UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
| ☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended June 30, 2023
or
| ☐ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from ________ to________
Commission
File Number 001-14784
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
(Exact
Name of Registrant as Specified in Its Charter)
| Nevada |
75-2615944 |
(State
or Other Jurisdiction of
Incorporation
or Organization) |
(I.R.S.
Employer
Identification
No.) |
1603
Lyndon B. Johnson Freeway, Suite 800, Dallas, Texas 75234
(Address
of principal executive offices) (Zip Code)
(469)
522-4200
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
| Title
of each class |
Trading
Symbol(s) |
Name
of each exchange on which registered |
| Common
Stock |
IOR |
NYSE
American Exchange |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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 ☐ No
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). ☒ Yes ☐ No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company in Rule 12b-2 of the Exchange Act.
| Large
accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated
filer ☒ |
Smaller reporting company ☒ |
| Emerging
growth Company ☐ |
|
|
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No.
As
of August 10, 2023, there were 4,168,414 shares of common stock outstanding.
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
FORM
10-Q
TABLE
OF CONTENTS
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED
BALANCE SHEETS
(dollars
in thousands, except share and par value amounts)
(Unaudited)
| | |
June 30, 2023 | | |
December 31, 2022 | |
| Assets | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 2 | | |
$ | 6 | |
| Interest receivable from related parties | |
| 665 | | |
| 676 | |
| Receivable from related parties | |
| 103,030 | | |
| 100,134 | |
| Total current assets | |
| 103,697 | | |
| 100,816 | |
| Non-current assets | |
| | | |
| | |
| Notes receivable from related parties | |
| 11,173 | | |
| 11,173 | |
| Total assets | |
$ | 114,870 | | |
$ | 111,989 | |
| | |
| | | |
| | |
| Liabilities and Equity | |
| | | |
| | |
| Liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 1 | | |
$ | 4 | |
| | |
| | | |
| | |
| Shareholders' equity | |
| | | |
| | |
| Common stock, $0.01 par value, 10,000,000 shares authorized; 4,173,675 shares issued and 4,168,414 outstanding | |
| 42 | | |
| 42 | |
| Treasury stock at cost, 5,261 shares | |
| (39 | ) | |
| (39 | ) |
| Additional paid-in capital | |
| 61,955 | | |
| 61,955 | |
| Retained earnings | |
| 52,911 | | |
| 50,027 | |
| Total shareholders’ equity | |
| 114,869 | | |
| 111,985 | |
| Total liabilities and equity | |
$ | 114,870 | | |
$ | 111,989 | |
The
accompanying notes are an integral part of these consolidated financial statements.
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(dollars
in thousands, except per share amounts)
(Unaudited)
| | |
|
|
|
|
|
| | |
|
|
|
|
|
| |
| | |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| Revenues: | |
| | |
| | |
| | |
| |
| Other income | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Expenses: | |
| | | |
| | | |
| | | |
| | |
| General and administrative (including $44 and $10 for the three months ended June 30, 2023 and 2022, respectively, and $142 and $89 for the six months ended June 30, 2023 and 2022, respectively, from related parties) | |
| 76 | | |
| 68 | | |
| 294 | | |
| 260 | |
| Advisory fee to related party | |
| 380 | | |
| 273 | | |
| 699 | | |
| 541 | |
| Total operating expenses | |
| 456 | | |
| 341 | | |
| 993 | | |
| 801 | |
| Net operating loss | |
| (456 | ) | |
| (341 | ) | |
| (993 | ) | |
| (801 | ) |
| Interest income from related parties | |
| 2,778 | | |
| 1,433 | | |
| 4,644 | | |
| 2,685 | |
| Income tax provision | |
| (488 | ) | |
| (244 | ) | |
| (767 | ) | |
| (410 | ) |
| Net income | |
$ | 1,834 | | |
$ | 848 | | |
$ | 2,884 | | |
$ | 1,474 | |
| | |
| | | |
| | | |
| | | |
| | |
| Earnings per share - basic and diluted | |
$ | 0.44 | | |
$ | 0.20 | | |
$ | 0.69 | | |
$ | 0.35 | |
| Weighted average common shares used in computing earnings per share | |
| 4,168,414 | | |
| 4,168,414 | | |
| 4,168,414 | | |
| 4,168,414 | |
The
accompanying notes are an integral part of these consolidated financial statements.
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED
STATEMENT OF EQUITY
(dollars
in thousands)
(Unaudited)
| | |
| | |
| | |
| | |
| | |
| |
| | |
Common
Stock | | |
Treasury Stock | | |
Paid-in Capital | | |
Retained Earnings | | |
Total Shareholders' Equity | |
| | |
| | |
| | |
| | |
| | |
| |
| Three Months Ended June 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, April 1, 2023 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 51,077 | | |
$ | 113,035 | |
| Net income | |
| — | | |
| — | | |
| — | | |
| 1,834 | | |
| 1,834 | |
| Balance, June 30, 2023 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 52,911 | | |
$ | 114,869 | |
| Three Months Ended June 30, 2022 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, April 1, 2022 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 46,722 | | |
$ | 108,680 | |
| Net income | |
| — | | |
| — | | |
| — | | |
| 848 | | |
| 848 | |
| Balance, June 30, 2022 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 47,570 | | |
$ | 109,528 | |
| Six Months Ended June 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, January 1, 2023 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 50,027 | | |
$ | 111,985 | |
| Net income | |
| — | | |
| — | | |
| — | | |
| 2,884 | | |
| 2,884 | |
| Balance, June 30, 2023 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 52,911 | | |
$ | 114,869 | |
| Six Months Ended June 30, 2022 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, January 1, 2022 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 46,096 | | |
$ | 108,054 | |
| Net income | |
| — | | |
| — | | |
| — | | |
| 1,474 | | |
| 1,474 | |
| Balance, June 30, 2022 | |
$ | 42 | | |
$ | (39 | ) | |
$ | 61,955 | | |
$ | 47,570 | | |
$ | 109,528 | |
The
accompanying notes are an integral part of these consolidated financial statements.
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(dollars
in thousands)
(Unaudited)
| | |
|
|
|
|
|
| |
| | |
Six Months Ended June 30, | |
| | |
2023 | | |
2022 | |
| Cash Flow From Operating Activities: | |
| | | |
| | |
| Net income | |
$ | 2,884 | | |
$ | 1,474 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
| Changes in assets and liabilities, net of dispositions: | |
| | | |
| | |
| Accrued interest on related party notes receivable | |
| 11 | | |
| (74 | ) |
| Related party receivables | |
| (2,896 | ) | |
| (1,390 | ) |
| Accounts payable | |
| (3 | ) | |
| (11 | ) |
| Net cash used in operating activities | |
| (4 | ) | |
| (1 | ) |
| Net decrease in cash and cash equivalents | |
| (4 | ) | |
| (1 | ) |
| Cash and cash equivalents, beginning of the period | |
| 6 | | |
| 2 | |
| Cash and cash equivalents, end of the period | |
$ | 2 | | |
$ | 1 | |
The
accompanying notes are an integral part of these consolidated financial statements.
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share and square
foot amounts)
(Unaudited)
Income
Opportunity Investors, Inc. (the “Company”) is an externally managed company that invests in mortgage notes receivables.
As used herein, the terms “IOR”, “the Company”, “We”, “Our”, or “Us”
refer to the Company.
Transcontinental
Realty Investors, Inc. (“TCI”), whose common stock is traded on the NYSE under the symbol “TCI”, owns
81.1% of our stock and with its affiliates owns approximately 87.6% of our common stock. Accordingly our financial results are
included in the consolidated financial statements of TCI’s in their Form 10-K and in their tax filings. American Realty
Investors, Inc. ("ARL"), whose common stock is traded on the NYSE under the symbol “ARL”, in turn, owns
approximately 78.4% of TCI.
Our
business is managed by Pillar Income Asset Management, Inc. (“Pillar”) in accordance with an Advisory Agreement that is
reviewed annually by our Board of Directors. Pillar is considered to be a related party (See Note 4 – Related Party
Transactions).
Pillar’s
duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities.
Pillar also arranges our debt and equity financing with third party lenders and investors.
| 2. | Summary
of Significant Accounting Policies |
Basis
of Presentation
The
accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed
or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent
the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring
matters) considered necessary for a fair presentation have been included.
The
consolidated balance sheet at December 31, 2022 was derived from the audited consolidated financial statements at that date,
but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information,
refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2022.
We
consolidate entities in which we are considered to be the primary beneficiary of a variable interest entity (“VIE”)
or have a majority of the voting interest of the entity. We have determined that we are a primary beneficiary of the VIE when
we have (i) the power to direct the activities of a VIE that most significantly impacts its economic performance, and (ii) the
obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining
whether we are the primary beneficiary, we consider qualitative and quantitative factors, including ownership interest, management
representation, ability to control decision and other contractual rights.
We
account for entities in which we have less than a controlling financial interest or entities where we are not deemed to be the
primary beneficiary under the equity method of accounting. Accordingly, we include our share of the net earnings or losses of
these entities in our results of operations.
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars
in thousands, except per share and square foot amounts)
(Unaudited)
The
following table summarizes our notes receivables at June 30, 2023 and December 31, 2022:
| | |
Carrying Value | | |
| | |
|
| Borrower / Project | |
June 30,
2023 | | |
December 31,
2022 | | |
Interest
Rate | | |
Maturity
Date |
| United Housing Foundation (Echo Station) | |
$ | 1,481 | | |
$ | 1,481 | | |
| 12.00 | % | |
12/31/2032 |
| United Housing Foundation (Lakeshore Villas) | |
| 2,000 | | |
| 2,000 | | |
| 12.00 | % | |
12/31/2032 |
| United Housing Foundation (Lakeshore Villas) | |
| 6,369 | | |
| 6,369 | | |
| 12.00 | % | |
12/31/2032 |
| United Housing Foundation (Timbers of Terrell) | |
| 1,323 | | |
| 1,323 | | |
| 12.00 | % | |
12/31/2032 |
| | |
$ | 11,173 | | |
$ | 11,173 | | |
| | | |
|
The
borrower is determined to be a related party due to our significant investment in the performance of the collateral secured by
the notes receivable. Principal and interest payments on the notes from Unified Housing Foundation, Inc. (“UHF”) are
funded from surplus cash flow from operations, sale or refinancing of the underlying properties and are cross collateralized to
the extent that any surplus cash available from any of the properties underlying the notes.
| 4. | Related
Party Transactions |
We
engage in certain business transactions with related parties, including investment in notes receivables. Transactions involving
related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that
naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable
to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in our best interest.
Pillar
is a wholly owned by a subsidiary of the May Realty Holdings, Inc., which owns approximately 90.8% of ARL, which owns approximately
78.4% of TCI, which owns 81.1% of the Company.
Advisory
fees paid to Pillar were $380 and $273 for the three months ended June 30, 2023 and 2022, respectively, and $699 and $541
for the six months ended June 30, 2023 and 2022, respectively.
Notes
receivable are amounts held by UHF (See Note 3 – Notes Receivable). UHF is determined to be a related party due to our significant
investment in the performance of the collateral secured by the notes receivable. Interest income on these notes was $334 for the
three months ended June 30, 2023 and 2022, and $665 for the six months ended June 30, 2023 and 2022.
Related
party receivables were $103,030 and
$100,134 at June 30, 2023 and December 31,
2022, respectively; which represents amounts outstanding from TCI for loans and advances,
net of unreimbursed fees and bear interest at prime plus one percent. Interest income on related party receivables from TCI
was $2,444 and $1,099 for the three months ended June 30, 2023 and 2022, respectively, and $3,979 and $2,020 for the six
months ended June 30, 2023 and 2022, respectively.
| 5. | Commitments
and Contingencies |
We
believe that we will generate excess cash from property operations in the next twelve months; such excess, however, might not
be sufficient to discharge all of our obligations as they become due.
The
date to which events occurring after June 30, 2023, the date of the most recent balance sheet, have been evaluated for possible
adjustment to the consolidated financial statements or disclosure is August 10, 2023, which is the date on which the consolidated
financial statements were available to be issued.
| ITEM
2. | MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The
following discussion and analysis by management should be read in conjunction with the unaudited Condensed Consolidated Financial
Statements and Notes included in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and in our Form 10-K
for the year ended December 31, 2022 (the “Annual Report”).
This
Report on Form 10-Q may contain forward-looking statements within the meaning of the federal securities laws, principally, but
not only, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
We caution investors that any forward-looking statements in this report, or which management may make orally or in writing from
time to time, are based on management’s beliefs and on assumptions made by, and information currently available to, management.
When used, the words “anticipate”, “believe”, “expect”, “intend”, “may”,
“might”, “plan”, “estimate”, “project”, “should”, “will”,
“result” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking
statements. These statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance,
which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated, or projected. We caution you that, while forward-looking statements reflect our good faith
beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after
we make such statements. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result
of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements,
which are based on results and trends at the time they are made, to anticipate future results or trends.
| • | Some
of the risks and uncertainties that may cause our actual results, performance, or achievements
to differ materially from those expressed or implied by forward-looking statements include,
among others, the following: |
| • | risks
associated with the availability and terms of financing and the use of debt to fund acquisitions
and developments; |
| • | failure
to manage effectively our growth and expansion into new markets or to integrate acquisitions
successfully; |
| • | risks
associated with downturns in the national and local economies, increases in interest
rates and volatility in the securities markets; |
| • | potential
liability for uninsured losses and environmental contamination; and |
| • | risks
associated with our dependence on key personnel whose continued service is not guaranteed. |
The
risks included here are not exhaustive. Some of the risks and uncertainties that may cause our actual results, performance, or
achievements to differ materially from those expressed or implied by forward-looking statements, include among others, the factors
listed and described in Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K, which investors
should review. There have been no changes from the risk factors previously described in the Company’s Form 10-K for the
fiscal year ended December 31, 2022.
Management's
Overview
We
are an externally advised and managed company that invests in notes receivable that are collateralized by income-producing properties
in the Southern United States and in the past, real property. Our current principal source of income is interest income on note
receivables from related parties.
We
have historically engaged in and may continue to engage in certain business transactions with related parties, including but not
limited to asset acquisition, dispositions and financings. Transactions involving related parties cannot be presumed to be carried
out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between
two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms,
conditions and agreements that are not necessarily beneficial to or in our best interest.
Our
operations are managed by Pillar in accordance with an Advisory Agreement. Pillar’s duties include, but are not limited
to, locating, evaluating and recommending investment opportunities. We have no employees. Employees of Pillar render services
to us in accordance with the terms of the Advisory Agreement. Pillar is considered to be a related party due to its common ownership
with TCI, who is our controlling shareholder.
Critical
Accounting Policies
The
preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.
Some
of these estimates and assumptions include judgments on the provisions for uncollectible accounts and fair value measurements.
Our significant accounting policies are described in more detail in Note 2—Summary of Significant Accounting Policies in
our notes to the consolidated financial statements. However, the following policies are deemed to be critical.
Fair
Value of Financial Instruments
We
apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets.
These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction
between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing
fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy
gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data
(Level 3 measurements), such as the reporting entity’s own data.
The
valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date
and includes three levels defined as follows:
Level
1 – Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets.
Level
2 – Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 – Unobservable inputs that are significant to the fair value measurement.
A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
Related
Parties
We
apply ASC Topic 805, “Business Combinations”, to evaluate business relationships. Related parties are persons or entities
who have one or more of the following characteristics, which include entities for which investments in their equity securities
would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate
families, management personnel of the entity and members of their immediate families and other parties with which the entity may
deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting
parties might be prevented from fully pursuing our own separate interests, or affiliates of the entity.
Results
of Operations
The
following discussion is based on our Consolidated Financial Statements Consolidated Statement of Operations, for the three and three
and six months ended June 30, 2023 and 2022 and is not meant to be an all-inclusive discussion of the changes in our net income
applicable to common shares. Instead, we have focused on significant fluctuations within our operations that we feel are relevant to
obtain an overall understanding of the change in income applicable to common shareholders.
Our
operating expenses consist primarily of general and administrative costs such as audit and legal fees and administrative fees
paid to a related party.
We
also have other income and expense items. We receive interest income from the funds deposited with TCI at a rate of prime plus
1.0%. We have receivables from related parties which also provide interest income.
Comparison
of the three months ended June 30, 2023 to the three months ended June 30, 2022:
Interest
income from related parties increased $1,345,
which was primarily due an increase in interest rates in 2023.
Comparison
of the six months ended June 30, 2023 to the six months ended June 30, 2022:
Interest
income from related parties increased $1,959,
which was primarily due an increase in interest rates in 2023.
Liquidity
and Capital Resources
Our
principal liquidity needs are to fund normal recurring expenses. Our principal sources of cash are and will continue to be the
collection of mortgage notes receivables, and the collections of receivables and interests from related companies.
We
anticipate that our cash and cash equivalents as of June 30, 2023, along with
cash that will be generated in the next twelve months from notes and interest receivables, will be sufficient to meet all of our
current cash requirements.
| ITEM
3. | QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS |
Optional
and not included.
| ITEM
4. | CONTROLS
AND PROCEDURES |
Based
on an evaluation by our management (with the participation of our Principal Executive and Financial Officer), as of the end of
the period covered by this report, our Principal Executive and Financial Officer concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms
and that such information is accumulated and communicated to our management, including our Principal Executive and Financial Officer,
to allow timely decisions regarding required disclosures.
There
has been no change in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
PART
II. OTHER INFORMATION
None
Except
as set forth below, there have been no material changes from the risk factors previously disclosed in the 2022 10-K. For a discussion
on these risk factors, please see “Item 1A. Risk Factors” contained in the 2022 10-K.
| ITEM
2. | UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
We
have a program that allows for the repurchase of up to 1,637,000 shares of our common stock. This repurchase program has no termination
date. There were no shares purchased under this program during the six months ended June 30, 2023. As of June 30, 2023,
1,230,535 shares have been purchased and 406,465 shares may be purchased under the program.
| ITEM
3. | DEFAULTS
UPON SENIOR SECURITIES |
None
| ITEM
4. | MINE
SAFETY DISCLOSURES |
Not
applicable
None
The
following exhibits are filed with this report or incorporated by reference as indicated;
| |
|
| 3.1 |
By-laws of Income Opportunity Realty Investors, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-4, filed on December 30, 1999). |
| |
|
| 4.1 |
Certificate
of Designations, Preferences and Relative Participating or Optional or Other Special Rights, and Qualifications, Limitations
or Restrictions Thereof of Series F Redeemable Preferred Stock of Income Opportunity Realty Investors, Inc., dated June 11,
2001 (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2001). |
| |
|
| 4.2 |
Certificate
of Withdrawal of Preferred Stock, Decreasing the Number of Authorized Shares of and Eliminating Series F Redeemable Preferred
Stock, dated June 18, 2002 (incorporated by reference to Exhibit 3.0 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2002). |
| |
|
| 4.3 |
Certificate
of Designation, Preferences and Rights of the Series I Cumulative Preferred Stock of Income Opportunity Realty Investors,
Inc., dated February 3, 2003 (incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form
10-K for the year ended December 31, 2002). |
| |
|
| 4.4 |
Certificate
of Designation for Nevada Profit Corporations designating the Series J 8% Cumulative Convertible Preferred Stock as filed
with the Secretary of State of Nevada on March 16, 2006 (incorporated by reference to Registrant current report on Form
8-K for event of March 16, 2006). |
| |
|
| 10.1 |
Advisory Agreement between Income Opportunity Realty Investors, Inc. and Pillar Income Asset Management, LLC, dated April 30, 2011 (incorporated by reference to Exhibit 10.0 to the Registrant’s Current Report on Form 8-K, dated April 30, 2011). |
| |
|
| 10.2 |
Second Amendment to Modification of Stipulation of Settlement dated October 17, 2001 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-4, dated February 24, 2002). |
| |
|
| 14.0 |
Code
of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14.0 to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2004). |
| |
|
| 31.1 * |
Rule 13a-14(a) Certification by Principal Executive and Financial Officer. |
| |
|
| 32.1 * |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| |
|
| 101.INS |
XBRL
Instance Document |
| |
|
| 101.SCH |
XBRL
Taxonomy Extension Schema Document |
| 101.CAL |
XBRL
Taxonomy Extension Calculation Linkbase Document |
| |
|
| 101.DEF |
XBRL
Taxonomy Extension Definition Linkbase Document |
| |
|
| 101.LAB |
XBRL
Taxonomy Extension Label Linkbase Document |
| |
|
| 101.PRE |
XBRL
Taxonomy Extension Presentation Linkbase Document |
* Filed
herewith.
SIGNATURE
PAGE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
| |
INCOME
OPPORTUNITY REALTY INVESTORS, INC. |
| |
|
|
| Date:
August 10, 2023 |
By: |
/s/
ERIK L. JOHNSON |
| |
|
Erik
L. Johnson |
| |
|
Executive
Vice President and Chief Financial Officer |