SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED |
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
IRONSTONE PROPERTIES, INC.
(Name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(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 this Form 10-K or any amendment to this 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 ☐ |
| 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 November 8, 2021
| CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
| (unaudited) |
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS: | ||||||||
| Cash | $ | $ | ( | ) | ||||
| Investments: | ||||||||
| Marketable securities | ||||||||
| Non-marketable securities | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Line of credit borrowings | ||||||||
| Note payable | ||||||||
| Note payable - related party | ||||||||
| Interest payable - related party | ||||||||
| Total liabilities | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, of which shares are issued and outstanding as of September 30, 2021 and December 31, 2020 | ||||||||
| Additional paid-in capital | ||||||||
| Additional paid-in capital - stock options | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive Income | ||||||||
| Net income | ||||||||
| Less: Treasury Stock, shares, at cost | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE PROFIT |
||||||||
| (unaudited) |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Compensation - stock options | $ | $ | $ | $ | ||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||||||||||
| State and local taxes | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense to related party | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net operating loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| COMPREHENSIVE PROFIT, NET OF TAX: | ||||||||||||||||
| Net operating loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Unrealized holding gain (loss) arising during the period | ||||||||||||||||
| Comprehensive profit | $ | $ | $ | $ | ||||||||||||
| Basic gain (loss) per share | ||||||||||||||||
| Net operating loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net comprehensive profit per share | $ | $ | $ | $ | ||||||||||||
| Shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| (unaudited) |
| Nine Months Ended | ||||||||
| September 30 | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net lncome | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Interest payable | ||||||||
| Interest payable - related party | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of notes payable | ||||||||
| Paid in capital stock options | ||||||||
| Prior period adjustment accrued expenses | ||||||||
| Net cash provided by financing activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in non-marketable securities | ( | ) | ||||||
| Net cash used by investing activities | ( | ) | ||||||
| Net increase in cash | ( | ) | ||||||
| Cash at beginning of period | ( | ) | ( | ) | ||||
| Cash at end of period | ( | ) | ||||||
| Cash at end of period | $ | $ | ( | ) | ||||
| Cash paid during the period for interest | $ | $ | ||||||
| Cash paid during the period for state franchise taxes | $ | $ | ||||||
| Supplemental noncash investing and financing activities: | ||||||||
| Officer and director common stock options issued | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
Ironstone Group, Inc. and subsidiaries purchases business interests where the Company has a relationship and influence; examples include being a current or prior board of director member, providing seed level capital, and serving in an advisory capacity. Currently Ironstone Group, Inc. is seeking appropriate business combination opportunities. Ironstone Group, Inc, (“Ironstone” or the “Company”) a Delaware corporation, was incorporated in 1972.
Name Change
On September 30, 2021 as part of bringing Ironstone Group, Inc. back into good standing in the State of Delaware where the Company is incorporated, Ironstone Group, Inc. changed its name to Ironstone Properties, Inc. During the time which Ironstone Group, Inc. was in “Void status” in the State of Delaware, another entity assumed the same name with “LLC”. Rather than negotiate with the other entity to be able to continue using the name “Ironstone Group, Inc.” the Board of Directors elected to rename the Company Ironstone Properties, Inc. hence forth. As of September 30, 2021 Ironstone Properties, Inc is in good standing with the Secretary of State of Delaware. The Company will continue to trade under the ticker symbol “IRNS”. Existing shares of formerly Ironstone Group Inc., will be recognized as 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 September 30, 2021 and December 31, 2020, the results of its operations for the three month periods ended September 30, 2021 and September 30, 2020 and nine months ending September 30, 2021 and September 30, 2020 and its cash flows for the nine month periods ended September 30, 2021 and September 30, 2020. 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, 2014.
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. Conversion of a material portion of the outstanding debt to equity will help alleviate such financial pressure. 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.
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 September 30, 2021 and December 31, 2020 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 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 September 30, 2021 and December 31, 2020, 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 September 30, 2021, 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).
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 three 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.
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
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:
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 September 30, 2021 and December 31, 2020 by the fair value hierarchy:
| Balance as of | ||||||||||||||||
| September 30, | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | 2021 | |||||||||||||
| Investments: | ||||||||||||||||
| Publicly traded common stock | $ | $ | - | $ | - | $ | ||||||||||
| Publicly traded options | ||||||||||||||||
| Private company common stock | - | - | ||||||||||||||
| Private company preferred stock | - | - | ||||||||||||||
| Total | $ | $ | - | $ | $ | |||||||||||
| Balance as of | ||||||||||||||||
| December 31, | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | 2020 | |||||||||||||
| Investments: | ||||||||||||||||
| Publicly traded common stock | $ | $ | - | $ | - | $ | ||||||||||
| Publicly traded options | $ | |||||||||||||||
| Private company common stock | - | - | - | |||||||||||||
| Private company preferred stock | - | - | ||||||||||||||
| Total | $ | $ | - | $ | $ | |||||||||||
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
2. FAIR VALUE MEASUREMENTS (concluded)
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:
| Fair Value as of | |||||||
| September 30, 2021 | Valuation Technique | Unobservable Inputs | |||||
| Private Company Common Stock | $ | Purchase price 3-10-2021 | Acquisition cost | ||||
| Private Company Preferred Stock | $ | Big data technology "MESE" valuation system | company valuation range $1.2bn to $5.0bn Best-fit $2.6bn company growth 131.9% SPAC inqueries | ||||
| Fair Value as of | |||||||
| December 31, 2020 | Valuation Technique | Unobservable Inputs | |||||
| Private Company Preferred Stock | $ | Big data technology "MESE" valuation system | company valuation average range $1.0bn to $1.5bn SPAC inqueries | ||||
The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for nine months ended September 30, 2021 and 2020. 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.
| Nine Months Ended | ||||
| September 30, 2021 | ||||
| Balance as of December 31, 2020 | $ | |||
| Unrealized gain on investments | ||||
| Purchase of investment | ||||
| Balance as of September 30, 2021 | $ | |||
| Nine Months Ended | ||||
| September 30, 2020 | ||||
| Balance as of December 31, 2019 | $ | |||
| Unrealized gain on investments | ||||
| Purchase of investment | ||||
| Balance as of September 30, 2020 | $ | |||
3. INVESTMENTS
TangoMe, Inc.
On March 30, 2012, the Company purchased
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
3. INVESTMENTS (concluded)
Arcimoto, Inc.
During fiscal year 2014 the Company purchased
Buoy Health, Inc.
On March 17, 2021 the Company purchased
4. RELATED PARTY TRANSACTIONS
On December 31, 2014 the Company combined all the various notes payable, which were issued at various times to Mr. William R. Hambrecht, to one note for $
A loan was made to Ironstone Properties, Inc. by William R. Hambrecht resulting from William R. Hambrecht paying the interest on the Bank Letter of Credit from the time period January 2016 through March 2021. The loan from William R. Hambrecht interest rate is
On March 10, 2021 William R. Hambrecht loaned Ironstone Properties, Inc. $
5. NOTE PAYABLE
On March 31, 2012, the Company received $
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
The scheduled maturities of notes and LOC payable outstanding as of September 30, 2021 are as follows:
| 2025 | 2026 | pending | Total | |||||||||||||
| Notes payable | $ | $ | $ | $ | ||||||||||||
| Letter of Credit | ||||||||||||||||
| Notes payable - related party | ||||||||||||||||
| 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 Q3, 2021 the Delaware Department of Corporations determined that Ironstone Group, Inc. became inoperative on March 1, 2017 falling into “Void” status. As a result,
During the period March 2017 and March 2021, the company recorded $
8. STOCKHOLDERS’ EQUITY
Common Stock
On January 2, 2014, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with new investors and existing investors (each, a “Share Purchaser” and, collectively, the “Share Purchasers”), pursuant to which, the Company issued and sold to such Share Purchasers
On May 1, 2014, a third party exercised warrants for
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
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
Stock Option Plans
On April 29, 2021 the Company is revised its existing Equity Incentive Plan. As of April 29, 2021,
Stock-Based Compensation
For the quarter ended September 30, 2021 the Company recorded stock options based compensation relating to the Equity Incentive Plan of $
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:
| Quarters Ended | Nine months ended | |||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding - basic | ||||||||||||||||
| Effect of dilutive potential shares | ||||||||||||||||
| Shares outstanding - diluted | ||||||||||||||||
| Net loss per share - basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
Comprehensive Earnings (Loss) Per Share
Comprehensive earnings include Operating earnings (loss) above, and securities and options investments held mark-to-market gains (loss).
|
| Quarters Ended | Nine months ended | ||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net Comprehensive Income | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding - basic | ||||||||||||||||
| Effect of dilutive potential shares | ||||||||||||||||
| Shares outstanding - diluted | ||||||||||||||||
| Net comprehensive income per share - basic | $ | $ | $ | $ | ||||||||||||
| Net comprehensive income per share - diluted | $ | $ | $ | $ | ||||||||||||
8. 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.
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
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 ended September 30, 2021 compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 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, 2014.
RESULTS OF OPERATIONS
Three and nine months ended September 30, 2021 and September 30, 2020
Operating expenses for three months ended September 30, 2021 totaled $72,384. an increase of $69,134 as compared to the three months ended September 30, 2020. The increase was due to $62,209 in compensation charges relating to the officers and directors stock options plan, and an increase in professional fees of $12,094. Other expenses for the three months ended September 30, 2021 totaled $(1,919) a decrease of $5,169 as compared to $3,250 for the three months ended September 30, 2020. This decrease was due to one of the Companys’ vendors forgiving $4,277 in fees due as part of re-establishing the relationship.
Operating expenses for nine months ended September 30, 2021 totaled $133,660 an increase of $121,276 as compared to the nine months ended September 30, 2020. The increase was due to $104,809 in compensation charges relating to the officers and directors stock options plan, and an increase in professional fees of $20,210.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $274,321 and $20,288 for the nine months ended September 30, 2021 and 2020, respectively. 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 September 30, 2021 the outstanding balance under the line was $350,000.
At September 30, 2021, the outstanding balance the Company borrowed from related party Mr. William R. Hambrecht was $324,313 with interest at 7.75% per annum and $300,000 at 6.0% per annum. As of September 30, 2021, the total notes payable to the third party was $2,272,237.
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.
While the Company explores new business opportunities, the primary capital resource of the Company relates to the 74,000 shares held of Arcimoto valued at $1,272,060 and Arcimoto options that are $75,648 in the money for the three months ended June 30, 2021. The 468,121 shares of non-marketable investment TangoMe, Inc. is also a primary capital resource. The investment in TangoMe, Inc. shares is valued at $2,574,666 for the three months ended June 30, 2021. Given the investment in TangoMe, Inc. does not have a readily determinable fair value, the Company exerts significant judgment in estimating the fair value using various pricing models and the information available to the Company that it deems most relevant.
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
Trends and Uncertainties
Termination of Historical Business Lines
Since winding down the Company’s traditional lines of business, Management and the Board of Directors have been seeking appropriate business opportunities for the Company. The Company’s cash assets are invested in corporate securities and demand deposit accounts. 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 September 30, 2021 in connection with the filing of this Annual Report on Form 10K. Based on that evaluation our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, 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 September 30, 2021 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.
IRONSTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
Our management, including our chief executive officer and chief financial officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2021. 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 September 30, 2021, our internal control over financial reporting was not effective based on those criteria, because of the existence of the following material weaknesses:
| 1) |
The Company does not have an independent Audit Committee; however the Company is exploring forming one. |
| 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. |
| 3) |
These absences constitute material weaknesses in the Company’s corporate governance structure. |
| 4) |
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., and Buoy Health, Inc., and marketable securities of Arcimoto Inc. There can be no assurance that a market will 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.
None.
| 31.1 |
||
| 31.2 |
||
| 32.1 |
||
| 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.
| IRONSTONE PROPERTIES, INC. | ||
| a Delaware corporation | ||
| Date: November 8, 2021 | ||
| By: | /s/ William R. Hambrecht | |
| William R. Hambrecht | ||
| Chief Executive Officer | ||
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William R. Hambrecht, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ironstone Properties Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: November 8, 2021 | |
| /s/ William R. Hambrecht | |
| William R. Hambrecht | |
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Eugene Yates, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ironstone Properties Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: November 8, 2021 | |
| /s/ Eugene Yates | |
| Eugene Yates | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ironstone Properties, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William R.. Hambrecht, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 8, 2021
/s/ William R. Hambrecht
William R. Hambrecht
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ironstone Properties, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eugene Yates, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 8, 2021
/s/ Eugene Yates
Eugene Yates
Chief Financial Officer
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Preferred stock, shares outstanding (in shares) | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
| Common stock, shares issued (in shares) | 2,937,225 | 2,937,225 |
| Common stock, shares outstanding (in shares) | 2,937,225 | 2,937,225 |
| Treasury stock, shares (in shares) | 745,536 | 745,536 |
Condensed Consolidated Statements of Comprehensive Profit (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Operating expenses: | ||||
| Compensation - stock options | $ 62,209 | $ 0 | $ 104,809 | $ 0 |
| Professional fees | 12,094 | 0 | 23,430 | 234 |
| General and administrative expenses | (4,277) | 0 | (4,316) | 0 |
| State and local taxes | 2,358 | 3,250 | 12,957 | 12,150 |
| Total operating expenses | 72,384 | 3,250 | 136,880 | 12,384 |
| Loss from operations | (72,384) | (3,250) | (136,880) | (12,384) |
| Other expense: | ||||
| Interest expense | (56,829) | (60,359) | (182,697) | (176,132) |
| Interest expense to related party | (11,649) | (6,520) | (30,924) | (18,800) |
| Net operating loss | (140,862) | (70,130) | (350,501) | (207,316) |
| COMPREHENSIVE PROFIT, NET OF TAX: | ||||
| Net operating loss | (140,862) | (70,130) | (350,501) | (207,316) |
| Unrealized holding gain (loss) arising during the period | 1,751,816 | 99,540 | 2,064,656 | 390,378 |
| Comprehensive profit | $ 1,610,954 | $ 29,410 | $ 1,714,155 | $ 183,061 |
| Basic gain (loss) per share | ||||
| Net operating loss per share (in dollars per share) | $ (0.06) | $ (0.03) | $ (0.16) | $ (0.09) |
| Net comprehensive profit per share (in dollars per share) | $ 0.74 | $ 0.01 | $ 0.78 | $ 0.08 |
| Shares outstanding (in shares) | 2,191,689 | 2,191,689 | 2,191,689 | 2,191,689 |
Note 1 - Business and Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] |
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
Ironstone Group, Inc. and subsidiaries purchases business interests where the Company has a relationship and influence; examples include being a current or prior board of director member, providing seed level capital, and serving in an advisory capacity. Currently Ironstone Group, Inc. is seeking appropriate business combination opportunities. Ironstone Group, Inc, (“Ironstone” or the “Company”) a Delaware corporation, was incorporated in 1972.
Name Change
On September 30, 2021 as part of bringing Ironstone Group, Inc. back into good standing in the State of Delaware where the Company is incorporated, Ironstone Group, Inc. changed its name to Ironstone Properties, Inc. During the time which Ironstone Group, Inc. was in “Void status” in the State of Delaware, another entity assumed the same name with “LLC”. Rather than negotiate with the other entity to be able to continue using the name “Ironstone Group, Inc.” the Board of Directors elected to rename the Company Ironstone Properties, Inc. hence forth. As of September 30, 2021 Ironstone Properties, Inc is in good standing with the Secretary of State of Delaware. The Company will continue to trade under the ticker symbol “IRNS”. Existing shares of formerly Ironstone Group Inc., will be recognized as 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 September 30, 2021 and December 31, 2020, the results of its operations for the three month periods ended September 30, 2021 and September 30, 2020 and nine months ending September 30, 2021 and September 30, 2020 and its cash flows for the nine month periods ended September 30, 2021 and September 30, 2020. 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, 2014.
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. Conversion of a material portion of the outstanding debt to equity will help alleviate such financial pressure. 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.
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 September 30, 2021 and December 31, 2020 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 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 September 30, 2021 and December 31, 2020, 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 September 30, 2021, 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).
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 three 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.
|
Note 2 - Fair Value Measurements |
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| Fair Value Disclosures [Text Block] |
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:
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 September 30, 2021 and December 31, 2020 by the fair value hierarchy:
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:
The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for nine months ended September 30, 2021 and 2020. 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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Note 3 - Investments |
9 Months Ended |
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Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Investment [Text Block] |
3. INVESTMENTS
TangoMe, Inc.
On March 30, 2012, the Company purchased 468,121 shares of Series A Preferred stock from related party William R. Hambrecht at $2.14 per share, resulting in a total investment of $1,000,000. For the year ended December 31, 2020 there was no valuation gain or loss for TangoMe, Inc., remaining at a valuation of $2,574,666. Updating the “MESE” valuation system with current available data from TangoMe, Inc., results in a “Best-fit” company valuation of $2.6bn, translating to a valuation of $4,781,521 as of September 30, 2021. This represents a gain of $2,206,856 for the three and nine months ended September 30, 2021. The investment fair value is based on using a Best-fit valuation for TangoMe Inc. as determined by the MESE big data analysis system and SPAC inquiries for TangoMe, Inc. These are the primary significant unobservable inputs used in the fair value measurement of the Company’s investment.
Arcimoto, Inc.
During fiscal year 2014 the Company purchased 37,000 shares of Arcimoto, Inc. series A-1 preferred stock for $100,011. The A-1 preferred stock was converted to common stock during 2017 prior to Arcimoto filing for its initial public offering. During 2017, prior to the initial public offering, there was a two for one stock split, increasing the shares held to 74,000. On October 2, 2015 the Ironstone Group, Inc. was granted 2,500 Arcimoto options, strike price $4.121 per share, expiration October 2, 2025. Following the two for one stock split, the options held increased to 5,000 with a $2.0605 strike price per share. On September 17, 2017, Arcimoto listed on Nasdaq. The closing price on December 31, 2020 $13.23 per share, resulting in a stock holdings valuation of $979,020 and in-the-money options valuation of $55,848. On September 30, 2021 the closing price was $11.43 per share, a common stock valuation of $845,820 resulting in a loss for the quarter ended September 30, 2021 of $426,240, and options in-the-money valuation of $46,848, resulting in a loss of $28,800 for the quarter ended September 30, 2021.
Buoy Health, Inc.
On March 17, 2021 the Company purchased 11,233 common shares of the private company Buoy Health, Inc. at $15.92 per share. The total value of the investment was $178,824 at September 30, 2021. |
Note 4 - Related Party Transactions |
9 Months Ended |
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Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Related Party Transactions Disclosure [Text Block] |
4. RELATED PARTY TRANSACTIONS
On December 31, 2014 the Company combined all the various notes payable, which were issued at various times to Mr. William R. Hambrecht, to one note for $182,000 at 7.75% interest. The note payable carried a principal balance of $182,000 as of September 30, 2021 and December 31, 2020 with additional accrued interest of $119,405 and $108,855 respectively. The loan maturity has been extended to December 31, 2025.
A loan was made to Ironstone Properties, Inc. by William R. Hambrecht resulting from William R. Hambrecht paying the interest on the Bank Letter of Credit from the time period January 2016 through March 2021. The loan from William R. Hambrecht interest rate is 7.75%. The loan balances at September 30, 2021 and December 31, 2020 were $142,313 and $135,625 respectively. Accrued interest at September 30, 2021 was $40,668 and December 31, 2020 was $30,437. Maturity of the note is March 31, 2026.
On March 10, 2021 William R. Hambrecht loaned Ironstone Properties, Inc. $300,000 at 6.0% interest rate with a March 11, 2026 maturity. Interest payable at September 30, 2021 was $10,143. |
Note 5 - Note Payable |
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| Long-term Debt [Text Block] |
5. NOTE PAYABLE
On March 31, 2012, the Company received $1,000,000 from a third party and issued a related promissory note. The note carries an 8% interest rate, per annum, and has a maturity date of March 31, 2017. Interest accrues on the balance and converts to separate notes payable on a quarterly basis. The total amounts due under this agreement, including the notes related to accrued interest, are due in full at the end of the term. The note is secured by all of the assets of the Company through an accompanying security agreement. If the Company defaults on the note or security agreement, interest would accrue at 10% per annum. The company was unable to meet its payment obligation by the prescribed deadline, therefore the interest rate stepped up to 10% and interest has been accrued using at the stepped up rate starting April 1, 2017. The gross amounts payable under the agreement as of September 30, 2021 and December 31, 2020 were $2,272,237 and $2,109,857 respectively.
The scheduled maturities of notes and LOC payable outstanding as of September 30, 2021 are as follows:
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Note 6 - Line of Credit Arrangement |
9 Months Ended |
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Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Line of Credit Facility [Text Block] |
6. LINE OF CREDIT ARRANGEMENT
The Company has a line of credit arrangement with First Republic Bank (the “lender”) with a borrowing limit of $350,000 with interest based upon the lender’s prime rate plus 4.5% and is payable monthly. At September 30, 2020 and December 31, 2020, interest was being paid at a rate of 7.75%. The line is guaranteed by both William R. Hambrecht, Director and Chief Executive Officer, and Robert H. Hambrecht, Director. The line of credit is due on demand and is secured by all of the Company’s business assets. As of September 30, 2021 and December 31, 2020, the outstanding balance under the line was $350,000. The total recorded interest expense on this note for the quarter ended September 30, 2021 and quarter ended December 31, 2020 was $6,814 and $6,837 respectively. Interest from January 2016 through March 2021 was paid by William R. Hambrecht. The line of credit is pending renewal. |
Note 7 - State Franchise Taxes Payable |
9 Months Ended |
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Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Franchise Tax Disclosure [Text Block] |
7. STATE FRANCHISE TAXES PAYABLE
During Q3, 2021 the Delaware Department of Corporations determined that Ironstone Group, Inc. became inoperative on March 1, 2017 falling into “Void” status. As a result, no Delaware State franchise tax or related penalties were due for the period March 2017 through March 2021. During the “Void” status period, another company incorporated in Delaware assumed the name Ironstone Group, LLC. As a result of this, Ironstone Group, Inc., renamed itself to Ironstone Properties, Inc., and is registered in Delaware. All Delaware State franchise taxes and related penalties from the period 2015 through March 2017 were paid. The Company filed a Certificate for Revival of Void with the State of Delaware and was accepted. The Company is currently in good standing in the State of Delaware.
During the period March 2017 and March 2021, the company recorded $58,504 of Delaware Franchise tax liabilities and related interest and penalties of $32,577. These items were reversed in a prior period adjustment to retained earnings as they applied to prior years. |
Note 8 - Stockholders' Equity |
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| Stockholders' Equity Note Disclosure [Text Block] |
8. STOCKHOLDERS’ EQUITY
Common Stock
On January 2, 2014, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with new investors and existing investors (each, a “Share Purchaser” and, collectively, the “Share Purchasers”), pursuant to which, the Company issued and sold to such Share Purchasers 131,429 shares of the Company’s Common Stock, representing approximately 7% of Ironstone’s outstanding equity securities on the date of purchase, for an aggregate purchase price of $230,000.
On May 1, 2014, a third party exercised warrants for 187,296 shares of the Company’s Common Stock. As of September 30, 2014, the Company issued 187,296 shares from the warrant exercise to the third party.
Treasury Stock
On September 15, 2003, the Board of Directors authorized the Company to purchase 745,536 shares of Company common stock at $0.70 per share for an aggregate purchase price of $521,875. The repurchase represented 50.11% of the issued and outstanding shares of the Company. During the year ended December 31, 2008, the Company paid $699 for fractional Treasury shares. As of September 30, 2021 and December 31, 2020, the treasury shares are held by the Company.
Preferred Stock
The Company is authorized to issue up to five 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 September 30, 2021 and December 31, 2020.
Stock Option Plans
On April 29, 2021 the Company is revised its existing Equity Incentive Plan. As of April 29, 2021, 175,000 options were granted under the Plan, with an exercise price of $1.99 per share, which is based on the weighted average price for the trailing six month average price and an illiquidity discount of 15%. The options vest straight line over years and expire years following the grant date. The plan provides for incentive stock options to be granted at times and prices determined by the Company’s Board of Directors. The stock options are to be granted to directors, officers and employees of the Company, as well as certain consultants and other persons providing services to the Company.
Stock-Based Compensation
For the quarter ended September 30, 2021 the Company recorded stock options based compensation relating to the Equity Incentive Plan of $62,209.
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:
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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Note 9 - Management's Plans |
9 Months Ended |
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Sep. 30, 2021 | |
| Notes to Financial Statements | |
| Substantial Doubt about Going Concern [Text Block] |
8. 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. |
Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| Consolidation, Policy [Policy Text Block] | 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 Accounting, Policy [Policy Text Block] | 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 September 30, 2021 and December 31, 2020, the results of its operations for the three month periods ended September 30, 2021 and September 30, 2020 and nine months ending September 30, 2021 and September 30, 2020 and its cash flows for the nine month periods ended September 30, 2021 and September 30, 2020. 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, 2014. |
| Going Concern [Policy Text Block] | 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. Conversion of a material portion of the outstanding debt to equity will help alleviate such financial pressure. 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. |
| Investment, Policy [Policy Text Block] | 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 September 30, 2021 and December 31, 2020 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 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, Policy [Policy Text Block] | 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 Tax, Policy [Policy Text Block] | 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 September 30, 2021 and December 31, 2020, 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 September 30, 2021, 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). |
| Share-based Payment Arrangement [Policy Text Block] | 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 three 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. |
| Earnings Per Share, Policy [Policy Text Block] | 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. |
| New Accounting Pronouncements, Policy [Policy Text Block] | 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. |
Note 2 - Fair Value Measurements (Tables) |
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| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] |
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| Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] |
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Note 5 - Note Payable (Tables) |
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| Schedule of Maturities of Long-term Debt [Table Text Block] |
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Note 8 - Stockholders' Equity (Tables) |
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| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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| Schedule of Comprehensive Earnings Per Share, Basic and Diluted [Table Text Block] |
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Note 1 - Business and Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Other than Temporary Impairment Losses, Investments, Total | $ 0 | $ 0 |
| Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | ||
| Open Tax Year | 2017 2018 2019 2020 | |
| State and Local Jurisdiction [Member] | California Franchise Tax Board [Member] | ||
| Open Tax Year | 2016 2017 2018 2019 2020 |
Note 2 - Fair Value Measurements - Investments Measured at Fair Value Using Significant Unobservable Inputs (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Private Company Common Stock [Member] | Valuation, Cost Approach [Member] | Purchase Price [Member] | ||
| Investments, fair value | $ 178,824 | |
| Private Company Preferred Stock [Member] | Valuation, Market Approach [Member] | Measurement Input, Quoted Price [Member] | ||
| Investments, fair value | $ 4,781,521 | $ 2,574,665 |
Note 2 - Fair Value Measurements - Additional Information about Level 3 Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Balance as of December 31, 2020 | $ 2,574,665 | $ 2,574,665 |
| Unrealized gain on investments | 2,206,855 | 0 |
| Purchase of investment | 178,824 | 0 |
| Balance as of September 30, 2021 | $ 4,960,344 | $ 2,574,665 |
Note 4 - Related Party Transactions (Details Textual) - Chief Executive Officer [Member] - USD ($) |
Sep. 30, 2021 |
Mar. 10, 2021 |
Dec. 31, 2020 |
Dec. 31, 2014 |
|---|---|---|---|---|
| Notes Payable, Related Party [Member] | ||||
| Debt Instrument, Face Amount | $ 182,000 | |||
| Debt Instrument, Interest Rate, Stated Percentage | 7.75% | |||
| Long-term Debt, Gross | $ 182,000 | $ 182,000 | ||
| Interest Payable | $ 119,405 | 108,855 | ||
| Loan Payable for Interest on Letter of Credit [Member] | ||||
| Debt Instrument, Interest Rate, Stated Percentage | 7.75% | |||
| Long-term Debt, Gross | $ 142,313 | 135,625 | ||
| Interest Payable | 40,668 | $ 30,437 | ||
| Loans Payable [Member] | ||||
| Debt Instrument, Face Amount | $ 300,000 | |||
| Debt Instrument, Interest Rate, Stated Percentage | 6.00% | |||
| Interest Payable | $ 10,143 |
Note 5 - Note Payable (Details Textual) - USD ($) |
9 Months Ended | ||||
|---|---|---|---|---|---|
Mar. 31, 2012 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Apr. 01, 2017 |
|
| Proceeds from Notes Payable, Total | $ 306,688 | $ 20,288 | |||
| Notes Payable, Other Payables [Member] | |||||
| Proceeds from Notes Payable, Total | $ 1,000,000 | ||||
| Debt Instrument, Interest Rate, Stated Percentage | 8.00% | 10.00% | |||
| Debt Instrument, Interest Rate, Default Percentage | 10.00% | ||||
| Long-term Debt, Gross | $ 2,272,237 | $ 2,109,857 | |||
Note 5 - Note Payable - Scheduled Maturities (Details) |
Sep. 30, 2021
USD ($)
|
|---|---|
| 2025 | $ 182,000 |
| 2026 | 442,313 |
| pending | 2,622,237 |
| Total | 3,246,550 |
| Letter of Credit [Member] | |
| 2025 | 0 |
| 2026 | 0 |
| pending | 350,000 |
| Total | 350,000 |
| Notes Payable, Other Payables [Member] | |
| 2025 | 0 |
| 2026 | 0 |
| pending | 2,272,237 |
| Total | 2,272,237 |
| Notes Payable, Related Party [Member] | |
| 2025 | 182,000 |
| 2026 | 442,313 |
| pending | 0 |
| Total | $ 624,313 |
Note 6 - Line of Credit Arrangement (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Long-term Line of Credit, Total | $ 350,000 | $ 350,000 | $ 350,000 | ||
| Interest Expense, Debt, Total | 56,829 | $ 60,359 | 182,697 | $ 176,132 | |
| First Republic Bank [Member] | Line of Credit [Member] | |||||
| Line of Credit Facility, Maximum Borrowing Capacity | 350,000 | 350,000 | |||
| Debt Instrument, Interest Rate, Effective Percentage | 7.75% | 7.75% | 7.75% | ||
| Long-term Line of Credit, Total | 350,000 | $ 350,000 | $ 350,000 | ||
| Interest Expense, Debt, Total | $ 6,814 | $ 6,837 | |||
| First Republic Bank [Member] | Line of Credit [Member] | Prime Rate [Member] | |||||
| Debt Instrument, Basis Spread on Variable Rate | 4.50% | ||||
Note 7 - State Franchise Taxes Payable (Details Textual) - USD ($) |
Sep. 30, 2021 |
Mar. 31, 2021 |
|---|---|---|
| Franchise Tax in Arrears, Including Related Penalties and Interest, Expense Total | $ 0 | |
| Franchise Taxes in Arrears, Total | $ 58,504 | |
| Franchise Taxes in Arrears, Interest and Penalties Accrued, Total | $ 32,577 |
Note 8 - Stockholders' Equity - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Net Operating Loss | $ (140,862) | $ (70,130) | $ (350,501) | $ (207,316) |
| Weighted average shares outstanding - basic (in shares) | 2,191,689 | 2,191,689 | 2,191,689 | 2,191,689 |
| Effect of dilutive potential shares (in shares) | 175,000 | 0 | 175,000 | 0 |
| Shares outstanding - diluted (in shares) | 2,366,689 | 2,191,689 | 2,366,689 | 2,191,689 |
| Net loss per share - basic (in dollars per share) | $ (0.06) | $ (0.03) | $ (0.16) | $ (0.09) |
| Net loss per share - diluted (in dollars per share) | $ (0.06) | $ (0.03) | $ (0.15) | $ (0.09) |
Note 8 - Stockholders' Equity - Computation of Comprehensive Earnings (Loss) Per Share (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Net income | $ 1,610,954 | $ 29,410 | $ 1,714,155 | $ 183,061 | $ 636,814 |
| Weighted average shares outstanding - basic (in shares) | 2,191,689 | 2,191,689 | 2,191,689 | 2,191,689 | |
| Effect of dilutive potential shares (in shares) | 175,000 | 0 | 175,000 | 0 | |
| Shares outstanding - diluted (in shares) | 2,366,689 | 2,191,689 | 2,366,689 | 2,191,689 | |
| Net comprehensive income per share - basic (in dollars per share) | $ 0.74 | $ 0.01 | $ 0.78 | $ 0.08 | |
| Net comprehensive income per share - diluted (in dollars per share) | $ 0.68 | $ 0.01 | $ 0.72 | $ 0.08 | |
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