Income Opportunity Realty Q3 profit falls to $878K

Available on EDGAR 11/12/2026 - 12:35 PM EST Accepted by SEC EDGAR 11/12/2026 - 12:35 PM EST Learn about SEC filing dates

Rhea-AI Filing Summary

Income Opportunity Realty Investors (IOR) reported net income of $878,000 for the three months ended September 30, 2026, versus $1.031 million a year earlier, and $2.593 million for the nine months, versus $3.014 million. Management attributed both declines primarily to lower interest income from related-party receivables as interest rates fell. Nine-month interest income from related parties was $3.563 million, compared with $4.097 million.

At September 30, 2026, total assets were $128.514 million, including $117.545 million of receivables from related parties; cash and cash equivalents were $6,000. Net cash used in operating activities for the nine months was $227,000, compared with $77,000 in 2025. Management anticipates cash on hand and cash generated from related-party receivables over the next twelve months will meet current cash requirements, while cautioning that excess cash from property operations might not be sufficient to discharge all obligations as they become due. The stock repurchase program permits repurchases of up to 1,650,000 shares; no shares were purchased under it in the nine months, and 513,003 remained available as of September 30, 2026.

0 points · 0 major

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It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

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0 major · 2 points

How the balance works

Positive

• None.

Negative

• Moderate pointNine-month net income fell to $2.593 million from $3.014 million.
• Minor pointNet cash used in operating activities was $227,000, versus $77,000 in 2025.

Filing Explained

At September 30, TCI owned about 85.1% of IOR and TCI together with an affiliate owned about 91.8%; the filing identifies TCI as IOR’s controlling shareholder and says manager Pillar is related through common ownership, adding governance context to the reported related-party balances.

Key Figures

Net income, three months: $878,000 Net income, nine months: $2.593 million Interest income from related parties: $3.563 million +5 more

8 metrics

Net income, three months $878,000 Three months ended September 30, 2026; $1.031 million in 2025

Net income, nine months $2.593 million Nine months ended September 30, 2026; $3.014 million in 2025

Interest income from related parties $3.563 million Nine months ended September 30, 2026; $4.097 million in 2025

Earnings per share, basic and diluted $0.64 per share Nine months ended September 30, 2026; $0.74 per share in 2025

Receivables from related parties $117.545 million At September 30, 2026

Total assets $128.514 million At September 30, 2026

Net cash used in operating activities $227,000 Nine months ended September 30, 2026; $77,000 used in 2025

Shares remaining under repurchase program 513,003 shares As of September 30, 2026

Key Terms

Secured Overnight Financing Rate, variable interest entity, primary beneficiary, equity method of accounting, +2 more

6 terms

Secured Overnight Financing Rate financial

"bears interest at the Secured Overnight Financing Rate"

A secured overnight financing rate (SOFR) is a daily benchmark interest rate that reflects the cost of borrowing cash overnight using U.S. Treasury securities as collateral. Think of it as the market price to “rent” cash for a day with a very safe pledge, similar to paying a short-term rental fee for money backed by government bonds. Investors track SOFR because it underpins pricing for loans, bonds and derivatives, so movements change borrowing costs, interest income and the valuation of interest-rate–linked positions.

variable interest entity technical

"primary beneficiary of a variable interest entity"

A variable interest entity (VIE) is a company structure where one party controls another company’s operations and economic outcomes through contracts or special arrangements instead of owning a majority of its voting shares. For investors, VIEs matter because the controlling party’s financial results, debts and risks can appear in the controller’s reports even though ownership looks separate, so understanding VIEs helps assess true exposure, governance limits and transparency—like spotting a puppet controlled by strings rather than direct ownership.

primary beneficiary technical

"determined to be a primary beneficiary of the VIE"

equity method of accounting financial

"account under the equity method of accounting"

An equity method of accounting is the way a company reports its financial interest in another business when it has significant influence but not full control, typically owning between about 20% and 50% of the voting stock. Instead of listing the investment at purchase cost or consolidating every line item, the investor records its proportional share of the other company’s profits or losses and adjusts the investment value for dividends or impairments, so investors see the economic impact of that stake. This matters because it changes reported earnings and asset values in a way that reflects ongoing performance—similar to showing your share of a small business’s monthly profit on your own books rather than just the amount you originally paid for your share—and helps gauge how much influence that stake has on the investor’s financial health.

fair value hierarchy technical

"disclosure of fair value measurements by level within the fair value hierarchy"

cross collateralized financial

"are cross collateralized to the extent that any surplus cash is available"

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What was IOR's net income in the first nine months of 2026?

IOR reported net income of $2.593 million for the nine months ended September 30, 2026, compared with $3.014 million in the same 2025 period. Management attributed the decrease primarily to lower interest income from related-party receivables as interest rates declined.

How many shares remained available under IOR's repurchase program?

IOR had 513,003 shares remaining for repurchase as of September 30, 2026. The program permits repurchases of up to 1,650,000 common shares, and no shares were purchased under it during the nine months ended September 30, 2026.

What are the terms of IOR's note with Unified Housing Foundation?

The note bears interest at the Secured Overnight Financing Rate in effect on the last day of the preceding calendar quarter, and its rate was 3.68% as of September 30, 2026, compared with 4.24% as of December 31, 2025. It matures on December 31, 2032.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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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 September 30, 2026

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 November 12, 2026, there were 4,066,178 shares of common stock outstanding.

Table of Contents

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 September 30, 2026 and December 31, 2025	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025	4
	Consolidated Statements of Equity for the three and nine months ended September 30, 2026 and 2025	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	11
Item 4.	Controls and Procedures	11
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Mine Safety Disclosures	11
Item 5.	Other Information	11
Item 6.	Exhibits	12
Signatures		13

2

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INCOME OPPORTUNITY REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS 

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

(Unaudited)

		September 30, 2026				December 31, 2025
Assets
Current assets
Cash and cash equivalents		$	6			$	6
Interest receivable from related parties			118				244
Receivable from related parties			117,545				114,595
Total current assets			117,669				114,845
Non-current assets
Notes receivable from related parties			10,845				11,072
Total assets		$	128,514			$	125,917
Liabilities and Equity
Liabilities:
Accounts payable		$	4			$	—
Shareholders’ equity
Common stock, $0.01 par value, 10,000,000 shares authorized; 4,173,675 shares issued and 4,066,178 shares outstanding.			42				42
Treasury stock at cost, 107,497 shares.			(1,749	)			(1,749	)
Additional paid-in capital			61,955				61,955
Retained earnings			68,262				65,669
Total shareholders’ equity			128,510				125,917
Total liabilities and equity		$	128,514			$	125,917

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

3

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INCOME OPPORTUNITY REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share amounts)

(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2026				2025				2026				2025
Revenues:
Other income		$	—			$	—			$	—			$	—
Expenses:
General and administrative (including $12 and $13 for the three months ended September 30, 2026 and 2025, respectively, and $35 and $38 for the nine months ended September 30, 2026 and 2025, respectively, from related parties)			62				63				209				205
Advisory fee to related party			25				27				72				77
Total operating expenses			87				90				281				282
Net operating loss			(87	)			(90	)			(281	)			(282	)
Interest income from related parties			1,198				1,395				3,563				4,097
Income tax provision			(233	)			(274	)			(689	)			(801	)
Net income		$	878			$	1,031			$	2,593			$	3,014
Earnings per share - basic and diluted		$	0.22			$	0.25			$	0.64			$	0.74
Weighted average common shares used in computing earnings per share			4,066,178				4,066,178				4,066,178				4,066,178

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

4

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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 September 30, 2026
Balance,  July 1, 2026		$	42			$	(1,749	)		$	61,955			$	67,384			$	127,632
Net income			—				—				—				878				878
Balance,  September 30, 2026		$	42			$	(1,749	)		$	61,955			$	68,262			$	128,510
Three Months Ended September 30, 2025
Balance,  July 1, 2025		$	42			$	(1,749	)		$	61,955			$	63,662			$	123,910
Net  income			—				—				—				1,031				1,031
Balance,  September 30, 2025		$	42			$	(1,749	)		$	61,955			$	64,693			$	124,941
Nine Months Ended September 30, 2026
Balance,  January 1, 2026		$	42			$	(1,749	)		$	61,955			$	65,669			$	125,917
Net income			—				—				—				2,593				2,593
Balance,  September 30, 2026		$	42			$	(1,749	)		$	61,955			$	68,262			$	128,510
Nine Months Ended September 30, 2025
Balance,  January 1, 2025		$	42			$	(1,749	)		$	61,955			$	61,679			$	121,927
Net income			—				—				—				3,014				3,014
Balance,  September 30, 2025		$	42			$	(1,749	)		$	61,955			$	64,693			$	124,941

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

5

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INCOME OPPORTUNITY REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2026				2025
Cash Flow From Operating Activities:
Net  income		$	2,593			$	3,014
Adjustments to reconcile net income to net cash used in operating activities:
Changes in assets and liabilities:
Accrued interest on related party notes receivable			126				150
Related party receivables			(2,950	)			(3,245	)
Accounts payable			4				4
Net cash used in operating activities			(227	)			(77	)
Cash Flow From Investing Activities:
Collection of notes receivable			227				74
Net cash provided by investing activities			227				74
Net decrease in cash and cash equivalents			—				(3	)
Cash and cash equivalents, beginning of the period			6				9
Cash and cash equivalents, end of the period		$	6			$	6

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

6

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INCOME OPPORTUNITY REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

1. Organization

Income Opportunity Realty Investors, Inc. (the “Company”) is an externally managed company that currently holds investments 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 listed on the NYSE under the symbol “TCI”, owned approximately 85.1% of our stock at September 30, 2026 and together with an affiliate owned approximately 91.8% of our common stock at September 30, 2026. Accordingly our financial results are included in the consolidated financial statements of TCI. American Realty Investors, Inc. (“ARL”), whose common stock is traded on the NYSE under the symbol “ARL”, in turn, owns approximately 79.2% of TCI.

Our business is managed by Pillar Income Asset Management, Inc. (“Pillar”). Their 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, 2025 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, 2025.

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.

3. Notes Receivable

We have a note receivable issued by Unified Housing Foundation, Inc. (“UHF”) that bears interest at the Secured Overnight Financing Rate (“SOFR”) in effect on the last day of the preceding calendar quarter and matures on December 31, 2032. The interest rate of the new note was 3.68% and 4.24% as of September 30, 2026 and December 31, 2025, 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 is available from any other property owned by UHF.

7

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INCOME OPPORTUNITY REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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 subsidiary of May Realty Holdings, Inc., which owns approximately 91.0% of ARL, which owns approximately 79.2% of TCI, which owns approximately 85.1% of the Company.

Advisory fees paid to Pillar were $25 and $27 for the three months ended September 30, 2026 and 2025, respectively, and $72 and $77 for the nine months ended September 30, 2026 and 2025, respectively.

Our note receivable is with 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 $101 and $125 for the three months ended September 30, 2026 and 2025, respectively, and $306 and $371 for the nine months ended September 30, 2026 and 2025, respectively.

Receivables from related parties were $117,545 and $114,595 at September 30, 2026 and December 31, 2025, 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 $1,097 and $1,270 for the three months ended September 30, 2026 and 2025, respectively, and $3,257 and $3,726 for the nine months ended September 30, 2026 and 2025, respectively.

5. 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. As of September 30, 2026, there are 513,003 shares remaining that can be repurchased.

6. 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.

7. Subsequent Events

The date to which events occurring after September 30, 2026, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is November 12, 2026, which is the date on which the consolidated financial statements were available to be issued.

8

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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, 2025 (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, 2025.

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.

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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 an orderly 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 850, “Related Party Disclosure”, 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 its 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 nine months ended September 30, 2026 and 2025 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.

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Comparison of the three months ended September 30, 2026 to the three months ended September 30, 2025:

The decrease in net income is primarily due to a decrease in interest income from related party receivables due to a decline in interest rates.

Comparison of the nine months ended September 30, 2026 to the nine months ended September 30, 2025:

The decrease in net income is primarily due to a decrease in interest income from related party receivables due to a decline in interest rates.

Liquidity and Capital Resources

Our main liquidity need is 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 September 30, 2026, 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 our 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 2025 10-K. For a discussion on these risk factors, please see “Item 1A. Risk Factors” contained in the 2025 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 no shares purchased under this program during the nine months ended September 30, 2026. As of September 30, 2026, 1,136,997 shares have been purchased and 513,003 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

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ITEM 6. EXHIBITS

The following exhibits are filed with this report or incorporated by reference as indicated;

3.1	Certificate of Restatement of Articles of Incorporation of Income Opportunity Realty Investors, Inc., dated August 3, 2000 (incorporated by reference to Exhibit 3.0 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
3.2	Certificate of Correction of Restated Articles of Incorporation of Income Opportunity Realty Investors, Inc., dated August 29, 2000 (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
3.3	Articles of Amendment to the Restated Articles of Incorporation of Income Opportunity Realty Investors, Inc. decreasing the number of authorized shares of and eliminating Series B Cumulative Convertible Preferred Stock dated August 26, 2003 (incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).
3.4	Articles of Amendment to the Restated Articles of Incorporation of Income Opportunity Realty Investors, Inc. decreasing the number of authorized shares of and eliminating Series I Cumulative Preferred Stock dated October 1, 2003 (incorporated by reference to Exhibit 3.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).
3.5	Certificate of Amendment to the Articles of Incorporation of Income Opportunity Realty Investors, Inc. amending Article TENTH, Subpart C  (incorporated by reference to Exhibit 3.5 to the Registrant’s Current Report on Form 8-K for event occurring on December 28, 2023, filed January 30, 2024 ).
3.6	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).
31.1 *	Section 302 Certification of Erik L. Johnson, Chief Executive Officer.
31.2 *	Section 302 Certification of Alla Dzyuba, Chief Accounting Officer.
32.1 *	Section 906 Certifications of Erik L. 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.

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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: November 12, 2026	By:	/s/ ERIK L. JOHNSON
		Erik L. Johnson
		President and Chief Executive Officer

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