SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the statements in this document that are not historical facts,
including, without limitation, statements of future expectations, projections of
financial condition and results of operations, statements of future economic
performance and other forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to differ materially from
those contemplated in such forward-looking statements. In addition to the
specific matters referred to herein, important factors which may cause actual
results to differ from those contemplated in such forward-looking statements
include (i) the results of the Company's efforts to implement its business
strategy; (ii) actions of the Company's competitors and the Company's ability to
respond to such actions; (iii) changes in governmental regulation, tax rates and
similar matters; and (iv) other risks detailed in the Company's other filings
with the SEC
USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES
The preparation of consolidated financial statements in conformity with U.S.
GAAP requires us to make estimates and judgments that affect the reported
amounts of assets and related disclosure. On an ongoing basis, we evaluate our
estimates, including those related to non-marketable securities. We base our
estimates on various assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets that are not readily apparent from other sources.
Actual results may differ from these estimates due to actual outcomes being
different from those on which we based our assumptions. These estimates and
judgments are reviewed by management on an ongoing basis and by our board of
directors at the end of each quarter prior to the public release of our
financial results.
As of the date of the filing of this quarterly report, we believe there have
been no material changes to our critical accounting policies and estimates
during the three ended June 30, 2021 compared to those disclosed in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2014 as filed with
the SEC. Additional information about these critical accounting policies may be
found in the "Management's Discussion & Analysis of Financial Condition and
Results of Operations" section included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2014.
RESULTS OF OPERATIONS
Three months ended June 30, 2021 and June 30, 2020
Operating expenses for three months ended June 30, 2021 totaled $54,579, an
increase of $51,329 or 1,579.3% as compared to the three months ended June 30,
2020. The increase was due to $42,600 in compensation charges relating to the
officers and directors stock options plan, and an increase in professional fees
of $8,729. Other expenses for the three months ended June 30, 2021 totaled
$75,663 an increase of $10,882 or 16.8% as compared to $64,781 for the three
months ended June 30, 2020. This increase was due to higher interest expense
accruals.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $239,911 and $277,386 for the six
months ended June 30, 2021 and 2020, respectively. The Company has a line of
credit arrangement with First Republic Bank with a borrowing limit of $350,000
with interest based upon the lender's prime rate plus 4.5%. Interest is
currently payable monthly at 7.75%. The line is guaranteed by William R.
Hambrecht, Chief Executive Officer, Director. The line of credit is due on
demand and is secured by all of the Company's business assets. At March 31, 2021
the outstanding balance under the line was $350,000.
At June 30, 2021, the outstanding balance the Company borrowed from related
party Mr. William R. Hambrecht was $324,313 with interest at 7.75% per annum and
$300,000 at 6.0% per annum. As of March 31, 2021, the total notes payable to the
third party was $2,216,372.
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IRONSTONE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(UNAUDITED)
The Company may obtain additional equity or working capital through additional
bank borrowings, debt conversion to common stock, and public or private sales of
equity securities. The Company may also borrow additional funds from Mr. William
R. Hambrecht. There can be no assurance, however, that such additional financing
will be available on terms favorable to the Company, or at all.
While the Company explores new business opportunities, the primary capital
resource of the Company relates to the 74,000 shares held of Arcimoto valued at
$1,272,060 and Arcimoto options that are $75,648 in the money for the three
months ended June 30, 2021. The 468,121 shares of non-marketable investment
TangoMe, Inc. is also a primary capital resource. The investment in TangoMe,
Inc. shares is valued at $2,574,666 for the three months ended June 30, 2021.
Given the investment in TangoMe, Inc. does not have a readily determinable fair
value, the Company exerts significant judgment in estimating the fair value
using various pricing models and the information available to the Company that
it deems most relevant.
Trends and Uncertainties
Termination of Historical Business Lines
Since winding down the Company's traditional lines of business, Management and
the Board of Directors have been seeking appropriate business opportunities for
the Company. The Company's cash assets are invested in corporate securities and
demand deposit accounts. If the Company does not find an operating entity to
combine with, and if its assets are not invested in certain types of securities
(primarily government securities), it may be deemed to be an investment company
under the terms of the Investment Company Act of 1940, as amended.
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