Income Opportunity Realty Investors (IOR) 10-Q 13 May 22 2022 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2022	May 13, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	001-09240
Entity Registrant Name	INCOME OPPORTUNITY REALTY INVESTORS, INC.
Entity Central Index Key	0000949961
Entity Tax Identification Number	75-2615944
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1603 Lyndon B. Johnson Freeway
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75234
City Area Code	469
Local Phone Number	522-4200
Title of 12(b) Security	Common Stock
Trading Symbol	IOR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,168,414

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 5	$ 2
Interest receivable from related parties	330	591
Receivable from related parties	97,177	96,300
Total current assets	97,512	96,893
Non-current assets
Notes receivable from related parties	11,173	11,173
Total assets	108,685	108,066
Liabilities:
Accounts payable	5	12
Shareholders' equity
Common stock, $0.01 par value, 10,000,000 shares authorized; 4,173,675 shares issued and 4,168,414 outstanding	42	42
Treasury stock at cost, 5,261 shares	(39)	(39)
Additional paid-in capital	61,955	61,955
Retained earnings	46,722	46,096
Total shareholders’ equity	108,680	108,054
Total liabilities and equity	$ 108,685	$ 108,066

CONSOLIDATED BALANCE SHEETS (_2

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized	10,000,000	10,000,000
Common stock, issued	4,173,675	4,173,675
Common stock, outstanding	4,168,414	4,168,414
Treasury stock	5,261	5,261

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues:
Other income
Expenses:
General and administrative (including $89 and $107 for the three months ended March 31, 2022 and 2021, respectively, from related parties)	192	188
Advisory fee to related party	268	336
Total operating expenses	460	524
Net operating loss	(460)	(524)
Interest income from related parties	1,252	1,218
Other income		1,017
Income tax provision	(166)	(359)
Net income	$ 626	$ 1,352
Earnings per share - basic	$ 0.15	$ 0.32
Earnings per share - diluted	$ 0.15	$ 0.32
Weighted average common shares used in computing earnings per share	4,168,414	4,168,414

CONSOLIDATED STATEMENTS OF OP_2

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
General and administrative, related parties	$ 89	$ 107

CONSOLIDATED STATEMENT OF SHARE

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance at Dec. 31, 2020	$ 42	$ (39)	$ 61,955	$ 42,498	$ 104,456
Net income				1,352	1,352
Ending balance at Mar. 31, 2021	42	(39)	61,955	43,850	105,808
Beginning balance at Dec. 31, 2021	42	(39)	61,955	46,096	108,054
Net income				626	626
Ending balance at Mar. 31, 2022	$ 42	$ (39)	$ 61,955	$ 46,722	$ 108,680

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash Flow From Operating Activities:
Net  income	$ 626	$ 1,352
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Recovery of doubtful accounts		(1,017)
Changes in assets and liabilities, net of dispositions:
Accrued interest on related party notes receivable	261	474
Related party receivables	(877)	(3,781)
Accounts payable	(7)	(10)
Net cash provided by (used in) operating activities	3	(2,982)
Cash Flow From Investing Activities:
Collection of notes receivable		2,970
Net cash provided by investing activities		2,970
Net  increase (decrease) in cash and cash equivalents	3	(12)
Cash and cash equivalents, beginning of the period	2	12
Cash and cash equivalents, end of the period	$ 5

Organization

Organization	3 Months Ended
	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	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 81.1 87.6 78.4 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 related parties (See Note 4 – Related Party Transactions). Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities. Pillar also arranges our debt and equity financing with third party lenders and investors.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	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, 2021 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, 2021. Certain 2021 consolidated financial statement amounts have been reclassified to conform to the current presentation. 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.

Notes Receivable

Notes Receivable	3 Months Ended
	Mar. 31, 2022
Receivables [Abstract]
Notes Receivable	3. Notes Receivable The following table summarizes our notes receivables at March 31, 2022 and 2021: Carrying Value Borrower / Project March 31, December 31, Interest Maturity United Housing Foundation ( Echo Station $ 1,481 $ 1,481 12.00 % 12/31/2032 United Housing Foundation ( Lakeshore Villas 2,000 2,000 12.00 % 12/31/2032 United Housing Foundation ( Lakeshore Villas 6,369 6,369 12.00 % 12/31/2032 United Housing Foundation ( Timbers of Terrell 1,323 1,323 12.00 % 12/31/2032 $ 11,173 $ 11,173 The borrower is determined to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. Principal and interest payments on the notes from Unified Housing Foundation, Inc. (“UHF”) are funded from surplus cash flow from operations, sale or refinancing of the underlying properties and are cross collateralized to the extent that any surplus cash available from any of the properties underlying the notes.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	4. Related Party Transactions We engage in certain business transactions with related parties, including investment in notes receivables. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in our best interest. Pillar is a wholly owned by an affiliate of May Realty Holdings, Inc., which owns approximately 90.8 78.4 81.1 Advisory fees paid to Pillar were $ 268 336 Notes receivable are amounts held by UHF (See Note 3 – Notes Receivable). UHF is determined to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. Interest income on these notes was $ 331 361 Interest income on related party receivables from TCI was $ 921 857 Related party receivables represents amounts outstanding from TCI for loans and advances, net of unreimbursed fees, expenses and costs as provided above.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	5. Commitments and Contingencies We believe that we will generate excess cash from operations in the next twelve months; such excess, however, might not be sufficient to discharge all of obligations as they become due. We intend to sell income-producing assets and obtain additional borrowings to meet our liquidity requirements to meet any cash deficiency. In February 2019, we were charged in a lawsuit brought by Paul Berger (“Berger”) against us and others that alleges that we completed improper sales and/or transfers of property with TCI. Berger requests that TCI pay off various related party loans to us and that we then distribute the funds to our shareholders. We intend to vigorously defend against the allegations.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	6. Subsequent Events The date to which events occurring after March 31, 2022, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is May 13, 2022, which is the date on which the consolidated financial statements were available to be issued.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Basis of Presentation	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, 2021 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, 2021. Certain 2021 consolidated financial statement amounts have been reclassified to conform to the current presentation. 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.

Notes Receivable (Tables)

Notes Receivable (Tables)	3 Months Ended
	Mar. 31, 2022
Receivables [Abstract]
The following table summarizes our notes receivables at March 31, 2022 and 2021:	The following table summarizes our notes receivables at March 31, 2022 and 2021: Carrying Value Borrower / Project March 31, December 31, Interest Maturity United Housing Foundation ( Echo Station $ 1,481 $ 1,481 12.00 % 12/31/2032 United Housing Foundation ( Lakeshore Villas 2,000 2,000 12.00 % 12/31/2032 United Housing Foundation ( Lakeshore Villas 6,369 6,369 12.00 % 12/31/2032 United Housing Foundation ( Timbers of Terrell 1,323 1,323 12.00 % 12/31/2032 $ 11,173 $ 11,173

Organization (Details Narrative

Organization (Details Narrative)	Mar. 31, 2022
Transcontinental Realty Investors Inc [Member]
Percentage of ownership	81.10%
Transcontinental Realty Investors Inc and Affiliates [Member] | Common Stock [Member]
Percentage of ownership	87.60%
American Realty Investors, Inc. [Member] | Transcontinental Realty Investors, Inc. [Member]
Percentage of ownership	78.40%

The following table summarizes

The following table summarizes our notes receivables at March 31, 2022 and 2021: (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Value	$ 11,173	$ 11,173
Unified Housing Foundation, Inc. (Echo Station) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Description of property	Echo Station
Carrying Value	$ 1,481	1,481
Interest Rate	12.00%
Maturity Date	Dec. 31, 2032
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Description of property	Lakeshore Villas
Carrying Value	$ 2,000	2,000
Interest Rate	12.00%
Maturity Date	Dec. 31, 2032
Unified Housing Foundation, Inc. (Lakeshore Villas)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Description of property	Lakeshore Villas
Carrying Value	$ 6,369	6,369
Interest Rate	12.00%
Maturity Date	Dec. 31, 2032
Unified Housing Foundation, Inc. (Timbers of Terrell) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Description of property	Timbers of Terrell
Carrying Value	$ 1,323	$ 1,323
Interest Rate	12.00%
Maturity Date	Dec. 31, 2032

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Related Party Transaction [Line Items]
Advisor fees paid	$ 268	$ 336
Interest income from related parties	$ 1,252	1,218
May Realty Holdings, Inc. [Member] | American Realty Investors, Inc.
Related Party Transaction [Line Items]
Percentage of ownership	90.80%
American Realty Investors, Inc. [Member] | Transcontinental Realty Investors, Inc. [Member]
Related Party Transaction [Line Items]
Percentage of ownership	78.40%
Transcontinental Realty Investors Inc [Member]
Related Party Transaction [Line Items]
Percentage of ownership	81.10%
Interest income from related parties	$ 921	857
Pillar [Member]
Related Party Transaction [Line Items]
Advisor fees paid	268	336
Unified Housing Foundation, Inc. [Member]
Related Party Transaction [Line Items]
Interest income from related parties	$ 331	$ 361