`ONESPAN INC., SCOTT CLEMENTS,
`and MARK S. HOYT,
`
`v.
`
`
`Defendants.
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`Case: 1:20-cv-04906 Document #: 1 Filed: 08/20/20 Page 1 of 30 PageID #:1
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`JUDITH ALMENDARIZ, Individually
`and On Behalf of All Others Similarly
`Situated,
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`
`Case No.
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
`
`Plaintiff,
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`Plaintiff Judith Almendariz (“Plaintiff”), individually and on behalf of all other persons
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`similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against
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`Defendants, alleges the following based upon personal knowledge as to Plaintiff and Plaintiff’s
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`own acts, and information and belief as to all other matters, based upon, inter alia, the investigation
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`conducted by and through Plaintiff’s attorneys, which included, among other things, a review of
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`the Defendants’ public documents, conference calls and announcements made by Defendants,
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`United States (“U.S.”) Securities and Exchange Commission (“SEC”) filings, wire and press
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`releases published by and regarding OneSpan Inc. (“OneSpan” or the “Company”), analysts’
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`reports and advisories about the Company, and information readily obtainable on the Internet.
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`Plaintiff believes that substantial additional evidentiary support will exist for the allegations set
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`forth herein after a reasonable opportunity for discovery.
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`NATURE OF THE ACTION
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`1.
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`This is a federal securities class action on behalf of a class consisting of all persons
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`and entities other than Defendants that purchased or otherwise acquired OneSpan securities
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`1
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`between May 9, 2018 and August 11, 2020, both dates inclusive (the “Class Period”), seeking to
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`recover damages caused by Defendants’ violations of the federal securities laws and to pursue
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`remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange
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`Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
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`2.
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`OneSpan was founded in 1991 and is headquartered in Chicago, Illinois. The
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`Company was formerly known as VASCO Data Security International, Inc. and changed its name
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`to OneSpan Inc. in May 2018.
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`3.
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`OneSpan, together with its subsidiaries, designs, develops, and markets digital
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`solutions for identity, security, and business productivity worldwide.
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`4.
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`Throughout the Class Period, Defendants made materially false and misleading
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`statements regarding the Company’s business, operational and compliance policies. Specifically,
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`Defendants made false and/or misleading statements and/or failed to disclose that: (i) OneSpan
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`had inadequate disclosure controls and procedures and internal control over financial reporting;
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`(ii) as a result, OneSpan overstated its revenue relating to certain contracts with customers
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`involving software licenses in its financial statements spread out over the quarters from the first
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`quarter of 2018 to the first quarter of 2020; (iii) as a result, it was foreseeably likely that the
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`Company would eventually have to delay one or more scheduled earnings releases, conference
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`calls, and/or financial filings with the SEC; (iv) OneSpan downplayed the negative impacts of
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`errors in its financial statements; (v) all the foregoing, once revealed, was foreseeably likely to
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`have a material negative impact on the Company’s financial results and reputation; and (vi) as a
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`result, the Company’s public statements were materially false and misleading at all relevant times.
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`5.
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`On August 4, 2020, during pre-market hours, OneSpan postponed its second quarter
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`2020 earnings release and conference call by one week, attributing the delay to prior period
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`2
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`revenue recognition problems relating to certain software license contracts spread out over the
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`quarters from the first quarter of 2018 to the first quarter of 2020. OneSpan further stated that
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`“[t]he net contract assets that originated from a portion of these contracts in prior periods were not
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`properly accounted for in subsequent periods, which caused overstatements of revenue.”
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`6.
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`On this news, OneSpan’s common share price fell $0.46 per share, or 1.40%, to
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`close at $32.50 per share on August 4, 2020.
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`7.
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`Then on August 11, 2020, during after-market hours, OneSpan disclosed that it
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`would not timely file its quarterly report for the quarter ended June 30, 2020, with the SEC;
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`reported that same quarter year-over-year revenues had declined; and withdrew its full year 2020
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`earnings guidance, which the Company had affirmed one quarter earlier.
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`8.
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`On this news, OneSpan’s common share price fell $12.36 per share, or 39.62%, to
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`close at $18.84 per share on August 12, 2020.
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`9.
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`As a result of Defendants’ wrongful acts and omissions, and the precipitous decline
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`in the market value of the Company’s securities, Plaintiff and other Class members have suffered
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`significant losses and damages.
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`JURISDICTION AND VENUE
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`10.
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`The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of
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`the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the
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`SEC (17 C.F.R. § 240.10b-5).
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`11.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. § 1331 and Section 27 of the Exchange Act.
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`12.
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`Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act
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`(15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b). OneSpan is headquartered in this Judicial District,
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`3
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`Defendants conduct business in this Judicial District, and a significant portion of Defendants’
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`actions took place within this Judicial District.
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`13.
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`In connection with the acts alleged in this complaint, Defendants, directly or
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`indirectly, used the means and instrumentalities of interstate commerce, including, but not limited
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`to, the mails, interstate telephone communications, and the facilities of the national securities
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`markets.
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`PARTIES
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`14.
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`Plaintiff, as set forth in the attached Certification, acquired OneSpan securities at
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`artificially inflated prices during the Class Period and was damaged upon the revelation of the
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`alleged corrective disclosures.
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`15.
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`Defendant OneSpan is a Delaware corporation with principal executive offices
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`located at 121 West Wacker Drive, Suite 2050, Chicago, Illinois 60601. OneSpan’s securities
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`trade in an efficient market on the NASDAQ stock market (“NASDAQ”) under the ticker symbol
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`“OSPN.”
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`16.
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`Defendant Scott Clements (“Clements”) has served as OneSpan’s Chief Executive
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`Officer at all relevant times.
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`17.
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`Defendant Mark S. Hoyt (“Hoyt”) has served as OneSpan’s Chief Financial Officer
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`at all relevant times.
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`18.
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`Defendants Clements and Hoyt are sometimes referred to herein as the “Individual
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`Defendants.”
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`19.
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`The Individual Defendants possessed the power and authority to control the
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`contents of OneSpan’s SEC filings, press releases, and other market communications. The
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`Individual Defendants were provided with copies of OneSpan’s SEC filings and press releases
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`4
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`alleged herein to be misleading prior to or shortly after their issuance and had the ability and
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`opportunity to prevent their issuance or to cause them to be corrected. Because of their positions
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`with OneSpan, and their access to material information available to them but not to the public, the
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`Individual Defendants knew that the adverse facts specified herein had not been disclosed to and
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`were being concealed from the public, and that the positive representations being made were then
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`materially false and misleading. The Individual Defendants are liable for the false statements and
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`omissions pleaded herein.
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`20.
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`OneSpan and the Individual Defendants are collectively referred to herein as
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`“Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`Background
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`21.
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`OneSpan was founded in 1991 and is headquartered in Chicago, Illinois. The
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`Company was formerly known as VASCO Data Security International, Inc. and changed its name
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`to OneSpan Inc. in May 2018.
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`22.
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`OneSpan, together with its subsidiaries, designs, develops, and markets digital
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`solutions for identity, security, and business productivity worldwide.
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`Materially False and Misleading Statements Issued During the Class Period
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`23.
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`The Class Period begins on May 9, 2018. On May 8, 2018, during after-market
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`hours, OneSpan issued a press release announcing its financial and operating results for the first
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`quarter of 2018 (the “1Q18 Press Release”). Among other results, that press release reported that
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`“[r]evenue for the first quarter of 2018 increased 8% to $45.4 million from $42.0 million in the
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`first quarter of 2017,” and that software licenses revenue was $16.003 million for the quarter.
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`5
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`24.
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`The 1Q18 Press Release also quoted Defendant Clements, who touted, in relevant
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`part, that OneSpan “reported record non-hardware revenue in the first quarter with strong
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`contributions from software licenses and subscriptions”; that this “success was underscored by the
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`doubling of [OneSpan’s] mobile security software and an increase of nearly 50% in [OneSpan’s]
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`e-signature solutions”; and that “[s]trong software and services revenue combined with expected
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`Q1 declines in hardware revenue contributed to a higher gross profit margin.”
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`25.
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`On May 9, 2018, OneSpan filed a quarterly report on Form 10-Q with the SEC,
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`reporting the Company’s financial and operating results for the quarter ended March 31, 2018 (the
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`“1Q18 10-Q”). The 1Q18 10-Q affirmed the Company’s revenue results reported in the 1Q18
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`Press Release, including the figure reported for software licenses revenue.
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`26.
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`Additionally, with respect to how the Company accounts for license revenue, the
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`1Q18 10-Q represented, in relevant part, that “[r]evenue from the sale of software licensing is
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`recorded upon the latter of when the customer receives the ability to access the software or when
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`they are legally allowed to use the software”; that “[n]o significant obligations or contingencies
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`exist with regard to delivery, customer acceptance or rights of return at the time revenue is
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`recognized”; that “[c]ustomer payments normally correspond with delivery for perpetual licenses”;
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`that, “[f]or term licenses, payments are either on installment or in advance”; that Defendants “have
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`determined that, consistent with [their] conclusion under prior revenue recognition rules, [they]
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`act as the principal with respect to the satisfaction of the related performance obligation and record
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`the corresponding revenue on a gross basis from these transactions”; and that “[t]he fees paid to
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`the third parties are recognized as a component of cost of sales when the revenue is recognized.”
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`27. With respect to how OneSpan recognized revenue following the Company’s
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`adoption of Accounting Standards Update No. 2014-09 “Revenue from Contracts with
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`6
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`Customers” (FASB Accounting Standards Codification (ASC) Topic 606, or “Topic 606”), the
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`1Q18 10-Q stated, in relevant part, that Defendants “determine revenue recognition through . . .
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`[i]dentification of the contract, or contracts, with a customer,” “[i]dentification of the performance
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`obligations in the contract,” “[d]etermination of the transaction price,” “[a]llocation of the
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`transaction price to the performance obligations in the contract,” and “[r]ecognition of revenue
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`when, or as, [they] satisfy a performance obligation”; that “[r]evenues are recognized when control
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`of the promised goods or services is transferred to [OneSpan’s] customers, in an amount that
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`reflects the consideration [Defendants] expect to be entitled to in exchange for those products or
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`services, which excludes any sales incentives and amounts collected on behalf of third parties”;
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`that “[t]axes assessed by a governmental authority that are both imposed on and concurrent with a
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`specific revenue-producing transaction, that are collected by the Company from a customer, are
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`excluded from revenue”; and that “[s]hipping and handling costs associated with outbound freight
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`after control over a product has transferred to a customer are accounted for as a fulfillment cost
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`and are in [sic] included in cost of revenues.”
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`28. With respect to OneSpan’s disclosure controls and procedures, the 1Q18 10-Q
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`represented, in relevant part, that OneSpan’s “management, with the participation of [OneSpan’s]
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`Chief Executive Officer and Chief Financial Officer . . . conducted an evaluation of the
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`effectiveness of [the Company’s] disclosure controls and procedures . . . as of the end of the period
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`covered by this Quarterly Report on Form 10-Q”; that “[d]isclosure controls and procedures
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`include, without limitation, controls and procedures designed to ensure . . . the information
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`required to be disclosed by [Defendants] in [OneSpan’s] reports that [Defendants] file or submit
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`under the Exchange Act is recorded, processed, summarized and reported within the time periods
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`specified in the [SEC]’s rules and forms,” as well as that “information required to be disclosed by
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`7
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`[Defendants] in [their] reports that [they] file or submit under the Exchange Act is accumulated
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`and communicated to [OneSpan’s] management, including [the] principal executive and principal
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`financial officers, or persons performing similar functions, as appropriate to allow timely decisions
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`regarding required disclosure”; and that OneSpan’s “disclosure controls and procedures are
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`designed to provide reasonable assurance of achieving their objectives.”
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`29. With respect to changes in internal controls, if any, that occurred during the quarter
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`covered by the 1Q18 10-Q, the 1Q18 10-Q stated, in relevant part, that, “[e]ffective January 1,
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`2018, [OneSpan] adopted Accounting Standards Codification 606 (‘ASC 606’), ‘Revenue from
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`Contracts with Customers’”; that “[c]hanges were made to the relevant business processes and the
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`related control activities in order to monitor and maintain appropriate controls over financial
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`reporting”; that “[t]hese included the development of new entity-wide policies based on the five-
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`step model provided in the revenue recognition standard, new training, ongoing contract review
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`requirements, and gathering of information provided for disclosures”; and that, “[o]ther than the
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`changes noted above, there were no changes in [OneSpan’s] internal control over financial
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`reporting during the quarter ended March 31, 2018 that have materially affected, or are reasonably
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`likely to materially affect, [the Company’s] internal control over financial reporting.”
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`30.
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`Additionally, the 1Q18 10-Q contained generic, boilerplate representations
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`regarding the risks inherent in “all control systems.” Specifically, the 1Q18 10-Q represented, in
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`relevant part, that OneSpan’s “management, including [its] Chief Executive Officer and Chief
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`Financial Officer, do not expect that [the Company’s] disclosure controls and procedures or
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`internal control over financial reporting will prevent all error and all fraud”; that “[a] control
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`system, no matter how well designed and implemented, can provide only reasonable, not absolute,
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`assurance that the control system’s objectives will be met”; that “the design of a control system
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`8
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`must reflect the fact that there are resource constraints, and the benefits of controls must be
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`considered relative to their costs”; that, “[b]ecause of the inherent limitations in all control systems,
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`no evaluation of controls can provide absolute assurance that all control issues and instances of
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`fraud, if any, within a company are detected”; that “[t]he inherent limitations include the realities
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`that judgments in decision-making can be faulty, and that breakdowns can occur because of simple
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`errors or mistakes”; that “[c]ontrols can also be circumvented by the individual acts of some
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`persons, by collusion of two or more people, or by management override of the controls”; that
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`“[t]he design of any system of controls is based in part on certain assumptions about the likelihood
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`of future events, and there can be no assurance that any design will succeed in achieving its stated
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`goals under all potential future conditions”; that “[p]rojections of any evaluation of controls’
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`effectiveness to future periods are subject to risks”; that, “[o]ver time, controls may become
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`inadequate because of changes in conditions or deterioration in the degree of compliance with
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`policies or procedures”; and that, “[b]ecause of the inherent limitations in a cost-effective control
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`system, misstatements due to error or fraud may occur and may not be detected.” Plainly, the
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`foregoing risk warnings were generic, catch-all provisions that were not tailored to OneSpan’s
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`actual known risks regarding the Company’s calculation of revenue for contracts with customers
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`involving software licenses.
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`31.
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`Appended as exhibits to the 1Q18 10-Q were signed certifications pursuant to the
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`Sarbanes-Oxley Act of 2002 (“SOX”), wherein the Individual Defendants certified that “[t]he
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`[1Q18 10-Q] fully complies with the requirements of Section 13(a) or 15(d) of the Securities
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`Exchange Act of 1934, as amended,” and that “[t]he information contained in the [1Q18 10-Q]
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`fairly presents, in all material respects, the financial condition and results of operations of the
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`[Company].”
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`9
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`32.
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`On July 26, 2018, OneSpan issued a press release announcing its financial and
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`operating results for the second quarter of 2018 (the “2Q18 Press Release”). Among other results,
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`that press release reported that “[r]evenue for the second quarter of 2018 was $49.6 million, an
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`increase of 8% from $45.7 million for the second quarter of 2017”; that “[r]evenue for the first six
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`months of 2018 was $95.0 million, an increase of 8% from $87.7 million for the first six months
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`of 2017”; and that software licenses revenue was $10.410 million and $26.413 million for the three
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`and six months ended June 30, 2018, respectively.
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`33.
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`The 2Q18 Press Release also quoted Defendant Clements, who touted, in relevant
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`part, that “[t]he second quarter marked a significant turning point for OneSpan™, with a global
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`rebrand, the launch of [the Company’s] Trusted Identity platform and the acquisition of identity
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`verification innovator, Dealflo,” each of which that “was executed in support of [OneSpan’s]
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`software focused growth strategy”; and that, “[d]uring the quarter, [OneSpan] benefitted from
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`strong growth in [inter alia] . . . increased software licenses.”
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`34.
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`On August 3, 2018, OneSpan filed a quarterly report on Form 10-Q with the SEC,
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`reporting the Company’s financial and operating results for the quarter ended June 30, 2018 (the
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`“2Q18 10-Q”). The 2Q18 10-Q affirmed the Company’s revenue results reported in the 2Q18
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`Press Release, including the figures reported for software licenses revenue. Additionally, the 2Q18
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`10-Q contained substantively the same statements as referenced in ¶¶ 26-28 and 30, supra.
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`35.
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`The 2Q18 10-Q also represented that “[t]here were no changes in [OneSpan’s]
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`internal control over financial reporting during the three months ended June 30, 2018 that have
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`materially affected, or are reasonably likely to materially affect, [the Company’s] internal control
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`over financial reporting.”
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`10
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`36.
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`Appended as exhibits to the 2Q18 10-Q were substantively the same SOX
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`certifications as referenced in ¶ 31, supra, signed by the Individual Defendants.
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`37.
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`On October 30, 2018, OneSpan issued a press release announcing its financial and
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`operating results for the third quarter of 2018 (the “3Q18 Press Release”). Among other results,
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`that press release reported that “[r]evenue for the third quarter of 2018 was $52.5 million, an
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`increase of 3% from $51.1 million for the third quarter of 2017”; that “[r]evenue for the first nine
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`months of 2018 was $147.5 million, an increase of 6% from $138.8 million for the first nine
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`months of 2017”; and that software licenses revenue was $9.826 million and $36.239 million for
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`the three and nine months ended September 30, 2018, respectively.
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`38.
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`On November 2, 2018, OneSpan filed a quarterly report on Form 10-Q with the
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`SEC, reporting the Company’s financial and operating results for the quarter ended September 30,
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`2018 (the “3Q18 10-Q”). The 3Q18 10-Q affirmed the Company’s revenue results reported in the
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`3Q18 Press Release, including the figures reported for software licenses revenue. Additionally,
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`the 3Q18 10-Q contained substantively the same statements as referenced in ¶¶ 26-28, 30, and 35,
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`supra.
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`39.
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`Appended as exhibits to the 3Q18 10-Q were substantively the same SOX
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`certifications as referenced in ¶ 31, supra, signed by the Individual Defendants.
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`40.
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`On February 19, 2019, OneSpan issued a press release announcing its financial and
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`operating results for the fourth quarter and full year of 2018 (the “4Q/FY18 Press Release”).
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`Among other results, that press release reported that “[r]evenue for the fourth quarter of 2018 was
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`$64.8 million, an increase of 19% from $54.5 million for the fourth quarter of 2017”; that
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`“[r]evenue for the full year 2018 was $212.3 million, an increase of 10% from $193.3 million for
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`11
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`the full year 2017”; and that software licenses revenue was $11.178 million and $47.417 million
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`for the three and twelve months ended December 31, 2018, respectively.
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`41.
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`The 4Q/FY18 Press Release also quoted Defendant Clements, who touted, in
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`relevant part, that OneSpan “had a very strong fourth quarter with revenue up 19% on solid
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`contributions across our portfolio of [inter alia] software,” and that “mobile security software
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`license revenue grew more than 50%.”
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`42.
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`On March 15, 2019, OneSpan filed an annual report on Form 10-K with the SEC,
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`reporting the Company’s financial and operating results for the quarter and year ended December
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`31, 2018 (the “2018 10-K”). The 2018 10-K affirmed the Company’s revenue results reported in
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`the 4Q/FY18 Press Release, including the figures reported for software licenses revenue.
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`Additionally, the 2018 10-K contained substantively the same statements as referenced in ¶¶ 26-
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`28, 30, and 35, supra.
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`43. While acknowledging that OneSpan’s “disclosure controls and procedures were not
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`effective as of December 31, 2018,” because of a “material weakness in [the Company’s] internal
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`control over financial reporting,” and that “the Company’s internal control over financial reporting
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`was not effective . . . as of December 31, 2018, due to the material weakness,” the 2018 10-K
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`simultaneously downplayed the impact of this deficiency by representing that “[t]hese control
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`deficiencies led to immaterial misstatements . . . some of which were corrected by the Company
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`prior to the issuance of the December 31, 2018 consolidated financial statements.”
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`44.
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`The 2018 10-K also downplayed the future impact or occurrence of future
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`deficiencies by touting various remedial measures Defendants had implemented to cure these
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`deficiencies, stating, in relevant part, that, “[d]uring the three months ended December 31, 2018,
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`the Company initiated its remediation plan related to the material weakness that was identified in
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`12
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`2018”; that Defendants “[h]ave hired, and plan to continue hiring, additional accounting personnel
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`with the requisite technical knowledge with respect to revenue recognition and internal control
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`over financial reporting”; that Defendants “will consider use of third party resources to ensure
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`[they] have a sufficient complement of resources”; that Defendants “[w]ill conduct an expanded
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`training program for [their] new and existing personnel on internal control over financial reporting
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`and accounting for revenue recognition”; that “[m]anagement will complete the implementation
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`of a new comprehensive worldwide enterprise resource planning (ERP) system, effective January
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`1, 2019,” which “will improve and enhance the Company’s processes by increasing the level of
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`automation, which is expected improve the efficiency and effectiveness of certain financial
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`reporting and business processes”; that Defendants “[d]esign, implement and operate effective
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`process-level controls throughout each of the processes in which there were ineffectively designed
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`and implemented controls during 2018”; that Defendants “[d]esign and implement an effective
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`continuous risk assessment processes to monitor changes that could significantly impact [their]
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`internal control over financial reporting”; and that Defendants “expect remediation of the material
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`weakness will be completed in fiscal year 2019.”
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`45.
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`Appended as exhibits to the 2018 10-K were substantively the same SOX
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`certifications as referenced in ¶ 31, supra, signed by the Individual Defendants.
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`46.
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`On May 7, 2019, OneSpan issued a press release announcing its financial and
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`operating results for the first quarter of 2019 (the “1Q19 Press Release”). Among other results,
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`that press release reported that “[r]evenue for the first quarter of 2019 was $47.6 million, an
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`increase of 5% from $45.4 million for the first quarter of 2018,” and that software licenses revenue
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`was $7.571 million for the quarter.
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`13
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`47.
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`That same day, OneSpan filed a quarterly report on Form 10-Q with the SEC,
`
`reporting the Company’s financial and operating results for the quarter ended March 31, 2019 (the
`
`“1Q19 10-Q”). The 1Q19 10-Q affirmed the Company’s revenue results reported in the 1Q19
`
`Press Release, including the figure reported for software licenses revenue. Additionally, the 1Q19
`
`10-Q contained substantively the same statements as referenced in ¶¶ 26-28, 30, and 35, supra.
`
`48. While acknowledging that a material weakness still existed in the Company’s
`
`disclosure controls and procedures and internal control over financial reporting, the 1Q19 10-Q
`
`continued to downplay this deficiency by touting the Company’s remediation plan as described in
`
`the 2018 10-K, and by assuring investors that, “[a]dditionally, the Company concluded the
`
`implementation of a new global enterprise resource planning (‘ERP’) system during the three
`
`months ended March 31, 2019,” which “has replaced [OneSpan’s] existing operating and financial
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`systems and is designed to accurately maintain the Company’s financial records, enhance
`
`operational functionality, and provide timely information to the Company’s management team
`
`related to the operation of the business.”
`
`49.
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`The 1Q19 10-Q further assured investors that Defendants “also implemented
`
`internal controls to ensure [they] adequately evaluated [their] contracts and properly assessed the
`
`impact of ASC 842 to facilitate the adoption on January 1, 2019, as well as [OneSpan’s] on-going
`
`accounting.”
`
`50.
`
`Appended as exhibits to the 1Q19 10-Q were substantively the same SOX
`
`certifications as referenced in ¶ 31, supra, signed by the Individual Defendants.
`
`51.
`
`On July 25, 2019, OneSpan issued a press release announcing its financial and
`
`operating results for the second quarter of 2019 (the “2Q19 Press Release”). Among other results,
`
`that press release reported that “[r]evenue for the second quarter of 2019 was $56.2 million, an
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`
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`increase of 13% from $49.6 million for the second quarter of 2018”; that “[r]evenue for the first
`
`six months of 2019 was $103.8 million, an increase of 9% from $95.0 million for the first six
`
`months of 2018”; and that software licenses revenue was $11.078 million and $18.649 million for
`
`the three and six months ended June 30, 2019, respectively.
`
`52.
`
`On July 31, 2019, OneSpan filed a quarterly report on Form 10-Q with the SEC,
`
`reporting the Company’s financial and operating results for the quarter ended June 30, 2019 (the
`
`“2Q19 10-Q”). The 2Q19 10-Q affirmed the Company’s revenue results reported in the 2Q19
`
`Press Release, including the figures reported for software licenses revenue. Additionally, the 2Q19
`
`10-Q contained substantively the same statements as referenced in ¶¶ 28, 30, 35, and 48, supra.
`
`53.
`
`Additionally, with respect to relevant accounting measures, the 2Q19 10-Q
`
`represented, in relevant part, that, “[e]xcept for the accounting policies related to lease accounting
`
`. . . there have been no changes to significant accounting policies described in [2018 10-K] . . . that
`
`have had a material impact on the Company’s condensed consolidated financial statements and
`
`related notes.”
`
`54.
`
`Appended as exhibits to the 2Q19 10-Q were substantively the same SOX
`
`certifications as referenced in ¶ 31, supra, signed by the Individual Defendants.
`
`55.
`
`On October 29, 2019, OneSpan issued a press release announcing its financial and
`
`operating results for the third quarter of 2019 (the “3Q19 Press Release”). Among other results,
`
`that press release reported that “[r]evenue for the third quarter of 2019 was $79.7 million, an
`
`increase of 52% from $52.5 million for the third quarter of 2018”; that “[r]evenue for the first nine
`
`months of 2019 was $183.6 million, an increase of 24% from $147.5 million for the first nine
`
`months of 2018”; and that software licenses revenue was $19.154 million and $37.803 million for
`
`the three and nine months ended September 30, 2019, respectively.
`
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`56.
`
`On October 30, 2019, OneSpan filed a quarterly report on Form 10-Q with the SEC,
`
`reporting the Company’s financial and operating results for the quarter ended September 30, 2019
`
`(the “3Q19 10-Q”). The 3Q19 10-Q affirmed the Company’s revenue results reported in the 3Q19
`
`Press Release, including the figures reported for software licenses revenue. Additionally, the 3Q19
`
`10-Q contained substantively the same statements as referenced in ¶¶ 28, 30, 35, 48, and 53, supra.
`
`57.
`
`Appended as exhibits to the 3Q19 10-Q were substantively the same SOX
`
`certifications as referenced in ¶ 31, supra, signed by the Individual Defendants.
`
`58.
`
`On March 3, 2020, OneSpan issued a press release announcing its financial and
`
`operating results for the fourth quarter and full year of 2019 (the “4Q/FY19 Press Release”).
`
`Among other results, that press release reported that “[r]evenue for the fourth quarter of 2019 was
`
`$71.0 million, an increase of 10% from $64.8 million for the fourth quarter of 2018”; that
`
`“[r]evenue for the full year 2019 was $254.6 million, an increase of 20% from $212.3 million for
`
`the full year 2018”; and that software licenses revenue was $19.365 million and $57.168 million
`
`for the three and twelve months ended December 31, 2019, respectively.
`
`59.
`
`The 4Q/FY19 Press Release also quoted Defendant Clements, who touted, in
`
`relevant part, that OneSpan’s “transformation continues to yield positive results as [the Company]
`
`enjoyed an impressive fourth quarter with [inter alia] software license revenue up 73% . . .
`
`contributing to total software revenue growth of 63%”; that “[t]otal revenue increased 20% to $255
`
`million, [the Company’s] highest year ever”; and that “total software revenue grew 26%.”
`
`60.
`
`On March 16, 2020, OneSpan filed an annual report on Form 10-K with the SEC,
`
`reporting the Company’s financial and operating results f