STOCK TITAN

Income Opportunity Realty (NYSE: IOR) Q2 2026 profit dips on lower rates

(Moderate)
(Neutral)
Form Type
10-Q

Rhea-AI Filing Summary

Income Opportunity Realty Investors, Inc. reported net income of $705 thousand for the quarter ended June 30, 2026, compared with $994 thousand a year earlier, or $0.17 vs $0.24 per share. For the first six months, net income was $1,715 thousand vs $1,983 thousand, or $0.42 vs $0.49 per share.

Performance reflects a model focused on lending to affiliates. Interest income from related parties was $989 thousand in the quarter and $2,365 thousand year‑to‑date, both lower than 2025 as interest rates declined, while operating expenses stayed modest at $97 thousand, mainly advisory and administrative fees to related parties.

Total assets at June 30, 2026 were $127,636 thousand, consisting largely of $116,409 thousand in receivables from related parties and $10,960 thousand in related‑party notes; liabilities were minimal, leaving shareholders’ equity at $127,632 thousand. Cash was $29 thousand, and management expects collections on related‑party receivables to cover near‑term needs. The company has repurchased 1,136,997 shares under its 1,650,000‑share buyback authorization, with 513,003 shares still available, and had 4,066,178 shares outstanding as of August 6, 2026. On July 31, 2026, controlling shareholder Transcontinental Realty Investors acquired 269,299 company shares from another affiliate in a stock‑for‑stock exchange, further concentrating ownership within the same group.

Positive

  • None.

Negative

  • Net income declined to $705 thousand in Q2 2026 from $994 thousand a year earlier, driven by lower interest income from related‑party receivables as interest rates fell.
Q2 2026 Net Income $705 thousand Three months ended June 30, 2026
Q2 2026 Earnings Per Share $0.17 Basic and diluted EPS for three months ended June 30, 2026
Six-Month 2026 Net Income $1,715 thousand Six months ended June 30, 2026
Q2 2026 Interest Income from Related Parties $989 thousand Interest income from related parties, three months ended June 30, 2026
Receivables from Related Parties $116,409 thousand Balance at June 30, 2026
Total Assets $127,636 thousand Balance at June 30, 2026
UHF Note Interest Rate 3.68% Interest rate on related-party note as of June 30, 2026
Remaining Share Repurchase Authorization 513,003 shares Shares still available for repurchase as of June 30, 2026
variable interest entity financial
"We consolidate entities in which we are considered to be the 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.
Secured Overnight Financing Rate financial
"bears interest at the Secured Overnight Financing Rate (“SOFR”) in effect on the last day"
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.
fair value hierarchy financial
"require disclosure of fair value measurements by level within the fair value hierarchy"

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

See more from StockTitan in Google Search and AI answers. Adds StockTitan as a preferred source · opens Google
Add on Google
Learn about SEC filing dates

FAQ

How did Income Opportunity Realty Investors (IOR) perform in Q2 2026?

Income Opportunity Realty Investors reported Q2 2026 net income of $705 thousand, down from $994 thousand a year earlier. Earnings per share were $0.17 versus $0.24, reflecting lower interest income from related‑party receivables as interest rates declined.

What were IOR’s results for the six months ended June 30, 2026?

For the first half of 2026, IOR generated net income of $1,715 thousand, compared with $1,983 thousand in 2025. Earnings per share were $0.42 versus $0.49, with the reduction mainly tied to decreased interest income from related‑party receivables.

What does IOR’s balance sheet look like as of June 30, 2026?

As of June 30, 2026, IOR reported total assets of $127,636 thousand, largely composed of $116,409 thousand in receivables from related parties and $10,960 thousand in related‑party notes. Liabilities were minimal, with shareholders’ equity at $127,632 thousand and cash of $29 thousand.

What share repurchase capacity does Income Opportunity Realty (IOR) have?

IOR maintains a stock repurchase program for up to 1,650,000 shares with no termination date. As of June 30, 2026, it had already repurchased 1,136,997 shares, leaving 513,003 shares available; no shares were repurchased in the first half of 2026.

How many shares of IOR are outstanding, and who controls the company?

As of August 6, 2026, IOR had 4,066,178 common shares outstanding. Transcontinental Realty Investors and its affiliate collectively owned about 91.8% of the common stock at June 30, 2026, giving them effective control over the company.

What are the key terms of IOR’s related‑party note to Unified Housing Foundation (UHF)?

IOR holds a note receivable from UHF that bears interest at SOFR and matures on December 31, 2032. The interest rate was 3.68% at June 30, 2026, with principal and interest funded from surplus cash flow, sales, or refinancing of the underlying property.
false --12-31 2026 Q2 0000949961 0000949961 2026-01-01 2026-06-30 0000949961 2026-08-06 0000949961 2026-06-30 0000949961 2025-12-31 0000949961 2026-04-01 2026-06-30 0000949961 2025-04-01 2025-06-30 0000949961 2025-01-01 2025-06-30 0000949961 us-gaap:RelatedPartyMember 2026-04-01 2026-06-30 0000949961 us-gaap:RelatedPartyMember 2025-04-01 2025-06-30 0000949961 us-gaap:RelatedPartyMember 2026-01-01 2026-06-30 0000949961 us-gaap:RelatedPartyMember 2025-01-01 2025-06-30 0000949961 us-gaap:CommonStockMember 2026-03-31 0000949961 us-gaap:TreasuryStockCommonMember 2026-03-31 0000949961 us-gaap:AdditionalPaidInCapitalMember 2026-03-31 0000949961 us-gaap:RetainedEarningsMember 2026-03-31 0000949961 2026-03-31 0000949961 us-gaap:CommonStockMember 2026-04-01 2026-06-30 0000949961 us-gaap:TreasuryStockCommonMember 2026-04-01 2026-06-30 0000949961 us-gaap:AdditionalPaidInCapitalMember 2026-04-01 2026-06-30 0000949961 us-gaap:RetainedEarningsMember 2026-04-01 2026-06-30 0000949961 us-gaap:CommonStockMember 2026-06-30 0000949961 us-gaap:TreasuryStockCommonMember 2026-06-30 0000949961 us-gaap:AdditionalPaidInCapitalMember 2026-06-30 0000949961 us-gaap:RetainedEarningsMember 2026-06-30 0000949961 us-gaap:CommonStockMember 2025-03-31 0000949961 us-gaap:TreasuryStockCommonMember 2025-03-31 0000949961 us-gaap:AdditionalPaidInCapitalMember 2025-03-31 0000949961 us-gaap:RetainedEarningsMember 2025-03-31 0000949961 2025-03-31 0000949961 us-gaap:CommonStockMember 2025-04-01 2025-06-30 0000949961 us-gaap:TreasuryStockCommonMember 2025-04-01 2025-06-30 0000949961 us-gaap:AdditionalPaidInCapitalMember 2025-04-01 2025-06-30 0000949961 us-gaap:RetainedEarningsMember 2025-04-01 2025-06-30 0000949961 us-gaap:CommonStockMember 2025-06-30 0000949961 us-gaap:TreasuryStockCommonMember 2025-06-30 0000949961 us-gaap:AdditionalPaidInCapitalMember 2025-06-30 0000949961 us-gaap:RetainedEarningsMember 2025-06-30 0000949961 2025-06-30 0000949961 us-gaap:CommonStockMember 2025-12-31 0000949961 us-gaap:TreasuryStockCommonMember 2025-12-31 0000949961 us-gaap:AdditionalPaidInCapitalMember 2025-12-31 0000949961 us-gaap:RetainedEarningsMember 2025-12-31 0000949961 us-gaap:CommonStockMember 2026-01-01 2026-06-30 0000949961 us-gaap:TreasuryStockCommonMember 2026-01-01 2026-06-30 0000949961 us-gaap:AdditionalPaidInCapitalMember 2026-01-01 2026-06-30 0000949961 us-gaap:RetainedEarningsMember 2026-01-01 2026-06-30 0000949961 us-gaap:CommonStockMember 2024-12-31 0000949961 us-gaap:TreasuryStockCommonMember 2024-12-31 0000949961 us-gaap:AdditionalPaidInCapitalMember 2024-12-31 0000949961 us-gaap:RetainedEarningsMember 2024-12-31 0000949961 2024-12-31 0000949961 us-gaap:CommonStockMember 2025-01-01 2025-06-30 0000949961 us-gaap:TreasuryStockCommonMember 2025-01-01 2025-06-30 0000949961 us-gaap:AdditionalPaidInCapitalMember 2025-01-01 2025-06-30 0000949961 us-gaap:RetainedEarningsMember 2025-01-01 2025-06-30 0000949961 ior:TranscontinentalRealtyInvestorsIncMember ior:IncomeOpportunityRealtyInvestorsIncMember 2026-06-30 0000949961 ior:TranscontinentalRealtyInvestorsIncAndAffiliateMember us-gaap:CommonStockMember ior:IncomeOpportunityRealtyInvestorsIncMember 2026-06-30 0000949961 ior:AmericanRealtyInvestorsIncMember ior:TranscontinentalRealtyInvestorsInc1Member 2026-06-30 0000949961 ior:UnifiedHousingFoundationIncMember 2026-01-01 2026-06-30 0000949961 ior:UnifiedHousingFoundationIncMember 2026-06-30 0000949961 ior:UnifiedHousingFoundationIncMember 2025-12-31 0000949961 ior:MayRealtyHoldingsIncMember ior:AmericanRealtyInvestorsInc1Member 2026-06-30 0000949961 ior:PillarMember 2026-04-01 2026-06-30 0000949961 ior:PillarMember 2025-04-01 2025-06-30 0000949961 ior:PillarMember 2026-01-01 2026-06-30 0000949961 ior:PillarMember 2025-01-01 2025-06-30 0000949961 ior:UnifiedHousingFoundationIncMember 2026-04-01 2026-06-30 0000949961 ior:UnifiedHousingFoundationIncMember 2025-04-01 2025-06-30 0000949961 ior:UnifiedHousingFoundationIncMember 2025-01-01 2025-06-30 0000949961 ior:PillarMember 2026-06-30 0000949961 ior:PillarMember 2025-12-31 0000949961 us-gaap:SubsequentEventMember ior:TranscontinentalRealtyInvestorsIncMember ior:RealtyAdvisorsIncMember ior:IncomeOpportunityRealtyInvestorsIncMember 2026-07-30 2026-07-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure

 

 

 

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, 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 August 6, 2026, 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, 2026 and December 31, 2025 3
     
  Consolidated Statements of Operations for the three  and six months ended June 30, 2026 and 2025 4
     
  Consolidated Statements of Equity for the three and six months ended June 30, 2026 and 2025 5
     
  Consolidated Statements of Cash Flows for the six months ended June 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

 

 

 

INCOME OPPORTUNITY REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS 

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

(Unaudited)

 

   June 30,
2026
   December 31,
2025
 
Assets          
Current assets          
Cash and cash equivalents  $29   $6 
Interest receivable from related parties   238    244 
Receivable from related parties   116,409    114,595 
Total current assets   116,676    114,845 
Non-current assets          
Notes receivable from related parties   10,960    11,072 
Total assets  $127,636   $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   67,384    65,669 
Total shareholders’ equity   127,632    125,917 
Total liabilities and equity  $127,636   $125,917 

 

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

 

3

 

 

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,
 
   2026   2025   2026   2025 
Revenues:                
Other income  $   $   $   $ 
Expenses:                    
General and administrative (including $12 and $13 for the three months ended June 30, 2026 and 2025, respectively, and $23 and $25 for the six months ended June 30, 2026 and 2025, respectively, from related parties)   74    74    147    142 
Advisory fee to related party   23    23    47    50 
Total operating expenses   97    97    194    192 
Net operating loss   (97)   (97)   (194)   (192)
Interest income from related parties   989    1,355    2,365    2,702 
Income tax provision   (187)   (264)   (456)   (527)
Net income  $705   $994   $1,715   $1,983 
                     
Earnings per share - basic and diluted  $0.17   $0.24   $0.42   $0.49 
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

 

 

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, 2026                         
Balance,  April 1, 2026  $42   $(1,749)  $61,955   $66,679   $126,927 
Net income               705    705 
Balance,  June 30, 2026  $42   $(1,749)  $61,955   $67,384   $127,632 
Three Months Ended June 30, 2025                         
Balance,  April 1, 2025  $42   $(1,749)  $61,955   $62,668   $122,916 
Net  income               994    994 
Balance,  June 30, 2025  $42   $(1,749)  $61,955   $63,662   $123,910 
Six Months Ended June 30, 2026                         
Balance,  January 1, 2026  $42   $(1,749)  $61,955   $65,669   $125,917 
Net income               1,715    1,715 
Balance,  June 30, 2026  $42   $(1,749)  $61,955   $67,384   $127,632 
Six Months Ended June 30, 2025                         
Balance,  January 1, 2025  $42   $(1,749)  $61,955   $61,679   $121,927 
Net income               1,983    1,983 
Balance,  June 30, 2025  $42   $(1,749)  $61,955   $63,662   $123,910 

 

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

 

5

 

 

INCOME OPPORTUNITY REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

 

         
   Six Months Ended
June 30,
 
   2026   2025 
Cash Flow From Operating Activities:          
Net  income  $1,715   $1,983 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:          
Changes in assets and liabilities:          
Accrued interest on related party notes receivable   6    (32)
Related party receivables   (1,814)   (1,851)
Accounts payable   4    2 
Net cash (used in) provided by operating activities   (89)   102 
Cash Flow From Investing Activities:          
Collection of notes receivable   112     
Net cash provided by investing activities   112     
Net increase in cash and cash equivalents   23    102 
Cash and cash equivalents, beginning of the period   6    9 
Cash and cash equivalents, end of the period  $29   $111 

 

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

 

6

 

 

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 June 30, 2026 and together with an affiliate owned approximately 91.8% of our common stock at June 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.

 

7

 

 

INCOME OPPORTUNITY REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

 

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 June 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.

 

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 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 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 $23 and $25 for the three months ended June 30, 2026 and 2025, respectively, and $47 and $50 for the six months ended June 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 $100 and $122 for the three months ended June 30, 2026 and 2025, respectively, and $205 and $246 for the six months ended June 30, 2026 and 2025, respectively.

 

Receivables from related parties were $116,409 and $114,595 at June 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 $889 and $1,233 for the three months ended June 30, 2026 and 2025, respectively, and $2,160 and $2,456 for the six months ended June 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 June 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 June 30, 2026, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is August 6, 2026, which is the date on which the consolidated financial statements were available to be issued.

 

On July 31, 2026, TCI acquired 269,299 common share of the Company from Realty Advisors, Inc. (“RAI”) for 134,649 new issued TCI common shares based on exchange rate of 0.5 share of TCI common stock in exchange for each common share of the Company. RAI is ARL’s controlling shareholder and a wholly-owned subsidiary of MRHI.

 

8

 

 

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.

 

9

 

 

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 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, 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.

 

10

 

 

Comparison of the three months ended June 30, 2026 to the three months ended June 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 six months ended June 30, 2026 to the six months ended June 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 June 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 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 six months ended June 30, 2026. As of June 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

 

11

 

 

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.

 

12

 

 

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 6, 2026 By: /s/ ERIK L. JOHNSON
    Erik L. Johnson
    President and Chief Executive Officer

 

13