Fortress Financial Group fka FFGO

[RoadLessTraveled]

Crunching The Numbers: What's Needed For FFGO's Dividend

Where is the money coming from to cover FFGO's 3499% Extraordinary Dividend? Let's see where the company itself says is the source.

Here is a very early reference in a 7/25/2008 Press Release:

Fortress Financial Group, Inc. -- Further Clarification
Date : 07/25/2008 @ 10:38AM
Source : MarketWire
Stock : Fortress Financial Group, Inc. (FFGO)
Quote : 0.0002 0.0 (0.00%) @ 10:27AM

NEW YORK, NY announced on July 24, 2008 that the Company had resolved to distribute an amount of US$400 million of its Gold Assets to its Stockholders, in the form of an Extraordinary Dividend.

This Extraordinary Dividend equates to an amount of 1.24 cents per share of Common Stock based upon the outstanding shares of the Company's Stock at July 24, 2008. The Company receives an amount of US$500 million in quoted Gold Mining stock ("Goldco") in exchange for its stockholding in the "Bouse" and "South Copperstone" Gold Mining & Exploration companies. This transaction will be consummated in August of 2008. Our calculations of this valuation are contained in the latest Form 8-K filings with the SEC.

The CEO of Fortress Financial Group, Inc., Alan Santini, pledged to stockholders that he would address each of their concerns in this Press Release. The main areas of interest and concern to our stockholders are listed below with Alan Santini's responses. (Note: Only the one relevant question from the PR is shown)

18. HOW DID THE COMPANY VALUE ITS GOLD ASSETS WHEN SELLING THEM TO GOLDCO:

The Company was in possession of historical data, Reports and valuations. These were utilized to ascertain the valuations based upon a Gold price of US$900/oz.

About Fortress Financial Group, Inc.

The Company is utilizing is substantial Balance Sheet of circa US$100 million comprised of quoted and unquoted Gold Mining & Exploration stocks (This is after the payment of the Extraordinary Dividend of US$400 million to stockholders); to aggressively fund a large number of acquisitions in the consumer financial services sector; initially focused in the Mortgage Lending and Banking sectors.

Note: While FFGO claimed that it "was in possession of historical data, Reports and valuations", the only document that was ever made public was Dr. Colliston's Report. For information on that, see this post. No industry standard assays or feasibility studies were ever made available, not even to investors, which meant that FFGO had never publicly shown that their mining claims were worth anything. However, that never stopped them from selling Common shares while making promises of eventual extraordinary returns.

Let's continue. This is from FFGO's FAQ page:

Does Fortress hold any other assets of whatsoever nature?

No, it does not. Its sole assets were its shares of Bouse Gold, Inc. and South Copperstone, Inc. common stock; now disposed of to NMGL. These shares were held by Western Diversified Mining resources, Inc. (“Western”), a wholly owned subsidiary company of Fortress.

Western (and Fortress) now only hold the NMGL Preferred Series “A” and Series “B” shares. These will be distributed in full as a dividend to stockholders on the Record Date in due course.

This passage is taken directly from FFGO's 8/12/2010 8-K:

ITEM 1.01 ENTRY MATERIAL AGREEMENT

On August 12, 2010 the Company’s wholly owned subsidiary Western Diversified Mining Resources, Inc. (“Western”) entered into an agreement with North American Gold & Minerals Fund (“North American”) pursuant to which North American agreed to acquire Western’s 23.22% shareholding in Bouse Gold Inc. (“Bouse Gold”) and Western’s 46.84% shareholding in South Copperstone Inc. (“South Copperstone”) for North American preferred stock valued at US$258,073,107, or US $0.003449 per share of the Company’s issued and outstanding common stock.

The North American Series A Preferred Stock that will be issued under the Agreement has liquidation and dividend preferences that apply to future distributions from Bouse Gold, Inc.; the Series B Preferred Stock has liquidation and dividend preferences that apply to future distributions from South Copperstone, Inc..

The valuation of US$258,073,107 is based on the liquidation preference of the preferred stock, which is US$16.00 per share for the Series A Preferred Stock and US$2.20 per share for the Series B Preferred Stock.

The annual non-cumulative dividend preference for both Series A and Series B Preferred Stock is 3% of the respective liquidation preference.

Both the Series A and Series B Preferred Stock may be redeemed by the North American Gold & Minerals Fund at any time after January 1, 2011 at a cash redemption price equal to the liquidation preference.

The Agreement is subject to several conditions of closing. The Company anticipates that Closing will occur no later than August 17, 2010.

The Agreement contemplates that the Company will distribute to the Company’s shareholders the shares received as the purchase price, and North American Gold & Minerals Fund is required to use its best efforts to cooperate in carrying out the contemplated distribution.

The distribution is expected to be 0.00016168455 (rounded up) per 1 (one) share of Series A Preferred Stock for each 1 (one) share of Fortress Financial Group, Inc. common stock and 0.0003921002 (rounded up) share of Series B Preferred Stock for each 1 (one) share of Fortress Financial Group, Inc. common stock.

Note: Part of NMGL's required "best efforts to cooperate in carrying out the contemplated distribution" is the registration of those Preferreds along with getting them "admitted for trading on a recognized exchange", just 2 of their 8 conditions in FFGO's Dividend process. Until both those events occur, NMGL's Preferreds remain untradable. And until NMGL sells those BG & SC shares, their Preferreds will also remain valueless, according to this statement also found on the FAQ page:

the current strategy of NMGL is to acquire a 100% interest in Bouse Gold, Inc. and South Copperstone, Inc. and to dispose of these two corporations and utilize the proceeds to redeem the NMGL Preferred Series “A” and the Series “B” shares

What FFGO/WD needs for the 3499% dividend distribution is $258,073,107, the stated value of NMGL's A&B Preferred shares.

That meant that the shares of Bouse Gold Inc & South Copperstone Inc bought just from FFGO and none of the other shareholders had to be worth the same $258,073,107, correct?

In August 2010, gold was $1200/oz which meant that for those BG & SC shares to be worth that much, there had to be at least 204,000 oz of gold on both properties to begin to justify paying that amount of money. And that's 204,000 oz of pure gold without factoring in the mining & processing costs.

Can anyone produce a Proven and Probable Mineral Reserve report showing that that quantity of gold exists on those properties? Because FFGO never has.

But since I raised the question, let's see what Searchlight Exploration themselves had said about Reserves there:

Bouse Property
COMMODITIES: Gold, silver, copper.
RESERVES
PROVEN: None at this time
PROBABLE: None at this time
INFERRED: 5,000,000 tons @.05 to .1 oz / T at Little Butte (oz of gold as inferred in the Colliston Report)

South Copperstone Property
COMMODITIES: Gold, silver.
RESERVES
PROVEN: None at this time
PROBABLE: None at this time
INFERRED: None at this time

In summary, neither Searchlight nor FFGO has produced any evidence that there is any gold worth mining on either of those 2 properties. Yet there are shareholders still waiting for just FFGO's shares of Bouse Gold Inc. & South Copperstone Inc. (the ones now belonging to NMGL) to be sold to someone for over a quarter billion dollars so that NMGL's Preferreds (just the ones held by FFGO/WD) would also be worth over a quarter billion dollars.

That means that FFGO shareholders believe that NMGL is currently holding BG & SC shares worth $258,073,107, correct? And all they have to do to sell them is to borrow to $2350 to settle up with NV SOS and get their Business License back to make the sale all legal.

Actually, they still have to make a decision as to whether or not to continue buying the remaining shares held by Searchlight & other shareholders, including those owning the shares from the 2005 Dividends (that info can be found here). Those shares have a combined value of $713,072,893 (which would have represented an additional 594,000 oz of gold back then, for a grand total of about 800,000 oz, once again, without the mining & processing costs).

But that's not a problem, is it? NMGL may not have a couple thousand dollars for NV SOS but they do have enough A & B Preferreds to "pay" for all those remaining shares as seen in this 8-k.

Gee, owning a penny stock company sure beats playing Monopoly. The "money" used with both for buying properties is worth the same though...isn't it?

Should NMGL decide against buying those remaining shares, then they can turn to Plan B found, once again, in their 8-K. That is where they would choose to sell just those shares bought from FFGO in December 2010 and distributing the proceeds to the holders of those Preferreds...even though FFGO considered it as "not a likely event":

How foreseeable or under what circumstances could there be or is there to be a partial liquidation of the NMGL Preferred Series “A” or Series “B” shares?

This not a likely event insofar as the current strategy of NMGL is to acquire a 100% interest in Bouse Gold, Inc. and South Copperstone, Inc. and to dispose of these two corporations and utilize the proceeds to redeem the NMGL Preferred Series “A” and the Series “B” shares. We cannot comment on behalf of NMGL but we would caution stockholders not to rely upon partial any liquidation whatsoever of the NMGL Preferred Series “A” and Series “B”.

That means simply finding someone stupid enough to pay that kind of money for shares in two administratively dissolved WY companies which appear to no longer even hold those mining claims (as evidence in this post indicates)...not that they ever had any publicly documented valuation anyway.

Easy as pie...

right?

Just keep checking NMGL's status with NV SOS to see when (or if) they get their required Business License back so that they can at least go through the motions of legally looking for that "buyer".

Oh, and feel free to challenge all those numbers. Remember though, the share counts and share values were taken straight from FFGO's own 8-K filings. No "partial truths" or "shrouds of mystery" there...

right?

Sources:
FFGO 7/25/2008 PR http://www.marketwire.com/press-release/fortress-financial-group-inc-further-clarification-882825.htm
Info on Dr. Colliston's Report http://investorshub.advfn.com/boards/read_msg.aspx?message_id=80049421
FFGO 8-K (8/12/2010) http://www.sec.gov/Archives/edgar/data/802206/000101376210001860/form8k.htm
http://www.mcintyrebaumangroup.com/abstracts/bouse
http://www.mcintyrebaumangroup.com/abstracts/south_copperstone
http://nvsos.gov/sosentitysearch/FeeDetails.aspx?ctok=yLvnnCbBIGZH667OE4mJiQ%253d%253d
https://wyobiz.wy.gov/Business/FilingDetails.aspx?eFNum=126243018060139019190164091186107108037109157044
https://wyobiz.wy.gov/Business/FilingDetails.aspx?eFNum=058103080151074021151244145010062100219232193107
BG & SC shareholder info post http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79696402
NMGL 8-K (8/12/2010) Series A & B Preferreds info including AS & Liquidation clauses http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7410342
AZ BLM mining claim fees info http://investorshub.advfn.com/boards/read_msg.aspx?message_id=80110998


Note to FFGO shareholders: Please don't even think about writing off your shares without professional advice and until you learn from NMGL exactly where they stand with their heavily promoted role in FFGO's dividend declaration process. Why not call or email President Ron Lowenthal and ask him about it? According to the NMGL Company Info on otcmarkets.com, NMGL's phone number is 702-635-8146 and he should also be able to be reached through GNCC Capital, Inc. where he serves as their Executive Chairman. Their email address is [e-mail]. Remember, it's your money on the line!