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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
  þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d ) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-12346
 IRONSTONE GROUP, INC.
  Delaware
    
    95-2829956(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 539 Bryant Street, San Francisco, California 94107
(
 (415) 551-3260
(
 None
 Common Stock, $0.01 par value
 þ o
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  o þ




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TABLE OF CONTENTS
 PagePART I:Item 1.
    
    Description of Business
    
    
    3Item 2.
    
    Description of Property
    
    
    3Item 3.
    
    Legal Proceedings
    
    
    3Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    3PART II:Item 5.
    
    Market for Common Equity, Related Stockholder Matters and Small Business Issuer
Purchases of Equity Securities
    
    
    4Item 6.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    4-5Item 7.
    
    Financial Statements
    
    
    6Item 8.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    6Item 8A.
    
    Controls and Procedures
    
    
    6Item 8B.
    
    Other Information
    
    
    6PART III:Item 9.
    
    Directors, Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act
    
    
    7Item 10.
    
    Executive Compensation
    
    
    8-9Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    10Item 12.
    
    Certain Relationships and Related Transactions
    
    
    10PART IV:Item 13.
    
    Exhibits
    
    
    11Item 14.
    
    Principal Accountant Fees and Services
    
    
    11SIGNATURES
    
    
    12EXHIBTI 21.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART 1
 
 ITEM 1. DESCRIPTION OF BUSINESS
 BACKGROUND
  BUSINESS STRATEGY
 .
  EMPLOYEES
  
 ITEM 2. DESCRIPTION OF PROPERTY
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  3




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PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES
  
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES
   RESULTS OF OPERATIONS
     4




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LIQUIDITY AND CAPITAL RESOURCES
  .
      5




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ITEM 7. FINANCIAL STATEMENTS
  
 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 8A. CONTROLS AND PROCEDURES
 EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
   Changes in internal controls
  
 ITEM 8B. OTHER INFORMATION
  6




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PART III
 
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
1 6(a) OF THE EXCHANGE ACT
 DIRECTORS
 Name
    
    Age
    
    Director SinceEdmund H. Shea, Jr.
    
    
    75
    
    
    
    1993William R. Hambrecht
    
    
    71
    
    
    
    2003Robert H. Hambrecht
    
    
    40
    
    
    
    2003
    EXECUTIVE OFFICERS
  Name
    
    Age
    
    PositionRobert H. Hambrecht
    
    
    40
    
    
    Chief Executive Officer and SecretaryQuock Q. Fong
    
    
    72
    
    
    Chief Financial Officer
  Code of Ethics
  7




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ITEM 10. EXECUTIVE COMPENSATION
     8




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NON-
    
    OTHEREQUITY
    
    COMPENNAME AND PRINCIPAL
    
    
    
    
    
    SALARY
    
    
    
    
    
    OPTION
    
    INCENTIVE
    
    SATIONPOSITION
    
    YEAR
    
    ($)
    
    BONUS
    
    AWARDS
    
    PLAN
    
    ($)
    
    TOTALRobert H. Hambrecht
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Executive
Officer and SecretaryQuock Q. Fong
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial Officer
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
   NUMBER OF SHARES
    
    PERCENTBENEFICIAL OWNER
    
    OF COMMON STOCK
    
    TOTAL (2)William R. Hambrecht
    
    
    432,604
    
    
    
    58.3539 Bryant Street
San Francisco, CA 94107Edmund H. Shea, Jr. and related entities
    
    
    113,173
    
    
    
    15.2655 Brea Canyon Road
Walnut, CA 91789All executive officers and directors
as a group (2 persons)
    
    
    545,777
    
    
    
    73.5
 
 (1)
    
    This table is based upon information supplied by officers, directors and principal
stockholders and Schedules 13D and 13G, if any, filed with the Securities and Exchange
Commission (the SEC). Unless otherwise indicated in the footnotes to this table and subject
to community property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power with respect to the
shares indicated as beneficially owned.(2)
    
    Applicable percentages are based on 742,108 shares outstanding on December 31, 2006 adjusted
as required by rules promulgated by the SEC. 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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PART IV
 
 ITEM 13. EXHIBITS
 ExhibitNumber
    
    Description21.1
    
    Subsidiaries of Ironstone Group, Inc.31.1
    
    Section 302  Principal Executive Officer Certification31.2
    
    Section 302  Principal Financial Officer Certification32.1
    
    Section 1350  Certification  Chief Executive Officer32.2
    
    Section 1350  Certification  Chief Financial Officer
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2006
    
    
    2005Audit  Related Fees
    
    $
    49,690
    
    
    $
    31,120
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SIGNATURES
  IRONSTONE GROUP, INC.
a Delaware corporationDate: March 28, 2007
    By:
    /s/  Robert H. HambrechtRobert H. HambrechtChief Executive OfficerDate:      March 28, 2007
    By:
    /s/  Quock Q. FongQuock Q. FongChief Financial Officer  Signature
    
    Title
    
    Date/s/ Robert H. Hambrecht
    
    Director, Chief Executive Officer,
    
    March 28, 2007Robert H. Hambrecht
    
    and
Secretary
(Principal Executive Officer)/s/ Quock Q. Fong
    
    Chief Financial Officer,
    
    March 28, 2007Quock Q. Fong
    
    (Principal
Financial Officer)/s/ Edmund H. Shea, Jr.
    
    Director
    
    March 28, 2007Edmund H. Shea, Jr./s/ William R. Hambrecht

William R. Hambrecht
    
    Director
    
    March 28, 2007
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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated balance sheet at December 31, 2006
    
    F-3Consolidated statements of operations and comprehensive income (loss) for the years ended
December 31, 2006 and 2005
    
    F-4Consolidated statements of shareholders equity for the years ended
December 31, 2006 and 2005
    
    F-5Consolidated statements of cash flows for the years ended
December 31, 2006 and 2005
    
    F-6Notes to consolidated financial statements
    
    F-7 to F-10
 F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-2




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEET
 December 31, 2006
 ASSETS:Current assets:Cash
    
    $
    2,369Marketable securities available for sale, at fair value
    
    
    10,920Salon Media Group, Inc. common stock, at fair value
    
    
    179,933Salon Media Group, Inc. Series C Preferred, at fair value
    
    
    1,896,750Total assets
    
    $
    2,089,972LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Line of credit borrowings
    
    $
    198,175Accounts payable
    
    
    29,326Total current liabilities
    
    
    227,501Shareholders equity:Preferred
stock, $0.01 par value, 5,000,000 shares authorized
of which there are no issued and outstanding sharesCommon
stock, $0.01 par value, 25,000,000 shares authorized
of which 1,487,644 shares are issued
    
    
    14,878Additional paid-in capital
    
    
    21,170,385Accumulated deficit
    
    
    (20,185,790
    )Accumulated other comprehensive income
    
    
    1,384,8732,384,346Less: Treasury Stock 745,536 shares at cost
    
    
    (521,875
    )Total shareholders equity
    
    
    1,862,471Total liabilities and shareholders equity
    
    $
    2,089,972
  F-3




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 Years Ended December 31, 2006 and 2005
 2006
    
    
    2005Costs and expenses:Legal and other professional fees
    
    $
    88,560
    
    
    $
    50,409State filing fee
    
    
    11,910
    
    
    
    43,235Miscellaneous expenses
    
    
    300
    
    
    
    369Total costs and expenses
    
    
    100,770
    
    
    
    94,013Loss from operations
    
    
    (100,770
    )
    
    
    (94,013
    )Other income (expense):Interest expense, net of interest income
of $17 in 2006 and $12 in 2005
    
    
    (13,595
    )
    
    
    (3,701
    )Net loss
    
    $
    (114,365
    )
    
    $
    (97,714
    )COMPREHENSIVE INCOME (LOSS), NET OF TAX:Net loss
    
    $
    (114,365
    )
    
    $
    (97,714
    )Unrealized holding gain (loss) arising during the year
    
    
    (4,430,104
    )
    
    
    4,517,637Comprehensive income (loss)
    
    $
    (4,544,469
    )
    
    $
    4,419,923Basic and diluted loss per share:Net loss per share
    
    $
    (0.15
    )
    
    $
    (0.13
    )Weighted average shares
    
    
    742,108
    
    
    
    742,108
  F-4




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Years Ended December 31, 2006 and 2005
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Shares
    
    
    Amount
    
    
    TotalBalances, January 1, 2005
    
    
    1,487,644
    
    
    $
    14,878
    
    
    $
    21,170,385
    
    
    $
    (19,973,711
    )
    
    $
    1,297,340
    
    
    
    745,536
    
    
    $
    (521,875
    )
    
    $
    1,987,017Other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,517,637
    
    
    
    
    
    
    
    
    
    
    
    4,517,637Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,714
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,714
    )Balances, December 31, 2005
    
    
    1,487,644
    
    
    
    14,878
    
    
    
    21,170,385
    
    
    
    (20,071,425
    )
    
    
    5,814,977
    
    
    
    745,536
    
    
    
    (521,875
    )
    
    
    6,406,940Other comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,430,104
    )
    
    
    
    
    
    
    
    
    
    
    (4,430,104
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,365
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,365
    )Balances, December 31, 2006
    
    
    1,487,644
    
    
    $
    14,878
    
    
    $
    21,170,385
    
    
    $
    (20,185,790
    )
    
    $
    1,384,873
    
    
    
    745,536
    
    
    $
    (521,875
    )
    
    $
    1,862,471
  F-5




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2006 and 2005
 2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (114,365
    )
    
    $
    (97,714
    )Adjustments to reconcile net loss to net cash used in
operating activities:Changes in operating assets and liabilities:Accounts payable
    
    
    3,313
    
    
    
    25,850Net cash used in operating activities
    
    
    (111,052
    )
    
    
    (71,864
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from line of credit
    
    
    109,792
    
    
    
    68,133Net cash provided from financing activities
    
    
    109,792
    
    
    
    68,133Net decrease in cash
    
    
    (1,260
    )
    
    
    (3,731
    )Cash at beginning of year
    
    
    3,629
    
    
    
    7,360Cash at end of year
    
    $
    2,369
    
    
    $
    3,629Supplemental disclosure of cash flow informationCash paid during the year for interest
    
    $
    13,612
    
    
    $
    3,713
  F-6




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Years Ended December 31, 2006 and 2005
 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business Activities
  Principles of Consolidation
  Marketable Securities
  Use of Estimates
  Income Taxes
  Earnings <Loss> per share
   F-7




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2006 and 2005
 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)
 Stock Based Compensation
    Reclassifications
 
 2. INVESTMENT IN SALON MEDIA GROUP, INC.
   4. RELATED PARTY TRANSACTIONS
  F-8




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2006 and 2005
 5. LINE OF CREDIT ARRANGEMENT
  6. INCOME TAXES
  2006
    
    
    2005Deferred tax assets:Operating loss carryforward
    
    $
    9,160,000
    
    
    $
    9,257,000Less valuation allowance
    
    
    (8,663,000
    )
    
    
    (6,941,000
    )Deferred tax assets  net
    
    
    497,000
    
    
    
    2,316,000Deferred tax liability  unrealized gain on marketable securities
    
    
    (497,000
    )
    
    
    (2,316,000
    )Deferred income taxes  net
    
    $
    
    
    
    $
    
  2006
    
    
    2005Expected income tax benefit
    
    $
    39,000
    

    $
    33,000State income tax, net of federal tax
    
    
    7,000
    

    
    6,000Expiration
of net operating loss carryforward
    
    
    (143,000
    )
    

    (217,000
    )Adjustment for state tax effect of prior deferred tax assets
    
    
    
    
    
    
    (138,000
    )Total before valuation allowance
    
    
    (97,000
    )

    
    (316,000
    )Change in valuation allowance
    
    
    97,000
    
    

    316,000Income tax benefit
    
    $
    
    
    
    $
    
    F-9




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2006 and 2005
 6. INCOME TAXES (concluded)
  7. SHAREHOLDERS EQUITY
 Treasury Stock
 Preferred Stock
 Stock Option Plans
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise Price
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    per Share
    
    
    Life
    
    
    ValueOutstanding at January 1, 2005
    
    
    7,600
    
    
    $
    .85Expired
    
    
    (1,600
    )
    
    $
    1.06Outstanding at December 31, 2005
and 2006
    
    
    6,000
    
    
    $
    .88
    
    
    .54 years
    
    $
    6.305Exercisable at December 31, 2006
    
    
    6,000
    
    
    $
    .88
    
    
    .54 years
    
    $
    6.305
  F-10