<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

   [X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

   [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                         COMMISSION FILE NUMBER 0-12346

                              IRONSTONE GROUP, INC.
                (Name of Registrant as specified in its charter)

            DELAWARE                                      95-2829956
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                  388 WINDFLOWER CT., WINDSOR, CALIFORNIA 95492
          (Address of principal executive offices, including zip code)

                                 (707) 837-9447
              (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:
                          COMMON STOCK, $0.01 PAR VALUE

Check whether the Registrant (1) 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. Yes [X] No[ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B 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-KSB or any
amendment to this Form 10-KSB. [X]

Check whether the Registrant has filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [X] No[ ]

The Registrant's revenues for the fiscal year ended December 31, 2000 were $615.

The approximate aggregate market value of voting stock held by non-affiliates of
the Registrant was $248,485 as of February 14, 2001 based on the closing bid
price on February 14, 2001. Shares of voting stock held by each officer and
director and by each person who owns 5% or more of the outstanding voting stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily conclusive.

As of February 14, 2001, 1,487,847 shares of Common Stock, $0.01 par value, were
outstanding.

Transitional Small Business Disclosure Format:  Yes [ ]   No [X]


<PAGE>   2

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                PAGE
                                                                                                ----
<S>                                                                                             <C>
 PART I:

Item 1.    Business...........................................................................   3
Item 2.    Properties.........................................................................   6
Item 3.    Legal Proceedings..................................................................   6
Item 4.    Submission of Matters to a Vote of Security Holders................................   6

PART II:

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters..............   7
Item 6.    Management's Discussion and Analysis or Plan of Operations.........................   7
Item 7.    Financial Statements...............................................................   8
Item 8.    Changes in and Disagreements with Accountants on Accounting and Financial
           Disclosure.........................................................................   8

PART III:

Item 9.    Directors, Executive Officers, Promoters and Control Persons; Compliance With
           Section 16(a) of the Exchange Act..................................................   9
Item 10.   Executive Compensation.............................................................   9
Item 11.   Security Ownership of Certain Beneficial Owners and Management.....................  11
Item 12.   Certain Relationships and Related Transactions.....................................  11


PART IV:

Item 13.  Exhibits and Reports on Form 8-K....................................................  12

SIGNATURES....................................................................................  13
</TABLE>




                                       2
<PAGE>   3

                                     PART 1


ITEM 1.  BUSINESS

BACKGROUND

Ironstone Group, Inc, ("Ironstone") a Delaware corporation, was incorporated in
1972. Since 1986, a majority of Ironstone's outstanding shares has been owned by
Hambrecht & Quist Group, a San Francisco-based investment banking and venture
capital firm, and its affiliates (collectively "H&Q"). H&Q presently owns over
70% of Ironstone's outstanding voting shares.


BANKRUPTCY

In January 1991, Ironstone filed a voluntary petition for protection under Title
11 of the U.S. Code in the United States Bankruptcy Court for the Northern
District of California (the "Bankruptcy Court"). Ironstone's First Amended Plan
of Reorganization, as modified (the "Plan"), was confirmed by the Bankruptcy
Court on May 24, 1993, and the effective date pursuant to the terms of the Plan
was July 15, 1993. On May 13, 1996, the Bankruptcy Court issued an order at
Ironstone's request which (i) confirmed that Ironstone's Plan had been fully
administered and (ii) closed Ironstone's Chapter 11 case.


ACQUISITION OF BELT PERRY ASSOCIATES, INC.

In October 1993, Ironstone purchased from Belt Perry Associates, Inc., an
Arizona corporation ("BPA"), 80% of BPA's outstanding shares for consideration
consisting of (i) a $2,500,000 cash payment (all of which was used by BPA to
redeem certain of its outstanding shares from existing shareholders) and (ii) a
guaranty by Ironstone of certain obligations of BPA in a maximum aggregate
amount of $3,500,000 payable to the redeemed BPA shareholders. Simultaneously,
Ironstone purchased from an existing shareholder 16% of the outstanding shares
of Belt Perry Associates, Inc., a California corporation ("BPC"), of which BPA
is an 80% shareholder, for a cash payment of $50,000 and contingent incentive
payments if certain BPC profit targets and other goals are achieved.

During 1994 through 1996, BPA purchased from the minority shareholders of BPA
all remaining minority interests in BPA's outstanding shares. During 1995 and
1997, BPC purchased from the minority shareholder of BPC all remaining minority
interests in BPC's outstanding shares.

BPA and BPC are collectively referred to herein as "Belt Perry" and Ironstone
and its consolidated subsidiaries are collectively referred to herein as the
"Company".


BUSINESS

In January 1998, the Company's Board of Directors approved a plan for the
Company to divest itself of the Belt Perry property and tax services group (see
Business Strategy). As of September 30, 1998, the Company had terminated all
property and tax service operations. Currently, the Company is reviewing options
to utilize significant tax loss carryforwards good through 2007 through
investments in other companies.

The Company's principal business activities were conducted through Belt Perry.
Belt Perry was engaged in the business of reviewing and, when deemed
appropriate, appealing on behalf of property owners real and personal property
tax assessments before governmental taxing authorities, concentrating primarily
on commercial, industrial and multi-tenant residential real estate in Arizona
and California. Belt Perry's agreements with its clients typically provided for
Belt Perry to be paid a portion of the amount, if any, by which the client's
property taxes were reduced as a result of an appeal processed by Belt Perry.




                                       3
<PAGE>   4

REAL PROPERTY TAX APPEALS

Belt Perry performed real property tax consulting work for over 2,000
commercial, industrial and residential clients, primarily in the states of
Arizona and California through its former offices in Phoenix, Arizona and San
Diego, Los Angeles and San Rafael, California. Belt Perry obtained new clients
through its account executives via referrals and telephone and direct contact.

Counties charge real property taxes based on the assessed value of real property
multiplied by the applicable tax rate. Belt Perry's consulting services included
the review and analysis of property records and the filing of property tax
appeals. Belt Perry employed state-certified appraisers who were responsible for
preparing documentation supporting an opinion of property valuation and
negotiating and arguing property tax appeals at hearings on behalf of Belt
Perry's clients. A computer-generated appraisal report was the basic document
used by the appraiser to support the opinion of property valuation (see
"Proprietary System"). Belt Perry typically charged contingent fees based on a
percentage of the tax savings, if any, resulting from the property tax appeal.
The majority of the Company's revenues were generated from real property tax
appeals.

Arizona Appeal Process

Most of Arizona's real property tax appeals were handled as administrative
appeals, which typically began with a filing with the county assessor, and if
such process did not produce results satisfactory to BPA, BPA may have appealed
as far as the Tax Court Division of the Superior Court of Arizona (the "Superior
Court"). Property valuations were set by the county assessor and mailed to
property owners between January and March of each year. Property owners had 45
days to appeal the valuation under the administrative appeal process.

BPA downloaded certain counties' property tax valuations into its computer
system. An appraiser then used the computer system to obtain the county
assessor's valuation for each parcel owned by BPA's clients and determined
whether or not such valuations appeared reasonable based on the appraiser's
initial valuation of the property. If the appraiser concluded that the
assessor's valuation was too high, a property tax appeal was filed with the
assessor stating the appraiser's position regarding the appropriate valuation
and the basis for such valuation (i.e., income approach, market approach, etc.).
The assessor may have accepted or denied an appeal. If an appeal was denied, BPA
had the option of filing an appeal with the County Board of Equalization (the
"Equalization Board"), which heard arguments from BPA and the assessor and
subsequently determined the appropriate valuation. If the decision rendered by
the Equalization Board was unsatisfactory to BPA, BPA had the option of filing
an appeal with the State Board of Tax Appeals and, finally, with the Superior
Court.

California Appeal Process

The California real property tax appeal process was similar to that of Arizona,
but generally involved only two levels: the county assessor and County Board of
Equalization. Although there was occasionally a judicial review through the
Superior Court, it was typically very limited in scope. The normal assessment
period occurs between January 1 and July 1 of each year, and appeals filed with
the Equalization Board had to be filed by September 15 of the same year.


PERSONAL PROPERTY TAX APPEALS

Belt Perry filed personal property tax appeals on behalf of clients in more than
30 states. Municipalities typically charge personal property taxes based on the
assessed value of machinery, equipment, inventories not held for resale,
supplies and other miscellaneous items multiplied by the applicable tax rate.
Personal property tax appeals generally were filed to contest depreciation
rates, items not classified correctly, and assessor audits. Belt Perry typically
charged contingent fees based on a percentage of the tax savings, if any,
generated from the personal property tax appeal.


TAXNET

BPA's wholly owned subsidiary, TaxNet, was a national referral network of
property tax consultants providing tax appeal services throughout the United
States and Canada. BPA charged TaxNet affiliates certain subscription and other
fees.




                                       4
<PAGE>   5

PROPRIETARY SYSTEM

BPA had developed a proprietary system, consisting of a database and software
system, that generated a substantial portion of the BPA appraisal report and
consequently, significantly reduced the amount of administrative time BPA
personnel devoted to each property tax appeal. The system held tens of thousands
of market and equity comparable property records, including the property tax
rolls for certain counties of Arizona. The software performed a number of
different functions, including analysis of pertinent details of county property
tax rolls to obtain valuations on selected properties and comparable properties,
preparation of market and equity comparable for selected properties, preparation
of the income analysis section of the appraisal report, and generation of a
substantial portion of the appraisal report utilizing a standardized format. The
database was updated on a regular basis with property sales information obtained
from third party sources and with additional information on comparable
properties selected from the county tax rolls.


BUSINESS STRATEGY

Currently, the Company is reviewing options to invest in new business
opportunities. The company has over $500,000 in marketable securities and
significant tax loss carryforwards at its disposal.

The Company's strategy was to provide property tax and tax-related services with
the primary focus on providing real and personal property tax consulting
services. The Company's acquisition of Belt Perry allowed the Company to provide
real and personal property tax consulting services primarily in the western
United States. Consistent with its strategy to seek out opportunities to expand
its core services, the Company purchased certain assets of the personal property
tax consulting division of Property Tax Consultants, Inc., a California
corporation doing business as Tax Management Group, Inc. during 1997.

In January 1998, the Company's Board of Directors approved a plan for the
Company to divest itself of the Belt Perry property and tax services group and
to actively pursue other business opportunities. The Company sold the property
and tax services group in October 1998. In addition, the Company had taken steps
to further reduce operating expenses by closing non-profitable locations. The
Company's Arizona and Northern California operations ceased and the process to
sublease the office spaces had commenced.

There can be no assurance that the Company will acquire businesses, form
additional alliances, or expand its existing services. Failure to expand the
scope of services provided by the Company may have an adverse effect on the
Company's results of operations.


RESTRUCTURING

During 1998, the Board of Directors continued with the Company's withdrawal from
the real and personal property tax consulting business, including a
restructuring and wind down of the Belt Perry property and tax services group.
During September 1998, the company initiated an early lease termination on its
former San Diego office facilities, and in an effort to reduce its monthly rent
expense, signed a one-year lease for a smaller office space. In addition,
management had begun the process to terminate the Company's 401(k) Plan and
subsidiary corporations. As of September 30, 1998, the Company's operation
relating to its property tax consulting business had ceased.

During October 1998, a former officer of the Company completed an Asset Purchase
Agreement (the "Agreement") to acquire from the Company certain furniture,
equipment and intangibles in exchange for a lump sum purchase price of $10,000
and the assumption of an existing equipment lease. The Agreement also transfers
ownership in the existing trade receivables in exchange for 50% of all
collections, net of expenses, for a period of one year.

Separate from the Agreement, the former officer assumed the lease on the San
Diego office facilities.

On September 30, 1998 the former officer's resignation took effect, and the
concurrent appointment of a new officer by the Company's Board of Directors took
place.


EMPLOYEES

As of March 30, 2001, the Company had one part-time employee. This employee is
not subject to a collective bargaining agreement.




                                       5
<PAGE>   6

ITEM 2.  PROPERTIES

The Company's principal executive offices are located at 388 Windflower Ct.,
Windsor, California and its telephone number is (707) 837-9447. BPA leased
approximately 9,900 and 800 square feet of office space in Phoenix, Arizona and
San Rafael, California, respectively. Such leases expired in June 2000 and March
2000, respectively. The Company subleased the majority of its office space in
Phoenix, Arizona, as well as its San Rafael office space.


ITEM 3.  LEGAL PROCEEDINGS

In January 1994, as part of the Plan, the Company settled a disputed claim with
an individual for $100,000, the payment of which was to be made to the
individual from the last $100,000 owed and paid by St. George Crystal, Ltd.
("SGC") on certain promissory notes, stocks and warrants (the "Notes"). In
December 1994, the Company sold its remaining 30% undivided interest in the
Notes. In February 1995, and again on May 6, 1996, the Company and the
court-appointed receiver for the Notes received notice from the individual that
as a result of the Company's disposition of the Notes, the $100,000 owed to such
individual was due. The Company believes that no payment is due to such
individual at this time and, in the event the Company were to make such payment,
it would be indemnified.

In April 1995, litigation was commenced by SGC in Pittsburgh, Pennsylvania
against the Company and others with regard to enforcement of obligations owing
under the Notes executed by SGC and the validity of the assignment of the Notes
by the Company. The case was transferred to the Bankruptcy Court. On March 6,
1996, the Bankruptcy Court issued an Order Dismissing Adversary Proceeding which
provided in part that "Defendant Ironstone Group, Inc....and Defendant Michael
Y. McGovern hold(s) no interest in the proceeds of the [SGC Loan Documents],"
thereby confirming the validity of the assignment.

On June 10, 1996, a settlement agreement was entered into by SGC and various
other parties settling most but not all disputes among them. In particular, the
individual's claim against the Company for $100,000 referred to in the first
paragraph above was resolved by the settlement.

Other than legal proceedings in which BPA and BPC are involved in the ordinary
course of business, the Company is not a party to any other material legal
proceedings.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of stockholders during 2000.




                                       6
<PAGE>   7

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company`s Common Stock is not eligible for publication of quotations on any
securities market and the Company is not aware of any recent material trading
activity in shares of its Common Stock. As of February 14, 2001, there were
approximately 1,000 holders of record of the Company's Common Stock. The Company
has not paid cash dividends on its Common Stock since its inception and does not
intend to pay cash dividends on its Common Stock in the foreseeable future.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

RESULTS OF OPERATIONS

Year ended December 31, 2000

Revenues for 2000 were $102,615, an increase of $92,221 as compared to 1999.
This increase was primarily due to the recognition of $102,000 of previously
deferred revenue associated with a long pending Arizona tax case.

Costs and expenses for 2000 totaled $124,335, a decrease of $124,416 or 50.02%
as compared to 1999. This decrease was primarily due to lower operating costs as
lease terms expired and legal costs declined.

Legal expenses decreased $40,247 or 46.35% due to lower costs for operations and
minimal costs related to SEC and tax filings.

Salaries and wages decreased $23,996 or 27.58% due to reduced operating
requirements.

Rent expense decreased $42,569 or 90.96% as the remaining leases for operating
space terminated.

Other operating expenses decreased $17,604 or 62.62% as business support
expenses declined.

Year ended December 31, 1999

Revenues for 1999 were $10,394, a decrease of $542,629 or 98.1% as compared to
1998. The decrease was primarily due to management's decision to close the
Company's Arizona, Northern California, and Southern California operations and
cease the Company's operations relating to its property tax consulting business
as of September 30, 1998.

Costs and expenses for 1999 totaled $248,751, a decrease of $1,832,817 or 88.1%
as compared to 1998. This decrease was primarily due to management's decision to
close the Company's Arizona, Northern California, and Southern California
operations and cease the Company's operations relating to its property tax
consulting business as of September 30, 1998.

Salaries and wages decreased $456,496 or 84.0% due to the effects of closing
locations and discontinuing its property tax business as of September 30, 1998.

Bad debts expense decreased $559,241 or 100% due to the 1998 write off in full
of previously considered collectible accounts at the discontinuance of its
property tax consulting business as of September 30, 1998.

Rent expense decreased $153,015 or 76.6% due to the Company's consolidating
office space and renegotiating the leases related to the Phoenix, Arizona and
San Diego and San Rafael, California offices.

Legal and other professional fees decreased $135,421 or 60.9% due to
discontinuing its property tax consulting business as of September 30, 1998.

Other operating expenses decreased $123,204 or 93.7% due to discontinuing its
property tax consulting business as of September 30, 1998.




                                       7
<PAGE>   8

RESULTS OF OPERATIONS, Year ended December 31, 1999, (Continued)

Restructuring charges decreased $218,262 or 100% due to discontinuing its
property tax consulting business as of September 30, 1998.


LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities for the year ended December 31, 2000 was
$125,103. Due to a reduction in marketable securities, working capital at
December 31, 2000 was $436,288, a decrease of $521,761 or 54.5% from 1999.

Cash decreased by $191,684 from $199,267 at the end of 1999 to $7,583 at the end
of 2000. Management believes that its current level of cash and marketable
securities will be adequate to meet its operating needs through 2001.

The Company may obtain additional equity or working capital through bank
borrowings and public or private sales of equity securities and exercises of
outstanding stock options. There can be no assurance, however, that such
additional financing will be available on terms favorable to the Company, or at
all.


ITEM 7.  FINANCIAL STATEMENTS

The financial statements required to be filed herewith begin on page F-1.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

On February 3, 2001, Deloitte & Touche LLP were dismissed as the Registrant's
independent public accountants. There have been no disagreements with the former
accountant on any matter of accounting principles or practices, financial
statement disclosures, or auditing scope or procedures. Also, the former
accountant has issued no qualified or adverse opinion or disclaimer of opinion
in the past two years.

On February 3, 2001, the Registrant engaged J. H. Cohn LLP to act as the
Registrant's independent public accountants. The Board of Directors approved
this change in the Registrant's certifying accountant on February 23, 2001.




                                       8
<PAGE>   9

                                    PART III


ITEM 9.  DIRECTORS, EXECUTIVES OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

DIRECTORS

NAME                         AGE                             DIRECTOR SINCE
----                         ---                             --------------

Edmund H. Shea, Jr.          70                                   1993


Edmund H. Shea, Jr. has served as director of the Company since October 1993. He
is a co-founder of J. F. Shea Co., Inc., a diversified construction, land
development and venture capital investment company, and has served as its
Executive Vice President and a director since 1954. He is also a director of
ADAC Laboratories, Inc., Hambrecht & Quist Group and several privately held
companies. He holds a B.S. degree from M.I.T.


EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of the Company's
executive officers as of March 30, 2000. A summary of the background and
experience of each of these individuals is set forth after the table.

NAME                         AGE                POSITION
----                         ---                --------

Robert W. Rembowski          54                 Chief  Executive Officer, Chief
                                                Financial Officer and Secretary

Mr. Rembowski has served as Chief Executive Officer, Chief Financial Officer and
as Secretary since October 1998. Robert Rembowski has served as Executive Vice
President and CFO of Belvedere Winery and the Hambrecht Vineyards from 1994 to
2000. In 1998 he was the CFO of WR Hambrecht + Co., LLC, an on-line investment
bank. In 2000 he joined Cierra Photonics, an optics component company, as
Director of Finance. He holds a B.S. degree from San Jose State University.

ITEM 10.  EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

Each non-employee director of the Company is entitled to receive a fee for each
meeting attended in person (plus $500 for each committee meeting attended by
committee members on a day other than a Board meeting date). The members of the
Board of Directors are also eligible for reimbursement for the their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.

Outside directors also receive stock option grants under the Company's 1993
Non-Employee Directors' Stock Option Plan (the "Directors' Plan"). Only
non-employee directors of the Company or an affiliate of such directors (as
defined in the Internal Revenue Code of 1986, as amended from time to time,
hereinafter the "Code") are eligible to receive options under the Directors'
Plan. Options granted under the Directors' Plan are not intended to qualify as
incentive stock options under the code.

The Directors' Plan provides for the automatic grant of options to purchase
share of Common Stock to non-employee directors. In October 1993, Mr. Shea
received an option to purchase 1,600 shares of Common Stock at an exercise price
of $3.00 per share. In addition, upon compliance by the Company with certain
securities law requirements in May 1995, Mr. Shea received, pursuant to the
terms of the Directors' Plan, an option to purchase 375 shares of Common Stock
at an exercise price of $4.00 per share and an additional option to purchase
1,600 shares of Common Stock at an exercise price of $4.00 per share. All
options under the Directors' Plan have been or will be granted at fair market
value on the date of grant. The Directors' Plan also provides that any future
non-employee director who is elected or appointed to the Board for the first
time shall, upon the date of his initial election or appointment, automatically
be granted an option to purchase 1,600 shares of Common Stock. In addition, the
Directors' Plan provides that on the first business day of each calendar year,
each person who is then serving as a non-employee director of the Board shall be
granted an option to




                                       9
<PAGE>   10

COMPENSATION OF DIRECTORS (continued)

purchase up to 1,600 shares of Common Stock, the exact number being based pro
rata on the portion of the preceding year that the non-employee director served
as such. Consequently, on January 2, 1997, and again on January 2, 1998, Mr.
Shea received an option to purchase 1,600 shares of Common Stock at an exercise
price of $0.50 and $1.31 per share, respectively. In addition, on April 1, 1997
and again on January 2, 1998, Mr. Hambrecht received an option to purchase 1,600
shares and 1,200 shares of Common Stock, respectively, at an exercise price of
$0.50 and $1.31 per share, respectively. Options under the Directors' Plan have
a ten-year term; however, each option will terminate prior to the expiration
date if the optionee's service as a non-employee director, or, subsequently, as
an employee, of the Company terminates. The exercise price of each option under
the Directors' Plan must be equal to the fair market value of the Common Stock
on the date of grant. All options issued pursuant to the Directors' Plan vest at
a rate of 1/36 per month for 36 months following the date of the grant of the
option, or in the event the grant was delayed pending compliance by the Company
with certain securities law requirements, the date from which the grant was
delayed.


COMPENSATION OF EXECUTIVE OFFICERS


                             SUMMARY OF COMPENSATION

The following table shows for the fiscal year ended December 31, 1999,
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer. The Company's Chief Executive Officer has served in this capacity since
October 1, 1998 and no other executive officers earned more than $100,000 during
the fiscal year ended December 31, 2000.

<TABLE>
<CAPTION>

    NAME AND PRINCIPAL                                               OTHER ANNUAL
        POSITION                  YEAR      SALARY($)      BONUS    COMPENSATION($)
<S>                               <C>       <C>            <C>      <C>

Robert W. Rembowski               2000       $62,000        --            --
  Chief Executive                 1999       $73,333        --            --
  Officer and Secretary
</TABLE>


                        STOCK OPTION GRANTS AND EXERCISES

The 1994 Equity Incentive Plan (the "Plan") provides for the grant of (i) both
incentive and nonstatutory stock options and (ii) rights to purchase restricted
stock, together "Stock Awards", to the Company's directors, officers and
employees. Directors who are not salaried employees of or consultants to the
Company or to any affiliate of the Company are not eligible to participate in
the Plan. As of March 16, 2001, options to purchase a total of 11,175 shares
were outstanding under the Plan, no shares had been purchased pursuant to the
Plan and 228,825 shares remained available for future issuance thereunder.

The Plan is administered by the Board of Directors of the Company. The Board has
the power to construe and interpret the Plan and, subject to the provisions of
the Plan, to determine the number of persons to whom and the dates on which
Stock Awards will be granted, the number of shares that may be exercised, the
type or types of such Stock Awards to be granted, the exercise price of such
Stock Award when appropriate and other terms of the Stock Award.

The maximum term of options under the Plan is typically ten years; however, in
the event that an optionee's service to the Company terminates, that optionee's
options will expire 90 days after the optionee's service to the Company
terminates. Option grants under the Plan typically vest over a five-year period
at the rate of 1/10 on the date six months after the date of grant and 1/60 per
month thereafter. The exercise price of nonstatutory options may not be less
than 85% of the fair market value of the Common Stock subject to the option on
the date of grant; the exercise price of incentive options may not be less than
100% of the fair market value of the Common Stock subject to the option on the
date of the grant.

No options or rights to purchase restricted stock were granted to the Company's
executive officers during the fiscal year ended December 31, 2000.




                                       10
<PAGE>   11

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of
the Company's Common Stock as of March 16, 2001 by: (i) each director and
nominee for director; (ii) all officers and directors of the Company as a group;
and (iii) all those known by the Company to be beneficial owners of more than
five percent of its Common Stock.


                            BENEFICIAL OWNERSHIP(1)

<TABLE>
<CAPTION>
                                                                                            NUMBER OF SHARES    PERCENT
BENEFICIAL OWNER                                                                            OF COMMON STOCK     TOTAL(2)
<S>                                                                                         <C>                 <C>
Venture Capital Entities affiliated with
   Hambrecht & Quist Group(3) .............................................................     1,090,271          73
       One Bush Street
       San Francisco, CA 94104

William R. Hambrecht(4) ...................................................................         2,800           *
       550 15th Street
       San Francisco, CA 94103

Edmund H. Shea, Jr.(5) ....................................................................         8,375           *

All executive officers and directors
   as a group (2 persons) .................................................................     1,100,833          73
</TABLE>

--------------------
 *   Less than 1%

(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 1,487,847 shares outstanding on March
     16, 2001 adjusted as required by rules promulgated by the SEC.

(3)  Represents shares beneficially owned by Hambrecht & Quist Group (4,596
     shares) and associated entities, including the following entities: H & Q
     Ventures IV (131,989 shares), Hambrecht & Quist California (242,904
     shares), Hambrecht & Quist Incorporated (3,656 shares), Hambrecht & Quist
     Venture Partners (128,875 shares), The Hambrecht 1980 Revocable Trust
     (344,735 shares), Hamquist (2,551 shares) and Venture Associates (BVI)
     Limited (230,965 shares).

(4)  Represents 2,800 shares subject to outstanding options that were
     exercisable on March 16, 2001 or will become exercisable within 60 days
     thereafter. Mr. Hambrecht was affiliated with entities described in Note
     (3) above and thereby subject to aggregation requirements. Mr. Hambrecht
     may have been deemed to share voting and investment power over those shares
     held by Hambrecht & Quist Group and associated entities listed in note (3).
     Mr. Hambrecht disclaims beneficial ownership as to all shares held by
     Hambrecht & Quist Group and associated entities, except to the extent of
     his pecuniary interest therein.

(5)  Represents 8,375 shares subject to outstanding options that were
     exercisable on March 16, 2001 or will become exercisable 60 days
     thereafter.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.




                                       11
<PAGE>   12

                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)       EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                    DESCRIPTION
-------                   -----------
<S>       <C>

  21.1    Subsidiaries of Ironstone Group, Inc.
</TABLE>


(b)        REPORTS ON FORM 8-K

Change in audit firm from Deloitte & Touche LLP to J. H. Cohn LLP.




                                       12
<PAGE>   13

                                   SIGNATURES

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-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.



                                        IRONSTONE GROUP, INC.
                                        A DELAWARE CORPORATION



Date:  April 13, 2001                   By: /s/  Robert W. Rembowski
                                            ------------------------------------
                                            Robert W. Rembowski
                                            Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                       TITLE                                  DATE
---------                       -----                                  ----
<S>                             <C>                                    <C>
/s/ Robert W. Rembowski         Chief Executive Officer,               April 13, 2001
-------------------------       Chief Financial Officer and
Robert W. Rembowski             Secretary
                                (Principal Executive Officer and
                                Principal Financial Officer)


/s/ Edmund H. Shea, Jr.         Director                               April 13, 2001
-------------------------
Edmund H. Shea, Jr.
</TABLE>




                                       13
<PAGE>   14

                     IRONSTONE GROUP, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                    PAGE
                                                                                                    ----
<S>                                                                                              <C>
Independent auditors' reports...............................................................     F-2 to F-3

Consolidated balance sheet at December 31, 2000.............................................        F-4

Consolidated statements of operations and comprehensive loss for the years ended
December 31, 2000 and 1999..................................................................        F-5

Consolidated statements of shareholders' equity for the years ended

December 31, 2000 and 1999..................................................................        F-6

Consolidated statements of cash flows for the years ended

December 31, 2000 and 1999..................................................................        F-7

Notes to consolidated financial statements..................................................     F-8 to F-11
</TABLE>




                                      F-1
<PAGE>   15

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders
Ironstone Group, Inc.


We have audited the accompanying consolidated balance sheet of IRONSTONE GROUP,
INC. AND SUBSIDIARIES as of December 31, 2000, and the related consolidated
statements of operations and comprehensive loss, shareholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ironstone Group,
Inc. and Subsidiaries at December 31, 2000, and their results of operations and
cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.


                                        J. H. COHN LLP


San Diego, California
March 16, 2001




                                      F-2
<PAGE>   16
                         [DELOITTE & TOUCHE LETTERHEAD]



INDEPENDENT AUDITORS' REPORT

We have audited the consolidated statements of operations and comprehensive
loss, shareholders' equity and cash flows of Ironstone Group, Inc. and
subsidiaries for the year ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of Ironstone Group,
Inc. and subsidiaries for the year ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States of America.



/s/ Deloitte & Touche LLP

San Diego, California
March 23, 2000




                                      F-3

<PAGE>   17


                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000



<TABLE>
<S>                                                                     <C>
ASSETS:
Current assets:
  Cash                                                                  $      7,583
  Marketable securities available for sale, at fair value                    543,139
                                                                        ------------
   Total assets                                                         $    550,722
                                                                        ============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
  Accounts payable                                                      $      5,119
  Loan interest payable to shareholder                                         4,952
  Loan payable to shareholder                                                102,920
  Other liabilities                                                            1,443
                                                                        ------------
    Total liabilities                                                        114,434
                                                                        ------------

Commitments and contingencies

Shareholders' equity:
  Preferred stock, $0.01 par value, 5,000,000 shares authorized of
    which there are no issued and outstanding shares                              --
  Common stock, $0.01 par value, 25,000,000 shares authorized of
    which 1,487,847 shares are issued and outstanding                         14,878
  Additional paid-in capital                                              21,170,386
  Accumulated deficit                                                    (20,239,593)
  Accumulated other comprehensive loss                                      (509,383)
                                                                        ------------
    Total shareholders' equity                                               436,288
                                                                        ------------
    Total liabilities and shareholders' equity                          $    550,722
                                                                        ============
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                       F-4
<PAGE>   18


                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999



<TABLE>
<CAPTION>
                                                            2000              1999
                                                        -----------       -----------
<S>                                                     <C>               <C>
Revenues:
  Consulting Fees                                       $   102,000       $        --
  Interest and other income                                     615            10,394
                                                        -----------       -----------
   Total Revenue                                            102,615            10,394
                                                        ===========       ===========

Costs and expenses:
  Salaries and wages, payroll taxes and benefits             63,003            86,999
  Legal and Other Professional fees                          46,592            86,839
  Rent expense                                                4,231            46,800
  Interest expense                                            5,343            12,133
  Other operating expenses                                    4,501             8,276
  Travel and entertainment                                       --             4,751
  Office expense                                                665             2,953
                                                        -----------       -----------
    Total costs and expenses                                124,335           248,751
                                                        -----------       -----------

Loss before income taxes                                    (21,720)         (238,357)
Income tax provision                                           (800)             (850)
                                                        -----------       -----------
Net loss                                                $   (22,520)      $  (239,207)
                                                        ===========       ===========

COMPREHENSIVE LOSS, NET OF TAX:
   Net loss                                             $   (22,520)      $  (239,207)
   Unrealized holding loss arising during the year         (499,241)       (1,426,965)
                                                        -----------       -----------

   Comprehensive loss                                   $  (521,761)      $(1,666,172)
                                                        ===========       ===========

Earnings per share:
Basic:
   Net loss per share                                   $     (0.02)      $     (0.16)
                                                        ===========       ===========
   Weighted average shares                                1,487,847         1,487,847
                                                        ===========       ===========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                       F-5
<PAGE>   19


                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2000 AND 1999



<TABLE>
<CAPTION>
                                                                                                 ACCUMULATED
                                                              ADDITIONAL                            OTHER
                                     COMMON STOCK              PAID IN         ACCUMULATED       COMPREHENSIVE
                                 SHARES         AMOUNT         CAPITAL           DEFICIT          INCOME(LOSS)         TOTAL
                               ---------      --------      ------------       ------------      -------------      -----------
<S>                            <C>            <C>           <C>                <C>                <C>               <C>
Balances,
   January 1, 1999             1,487,847      $ 14,878      $ 21,170,386       $(19,977,866)      $ 1,416,823       $ 2,624,221

Other comprehensive
loss                                                                             (1,426,965)       (1,426,965)
Net loss                                                                                             (239,207)         (239,207)

                               ---------      --------      ------------       ------------       -----------       -----------
Balances,
   December 31, 1999           1,487,847        14,878        21,170,386        (20,217,073)          (10,142)          958,049

 Other comprehensive
 loss                                                                              (499,241)         (499,241)
 Net loss                                                                           (22,520)                            (22,520)

                               ---------      --------      ------------       ------------       -----------       -----------
 Balances,
   December 31, 2000           1,487,847      $ 14,878      $ 21,170,386       $(20,239,593)      $  (509,383)      $   436,288
                               =========      ========      ============       ============       ===========       ===========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                      F-6
<PAGE>   20

                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999



<TABLE>
<CAPTION>
                                                                      2000            1999
                                                                   ---------       ---------
<S>                                                                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                         $ (22,520)      $(239,207)
  Adjustments to reconcile net loss to net cash
    used in operating activities:

    Changes in operating assets and liabilities:
      Accounts receivable                                                 --          26,870
      Other assets                                                     2,941           1,911
      Accounts payable                                                  (150)        (14,057)
      Accrued compensation                                            (3,418)             --
      Deferred revenue                                              (102,000)             --
      Other current liabilities                                           44            (811)
                                                                   ---------       ---------
          Net cash used in operating activities                     (125,103)       (225,294)
                                                                   ---------       ---------


CASH FLOWS FROM INVESTING ACTIVITIES - Purchase of marketable
securities available for sale                                             --        (166,345)
                                                                   ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Margin loan, net                                                  (1,024)       (156,343)
    Margin loan from shareholder                                     (65,557)        168,477
                                                                   ---------       ---------
        Net cash provided by (used in) financing activities          (66,581)         12,134
                                                                   ---------       ---------

Net decrease in cash                                                (191,684)       (379,505)
Cash at beginning of year                                            199,267         578,772
                                                                   ---------       ---------
Cash at end of year                                                $   7,583       $ 199,267
                                                                   =========       =========

Supplemental disclosure of cash flow information:

Cash paid during the year for:
    Interest                                                       $     112       $      --
    Income taxes                                                   $     800       $      --
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                      F-7
<PAGE>   21

                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Business Activities

Ironstone Group, Inc. (the "Company") significant business activities included
reducing, for a fee, ad valorem taxes assessed to owners of real and personal
property, generally in the Arizona and California markets. In January 1998, the
Company's Board of Directors approved a plan for the Company to divest itself of
the Belt Perry property and tax services group. As of December 31, 1998 the
Company ceased operations relating to its property tax consulting business. The
Company is actively seeking appropriate business combination opportunities. In
the alternative, the Company is looking for an investment opportunity for some
or all of its remaining liquid assets.


Marketable Securities

Marketable securities have been classified by management as available for sale
in accordance with Statement of Financial Accounting Standard No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115"). In accordance with SFAS No. 115, marketable securities are recorded at
fair value and any unrealized gains and losses are excluded from earnings and
reported as a separate component of shareholders' equity until realized. The
fair value of the Company's marketable securities at December 31, 2000 is based
on quoted market prices.


Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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. Actual results could differ from those estimates.


Reclassifications

Certain 1999 amounts have been reclassified to conform to the 2000 presentation.


Income Taxes

The Company and its wholly-owned subsidiaries file a consolidated federal income
tax return. The Company accounts for income taxes pursuant to the asset and
liability method which requires deferred tax assets and liabilities be computed
for differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount to expect
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.




                                      F-8
<PAGE>   22

                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999


Earnings (loss) per share

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share", which provides
simplified standards for the computation and presentation of earnings of "Basic"
and "Diluted" earnings per share ("EPS").

Basic EPS excludes dilution from common stock equivalents 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 potential dilution from common stock equivalents, except where
inclusion of such common stock equivalents would have an anti-dilutive effect,
using only the average stock price during the period in the computation.

Options to purchase 11,175 shares of the Company's common stock were outstanding
during 2000 and 1999, but were not included in the computation of diluted EPS as
the Company incurred a net loss from operations.

2. MARKETABLE SECURITIES

All marketable securities are classified as available for sale. The cost and
fair value of marketable securities at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                                  UNREALIZED
                                                    COST             LOSS        FAIR VALUE
          <S>                                   <C>               <C>             <C>
          Corporate Equity Securities:

          Interlinq Software Corporation        $   886,177       $(351,618)      $534,559
          Flexinternational Software, Inc.          166,345        (157,765)         8,580
                                                -----------       ---------       --------

                                                $ 1,052,522       $(509,383)      $543,139
                                                ===========       =========       ========
</TABLE>


3. MARGIN LOAN

The Company had entered into a margin loan agreement ("Margin Loan") with WR
Hambrecht and Co., LLC, a major shareholder of the Company, pledging all
marketable securities as collateral for the Margin Loan. The Margin Loan bore
interest at WR Hambrecht and Co., LLC's margin loan rate, which for the period
from January 1, 1998 through December 31, 1999 ranged between 8.751% and 7.25%
per annum (8.751% at December 31, 1999). At December 31, 1999, the Company owed
$1,024 on the Margin Loan. In addition the Company had a margin loan payable to
a major shareholder of $168,477. This liability was satisfied on January 12,
2000.

During 2000 the major stockholder of the Company loaned the Company $102,920.
The unsecured loan bears interest at 10% per annum and is due on demand. During
2000, interest expense of $4,952 was accrued but remains unpaid at December 31,
2000.




                                      F-9
<PAGE>   23

                     IRONSTONE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999


4. INCOME TAXES

SFAS No. 109 requires the recognition of deferred tax assets and liabilities for
the expected future consequences of events that have been recognized in the
financial statements or tax returns. Deferred income taxes reflect the net tax
effects of (i) temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes and (ii) operating loss and tax credit carryforwards. The tax effects
of significant items comprising the Company's deferred income taxes at December
31, 2000 are as follows:

<TABLE>
          <S>                                            <C>
          Deferred tax assets:
           Operating loss carryforwards                  $ 18,300,000
           Other Comprehensive loss                           200,000
                                                         ------------

          Total deferred income taxes                      18,500,000
          Less valuation allowance                        (18,500,000)
                                                         ------------

          Deferred income taxes - net                    $         --
                                                         ============
</TABLE>

The Company's income tax provision of $800 and $850 for the years ended
December 31, 2000 and 1999, respectively, relates to annual franchise and
minimum taxes charged by the states in which the Company is incorporated or does
business. The primary difference between the income tax provisions for the years
ended December 31, 2000 and 1999 and the income tax benefit (provision) which
would be computed based upon the statutory income tax rate and the net income
(loss) is due to not recording the potential benefit of the net operating loss
carryforwards. As of December 31, 2000, the Company has net operating loss
carryforwards for tax purposes of approximately $45,800,000. These carryforwards
will expire in the years 2001 to 2020.

The Tax Reform Act of 1986 significantly limited the amount of net operating
loss carryforwards that are available to offset future taxable income when an
ownership change occurs. The amount of the net operating loss carryforward that
may be available for use in future years may be limited.

In the opinion of management, based on limitations on the use of net operating
loss carryforwards, the realization of such carryforwards is not likely, and
accordingly, a valuation allowance has been recorded to offset such amount in
its entirety.


5. COMMITMENTS AND CONTINGENCIES

During 1992, a judgment was rendered in Tax Court (the "1992 Judgment") in a
court case in which Belt Perry Associates ("BPA") had appealed a 1990 property
tax valuation on behalf of a client. The 1992 Judgment resulted in a significant
property tax savings for the client on which BPA's contingency fee was
approximately $82,000. The taxing authority subsequently filed an appeal to the
Court of Appeals. The Court of Appeals upheld the original 1992 Judgment and
rejected a motion to reconsider. The taxing authority then filed an appeal to
the Arizona Supreme Court. The Arizona Supreme Court reversed both the Court of
Appeals' and the Tax Court's decisions and judgments. The case is now back
before the Tax Court and will be heard along with other pending appeals for the
1991 through 1994 tax years filed by BPA on behalf of the client. At
December 31, 1999, the case remains unresolved. During 1993, the County
Treasurer made a payment to BPA on behalf of BPA's client related to the 1992
Judgment of which $102,000 represents BPA's contingent fee plus interest. Such
amount is included in deferred revenue pending the completion of the appeal
process. During 2000, the Company was informed that, due to the anticipated
costs involved in continuing the appeal process, the appeal process would not be
pursued any further. As a result, the revenues previously deferred pending
completion of the appeal process have been recognized in the accompanying
Consolidated Statement of Operations.


6. DEFINED CONTRIBUTION PLAN

A favorable determination to terminate the 401(k) plan was received in February
2000.




                                      F-10
<PAGE>   24

                     IRONSTONE GROUP, INC.AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999


7. SHAREHOLDERS' EQUITY

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 ever been issued.

Stock Option Plans The Company has adopted a 1989 Equity Incentive Plan, a 1993
Non-Employee Directors' Stock Option Plan and a 1994 Equity Incentive Plan
(collectively, the "Plans"). In March 1994, the 1989 Equity Incentive Plan was
amended to reduce the number of shares reserved thereunder and the Board of
Directors determined that no further grants would be made under this plan. As of
December 31, 2000 and 1999, 328,105 shares were available for grant under the
Plans. The Plans provide for incentive stock options to be granted at times and
prices determined by the Company's Board of Directors, to be granted at not less
than 100% of the fair value of the Company's common stock on the date of grant.
Options are generally subject to a three or four-year vesting schedule. Options
issued under the Plans expire at the earlier of the end of the exercise period
of no more than ten years from the date of grant or 90 days following the
grantee's end of service to the Company.

During 2000 and 1999, options to purchase 11,175 shares of common stock with a
weighted average exercise price of $1.71 were outstanding. Of those options,
11,175 and 10,007 (weighted average exercise price of $1.79) were exercisable at
December 31, 2000 and 1999, respectively. During 2000 and 1999, no options were
granted, exercised, expired or were forfeited.

The following table summarizes information about fixed price stock options
outstanding at December 31, 2000:

                       Options Outstanding and Exercisable


<TABLE>
<CAPTION>
                                Number        Weighted Ave.        Weighted-
              Range of       Outstanding        Remaining           Average
          Exercise Prices      12/31/00     Contractual Life     Exercise Price
          ---------------    -----------    ----------------     --------------
          <S>                <C>            <C>                  <C>
                 $0.50          3,200           6.1 years            $0.50
           1.06 - 1.13          4,400           6.3                   1.10
                  3.00          1,600           2.8                   3.00
                  4.00          1,975           4.0                   4.00
                                -----

         $0.50 - $4.00         11,175           5.3                  $1.71
                               ======
</TABLE>

The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the stock option plans. Had compensation for the Company's
three stock option plans been determined based on the fair value at the grant
date for awards in 1998 and 1997 consistent with the provisions of SFAS No. 123,
the Company's net earnings and earnings per share would have been reduced to the
pro forma amounts indicated below:

<TABLE>
<CAPTION>
                         2000                               1999
                         ----                               ----

                    Net       Per Share                Net        Per Share
                   Loss         Basic                 Loss          Basic
                 --------       ------              ---------       ------
<S>              <C>            <C>                 <C>             <C>
As Reported      $(22,520)      $(0.02)             $(239,207)      $(0.16)
                 ========       ======              =========       ======

Pro Forma        $(23,174)      $(0.02)             $(240,303)      $(0.16)
                 ========       ======              =========       ======
</TABLE>

In 2000 and 1999 no options were granted to employees. In 1998 the fair value of
options granted is estimated as approximately $0.56 per share on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions used for the grants; dividend yield of 0%; expected
volatility of 69%; risk free interest rate of 6.00%; and expected lives of 3
years.





                                      F-11