Archive for October, 2012

Is TAGG Legit?

Posted in Internet Frauds and SCAMS on 27, October 2012 by nathanbusch

One of my readers has asked whether TagLikeMe, Corp., (OTC: TAGG) was “legitimate.” This question was raised during the TFER penny stock SCAM by our mysterious “John Bell”. Apparently the only basis upon which our “John Bell” founded his latest pump of TFER was that AwesomePennyStocks was about to initiate a promotion of the company as a promising penny stock company. Also, it appears that currently, AwesomePennyStocks is promoting TAGG.

As a preliminary matter, I am deeply skeptical of any company of which the shares are promoted by any penny stock promoter, especially if that promoter is “John Bell”. In fact, I stay away from initial public offerings, or secondary public offerings, if the shares are primarily sold by insiders to increase the size of their purse. I followed this rule during the Initial Public Offering for Facebook. To my way of thinking, an investor should purchase shares during an initial, or secondary, public offering only if the company is selling the shares to raise funds to expand or to invest in research and development to bring new products to market. I simply refuse to give my money to some insider so that he can spend his days on a fancy yacht in a warm climate. If a company wants my money, it better have a clear business plan as to how that money will be used to make me more money in the future. TAGG has been promoted by a penny stock promoter, thus the first of the three clear indicators for a penny-stock SCAM is found.

A second and third clear indicators for a company that is the subject matter of a penny stock SCAM are the following: (1) a share price less than $4.00; (2) the company is the result of a reverse merger. TAGG certainly satisfies the second of the three clear indicators.

We may now turn our attention to TagLikeMe. From the information supplied on Finance Yahoo!, we find that TagLikeMe is identified as existing in the “Basic Materials” Section and the “Oil and Gas Equipment and Services” industry. Also, the company claims that: “through its subsidiary, Glob Media Works Inc., provides Internet cloud based software application related to online search and social media. The company[‘]s primary business is a social search destination, Taglike.me or Taglikeme.com, which is an Internet services platform that allows individuals to search the Internet by using search engines of Bind and Google; and in viewing related activities from social media ased sites, such as Facebook, YouTube, Twitter, and Wikipedia with regard to their search inquiry.” In that rather lengthy, tedious, and strained description, we find all the “buzz words” necessary to attract those who gamble rather than invest, to wit: cloud computing, social media, Google, Bing, Facebook, YouTube, Twitter, and Wikipedia.

ALso, we may readily find that TagLikeMe Corp., “locates, explores, acquires, and develops oil and gas properties in North America. * * * The company was formerly known as Morgan Creek Energy Corp.” This is a very strange combination: an internet search engine exploring for gas and oil in New Mexico with offices in Dallas, Texas. Based upon this description alone, I would rank this company as a -4 on a 1 to 10 credibility scale.

I performed an investigation of the website for TagLikeMe: it consists of a 45 second, or so, video that informs one of nothing and is otherwise devoid of substance.

I also performed a search on the EDGAR website that belongs to the SEC for the ticker symbol TAGG. The website responded that no such sticker symbol existed. I also used the file number for the company that I found on the website for TagLikeMe. Again, the EDGAR website returned notice that no such company existed with such a file number. Following an alternative search route, I found that the company had filed documents with the SEC under the CIK identifier: 0001323143.

On, or about, 18th May 2012, Peter Wilson resigned as the President, Chief Executive Officer, and Principal Executive Officer of Morgan Creek Energy Corp. On that date, the Board of Directors accepted the consent of Richard Elliot-Square to act as the President/Chief Executive Officer/Principal Executive Officer. According to the available record, Mr. Elliot-Square has been an investment banker based in London, Vancouver and Zurich specializing in the introduction of investment banking and venture capital projects. Of import to TagLikeMe, Mr. Elliot-Square has been successful in the re-structuring and funding of several publicly traded companies in the United Kingdom and North American. During the installation of Mr. Elliot-Square as President and CEO, Morgan Creek executed some complex share transactions with Mr. Gary Powers, who apparently owns Westrock Land Corporation of Dallas, Texas, and initiated a share transaction with Glob Media Corporation.

On 21st May 2012, the Board of Directors of Morgan Creek Energy created a wholly-owned subsidiary named TagLikeMe, Corp., and reverse-merged that subsidiary into Morgan Creek Energy and the resulting entity acquired the name TagLikeMe, Corp. Thus, TagLikeMe meets the third of the three clear criteria that I use to determine whether the company is the subject of a penny-stock SCAM.

On, or about 15th June 2012, Mr. Elliot-Square acquired 2,000,000 shares of TagLikeMe in exchange for 3¢ per share, William David Thomas acquired 400,000 shares at that same price, and Peter Grant Wilson obtained options for 800,000 shares at a strike price of 25¢ per share. Subsequently, the company reported that:

Effective June 29, 2012, TagLikeMe corp., formerly known as Morgan Creek Energy Corp., a Nevada corporation (the “Corporation”) completed and consummated that certain share exchange agreement dated May 14, 2012, as fully executed on May 24, 2012 (the “Share Exchange Agreement”) with Glob Media Works Inc., a company incorporated under the laws of the State of Washington (“Glob Media”), and each of the shareholders of Glob Media (collectively the “Glob Media Shareholders”), whereby the Corporation has acquired all of the issued and outstanding shares of Glob Media in exchange for the issuance of 9,075,734 shares of its restricted common stock to the Glob Media Shareholders on a pro rata basis in accordance with each Glob Media Shareholder’s respective percentage equity ownership in Glob Media. Glob Media owns intellectual property rights to its internet cloud based software application related to online search and social media developed by Glob Media. As a result of the closing of the Share Exchange Agreement, Glob Media has become the Corporation’s direct wholly owned subsidiary.

This means that the shareholders of Glob Media Corporation received 9,075,734 shares of TagLikeMe, Corp., which was created as a reverse merger into Morgan Creek Energy Corporation. It should be observed that, as at 31st December 2011, Morgan Creek had total declared assets equal to $5,673.00, and total declared liabilities of $794,021, which means that this company was technically bankrupt as of the end of fiscal year 2011. The question is, of course, who received the 9,075,734 shares.

On, or about, 23rd July 2012, the company executed a 5:1 stock split. The Stock Split increased the total issued and outstanding shares of common stock from 61,688,126 to 308,440,630 shares of common stock. Thus, the previous shareholders of Glob Media Corporation held 45,378,670 shares of TAGG and Mr. Elliot-Square held 10,000,000 shares for which the original price was 3/5 ¢. Since the shares closed on Friday, 26th October 2012 at 32¢ per share, Mr. Elliot-Square has had a gain of $3,140,000 in a matter of five (5) months. Not bad pay if you can get it. Better still, for the previous shareholders of Glob Media, who have had a gain of $14,248,902 in a matter of three (3) months. Given that the Mr. Elliot-Square will probably take advantage of the U.S. Capital Gains taxes and obtain credit for such taxes under the U.S-Britain Tax Treaty, he has, indeed, done very well.

We may take note that, as at 30th June 2012, the total declared assets for TagLikeMe was $363,428 and the total declared liabilities was $957,173. Presumably, the total declared assets included $344,461 of “intellectual property” obtained in the share transaction with Glob Media. This is starting to strongly resemble a Jammin Java transaction. It is quite dubious that the intellectual property was actually valued at $344,461. Even if it was, the company is still in technical bankruptcy.

The following language, which was obtained from a recent filing with the SEC, provides almost all of the information that we need to know about TagLikeMe to determine whether it is a viable investment opportunity:

Employees and Contractors

The Company employs three full time contract engineers/software developers. The Company also contracts for certain software development services in Europe. The Company may also utilize temporary contractors that have previously worked for the Company as required depending on the workload. The Company has its President/Chief Executive Officer/CFO and a member of the Board of Directors, Richard Elliot-Square, on a semi-full time basis. This individual is primarily responsible for all of the Company’s day-to-day operations. Other services may be provided by outsourcing and consultant and special purpose contracts.

Research and Development Activities

The Company, through Glob Media, has incurred approximately $400,000 on software development and $19,342 on research and development during the past two fiscal years for its products. None of these software development or research or development costs are borne by the customer.

Intellectual Property

As of the date of this Current Report, the Company has not filed patents on any of its proprietary technology developed. The Company may consider filing a patent applications with respect to its system technologies and any novel aspects of its technology to protect its intellectual property. Future patents, if issued, may be challenged, invalidated or circumvented. Thus, any patent that the Company may own may not provide adequate protection against competitors. Any patent applications that the Company may file in the future may not result in issued patents. Also, patents may not provide the Company with adequate proprietary protection or advantages against competitors with similar or competing technologies. As a result of potential conflicts with the proprietary rights of others, the Company may in the future have to prove that it is not infringing the patent rights of others or be required to obtain a license to the patent.

Thus, the company has no identifiable employees, three contract employees, and no protectable intellectual property. It is dubious that any intellectual property generated by the contract employee could be protected against disclosure or use elsewhere. Even if the contract with the contract employees did address this point, it would be a matter of breach of contract, not violation of either patent or copyright protection. The company could only resort to relatively weak measures should any disclosure of any intellectual property occur. In combination with the observation that the website for TagLikeMe has no apparent substance and the stock is being promoted by a penny-stock promoter, I can reach only one conclusion. A near perfect ruse is occurring whereby the insiders and the previous owners of Glob Media are making a fortune in a very short amount of time with no apparent upside for those that are purchasing the shares during the penny-stock promotion.

My recommendation is to stay away from this stock unless you want to lose a lot of money very quickly.

I hope that this helps.

Nathan A. Busch

TFER Again.

Posted in Internet Frauds and SCAMS on 24, October 2012 by nathanbusch

Tuesday, 23rd October 2012:

Word has it that our mysterious “John Bell” has again selected TFER as his “magic stock pick”. If memory serves, this is the same stock pick as he promoted back in March-April of 2012. Apparently, it turned such a poor performance then that he, and the insiders, were unable to dump all of their shares at that time. As a result, they are rerunning this penny stock SCAM again.

My advice: stay as far away from this one as you possibly can.

Nathan A. Busch

Penny-Stock SCAM Insider Trading

Posted in Internet Frauds and SCAMS on 19, October 2012 by nathanbusch

One of my readers has recently enquired as to the law regarding whether insiders, in penny-stock companies, are required to wait a certain period of time before they can sell their shares. Whilst the question, as asked, was relatively vague, it appears that he sought some insight was to whether the following scenario would be legal: an insider of a penny stock company purchases shares during a “pump-and-dump” at a favorable price and then sells those shares when the price has risen as a result of the “pump-and-dump” scheme. Simply put, “pump-and-dump” stock scams are illegal; however, as with everything in the law, exceptions do exist. Many penny-stock SCAMS have been shut down by the Securities and Exchange Commission. However, these types of SCAMS, by and large, have been successful for decades because: (1) the SEC does not have the manpower to identify, track, indict, and successfully prosecute the perpetrators of these scams; (2) there is a steady supply of suckers that are willing to believe that it is possible to increase their assets “500%” in a single trade without risk.

As to the question: the securities laws are very strict on when, and under what conditions, an insider may either buy or sell shares in the company. Based upon my reading of the security laws, the insider would be buying and then selling the shares knowing that nothing within the functioning of the company would give rise to an increase in the price of the shares and that the only reason that the shares would be increasing is the pump-and-dump scheme. By his actions, he would be sending a signal to the public that the company is worth buying leading other to start buying. By any measure, that is the definition of securities fraud. In legitimate cases, when the insiders do either buy or sell shares, full disclosure must be made to the SEC and they better make sure that they are not buying, or selling, on information that is not readily available to the public.

The broader question is as follows: can an insider, who obtained shares prior to the initiation of the pump-and-dump, sell shares into the SCAM. That is the only method by which a pump-and-dump will work to the advantage of the insiders. Insiders make money during these SCAMs only because the greedy public buys shares that are not worth the paper used to print the certificates. Is that considered to be illegal: based upon my knowledge of the securities laws, it probably is not under certain circumstances. However, I would not want to be in the position of convincing a jury that, as a hypothetical insider, I was not trading based upon information not available to the public. Of course, one could say that anyone who buys on a pump-and-dump scheme should know that it was a scam and, therefore, all relevant and material information was in the public domain. In response, I say: good luck convincing the jury of your position.

To my way of thinking, it does not really matter whether the insiders and promoters are differentially on the inside or outside of the line. The perpetrators make a lot of money during these SCAMS because of gullible, and greedy, people are willing to ante up money hoping to strike it rich. Of course, there are people who also believe that a pot of gold is to be found at the end of the rainbow. Some outsiders do make money if they are clever; most, however, lose money.

I hope that this helps.

Nathan A. Busch