Small Cap Value Report (Tue 4 Dec 2018) - TAP, QTX | Paul Scott

4th Dec '18 by Paul Scott

68 comments 14990 reads

Good morning! It's Paul here.

I'll start Tuesday's article with an interesting announcement from after-hours on Monday:

Taptica International (LON:TAP)

Taptica (AIM: TAP), a global leader in advertising technologies for performance-based mobile marketing and brand advertising...

This is an Israeli-based tech company. I avoid all of these, as it seems to me there can sometimes be something wrong with them, lurking under the surface.

Taptica's CEO seems to have been found guilty of lying;

Hagai Tal, CEO of the Company, has today been found liable for certain statements made in relation to the sale of Plimus Inc, a company of which he was both a shareholder and chief executive officer at its time of sale in August 2011. The plaintiffs in the case are entitled to restitution for breaches of certain representations and warranties.

From what I can make out, this does not seem to have any financial impact on Taptica itself.

He has resigned as CEO of Taptica. His LinkedIn profile indicates that he was CEO of Taptica from Jan 2014 until yesterday. So the problem with Plimus pre-dates his involvement in Taptica by over 3 years.

As Monday's RNS states, the legal action against him was disclosed in Taptica's Admission Document. I wonder how many investors actually spotted it though? It just shows, those Admission Documents really are important, and need to be scrutinised closely, as that's often the only time that important negative information will be disclosed. Especially in the notes near the back of the Admission Document, as many people will have given up reading it by that late stage!

Details of the claim were disclosed in the Company's admission document on page 85 (section 7.9 of Part IV), which is available on the Company's website.

Let's have a look then! This is what section 7.9 says;

7.9 In September 2012, Great Hill Equity Partners IV LP, Great Hill Investors LLC, Fremont Holdco, Inc and Bluesnap Inc (formerly Plimus Inc), (collectively “Great Hill”), filed a complaint in the Court of Chancery of the State of Delaware against SIG Growth Equity Fund I LLP, SIG Growth Equity
Management LLC, Hagai Tal and others (collectively the “Defendants”) arising out of the acquisition by Great Hill in August 2011 of Plimus Inc (“Plimus”), a provider of mobile and internet payment solutions. Great Hill filed…

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malcolmbell

3rd Dec '18

Why would Taptica hold investor days and refuse to put the slides on its website. Why would it raise funds for M&A and not do m&A. Why was there no financial disclosure on Termor vs Taptica so how do we know they did not cover up extremely poor Tremor results. If Taptica had truly been performing well it would be exceeding expectations on sales like TTD.

bestace

Taptica International (LON:TAP) - the court judgement is here:
https://courts.delaware.gov/Op...

Key sentence on page 2:

I find that... Defendant Hagai Tal committed fraud by failing to disclose the threatened termination of Plimus’s relationship with one payment processor, PayPal

Luthrin

Re Taptica International (LON:TAP)

I highlighted my concern regarding the ongoing lawsuit involving Taptica's CEO Hagai Tal in this Stockopedia comment on 19 May 2018.

I concluded:

"After digging deeper into this claim (which I believe is still ongoing), and in particular after reviewing this Delaware Chancery Court opinion, I reluctantly sold all of my holding in Taptica last month at a 6% loss.

"I appreciate that as a consequence I may be missing out on a great growth story, but the above issue undermined my faith in the veracity of any of the company's claims, and this applies to the Q&A RNS released on Thursday."

gus 1065 gave a considered counter to my concerns in the same thread, and it remains to be seen how material an issue this is for the company going forward. As it stands though, I'm happy with my original decision to sell all of my holdings in the company despite the attractive prospects.

daveinthelakes

Taptica International (LON:TAP)
Extract from Taptica website-

"Hagai Tal joined Taptica in 2010 as a major shareholder and became the Company’s Chief Executive Officer in December 2013. Mr Tal has invested in, led and developed a number of companies through successful growth, continued investment and the IPO/disposal process. These companies include Kontera, Amadesa, Payoneer, BlueSnap (formerly Plimus) and Spark Networks (NYSE:LOV). Mr Tal’s previous positions include Chief Executive Officer at BlueSnap "

So he was at TAP from 2010 as a major shareholder but only became CEO Dec2013. Marvellous that he claims Blue Snap (formerley Plimus) as a success story!

He owns (directly & indirectly) 14% of TAP and assuming no appeal route, will presumably need to sell sooner or later to make restitution?

barnetpeter

CAKE mentioned yesterday. I think this will be delisted early next year after 6 months of suspension. It is going to take some time to resolve what went on and restate the accounts and cash position. It cannot all be done in a few more weeks. I suspect there are a few in the company who would welcome this....it would mean the media would lose interest and of course the new private company would not need to report as much as currently.

I have two many former shares that are now private. One in particular is booming but with no trading facility all that has happened is that the directors have increased their remuneration. Not great! “Lion” is another former favourite of many small cap punters that suspended and is now delisted. No one knows what is going on there and of course the company does not need to say. This risk is something that is rarely talked away and especially by the stock exchange!

MiserableJacktPotato

I’m no legal eagle and am more than happy to be corrected, but I think it’s a bit harsh to say this is an Israeli problem given the Autonomy (think I got the right name) / HP case, and we’ve had several listed UK companies go to the wall this year for, er choose words carefully time, director mistakes of different kinds.
Some comments I read on various fora speculate that American companies seem to rely on the courts to absolve their directors of foolish decisions, I’m not enough in the know to make a judgement one way or the other, and would be grateful if more learned posters could add clarity.

gus 1065

4th Dec '18

Hi IGPJ.

The conspiracy theorist in me does feel there’s a strong sense of “America first” in the way the US judiciary works.

In addition to the pending Mike Lynch/Autonomy/HP situation you mention, the treatment of BP over the Deepwater Horizon incident (contrasted to that of some of the US contractors such as Halliburton that were involved), Indivior (LON:INDV) ‘s ongoing opioid patent dispute, the treatment of Barclays/RBS and Deutsche compared to that of the likes of home players such as Goldman’s and Citi over the sub prime MBS market abuse etc., all seem to be examples of the away team getting the rough end of the system. I’m no legal eagle either and there may be counter examples of US firms losing out to foreign plaintiffs via the courts (though I can’t immediately think of any). It may simply be that US companies are better able to understand/game the US legal system. Either way, as a private investor we’re in no position to affect US due process, so it’s just another risk we need to assess and take on board.

On the specifics of Taptica International (LON:TAP) , the wording of the RNS suggests that while Tal has offered to resign the board hasn’t (yet) accepted it. Not quite sure how to interpret that,

Gus.

grb

The several "Second Price Monitoring Extn" RNSs at 07:02 today amused me...

Small Cap Value Report (Tue 4 Dec 2018) - TAP, QTX

Taptica International (LON:TAP)

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Paul Scott

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