Income Opportunity Realty Investors Inc. Files Q1 2024 10-Q Report

TL;DR

<b>Income Opportunity Realty Investors Inc. filed its Q1 2024 10-Q report detailing financial data and corporate structure.</b>

AI Summary

INCOME OPPORTUNITY REALTY INVESTORS INC /TX/ (IOR) filed a Quarterly Report (10-Q) with the SEC on May 9, 2024. Filed a 10-Q quarterly report for the period ending March 31, 2024. The company is incorporated in Nevada (NV) with a fiscal year end of December 31. Business and mailing address is 1603 LBJ Freeway, Suite 800, Dallas, TX 75234. The filing includes data related to common stock, treasury stock, additional paid-in capital, and retained earnings for various periods. References related party members and specific entities like Transcontinental Realty Investors Inc. and American Realty Investors Inc.

Why It Matters

For investors and stakeholders tracking INCOME OPPORTUNITY REALTY INVESTORS INC /TX/, this filing contains several important signals. This filing provides investors with the latest quarterly financial performance and position of Income Opportunity Realty Investors Inc. The detailed information on equity accounts and related party transactions offers insights into the company's financial health and operational relationships.

Risk Assessment

Risk Level: low — INCOME OPPORTUNITY REALTY INVESTORS INC /TX/ shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain significant new financial data or strategic announcements that would indicate immediate high risk.

Analyst Insight

Review the detailed financial statements and disclosures within the 10-Q to understand the company's current financial standing and any potential changes from previous periods.

Key Numbers

• 2024-03-31 — Report Period End Date (10-Q filing)
• 2024-05-09 — Filing Date (10-Q filing)
• 2023-12-31 — Previous Year End Date (Balance Sheet comparison)
• 2023-03-31 — Prior Year Q1 End Date (Comparative data)

Key Players & Entities

• INCOME OPPORTUNITY REALTY INVESTORS INC /TX/ (company) — Filer name
• 0000949961 (company) — Central Index Key
• NV (company) — State of Incorporation
• 1603 LBJ FREEWAY SUITE 800 DALLAS TX 75234 (company) — Business Address
• 4685224200 (company) — Business Phone
• Transcontinental Realty Investors Inc. (company) — Related entity
• American Realty Investors Inc. (company) — Related entity
• UnifiedHousingFoundationInc (company) — Related entity

FAQ

Industry Context

The company operates within the Real Estate Investment Trusts (REITs) sector, focusing on income-generating properties.

Regulatory Implications

The filing is made pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, requiring regular reporting of financial information.

What Investors Should Do

1. Analyze the balance sheet for changes in assets, liabilities, and equity compared to the prior period.
2. Review any disclosed notes to the financial statements for details on accounting policies, related party transactions, or significant events.
3. Compare key financial metrics with historical filings to identify trends in revenue, profitability, and debt levels.

Year-Over-Year Comparison

This is the initial 10-Q filing for the fiscal year 2024, providing the first quarter's financial data.

Filing Documents

• ior-10q_033124.htm (10-Q) — 208KB
• ex31-1.htm (EX-31.1) — 10KB
• ex32-1.htm (EX-32.1) — 4KB
• 0001999371-24-005847.txt (&nbsp;) — 1298KB
• ior-20240331.xsd (EX-101.SCH) — 14KB
• ior-20240331_cal.xml (EX-101.CAL) — 19KB
• ior-20240331_def.xml (EX-101.DEF) — 36KB
• ior-20240331_lab.xml (EX-101.LAB) — 112KB
• ior-20240331_pre.xml (EX-101.PRE) — 87KB
• ior-10q_033124_htm.xml (XML) — 81KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION PAGE Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 3 Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 4 Consolidated Statements of Equity for the three months ended March 31, 2024 and 2023 5 Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3.

Quantitative and Qualitative Disclosures About Market Risks

Quantitative and Qualitative Disclosures About Market Risks 12 Item 4.

Controls and Procedures

Controls and Procedures 12

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 12 Item 1A.

Risk Factors

Risk Factors 12 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Mine Safety Disclosures 12 Item 5. Other Information 12 Item 6. Exhibits 13

Signatures

Signatures 14 2 INCOME OPPORTUNITY REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share and par value amounts) (Unaudited) March 31, 2024 December 31, 2023 Assets Current assets Cash and cash equivalents $ 36 $ 71 Interest receivable from related parties 191 293 Receivable from related parties 107,272 106,541 Total current assets 107,499 106,905 Non-current assets Notes receivable from related parties 11,173 11,173 Total assets $ 118,672 $ 118,078 Liabilities and Equity Liabilities: Accounts payable $ 3 $ — 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 March 31, 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 58,206 57,028 Total shareholders' equity 118,669 118,078 Total liabilities and equity $ 118,672 $ 118,078 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 March 31, 2024 2023 Revenues: Other income $ — $ — Expenses: General and administrative (including $ 12 and $ 98 for the three months ended March 31, 2024 and 2023, respectively, from related parties) 66 218 Advisory fee to related party 29 319 Total operating expenses 95 537 Net operating loss ( 95 ) ( 537 ) Interest income from related parties 1,586 1,866 Income tax provision ( 313 ) ( 279 ) Net income $ 1,178 $ 1,050 Earnings per share - basic and diluted $ 0.29 $ 0.25 Weighted average common shares used in computing earnings per share 4,107,131 4,168,414 The accompanying notes are an integral part of these consolidat

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share and square foot amounts) (Unaudited) 1. 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. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial 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 o

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share and square foot amounts) (Unaudited) 3. 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 5.38 % and 5.31 % as of March 31, 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. 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share and square foot amounts) (Unaudited) 7. Subsequent Events The date to which events occurring after March 31, 2024, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is May 9, 2024, which is the date on which the consolidated financial statements were available to be issued. 9

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 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, inv

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS Optional and not included.

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES Based on an evaluation by our management (with the participation of our Principal Executive and Financial Officer), as of the end of the period covered by this report, our Principal Executive and Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive and Financial Officer, to allow timely decisions regarding required disclosures. There has been no change in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

PART II. OTHER INFORMATION

LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS None

RISK FACTORS

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.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS We have a program that allows for the repurchase of up to 1,637,000 shares of our common stock. This repurchase program has no termination date. There were 32,608 shares purchased under this program during the three months ended March 31, 2024. As of March 31, 2024, 1,125,069 shares have been purchased and 524,931 shares may be purchased under the program.

DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES None

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES Not applicable

OTHER INFORMATION

ITEM 5. OTHER INFORMATION None 12

EXHIBITS

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 Advisory Agreement between Income Opportunity Realty Investors, Inc. and Pillar Income Asset Management, LLC, dated April 30, 2011 (incorporated by reference to Exhibit 10.0 to the Registrant's Current Report on Form 8-K, dated April 30, 2011). 10.2 Second Amendment to Modification of Stipulation of Settlement dated October 17, 2001 (incorporated by reference to Exhibit 10.1 to the Registrant

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