SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED |
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Name of Registrant as specified in its charter)
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(State or other jurisdiction of |
(IRS Employer Identification No.) |
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incorporation or organization) |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Company’s Form 10-K or any amendment to their Form 10-K. ☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the Registrant is an accelerated filer as defined in Rule 12b-2 of the Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company |
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| Emerging growth company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
As of March 31, 2025,
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Item 1. |
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Condensed consolidated balance sheets as of March 31, 2025, and December 31, 2024. |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
18 | |
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Item 4. |
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Item 5. |
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Item 6. |
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Exhibit Index
ITEM I – FINANCIAL STATEMENT
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
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March 31, 2025 |
December 31, 2024 |
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ASSETS: |
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Cash |
$ | $ | ||||||
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Investments: |
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Marketable securities |
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Non-marketable securities |
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Total Assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY: |
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Accounts payable and accrued expenses |
$ | $ | ||||||
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Line of credit borrowings |
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Interest payable line of credit |
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Note payable and accrued interest |
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Total liabilities |
$ | $ | ||||||
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Additional paid-in capital - stock options |
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Accumulated deficit |
( |
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Accumulated other comprehensive Income |
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Less: Treasury Stock, |
( |
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Total stockholders' equity |
( |
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Total liabilities and stockholders' equity |
$ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE PROFIT
(unaudited)
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Three Months Ended March 31, |
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2025 |
2024 |
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Income |
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Mark to Market Gain/(Loss) |
$ | $ | ( |
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Realized Gain – Private Investments |
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Dividend Income |
$ | |||||||
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Gain (loss) from operations |
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Operating expenses: |
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Compensation – stock options |
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Professional fees |
( |
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State and local taxes |
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General and administrative expenses |
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Total operating expenses |
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Gain (loss) from operations |
( |
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Other expense: |
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Interest expense |
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Net operating gain (loss) |
$ | ( |
) | $ | ( |
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COMPREHENSIVE LOSS, NET OF TAX |
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Net operating gain (loss) |
$ | ( |
) | $ | ( |
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Unrealized holding gain (loss) arising during the period |
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Comprehensive profit |
$ | ( |
) | $ | ( |
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Basic gain (loss) per share |
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Net operating profit (loss) per share |
$ | ( |
) | $ | ( |
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Net comprehensive profit (loss) per share |
$ | ( |
) | $ | ( |
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Weighted average shares outstanding |
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The accompanying notes are an integral part of these condensed consolidated financial statement
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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3 Months Ended March 31, |
3 Months Ended March 31, |
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2025 |
2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net Comprehensive income (loss) |
$ | ( |
) | $ | ( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Changes in operating assets and liabilities: |
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Accounts payable and accrued expenses |
( |
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Interest payable |
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Net cash used in operating activities |
( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of notes payables |
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Paid in capital stock options |
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Net cash provided by financing activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Marketable securities mark to market |
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Non-marketable securities mark to market |
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Net cash provided (used) by financing activities |
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Net increase (decrease) in cash |
( |
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Cash at beginning of period |
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Cash at end of period |
$ | $ | ||||||
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Supplemental disclosure of cash flow information: |
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Cash paid during the period for interest |
$ | $ | ||||||
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Cash paid during the period for state franchise taxes |
$ | $ | ||||||
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Supplemental noncash investing and financing activities: |
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Officer and director common stock options issued |
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The accompanying notes are an integral part of these condensed consolidated financial statements
IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
Ironstone Properties, Inc., (“Ironstone” or the “Company”) formerly named Ironstone Group, Inc. a Delaware corporation, was incorporated in 1972. Since 1986, a majority of Ironstone’s outstanding shares has been owned by Hambrecht & Quist Group, a San Francisco-based investment banking and venture capital firm, and its affiliates (collectively “H&Q”). In September 2003, Ironstone repurchased all of these shares. Such repurchased shares are currently being held as treasury stock. William R. Hambrecht, Director and Chief Executive Officer, owns approximately 49.8% of Ironstone’s outstanding voting shares as of December 31, 2022. In September 2021, Ironstone Group, Inc. changed its name to Ironstone Properties, Inc.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Ironstone Group, Inc. and its subsidiaries, AcadiEnergy, Inc., Belt Perry Associates, Inc., DeMoss Corporation, and TaxNet, Inc. (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.
Basis of Presentation
The unaudited condensed consolidated financial statements included herein have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 2025 and December 31, 2024 and for the results of its operations for the three-month periods ended March 31, 2025 and March 31, 2024 and its cash flows for the three-month periods ended March 31, 2025 and March 31, 2024. The results of operations for the periods presented are not necessarily indicative of those that may be expected for the full year. The condensed consolidated financial statements presented herein have been prepared by management, without audit by independent auditors who do not express an opinion thereon and does not include all disclosures required for annual periods. The last audited annual report on Form 10-K was for the fiscal year ended December 31, 2014.
There have been no significant changes in the Company’s significant accounting policies from those were disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Going Concern
These financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Ironstone Group has incurred losses and negative cash flows from operations over the last ten years. The Company has operated in the past principally with the assistance of loans from private institutions and related party individuals. The on-going accrual of unpaid interest on external and related party debt, excluding the LOC, continues to increase the financial risk to the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Marketable and Non-Marketable Securities
Marketable and non-marketable securities have been classified by management as available for sale in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320, marketable securities are recorded at fair value and any unrealized gains and losses are excluded from earnings and reported as a separate component of stockholders’ equity until realized. The fair value of the Company’s marketable securities and investments at March 31, 2025 and December 31, 2024 are based on quoted market prices. For the purpose of computing realized gains and losses, cost is identified on a specific identification basis. For marketable securities for which there is an other-than-temporary impairment, an impairment loss is recognized as a realized loss, and related adjustments are not made for recovery in value. The Company has not realized any such impairment losses to date.
Securities determined to be non-marketable by the Company do not have readily determinable fair values. The Company estimates the fair value of these instruments using various pricing models and the information available to the Company that it deems most relevant. Among the factors considered by the Company in determining the fair value of financial instruments are discounted anticipated cash flows, the cost, terms and liquidity of the instrument, the financial condition, operating results and credit ratings of the issuer or underlying company, the quoted market price of publicly traded securities with similar duration and yield, the Black-Scholes Options Valuation methodology adjusted for active market, the share price of recent round of financings by an outsider, and other considerations on a case-by-case basis and other factors generally pertinent to the valuation of financial instruments.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in the financial statements relate to the valuation of the Company’s non-marketable investments. Actual results could differ from those estimates.
Income Taxes
The Company and its wholly owned subsidiaries file a consolidated federal income tax return. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred income taxes. Deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. Deferred income taxes are also recognized for net operating loss carryforwards that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of March 31, 2025 and December 31, 2024, a full valuation allowance has been recorded to offset loss carryforwards as, in management’s opinion, there is uncertainty as to whether or not the Company will be able to generate taxable income in the future.
The Company follows the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company has determined that there is no effect on the financial statements from this authoritative guidance.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, local, and foreign jurisdictions, where applicable. As of March 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year forward for Federal and forward for California (with limited exceptions).
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)
Stock-Based Compensation
Ironstone recognizes the fair value of stock options granted on a straight-line basis over the requisite service period of the option grant, which is the standard vesting term of years. The full impact of stock-based compensation in the future is dependent upon, among other things, the total number of stock options granted, the fair value of the stock options at the time of grant and the tax benefit that Ironstone may or may not receive from stock-based expenses. Additionally, stock-based compensation requires the use of an option-pricing model to determine the fair value of stock option awards. This determination of fair value is affected by Ironstone’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include but are not limited to Ironstone’s expected stock price volatility over the term of the awards.
Basic and Diluted Loss per Share
Basic loss per share (“EPS”) excludes dilution and is computed by dividing net income (loss) applicable to common shareholders by the weighted average number of common shares actually outstanding during the period. Diluted EPS reflects the dilution from potentially dilutive securities, except where inclusion of such potentially dilutive securities would have an anti-dilutive effect, using the average stock price during the period in the computation and because of the net loss for the periods presented.
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 introduces an explicit requirement for management to assess and provide certain disclosures if there is substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016. The Company has adopted ASU 2014-15.
In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. ASU 2018-13 removes certain disclosures, modifies others and introduces additional disclosure requirements for entities. The amendments in ASU 2018-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted the new standard on January 1, 2020. The adoption did not have a material impact on the Company’s financial statements.
2. FAIR VALUE MEASUREMENTS
Fair value is defined under FASB ASC 820, “Fair Value Measurement and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 describes a fair value hierarchy based on three levels of inputs of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:
2. FAIR VALUE MEASUREMENTS (continued)
Level 1–Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Level 2–Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3–Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement.
The Company’s assets and liabilities that are measured at fair value on a non-recurring basis include cash, accounts payable, accrued expenses, and interest payable given their short-term nature. Furthermore, the fair value of the Company’s notes payable are initially measured at fair value given that they are estimated based on current rates that would be available for debt of similar terms.
The following tables provide information about the Company’s financial instruments measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 by the fair value hierarchy:
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Level 1 |
Level 2 |
Level 3 |
Balance as of March 31, 2025 |
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Publicly traded common stock |
$ | $ | 0 | |||||||||||||
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Publicly traded options |
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Private company common stock |
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Private company preferred stock |
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Total |
$ | $ | 3,161,359 | $ | ||||||||||||
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Level 1 |
Level 2 |
Level 3 |
Balance as of December 31, 2024 |
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Publicly traded common stock |
$ | $ | 0 | |||||||||||||
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Publicly traded options |
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Private company common stock |
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Private company preferred stock |
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Total |
$ | 3,161,359 | $ | |||||||||||||
The following tables presents the Company’s investments measured at fair value using significant unobservable inputs (Level 3), including the valuation technique and unobservable inputs used to measure the fair value of those financial instruments:
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Fair Value as of March 31, 2025 |
Valuation Technique |
Unobservable Inputs |
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Private Company Preferred Stock |
$ |
Purchase price June, 2022 |
Acquisition cost |
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Private Company Common Stock |
$ |
Price of Management Buyout |
Recent funding round |
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Private Company Common Stock |
$ |
Valuation range $2.25bn |
Virtua Valuation Analysis |
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2. FAIR VALUE MEASUREMENTS (continued)
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Fair Value as of December 31, 2024 |
Valuation Technique |
Unobservable Inputs |
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Private Company Preferred Stock |
$ |
Purchase price June, 2022 |
Acquisition cost |
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Private Company Common Stock |
$ |
Price of Management Buyout |
Recent funding round |
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Private Company Common Stock |
$ |
Valuation range $2.25bn |
Virtua Valuation Analysis |
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The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for three months ended March 31, 2025. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, unrealized gains or (losses) during the period for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value during the period that were attributable to both observable and unobservable inputs.
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Three months ended March 31, 2025 |
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Balance as of December 31, 2024 |
$ | |||
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Unrealized loss on investments |
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Purchase of investment |
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Realized Gain – return of capital |
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Balance as of March 31, 2025 |
$ | |||
3. INVESTMENTS
TangoMe, Inc.
On March 30, 2012, the Company purchased
On January 3, 2024, the Company completed the sale of
On May 3, 2024, the Company received a dividend of $
There was no change in valuation during the three months ending March 31, 2025.
3. INVESTMENTS (continued)
Arcimoto, Inc.
During fiscal year 2014 the Company purchased
The closing price on December 31, 2021 was $
Buoy Health, Inc.
On March 17, 2021 the Company purchased
Aristotle
On June 10, 2022 Ironstone Properties, Inc. purchased
4. RELATED PARTY TRANSACTIONS
On March 10, 2021 William Hambrecht loaned Ironstone Group, Inc. $
On May 27, 2022 William Hambrecht converted to common stock the entirety of the debt outstanding to him, including the aforementioned loans and related accrued interest owed by the Ironstone Properties, Inc. totaling $
On June 6, 2022 Harold Bradley, Board of Director member Ironstone Properties Inc. purchased
4. RELATED PARTY TRANSACTIONS (continued)
On June 10, 2022 Ironstone Properties, Inc. purchased
On June 16, 2022 Ironstone Properties, Inc. purchased
5. NOTE PAYABLE
On March 31, 2012, the Company received $
On November 30, 2022 the Company renewed its note for five years, replacing the note issued April 1, 2012. The renewed terms are
On May 27, 2022, William Hambrecht, CEO converted a total of $
The scheduled maturities of notes payable outstanding as of March 31, 2025 are as follows:
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Open |
Total |
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Note Payable |
$ | $ | ||||||
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Letter of Credit |
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Total |
$ | $ | ||||||
6. LINE OF CREDIT ARRANGEMENT
The Company has a line of credit arrangement with First Republic Bank (the “lender”) with a borrowing limit of $
7. STATE FRANCHISE TAXES PAYABLE
During the three months ended March 31, 2025 the Company recorded $
8. STOCKHOLDERS’ EQUITY
Common Stock
The Company has
On May 27, 2022, William Hambrecht, CEO converted a total of $
On June 6, 2022 Board of Director member Harold Bradley purchased
Treasury Stock
On September 15, 2003, the Board of Directors authorized the Company to purchase
Preferred Stock
The Company is authorized to issue up to million shares of preferred stock without further shareholder approval; the rights, preferences and privileges of which would be determined at the time of issuance. No shares have been issued as of March 31, 2025 and December 31, 2024.
Stock Option Plans
On April 29, 2021 the Company revised its 2013 Equity Incentive Plan. As of April 29, 2021, an additional
For the three months ended March 31, 2025 the Company recorded share-based compensation expense related to stock options in the amount of $
On February 5, 2024,
8. STOCKHOLDERS’ EQUITY (continued)
Operating Earnings (Loss) Per Share
Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and dilutive potential common shares outstanding during the period, if dilutive. Potentially dilutive common equivalent shares are composed of the incremental common shares issuable upon the exercise of stock options. The following is the computations of the basic and diluted net income per share and from operations and the dilutive common stock equivalents for the periods presented:
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Quarters Ended |
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March 31, 2025 |
March 31, 2024 |
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Numerator: |
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Net Operating Gain (Loss) |
$ | ( |
) | $ | ( |
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Denominator: |
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Weighted average shares outstanding - basic |
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Effect of dilutive potential shares |
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Shares outstanding - diluted |
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Net loss per share - basic |
$ | ( |
) | $ | ( |
) | ||
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Net loss per share - diluted |
$ | ( |
) | $ | ( |
) | ||
Comprehensive Earnings (Loss) Per Share
Comprehensive earnings include Operating earnings (loss) above, and securities and options investments held mark-to-market gains (loss).
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Quarters Ended |
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March 31, 2025 |
March 31, 2024 |
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Numerator: |
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Comprehensive Earnings (Loss) |
$ | ( |
) | $ | ( |
) | ||
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Denominator: |
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Weighted average shares outstanding - basic |
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Effect of dilutive potential shares |
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Shares outstanding - diluted |
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Net loss per share - basic |
$ | ( |
) | $ | ( |
) | ||
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Net loss per share - diluted |
$ | ( |
) | $ | ( |
) | ||
9. MANAGEMENT’S PLANS
As reflected in the accompanying financial statements, the Company has net losses and has a negative cash flow from operations. The attainment of profitable operations is dependent upon future events, including liquidity events in privately held investments in excess of purchase price, and or the profitable sale of publicly traded investments. If necessary, to provide liquidity, the Company may seek to sell additional equity securities, or convert existing privately held debt to equity, providing the debt holders are agreeable to the terms and share conversion price. The Company cannot make assurances that it will be able to complete any financing, liquidity, or debt conversion transaction, that such financing, liquidity, or debt conversion transaction will be adequate for the Company’s needs, or that a financing, liquidity or debt conversion transaction will be completed in a timely manner. Furthermore, the Company may seek to sell its marketable securities to meet its operating needs. However, the fair value of these marketable securities fluctuates and may not be adequate for the Company’s needs. The Company has extended its line of credit payment terms with the lender with similar terms to the recently expired line of credit.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the statements in this document that are not historical facts, including, without limitation, statements of future expectations, projections of financial condition and results of operations, statements of future economic performance and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to differ materially from those contemplated in such forward-looking statements. In addition to the specific matters referred to herein, important factors which may cause actual results to differ from those contemplated in such forward-looking statements include (i) the results of the Company’s efforts to implement its business strategy; (ii) actions of the Company’s competitors and the Company’s ability to respond to such actions; (iii) changes in governmental regulation, tax rates and similar matters; and (iv) other risks detailed in the Company’s other filings with the SEC
USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES
The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets and related disclosure. On an ongoing basis, we evaluate our estimates, including those related to non-marketable securities. We base our estimates on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets that are not readily apparent from other sources. Actual results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions. These estimates and judgments are reviewed by management on an ongoing basis and by our board of directors at the end of each quarter prior to the public release of our financial results.
As of the date of the filing of this quarterly report, we believe there have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2025 compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as filed with the SEC. Additional information about these critical accounting policies may be found in the "Management's Discussion & Analysis of Financial Condition and Results of Operations" section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
RESULTS OF OPERATIONS
Three months ended March 31, 2025 and March 31, 2024
Total income decreased from $11,268 to $0 for the three months ended March 31, 2025 as compared to March 31, 2024. This decrease in income was due primarily to a one-time sale of stock in 2024 that was not repeated in 2025. Operating expenses for three months ended March 31, 2025 totaled $16,329 a decrease of $49,454 or 75% as compared to the three months ended March 31, 2024. The decrease was primarily due to a decrease in officer incentive stock options amortization, as a portion of options previously granted are now fully vested.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a line of credit arrangement with First Republic Bank with a borrowing limit of $350,000 with interest based upon the lender’s prime rate plus 4.5%. Interest is currently payable monthly at 7.75%. The line is guaranteed by William R. Hambrecht, Chief Executive Officer, Director. The line of credit is due on demand and is secured by all of the Company’s business assets. At March 31, 2025 the outstanding balance under the line was $348,843.
The Company may obtain additional equity or working capital through additional bank borrowings, debt conversion to common stock, and public or private sales of equity securities. The Company may also borrow additional funds from Mr. William R. Hambrecht. There can be no assurance, however, that such additional financing will be available on terms favorable to the Company, or at all.
Trends and Uncertainties
The Company is pursuing existing and new disruptive business opportunities across a number of technology sectors. There can be no assurance that the Company will acquire businesses, form additional alliances, or expand its existing services. Failure to expand the scope of services provided by the Company may have an adverse effect on the Company’s results of operations.
If the Company does not find an operating entity to combine with, and if its assets are not invested in certain types of securities (primarily government securities), it may be deemed to be an investment company under the terms of the Investment Company Act of 1940, as amended.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) as of December 31, 2024 in connection with the filing of the Annual Report on Form 10K. Based on that evaluation our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2024, in light of the material weakness described below, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.
Notwithstanding the material weakness, our company’s financial statements in this Form 10Q fairly present in all material respects, the financial condition, results of operations and cash flows of our company as of and for the periods presented in accordance with generally accepted accounting principles in the United States.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting for the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Controls over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.
All internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls. Therefore, even effective internal control over financial reporting can provide only reasonable, and not absolute, assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal controls over financial reporting may vary over time.
Our management, including our chief executive officer and chief financial officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2025. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our evaluation, management concluded that, as of March 31, 2025, our internal control over financial reporting was not effective based on those criteria, because of the existence of the following material weaknesses:
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1) |
The Company does not have an independent Audit Committee. |
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2) |
Our limited number of employees which is a structural issue, results in the Company’s inability to have a sufficient segregation of duties within its accounting and financial reporting activities. |
These absences constitute material weaknesses in the Company’s corporate governance structure.
This quarterly report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting because the Company is a smaller reporting company.
None.
The Company’s main assets are investments in non-marketable securities of TangoMe Inc., Aristotle and Buoy Health, Inc., and marketable securities of Arcimoto Inc. There can be no assurance that a market will emerge or continue to exist for these investments.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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31.1 |
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31.2 |
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32.1 |
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32.2 |
101.INS Inline XBRL Instance
101.SCH Inline XBRL Taxonomy Extension Schema
101.CAL Inline XBRL Taxonomy Extension Calculation
101.DEF Inline XBRL Taxonomy Extension Definition
101.LAB Inline XBRL Taxonomy Extension Labels
101.PRE Inline XBRL Taxonomy Extension Presentation
104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
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IRONSTONE GROUP, INC. a Delaware corporation |
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Date: May 19, 2025 |
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By: |
/s/ William R. Hambrecht |
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William R. Hambrecht |
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Chief Executive Officer |
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