offering Documents, as of September 30, 2020, Cloopen had established sales representative offices in over 20 cities distributed across China. Cloopen admits that, as it disclosed in the Offering Documents, it believed that such offices allowed the Company to stay closer to its potential customers, to capture and accommodate specific needs and customers in different localities more effectively, to recruit experienced sales personnel with first-hand customer resources locally, and 14 15 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 to build collaborative relationships with mobile network operators’ local branches. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 41. 42. To the extent that the allegations contained in paragraph 42 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen admits, as it disclosed in the Offering Documents, that Cloopen’s revenues increased by 29.7% from RMB501.5 million in FY 2018 to RMB650.3 million (US$95.8 million) in FY 2019, and by 19.4% from RMB426.3 million in the nine months ended September 30, 2019 to RMB509.0 million (US$75.0 million) in the nine months ended September 30, 2020, of which 72.3%, 75.0%, 74.9%, and 76.5% were recurring revenues, respectively. Cloopen further admits that, in FY 2018 and FY 2019, and the nine months ended September 30, 2019 and 2020, Cloopen incurred net loss of RMB155.5 million, RMB183.5 million (US$27.0 million), RMB129.6 million and RMB203.7 million (US$30.0 million), respectively. Except as expressly admitted herein, Cloopen denies each and every remaining allegation in paragraph 42. 43. Cloopen admits to the allegations contained in paragraph 43. 44. To the extent that the allegations contained in paragraph 44 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen otherwise admits the allegations in paragraph 44. 15 16 of 45 FILED: NEW YORK COUNTY CLERK 08/30/2022 05:31 PM INDEX NO. 652617/2021 NYSCEF DOC. NO. 64 RECEIVED NYSCEF: 08/30/2022 45. To the extent that the allegations contained in paragraph 45 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen denies that Plaintiff’s selective description of disclosures contained in the Offering Documents is complete or presented with full context, and denies Plaintiff’s characterization of the disclosures. Cloopen otherwise admits that, as it disclosed in the Offering Documents, in March 2020 and July 2020, Cloopen issued additional warrants to the Series E warrant holders with rights to purchase an aggregate of 314,274 series E preferred shares at nominal value for anti-dilution purpose. 46. To the extent that the allegations contained in paragraph 46 purport to characterize information disclosed in Cloopen’s Offering Documents, the Offering Documents speak for themselves, and Cloopen respectfully refers to the Offering Documents for their true and correct contents. Cloopen otherwise admits the allegations in paragraph 46.