Is TAGG Legit?

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

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6 Responses to “Is TAGG Legit?”

  1. Thank you Nathan for your time and effort reporting on TAGG. You answered my question very intellectually and factually. I wish you had a “stock pick” list I could join! Thanks again for the info!!!

    • Chris:

      I will not conduct a stock pick business. It is very difficult to pick stocks that might be profitable over the long term and it is even harder to stay the course when the stock picks do go south. I have written about a particular case before: I purchased Weyerhauser (NYSE: WY) in February 2011 at $25.00 per share and then watched as the price of the shares dropped to $15.00 per share over the next 12 months for an on-paper loss of 40%. My rationale for holding was that Weyerhauser is the bell weather stock for the construction industry; that is, the price of WY is derivative of the number of new housing starts each month. I was certain that, eventually, the construction industry would start to come alive again and that the revenue and EBITDA of WY would improve accordingly. Today, the price of WY stands at $27.79 per share. Of course, I had WY in a DRIP. When the 2.5% dividend is included, the total annual return on investment to date exceeds approximately 8.79%. This total annual return is, of course, not particularly stellar but it is certainly nothing about which to complain. The point is, that had I recommended WY to a “membership list” in February 2011, I would have been thought to be a lousy stock picker over the ensuing 14 months.

      By the way, I bought option rights for SHOS about a month ago at $2.25 per right. To purchase the shares of SHOS during the IPO required approximately 4.6 option rights plus $15.00 to purchase a share of SHOS. Today, the price stands at $36.75. Luck was, of course, on my side but it takes a lot of hard work to identify possibilities that will be profitable over the long term. I would not want to subject myself to the scrutiny and ridicule of those that seek substantial returns in the short term whilst these same individuals ignore the risk inherent in such short-term tactics.

      Having said all of that, I have been considering posting my analysis of companies that might provide substantial capital and dividend gains over the long term. I am not yet sure that I want to commit to such an endeavour when many other matters press themselves upon me.

      I hope that this helps.

      Nathan A. Busch

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  4. Rob Weiner Says:

    I paid $500.00 for 5,000 shares. The shares tripled almost overnight. I’m an investor not a trader. I didn’t sell. Again, almost overnight, the price went to zero. Do I have any recourse? How can I get this out of my portfolio?

    • Mr. Weiner:

      I was not aware that TAGG was still being flogged as a penny stock. It is a fraud perpetrated upon those who are looking for a “get-rich-quick” scheme only to soon be separated from their purse.

      Let us look at the basics of your transaction. You claimed to have purchased 5,000 shares for $500.00, which means that you paid $0.10 per share. Let us take this transaction apart in an exercise to demonstrate that you do not know what you are doing. Anyone who purchases a stock at $0.10 per share is not an investor: rather that person is a speculator. I am a deep value investor: however, I will not even consider any ticker symbol with a market price of less than $4.00. Also, you spent $500.00 on this transaction. I do not know which broker you used nor do I care. The arithmetic is simple. Say your trading cost is $10.00: that means you paid 2% of the total transaction amount in transaction costs. We will not even start to consider the bid/ask split problem, slippage, liquidity, & etc. By paying 2% going in and 2% coming out of a ticker symbol, you have already paid someone else 4% of the total transaction amount just so you can lose money on an ill-considered transaction: that means, you were betting that the market price of the ticker symbol would appreciate by $25.00 by the time that you intended to sell it. By the way, I would bet a dollar to a doughnut hole that you never thought about the rules by which you would sell the shares. If I am correct, you are not an investor: you are a fool intent on retiring poor and being a greeter at Walmart. Let us look at that $25.00 claim: you would spend $10.00 purchasing the shares; you would spend $10.00 selling the shares; and, you would have to make enough to pay the income taxes that $20.00 assuming that your average tax rate is 25%. This means that you were betting that the market value of the shares would appreciate 5% just to break even. What were you thinking?

      Also, did you give any consideration to the people on the other side of this transaction: odds are that they were shorting the ticker symbol whilst you were intending to go long. I find it incredulous that any one would be long against a short on a stock trading at 10¢ per share: that is just too much to get my simple mind around.

      Also, did you do any research on this company? Years ago before I purchased REGI, I travelled from southwest Minnesota to the other side of Des Moines, Iowa, to visit the plant that the company had in that location. The first thing I look for is whether the parking lot is full of vehicles of the employees and what was the condition of those cars. That told me almost everything that I wanted to know about the company. Then I considered the condition of the plant, was it using electricity efficiently, was it using rail instead of semi for transportation. I then visited the office: were the employees happy with their work and their pay, & etc. Upon return home, I carefully examined the financials of the company; I read the transcripts of the past 4 quarterly investor conferences; I studied biodiesel credits and at what price were those credits were trading. In other words, I knew more about the company, most probably, than the employees working at the company. I established the rules by which I would sell the shares. Only then did I purchase shares. The appreciation in the stocks by the time that I sold was quite satisfactory.

      As to what you can do now that you have lost money: first rule, never lose money; second rule, never forget the first rule. You could file a complaint with the FBI and the SEC. A few years back, an agent from the FBI contacted me about John Bell. Amongst all the information that I gave him, I informed him that because the FBI was so incompetent that they could not even find a buggar hanging out of their nose, the would never find or convict John Bell. John Bell is still alive, well, and perpetrating frauds upon idiots willing to believe his stories about “fantastic penny stocks”. With President Bannon in the White House, your chances of ever getting the FBI or the SEC to do any thing are about as good as your having a date with Ivanka Trump: good luck.

      You could try to sue: good luck.

      Here is my advice: register for automatic withdrawals from your paycheck every month to fund your 401(k) or 403(b) retirement account and utilize the matching program offered by your company. That matching money is a freebie, use it. Instruct the manager of your retirement account to put everything into either VTI or RSP. Leave the money alone until you retire at 72: you will be just fine.

      And, please, do not try to invest in any ticker symbols on your own: you do not know what you are doing. If you insist on repeating such foolish trades, then first purchase and memorise the following books: Graham and Dodd, Securities Analysis; Graham, The Intelligent Investor; Philip Fisher, Common Stocks, Uncommon Profits. Also, stay away from anything regarding investing that was written after 1960. Further, turn off your television, your radio, and stop reading any news paper other than the Wall Street Journal, the Financial Times, and Barrons.

      I hope that this helps.

      Nathan A. Busch

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