Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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, 2024

☐	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 8, 2024, there were 4,066,178 shares of common stock outstanding.

INCOME OPPORTUNITY REALTY INVESTORS, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		PAGE

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at June 30, 2024 and December 31, 2023	3

	Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023	4

	Consolidated Statements of Equity for the three and six months ended June 30, 2024 and 2023	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	13

Item 4.	Controls and Procedures	13

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	13

Item 1A.	Risk Factors	13

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13

Item 3.	Defaults Upon Senior Securities	13

Item 4.	Mine Safety Disclosures	13

Item 5.	Other Information	13

Item 6.	Exhibits	14

Signatures		15

INCOME OPPORTUNITY REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and par value amounts)

(Unaudited)

	June 30, 2024			December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	16		$	71
Interest receivable from related parties		326			293
Receivable from related parties		108,316			106,541
Total current assets		108,658			106,905
Non-current assets
Notes receivable from related parties		11,173			11,173
Total assets	$	119,831		$	118,078

Shareholders’ equity
Common stock, $0.01 par value, 10,000,000 shares authorized; 4,173,675 shares issued, 4,078,106 and 4,110,714 shares outstanding at June 30, 2024 and December 31, 2023, respectively.		42			42
Treasury stock at cost, 95,569 shares		(1,534	)		(947	)
Additional paid-in capital		61,955			61,955
Retained earnings		59,368			57,028
Total shareholders’ equity		119,831			118,078
Total liabilities and equity	$	119,831		$	118,078

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,
	2024			2023			2024			2023
Revenues:
Other income	$	—		$	—		$	—		$	—
Expenses:
General and administrative (including $11 and $44 for the three months ended June 30, 2024 and 2023, respectively, and $23 and $142 for the six months ended June 30, 2024 and 2023, respectively, from related parties)		93			76			159			294
Advisory fee to related party		21			380			50			699
Total operating expenses		114			456			209			993
Net operating loss		(114	)		(456	)		(209	)		(993	)
Interest income from related parties		1,585			2,778			3,171			4,644
Income tax provision		(309	)		(488	)		(622	)		(767	)
Net income	$	1,162		$	1,834		$	2,340		$	2,884

Earnings per share - basic and diluted	$	0.28		$	0.44		$	0.57		$	0.69
Weighted average common shares used in computing earnings per share		4,107,131			4,168,414			4,092,618			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, 2024
Balance, April 1, 2024	$	42	$	(1,534	)	$	61,955	$	58,206	$	118,669
Net income		—		—			—		1,162		1,162
Balance, June 30, 2024	$	42	$	(1,534	)	$	61,955	$	59,368	$	119,831
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
Six Months Ended June 30, 2024
Balance, January 1, 2024	$	42	$	(947	)	$	61,955	$	57,028	$	118,078
Net income		—		—			—		2,340		2,340
Repurchase of common shares		—		(587	)		—		—		(587	)
Balance, June 30, 2024	$	42	$	(1,534	)	$	61,955	$	59,368	$	119,831
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

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,
	2024			2023
Cash Flow From Operating Activities:
Net income	$	2,340		$	2,884
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Changes in assets and liabilities:
Accrued interest on related party notes receivable		(33	)		11
Related party receivables		(1,775	)		(2,896	)
Accounts payable		—			(3	)
Net cash provided by (used in) operating activities		532			(4	)
Cash Flow From Financing Activities:
Repurchase of common shares		(587	)		—
Net cash used in financing activities		(587	)		—
Net decrease in cash and cash equivalents		(55	)		(4	)
Cash and cash equivalents, beginning of the period		71			6
Cash and cash equivalents, end of the period	$	16		$	2

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)

Organization

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 82.9% of our stock and with its affiliates owns approximately 89.5% 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.

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, 2023 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, 2023.

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)

Notes Receivable

At January 1, 2023, we had four notes receivable issued by Unified Housing Foundation, Inc. (“UHF”) with an aggregate balance of $11,173. Each of the notes bore interest at 12.0% and was to mature on December 31, 2032.

On October 1, 2023, we amended the four UHF notes, whereby the four notes were consolidated into a single note and the 12.0% fixed interest rate was replaced with a floating rate indexed to the Secured Overnight Financing Rate (“SOFR”) in effect on the last day of the preceding calendar quarter. The maturity date of the new note is December 31, 2032. In connection with the amendment, $605 of accrued interest was forgiven in exchange for an increased participation in the proceeds from any future refinancing of the underlying property. The interest rate of the new note was 5.34% and 5.31% as of June 30, 2024 and December 31, 2023, respectively.

UHF is determined to be a related party due to our significant investment in the performance of the collateral secured by the note receivable. Principal and interest payments on the note are funded from surplus cash flow from operations, sale or refinancing of the underlying property and are cross collateralized to the extent that any surplus cash available from any of other property owned by UHF.

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 at 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 82.9% of the Company.

Advisory fees paid to Pillar were $21 and $380 for the three months ended June 30, 2024 and 2023, respectively, and $50 and $699 for the six months ended June 30, 2024 and 2023, 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 $149 and $334 for the three months ended June 30, 2024 and 2023, respectively, and $299 and $665 for the six months ended June 30, 2024 and 2023, respectively.

Receivables from related parties were $108,316 and $106,541 at June 30, 2024 and December 31, 2023, respectively; which represents amounts outstanding advanced to Pillar net of unreimbursed fees (“Pillar Receivable”), which bears interest in accordance with a cash management agreement. On January 1, 2024, an amendment to the cash management agreement changed the interest rate on the Pillar Receivable from prime plus one percent to SOFR. Interest income on related party receivables was $1,436 and $2,444 for the three months ended June 30, 2024 and 2023, respectively, and $2,872 and $3,979 for the six months ended June 30, 2024 and 2023, respectively.

Stockholders’ Equity

We have a stock repurchase program that allows for the repurchase of up to 1,650,000 shares of our common stock. This repurchase program has no termination date. During the six months ended June 30, 2024, we repurchased a total of 32,608 shares in two block transactions for a total of $587.

As of June 30, 2024, there are 524,931 shares remaining that can be repurchased.

INCOME OPPORTUNITY REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share and square foot amounts)

(Unaudited)

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.

INCOME OPPORTUNITY REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share and square foot amounts)

(Unaudited)

Subsequent Events

The date to which events occurring after June 30, 2024, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is August 8, 2024, 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, 2023 (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, 2023.

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 from related party receivables.

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 six months ended June 30, 2024 and 2023 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, legal and administrative fees paid to a related party.

We also have other income and expense items including interest income from notes receivable and funds deposited with Pillar.

Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023:

The decrease in net income is primarily due to a decrease in interest income from related party receivables offset in part be a decrease in general, administrative and advisory fees.

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023:

The decrease in net income is primarily due to a decrease in interest income from related party receivables offset in part be a decrease in general, administrative and advisory fees.

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, 2024, along with cash that will be generated in the next twelve months from our related party 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 Officer and Principal Financial Officer), as of the end of the period covered by this report, our Principal Executive and Principal 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 Principal 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

ITEM 1.

LEGAL PROCEEDINGS

None

ITEM 1A.

RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the 2023 10-K. For a discussion on these risk factors, please see “Item 1A. Risk Factors” contained in the 2023 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 1,650,000 shares of our common stock. This repurchase program has no termination date. There were 32,608 shares purchased under this program during the six months ended June 30, 2024. As of June 30, 2024, 1,125,069 shares have been purchased and 524,931 shares may be purchased under the program.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS

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	Amended and Restated Advisory Agreement between Income Opportunity Realty Investors, Inc. and Pillar Income Asset Management, LLC, dated May 7, 2024 (incorporated by reference to Exhibit 10.0 to the Registrant’s Current Report on Form 8-K, dated May 7, 2024).

31.1 *	Section 302 Certification by Erik L. Johnson, Chief Executive Officer.

31.2 *	Section 302 Certification by Alla Dzyuba, Chief Accounting Officer.

32.1 *	Section 906 Certifications of Erik Johnson and Alla Dzyuba.

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 8, 2024	By:	/s/ ERIK L. JOHNSON
		Erik L. Johnson
		President and Chief Executive Officer

Income Opportunity Realty Investors, Inc. 10-Q

Exhibit 31.1

CERTIFICATION

I, Erik L. Johnson, certify that:

I have reviewed this quarterly report on Form 10-Q of Income Opportunity Realty Investors, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;

The registrant’s other certifying officers(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and

(d)

Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officers(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 8, 2024	By:	/s/ ERIK L. JOHNSON
		Erik L. Johnson
		President and Chief Executive Officer

Income Opportunity Realty Investors, Inc. 10-Q

Exhibit 31.2

CERTIFICATION

I, Alla Dzyuba, certify that:

I have reviewed this quarterly report on Form 10-Q of Income Opportunity Realty Investors, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 8, 2024	By:	/s/ ALLA DZYUBA
		Alla Dzyuba
		Vice President and Chief Accounting Officer

Income Opportunity Realty Investors, Inc. 10-Q

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officer of Income Opportunity Realty Investors, Inc., a Nevada corporation (the “Company”) hereby certifies that:

(i)

The Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2024 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(ii)

The information contained in the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2024 fairly presents in all material respects, the financial condition and results of operations of the Company, at and for the period indicated.

Dated: August 8, 2024	By:	/s/ ERIK L. JOHNSON
		Erik L. Johnson
		President and Chief Executive Officer

		/s/ ALLA DZYUBA
		Alla Dzyuba
		Vice President and Chief Accounting Officer

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 08, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-14784
Entity Registrant Name	INCOME OPPORTUNITY REALTY INVESTORS, INC.
Entity Central Index Key	0000949961
Entity Tax Identification Number	75-2615944
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1603 Lyndon B. Johnson Freeway
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75234
City Area Code	(469)
Local Phone Number	522-4200
Title of 12(b) Security	Common Stock
Trading Symbol	IOR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,066,178

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 16	$ 71
Interest receivable from related parties	326	293
Receivable from related parties	108,316	106,541
Total current assets	108,658	106,905
Non-current assets
Notes receivable from related parties	11,173	11,173
Total assets	119,831	118,078
Shareholders’ equity
Common stock, $0.01 par value, 10,000,000 shares authorized; 4,173,675 shares issued, 4,078,106 and 4,110,714 shares outstanding at June 30, 2024 and December 31, 2023, respectively.	42	42
Treasury stock at cost, 95,569 shares	(1,534)	(947)
Additional paid-in capital	61,955	61,955
Retained earnings	59,368	57,028
Total shareholders’ equity	119,831	118,078
Total liabilities and equity	$ 119,831	$ 118,078

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized	10,000,000	10,000,000
Common stock, issued	4,173,675	4,173,675
Common stock, outstanding	4,078,106	4,110,714
Treasury stock	95,569	95,569

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues:
Other income
Expenses:
General and administrative (including $11 and $44 for the three months ended June 30, 2024 and 2023, respectively, and $23 and $142 for the six months ended June 30, 2024 and 2023, respectively, from related parties)	93	76	159	294
Advisory fee to related party	21	380	50	699
Total operating expenses	114	456	209	993
Net operating loss	(114)	(456)	(209)	(993)
Interest income from related parties	1,585	2,778	3,171	4,644
Income tax provision	(309)	(488)	(622)	(767)
Net income	$ 1,162	$ 1,834	$ 2,340	$ 2,884
Earnings per share - basic	$ 0.28	$ 0.44	$ 0.57	$ 0.69
Earnings per share - diluted	$ 0.28	$ 0.44	$ 0.57	$ 0.69
Weighted average common shares used in computing basic earnings per share	4,107,131	4,168,414	4,092,618	4,168,414
Weighted average common shares used in computing diluted earnings per share	4,107,131	4,168,414	4,092,618	4,168,414

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
General and administrative	$ 93	$ 76	$ 159	$ 294
Related Party [Member]
General and administrative	$ 11	$ 44	$ 23	$ 142

CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock, Common [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Beginning balance, value at Dec. 31, 2022	$ 111,985	$ 42	$ (39)	$ 61,955	$ 50,027
Net income	2,884				2,884
Ending balance, value at Jun. 30, 2023	114,869	42	(39)	61,955	52,911
Beginning balance, value at Mar. 31, 2023	113,035	42	(39)	61,955	51,077
Net income	1,834				1,834
Ending balance, value at Jun. 30, 2023	114,869	42	(39)	61,955	52,911
Beginning balance, value at Dec. 31, 2023	118,078	42	(947)	61,955	57,028
Net income	2,340				2,340
Repurchase of common shares	(587)		(587)
Ending balance, value at Jun. 30, 2024	119,831	42	(1,534)	61,955	59,368
Beginning balance, value at Mar. 31, 2024	118,669	42	(1,534)	61,955	58,206
Net income	1,162				1,162
Ending balance, value at Jun. 30, 2024	$ 119,831	$ 42	$ (1,534)	$ 61,955	$ 59,368

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Cash Flow From Operating Activities:
Net income	$ 1,162	$ 1,834	$ 2,340	$ 2,884
Changes in assets and liabilities:
Accrued interest on related party notes receivable			(33)	11
Related party receivables			(1,775)	(2,896)
Accounts payable				(3)
Net cash provided by (used in) operating activities			532	(4)
Cash Flow From Financing Activities:
Repurchase of common shares			(587)
Net cash used in financing activities			(587)
Net decrease in cash and cash equivalents			(55)	(4)
Cash and cash equivalents, beginning of the period			71	6
Cash and cash equivalents, end of the period	$ 16	$ 2	$ 16	$ 2

Organization

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

Notes Receivable

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Notes Receivable

Notes Receivable

Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions

Related Party Transactions

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 82.9% of the Company.

Advisory fees paid to Pillar were $21 and $380 for the three months ended June 30, 2024 and 2023, respectively, and $50 and $699 for the six months ended June 30, 2024 and 2023, respectively.

Stockholders’ Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Stockholders’ Equity

Stockholders’ Equity

As of June 30, 2024, there are 524,931 shares remaining that can be repurchased.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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.

Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Organization (Details Narrative)	Jun. 30, 2024
Transcontinental Realty Investors, Inc [Member] \| IOR [Member]
Percentage of ownership	82.90%
Transcontinental Realty Investors, Inc. and Affiliates [Member] \| IOR [Member] \| Common Stock [Member]
Percentage of ownership	89.50%
American Realty Investors, Inc. [Member] \| Transcontinental Realty Investors, Inc. [Member]
Percentage of ownership	78.40%

Notes Receivable (Details Narrative) - USD ($) $ in Thousands		12 Months Ended
	Oct. 02, 2023	Dec. 31, 2022	Jun. 30, 2024	Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable from related parties			$ 11,173	$ 11,173
Unified Housing Foundation, Inc. [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable from related parties		$ 11,173
Fixed interest rate		12.00%
Maturity date	Dec. 31, 2032	Dec. 31, 2032
Accrued Interest forgiven	$ 605
Interest rate			5.34%	5.31%

Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Advisory fees paid	$ 21	$ 380	$ 50	$ 699
Interest income from related parties	1,585	2,778	3,171	4,644
Related party receivables	$ 108,316		$ 108,316		$ 106,541
May Realty Holdings, Inc. [Member] \| American Realty Investors, Inc. [Member]
Related Party Transaction [Line Items]
Percentage of ownership	90.80%		90.80%
American Realty Investors, Inc. [Member] \| Transcontinental Realty Investors, Inc. [Member]
Related Party Transaction [Line Items]
Percentage of ownership	78.40%		78.40%
Transcontinental Realty Investors, Inc [Member] \| IOR [Member]
Related Party Transaction [Line Items]
Percentage of ownership	82.90%		82.90%
Pillar [Member]
Related Party Transaction [Line Items]
Advisory fees paid	$ 21	380	$ 50	699
Interest income from related parties	1,436	2,444	2,872	3,979
Related party receivables	108,316		108,316		$ 106,541
Unified Housing Foundation, Inc. [Member]
Related Party Transaction [Line Items]
Interest income from related parties	$ 149	$ 334	$ 299	$ 665

Stockholders’ Equity (Details Narrative) $ in Thousands	6 Months Ended
Stockholders’ Equity (Details Narrative) $ in Thousands	Jun. 30, 2024 USD ($) shares
Equity [Abstract]
Common stock repurchase limit	1,650,000
Common stock repurchased	32,608
Common stock repurchased, value \| $	$ 587
Remaining shares for repurchase	524,931