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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 1934FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
 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
(State or other jurisdiction of
incorporation or organization)
    
    95-2829956
(IRS Employer Identification No.)
 539 Bryant Street, San Francisco, California 94107
(
 (415) 551-3260
(
 None
 Common Stock, $0.01 par value
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##### Table of Contents



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 Operations
    
    
    4Item 7.
    
    Financial Statements
    
    
    5Item 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
    
    
    8Item 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
    
    
    12EXHIBIT 21.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
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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
 Year ended December 31, 2005
   Year ended December 31, 2004
   4




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LIQUIDITY AND CAPITAL RESOURCES
           
 ITEM 7. FINANCIAL STATEMENTS
  5




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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 16(a) OF THE EXCHANGE ACT
 DIRECTORS
 Name
    
    Age
    
    Director SinceEdmund H. Shea, Jr.
    
    
    74
    
    
    
    1993William R. Hambrecht
    
    
    70
    
    
    
    2003Robert H. Hambrecht
    
    
    39
    
    
    
    2003
    EXECUTIVE OFFICERS
  Name
    
    Age
    
    PositionRobert H. Hambrecht
    
    
    39
    
    
    Chief Executive Officer, Chief Financial Officer and Secretary
  Code of Ethics
  7




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ITEM 10. EXECUTIVE COMPENSATION
     8




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NAME AND PRINCIPAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    OTHER ANNUALPOSITION
    
    YEAR
    
    SALARY ($)
    
    BONUS
    
    COMPENSATION ($)Robert H. Hambrecht
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    Chief Executive
Officer, Chief
Financial Officer and
SecretaryAnna-Marie E. Schweizer
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial
Officer (through July,
2005)
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
   NUMBER OF SHARES OF
    
    PERCENTBENEFICIAL OWNER
    
    COMMON STOCK
    
    TOTAL (2)William R. Hambrecht
    
    
    432,604
    
    
    
    58.3539 Bryant StreetSan Francisco, CA 94107Edmund H. Shea, Jr. and related entities
    
    
    113,173
    
    
    
    15.2655 Brea Canyon RoadWalnut, 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, 2005 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
    
    Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated
under the Securities Exchange Act of 193431.2
    
    Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated
under the Securities Exchange Act of 193432.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2005
    
    
    2004Audit  Related Fees
    
    $
    31,120
    
    
    $
    22,850
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SIGNATURES
  IRONSTONE GROUP, INC.a Delaware corporationDate: March 29, 2006
    
    By:
    
    /s/ Robert H. HambrechtRobert H. HambrechtChief Executive OfficerDate: March 29, 2006
    
    By:
    
    /s/ Quock Q. FongQuock Q. FongChief Financial Officer
  Signature
    
    Title
    
    Date/s/ Robert H. Hambrecht
    

Director, Chief Executive Officer, and Secretary
    
    March 29, 2006Robert H. Hambrecht
    
(Principal Executive
Officer)/s/ Quock Q. Fong
    
    Chief Financial Officer,
    
    March 29, 2006Quock Q. Fong
    
    (Principal Financial Officer)/s/ Edmund H. Shea, Jr.
    
    Director
    
    March 29, 2006Edmund H. Shea, Jr./s/ William R. Hambrecht
    
    Director
    
    March 29, 2006William R. Hambrecht
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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, 2005
    
    F-3Consolidated statements of operations and comprehensive income for the years ended December 31, 2005 and 2004
    
    F-4Consolidated statements of shareholders equity for the years ended December 31, 2005 and 2004
    
        F-5Consolidated
statements of cash flows for the years ended December 31, 2005 and 2004
    
    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, 2005
 ASSETS:Current assets:Cash
    
    $
    3,629Marketable securities available for sale, at fair value
    
    
    21,060Salon Media Group, Inc. Series C Preferred, at fair value
    
    
    5,901,000Warrants to purchase Salon Media Group common stock, at fair value
    
    
    595,647Total assets
    
    $
    6,521,336LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Line of credit borrowings
    
    $
    88,383Accounts payable
    
    
    26,013Total Liabilities
    
    
    114,396Shareholders 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
    
    
    (20,071,425
    )Accumulated other comprehensive income
    
    
    5,814,9776,928,815Less: Treasury Stock 745,536 shares
    
    
    (521,875
    )Total shareholders equity
    
    
    6,406,940Total liabilities and shareholders equity
    
    $
    6,521,336
  F-3




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Revenues   interest and other income
    
    $
    12
    
    
    $
    11Total revenues
    
    
    12
    
    
    
    11Costs and expenses:Impairment loss on marketable securities
    
    
    
    
    
    
    157,365Legal and other professional fees
    
    
    50,409
    
    
    
    56,915State filing fee
    
    
    43,235Miscellaneous expenses
    
    
    369
    
    
    
    1,756Total costs and expenses
    
    
    94,013
    
    
    
    216,036Loss from operations
    
    
    (94,001
    )
    
    
    (216,025
    )Other income (expense):Interest expense
    
    
    (3,713
    )
    
    
    (172
    )Net loss
    
    $
    (97,714
    )
    
    $
    (216,197
    )COMPREHENSIVE INCOME, NET OF TAX:Net loss
    
    $
    (97,714
    )
    
    $
    (216,197
    )Unrealized holding gain arising during the year:Unrealized holding gain arising during the period
    
    
    4,517,637
    
    
    
    1,290,570Reclassification adjustment for impairment loss included in net loss
    
    
    
    
    
    
    157,365Comprehensive income
    
    $
    4,419,923
    
    
    $
    1,231,738Basic and diluted loss per share:Net loss per share
    
    $
    (0.13
    )
    
    $
    (0.29
    )Weighted average shares
    
    
    742,108
    
    
    
    742,209
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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Years Ended December 31, 2005 and 2004
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income/(Loss)
    
    
    Shares
    
    
    Amount
    
    
    TotalBalances,
January 1, 2004
    
    
    1,487,847
    
    
    $
    14,878
    
    
    $
    21,170,385
    
    
    $
    (19,757,514
    )
    
    $
    (150,595
    )
    
    
    745,536
    
    
    $
    (521,875
    )
    
    $
    755,279Retirement of stock
    
    
    (203
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,447,935
    
    
    
    
    
    
    
    
    
    
    
    1,447,935Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (216,197
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (216,197
    )Balances,
December 31, 2004
    
    
    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
    )
    
    $
    6,406,940
  F-5




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2005 and 2004
 2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (97,714
    )
    
    $
    (216,197
    )Adjustments to reconcile net loss to net cash used in
operating activities:Impairment loss on marketable securities
    
    
    
    
    
    
    157,365Changes in operating assets and liabilities:Other assets
    
    
    
    
    
    
    578Accounts payable
    
    
    25,850
    
    
    
    (7,963
    )Net cash used in operating activities
    
    
    (71,864
    )
    
    
    (66,217
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from line of credit
    
    
    68,133
    
    
    
    20,250Net cash provided from financing activities
    
    
    68,133
    
    
    
    20,250Net decrease in cash
    
    
    (3,731
    )
    
    
    (45,967
    )Cash at beginning of year
    
    
    7,360
    
    
    
    53,327Cash at end of year
    
    $
    3,629
    
    
    $
    7,360Supplemental disclosure of cash flow informationCash paid during the year for interest
    
    $
    3,713
    
    
    $
    172
  F-6




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Years Ended December 31, 2005 and 2004
 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, 2005 and 2004
 2. INVESTMENT IN SALON MEDIA GROUP, INC.
      4. RELATED PARTY TRANSACTIONS
  5. LINE OF CREDIT ARRANGEMENT
  F-8




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2005 and 2004
 6. INCOME TAXES
  2005
    
    
    2004Deferred tax assets:Operating loss carryforward
    
    $
    9,257,000
    
    
    $
    9,505,000Impairment of marketable securities
    
    
    
    
    
    
    67,000Less valuation allowance
    
    
    (6,941,000
    )
    
    
    (9,008,000
    )Deferred tax assets  net
    
    
    2,316,000
    
    
    
    564,000Deferred tax liability  unrealized gain on marketable securities
    
    
    (2,316,000
    )
    
    
    (564,000
    )Deferred income taxes  net
    
    $
    
    
    
    $
    
    7. SHAREHOLDERS EQUITY
 Treasury Stock
 Preferred Stock
 Stock Option Plans
 F-9




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IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2005 and 2004
 SHAREHOLDERS EQUITY
 Stock Option Plans
   AveragePrice perShares
    
    ShareOutstanding at January 1, 2004
    
    
    11,175
    
    
    $
    1.76Expired
    
    
    (3,575
    )
    
    $
    3.55Outstanding at December 31, 2004
    
    
    7,600
    
    
    $
    .85Expired
    
    
    (1,600
    )
    
    $
    1.06Outstanding at December 31, 2005
    
    
    6,000
    
    
    $
    .88
  Options Outstanding and ExercisableNumber
    
    
    
    
    
    Weighted-Range of
    
    Outstanding
    
    Remaining
    
    AverageExercise Prices
    
    12/31/05
    
    Contractual Life
    
    Exercise Price$0.50
    
    
    3,200
    
    
    1  year
    
    $
    0.50$1.31
    
    
    2,800
    
    
    2  year
    
    $
    1.31$0.50 - $1.31
    
    
    6,000
    
    
    
    
    
    
    $
    0.88
 F-10