<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q


             [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1999
                                                            -------------


                        Commission File Number 1-14784
                                               -------



                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)



            NEVADA                                        75-2615944
-------------------------------                      -------------------
(State or Other Jurisdiction of                       (I.R.S. Employer
 Incorporation or Organization)                      Identification No.)



   10670 North Central Expressway, Suite 300, Dallas, Texas,     75231
   -----------------------------------------------------------------------
   (Address of Principal Executive Offices)                    (Zip Code)



                                (214) 692-4700
                         ------------------------------
                         (Registrant's Telephone Number,
                             Including Area Code)



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  X .  No    .
                                        ---      ---



Common Stock, $.01 par value                          1,526,819
----------------------------              --------------------------------
         (Class)                           (Outstanding at July 31, 1999)

                                       1
<PAGE>

                        PART I.  FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

The accompanying Consolidated Financial Statements have not been audited by
independent certified public accountants, but in the opinion of the management
of Income Opportunity Realty Investors, Inc. (the "Company"), all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the Company's consolidated financial position, consolidated results of
operations and consolidated cash flows at the dates and for the periods
indicated, have been included.

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                      June 30,  December 31,
                                                        1999        1998
                                                      --------  ------------
                                                      (dollars in thousands,
                                                         except per share)
                    Assets
                    ------
<S>                                                   <C>       <C>
Real estate held for investment, net of
 accumulated depreciation ($8,697 in 1999 and
 $7,379 in 1998)....................................  $  83,995    $  83,691

Investment in partnerships..........................        479        1,483
Cash and cash equivalents...........................        486          103
Other assets (including $118 in 1999 and $475 in
 1998 from affiliates)..............................      2,443        3,418
                                                       --------     --------
                                                        $87,403     $ 88,695
                                                       ========     ========

        Liabilities and Stockholders' Equity
        ------------------------------------
Liabilities
Notes and interest payable..........................   $ 60,324     $ 60,786
Other liabilities (including $606 in 1999 and
 $1,194 in 1998 to affiliates)......................      3,940        4,349
                                                       --------     --------
                                                         64,264       65,135

Commitments and contingencies

Stockholders' equity
Common Stock, $.01 par value;
 authorized, 10,000,000 shares; issued and
 outstanding, 1,526,819 shares in 1999 and
 1,526,043 in 1998..................................         15           15
Paid-in capital.....................................     64,862       64,857
Accumulated distributions in excess of accumulated
 earnings...........................................    (41,738)     (41,312)
                                                       --------     --------
                                                         23,139       23,560
                                                       --------     --------
                                                        $87,403     $ 88,695
                                                       ========     ========

</TABLE>

The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                       2
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>


                                               For the Three Months  For the Six Months
                                                  Ended June 30,           Ended June 30,
                                                    --------------------------       --------------------------
                                                       1999             1998            1999            1998
                                                    ----------       ----------      ----------      ----------
                                                              (dollars in thousands, except per share)
<S>                                             <C>               <C>              <C>            <C>
INCOME
 Rents.......................................       $    4,089       $    3,600      $    7,817      $    7,190
 Interest....................................                6               62              13             125
                                                    ----------       ----------      ----------      ----------
                                                         4,095            3,662           7,830           7,315

EXPENSES
 Property operations.........................            1,621            1,494           3,293           2,955
 Interest....................................            1,464            1,423           2,835           2,829
 Depreciation................................              675              518           1,318           1,022
 Advisory fee to affiliate...................              166              167             332             335
 Net income fee to affiliate.................               2                4               2               4
 General and administrative..................              173              172             329             388
                                                    ----------       ----------      ----------      ----------
                                                         4,101            3,778           8,109           7,533
                                                    ----------       ----------      ----------      ----------

(Loss) from operations.......................               (7)            (116)           (279)           (218)

Equity in income of
  partnerships...............................              253              248             305             261
                                                    ----------       ----------      ----------      ----------

Net income...................................       $      247       $      132      $       26      $       43
                                                    ==========       ==========      ==========      ==========

Earnings Per Share

 Net income..................................       $      .16       $      .09      $      .02      $      .03
                                                    ==========       ==========      ==========      ==========

Weighted average Common shares
 used in computing earnings
 per share...................................        1,526,785        1,520,481       1,526,416       1,520,186
                                                    ==========       ==========      ==========      ==========

</TABLE>


The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                       3
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    For the Six Months Ended June 30, 1999

<TABLE>
<CAPTION>

                                                                             Accumulated
                                                                            Distributions
                                     Common Stock                           in Excess of
                                ----------------------       Paid-In         Accumulated      Stockholders'
                                  Shares       Amount        Capital           Earnings         Equity
                                ----------    --------      ----------      -------------     -------------
                                                   (dollars in thousands, except per share)
<S>                          <C>             <C>          <C>             <C>              <C>

Balance, January 1, 1999.....    1,526,043    $     15      $   64,857      $     (41,312)    $      23,560


Sale of Common Stock under
     dividend reinvestment
     plan....................          776           -               5                  -                 5


Dividends ($.30 per share)               -           -               -               (452)             (452)


Net income...................            -           -               -                 26                26
                                ----------    --------      ----------       ------------     -------------

Balance, June 30, 1999.......    1,526,819    $     15      $   64,862       $    (41,738)    $      23,139
                                ==========    ========      ==========       ============     =============

</TABLE>

The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                       4
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                         For the Six Months
                                                           Ended June 30,
                                                       ----------------------
                                                         1999          1998
                                                       --------      --------
                                                       (dollars in thousands)
<S>                                                   <C>         <C>
Cash Flows from Operating Activities
 Rents collected......................................  $ 7,818       $ 7,251
 Interest collected...................................       13           119
 Interest paid........................................   (2,734)       (2,706)
 Payments for property operations.....................   (3,175)       (3,223)
 Advisory fee paid to/refunded by affiliate...........        6          (400)
 General and administrative expenses paid.............     (342)         (700)
   Distributions from equity partnership's operating
    cash flow.........................................      155             -
 Other................................................      626            18
                                                        -------       -------
    Net cash provided by operating activities.........    2,367           359

Cash Flows from Investing Activities
 Real estate improvements.............................   (1,622)       (2,090)
   Funding of equity partnerships.....................       (2)           (2)
   Distributions from equity partnerships'
    investing cash flow...............................    1,155           399
                                                        -------       -------
    Net cash (used in) investing activities...........     (469)       (1,693)

Cash Flows from Financing Activities
 Payments on notes payable............................     (452)         (461)
   Deferred borrowing costs...........................      (37)            -
   Sale of Common Stock under dividend reinvestment
    plan..............................................        5            29
   Dividends to stockholders..........................     (452)         (444)
   Advances from/reimbursements to affiliates.........     (579)        1,485
                                                        -------       -------
    Net cash provided by (used in) financing
     activities.......................................   (1,515)          609

Net increase (decrease) in cash and cash
   equivalents........................................      383          (725)
Cash and cash equivalents, beginning of period........      103         1,145
                                                        -------       -------
Cash and cash equivalents, end of period..............  $   486       $   420
                                                        =======       =======


Reconciliation of net income to net cash
 provided by operating activities
Net income............................................  $    26       $    43
Adjustments to reconcile net income to net
 cash provided by operating activities
 Depreciation and amortization........................    1,428         1,081
 Equity in (income) of partnerships...................     (305)         (261)
 Distributions from equity partnership's operating
   cash flow.........................................       155             -
 Decrease in other assets.............................      902           218
 Increase (decrease) in interest payable..............       (8)           58
 Increase (decrease) in other liabilities.............      169          (780)
                                                        -------       -------
    Net cash provided by operating activities.........  $ 2,367       $   359
                                                        =======       =======
</TABLE>

The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                       5
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1. BASIS OF PRESENTATION
-----------------------------

The accompanying Consolidated Financial Statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly, they do not include all of the information and notes required
by generally accepted accounting principles for complete financial statements.
Operating results for the six month period ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. For further information, refer to the Consolidated Financial
Statements and notes thereto included in the Company's Annual Report on Form 10-
K for the year ended December 31, 1998 (the "1998 Form 10-K").

Certain balances for 1998 have been reclassified to conform to the 1999
presentation.

NOTE 2. INVESTMENT IN EQUITY METHOD REAL ESTATE ENTITIES
--------------------------------------------------------

The Company owns a 36.3% general partner interest in Tri-City Limited
Partnership ("Tri-City"), which, at January 1, 1999, owned three commercial
properties in Texas.  In June 1999, Tri-City sold the 48,696 sq. ft. Summit at
Bridgewood Shopping Center for $3.3 million, receiving net cash of $3.1 million
after the payment of various closing costs, including a real estate brokerage
commission of $119,000 to Carmel Realty, Inc. ("Carmel Realty"), an affiliate of
Basic Capital Management, Inc. ("BCM"), the Company's advisor.  The Company
received a distribution of $1.2 million of such net cash.  Tri-City recognized a
gain of $587,000 on the sale of which the Company's equity share was $213,000.

NOTE 3. NOTES AND INTEREST PAYABLE
----------------------------------

In January 1999, the mortgage debt in the amount of $2.5 million secured by the
42,895 sq. ft. Akard Plaza Office Building in Dallas, Texas, matured.  In
February 1999, the lender agreed to extend the maturity date to June 1999.  All
other terms remained unchanged.  See NOTE 6. "SUBSEQUENT EVENTS."

NOTE 4. COMMITMENTS AND CONTINGENCIES
-------------------------------------

The Company is involved in various lawsuits arising in the ordinary course of
business.  Management is of the opinion that the outcome of these lawsuits will
have no material impact on the Company's financial condition, results of
operations or liquidity.

NOTE 5. OPERATING SEGMENTS
--------------------------

Significant differences among the accounting policies of the Company's operating
segments as compared to the Company's consolidated financial statements
principally involve the calculation and allocation of administrative expenses.
Management evaluates the performance of the

                                       6
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                   -----------------------------------------
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 5. OPERATING SEGMENTS (Continued)
--------------------------

operating segments and allocates resources to each of them based on their
operating income and cash flow.  The Company based reconciliation of expenses
that are not reflected in the segments is $329,000 of administrative expenses in
the six months ended June 30, 1999 and $388,000 in 1998.  There are no
intersegment revenues and expenses and the Company conducts all of its business
in the United States.

Presented below is the operating income of each of the Company's reportable
operating segments for the six months ended June 30, and each segment's assets
at June 30.

<TABLE>
<CAPTION>

                                   Commercial
1999                               Properties  Apartments   Total
----                               ----------  ----------  -------
<S>                                <C>         <C>         <C>
   Rents.........................     $ 5,169     $ 2,648  $ 7,817
   Property operating expenses...       2,142       1,151    3,293
                                      -------     -------  -------
   Operating income..............     $ 3,027     $ 1,497  $ 4,524
                                      =======     =======  =======

   Depreciation..................     $ 1,015     $   303  $ 1,318
   Interest......................       1,925         910    2,835
   Real estate improvements......       1,622           -    1,622
   Assets........................      59,399      24,596   83,995

1998
----
   Rents.........................     $ 4,577     $ 2,613  $ 7,190
   Property operating expenses...       1,755       1,200    2,955
                                      -------     -------  -------
   Operating income..............     $ 2,822     $ 1,413  $ 4,235
                                      =======     =======  =======

   Depreciation..................     $   723     $   299  $ 1,022
   Interest......................       1,905         924    2,829
   Real estate improvements......       2,003          87    2,090
   Assets........................      57,740      25,243   82,983

</TABLE>

NOTE 6.  SUBSEQUENT EVENTS
--------------------------

In July 1999, the Company refinanced the matured mortgage debt secured by Akard
Plaza, in the amount of $2.1 million, paying net cash of $400,000 to payoff $2.5
million in mortgage debt and the payment of various closing costs, including a
mortgage brokerage and equity refinancing fee of $21,000 to BCM.  The new
mortgage bears interest at a variable rate, currently 8.07% per annum,  requires
monthly payments of principal and interest of $16,305 and matures in August
2002.

Also in July 1999, Tri-City sold the 53,472 sq. ft. MacArthur Mills Office
Building in Carrollton, Texas, for $3.9 million, receiving net cash of $2.3
million after paying off $1.3 million of mortgage debt and the payment of
various closing costs, including a real estate brokerage commission of $137,000
to Carmel Realty. The Company received a distribution of $835,000 of such net
cash. Tri-City will recognize a gain on the sale.

                                       7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

Introduction
------------

The Company invests in equity interests in real estate through direct equity
ownership and partnerships and has invested in mortgage loans on real estate.
The Company is the successor to a California business trust organized on
December 14, 1984 which commenced operations on April 10, 1985.

Liquidity and Capital Resources
-------------------------------

Cash and cash equivalents at June 30, 1999, were $486,000, compared with
$103,000 at December 31, 1998.  The Company's principal sources of cash have
been, and will continue to be property operations, proceeds from property sales,
financings and refinancings, partnership distributions and, to the extent
necessary,  advances from its advisor.

The Company's cash flow from property operations (rents collected less payments
for expenses applicable to rental income) increased to $4.6 million in the six
months ended June 30, 1999 from $4.0 million in 1998. This increase was mainly
due to an increase in rents and an increase in occupancy at the Company's
commercial properties.

Interest collected decreased to $13,000 in 1999 from $119,000 in 1998. The
decrease was due to the collection of the Company's last remaining mortgage note
receivable in August 1998.

General and administrative expenses paid decreased to $342,000 in 1999 from
$700,000 in 1998.  This decrease was due to a decrease in legal fees relating to
the Olive litigation and a decrease in professional fees paid related to
potential property purchases.

Distributions received from an equity partnership were $1.3 million in 1999
compared to $399,000 in 1998.  This increase was due to Tri-City's sale of the
Summit at Bridgewood Shopping Center.  See NOTE 2. "INVESTMENT IN EQUITY METHOD
REAL ESTATE ENTITIES."

Other cash from operating activities increased to $626,000 in 1999 from a use of
$18,000 in 1998.  The increase is due to a decrease in prepaid and other assets.

Under its advisory agreement, all or a portion of the annual advisory fee must
be refunded by the advisor if the operating expenses of the Company exceed
certain limits specified in the advisory agreement.  The Company received a
refund of $337,000 of its 1998 advisory fee in March 1999 as compared to
$202,000 of its 1997 advisory fee in March 1998.

In 1999, dividends of $.30 per share or a total of $452,000 were paid and 776
shares of Common Stock were sold through the dividend reinvestment program for a
total of $5,000.

Management reviews the carrying values of the Company's properties at least
annually and whenever events or a change in circumstances indicate

                                       8
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

Liquidity and Capital Resources (Continued)
-------------------------------

that impairment may exist.  Impairment is considered to exist if, in the case of
a property, the future cash flow from the property (undiscounted and without
interest) is less than the carrying amount of the property. If impairment is
found to exist, a provision for loss is recorded by a charge against earnings.
The property review generally includes selective property inspections,
discussions with the manager of the property and visits to selected  properties
in the area and a review of the following:  (1) the property's current rents
compared to market rents; (2) the property's expenses; (3) the property's
maintenance requirements; and (4) the property's cash flows.

Results of Operations
---------------------

For the three and six months ended June 30, 1999, the Company had net income of
$246,000 and $26,000 as compared with net income of $132,000 and $43,000 for the
corresponding periods in 1998.  Fluctuations in components of revenue and
expense between the 1998 and 1999 periods are discussed below.

Rents in the three and six months ended June 30, 1999 were $4.1 million and $7.8
million as compared to $3.6 million and $7.2 million in the corresponding
periods in 1998.  The increase in rents was mainly due to an increase in rental
rates and an increase in occupancy at the Company's commercial properties and
the initial leasing of an office building construction of which was completed in
September 1998.  Rents for the remainder of 1999 are expected to increase as the
occupancy rate at the Company's commercial properties is expected to increase.

Property operations expense in the three and six months ended June 30, 1999 was
$1.6 million and $3.3 million as compared to $1.5 million and $3.0 million in
the corresponding periods in 1998.  The increases were due to an increase in
property tax and repair and maintenance expenses at the Company's commercial
properties.

Interest income in the three and six months ended June 30, 1999 was $5,000 and
$13,000 as compared to $62,000 and $125,000 in the corresponding periods in
1998.  The decrease was due to the collection of the Company's last remaining
mortgage note receivable in August 1998. Interest income for the remainder of
1999 is expected to be insignificant.

Interest expense was constant at $1.5 million and $2.8 million in the three and
six months ended June 30, 1999 and as compared to 1998. Interest expense for the
remaining quarters of 1999 is expected to approximate that of the first and
second quarter, unless the Company should acquire or sell properties.

Depreciation increased to $675,000 and $1.3 million in the three and six months
ended June 30, 1999 compared to $518,000 and $1.0 million in the corresponding
periods in 1998. The increase was due to increased

                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
         RESULTS OF OPERATIONS (Continued)
         ---------------------

Results of Operations (Continued)
---------------------

depreciation of capital and tenant improvements at the Company's commercial
properties.  Depreciation is expected to remain constant, unless the Company
should acquire or sell properties.

Advisory fee of $166,000 and $332,000 in the three and six months ended June 30,
1999 was comparable to the $167,000 and $335,000 in 1998.  The Company's gross
assets are the basis for such fee.  Advisory fee expense is expected to remain
constant, unless the Company should acquire or sell properties.

General and administrative expense was $173,000 and $329,000 for the three and
six months ended June 30, 1999 as compared to $172,000 and $388,000 in the
corresponding periods in 1998.  The six month decrease was mainly due to a
decrease in legal fees related to the Olive litigation and professional fees
relating to potential property purchases.  General and administrative expense
for the remaining quarters of 1999 is expected to approximate that of the first
and second quarter of 1999.

Tax Matters
-----------

As more fully discussed in the Company's 1998 Form 10-K, the Company has elected
and, in management's opinion, qualified, to be taxed as a real estate investment
trust ("REIT"), as defined under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended, (the "Code").  To continue to qualify for
federal taxation as a REIT under the Code, the Company is required to hold at
least 75% of the value of its total assets in real estate assets, government
securities, cash and cash equivalents at the close of each quarter of each
taxable year.  The Code also requires a REIT to distribute at least 95% of its
REIT taxable income plus 95% of its net income from foreclosure property, all as
defined in Section 857 of the Code, on an annual basis to shareholders.

Inflation
---------

The effects of inflation on the Company's operations are not quantifiable.
Revenues from apartment operations tend to fluctuate proportionately with
inflationary increases and decreases in housing costs.  Fluctuations in the rate
of inflation also affect the sales value of properties and the ultimate gain to
be realized from property sales.  To the extent that inflation affects interest
rates, earnings from short-term investments and the cost of new financings as
well as the cost of variable interest rate debt will be affected.

Environmental Matters
---------------------

Under various federal, state and local environmental laws, ordinances and
regulations, the Company may be potentially liable for removal or remediation
costs, as well as certain other potential costs, relating to hazardous or
toxic substances (including governmental fines and injuries

                                       10
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
         RESULTS OF OPERATIONS (Continued)
         ---------------------


Environmental Matters (Continued)
---------------------

to persons and property) where property-level managers have arranged for the
removal, disposal or treatment of hazardous or toxic substances.  In addition,
certain environmental laws impose liability for release of asbestos-containing
materials into the air, and third parties may seek recovery for personal injury
associated with such materials.

Management is not aware of any environmental liability relating to the above
matters that would have a material adverse effect on the Company's business,
assets or results of operations.

Year 2000
---------

BCM, the Company's advisor, has informed management that its computer hardware
operating system and computer software have been certified as year 2000
compliant.

Further, Carmel Realty Services, Ltd. ("Carmel, Ltd."), an affiliate of BCM that
performs property management services for the Company's properties, has informed
management that effective January 1, 1999 it began using year 2000 compliant
computer hardware and property management software for the Company's commercial
properties.  With regard to the Company's apartments, Carmel, Ltd. has informed
management that its subcontractors are also using year 2000 compliant computer
hardware and property management software.

The Company has not incurred, nor does it expect to incur, any costs related to
its computer hardware and accounting and property management software being
modified, upgraded or replaced to make them year 2000 compliant.  Such costs
have been or will be borne by either BCM, Carmel, Ltd. or the property
management subcontractors of Carmel, Ltd.

Management has completed its evaluation of the Company's computer controlled
building systems, such as security, elevators, heating and cooling, etc., to
determine what systems are not year 2000 compliant. Management believes that
necessary modifications to such systems are insignificant and do not require
significant expenditures to make the affected systems year 2000 compliant, as
enhanced operating systems are readily available.

The Company has or will have in place the year 2000 compliant systems that will
allow it to operate.  The risks the Company faces are that certain of its
vendors will not be able to supply goods or services and that financial
institutions and taxing authorities will not be able to accurately apply
payments made to them.  Management believes that other vendors are readily
available and that financial institutions and taxing authorities will, if
necessary, apply monies received manually.  The likelihood of the above having a
significant impact on the Company's operations is negligible.

                                       11
<PAGE>

                          PART II.  OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS
--------------------------

Olive Litigation.  In February 1990, the Company, together with Continental
Mortgage and Equity Trust ("CMET"), National Income Realty Trust and
Transcontinental Realty Investors, Inc. ("TCI"), three real estate entities
with, at the time, the same officers, directors or trustees and advisor as the
Company, entered into a settlement (the "Settlement") of a class and derivative
action entitled Olive et al. v. National Income Realty Trust et al. relating to
the operation and management of each of the entities (the "Olive Litigation").
On April 23, 1990, the Court granted final approval of the terms of the
Settlement.

On January 27, 1997, the parties entered into an Amendment to the Settlement
effective January 9, 1997 (the "Olive Amendment"), which was submitted to the
Court for approval on January 29, 1997.  The Olive Amendment provided for the
settlement of additional matters raised by plaintiffs' counsel in 1996.  The
Court issued an order approving the Olive Amendment on July 3, 1997.

The Olive Amendment provided for the addition of four new unaffiliated members
to the Company's Board of Directors and set forth new requirements for the
approval of any transactions with certain affiliates until April 28, 1999.  In
addition, the Company, CMET, TCI and their stockholders released the defendants
from any claims relating to the plaintiffs' allegations.

Under the Olive Amendment, all shares of the Company owned by any affiliates
were required to be voted at all stockholder meetings of the Company held until
April 28, 1999 in favor of all new Board members added under the Olive
Amendment.  The Olive Amendment also required that, until April 28, 1999, all
shares of the Company owned by any affiliates in excess of forty percent (40%)
of the Company's outstanding shares were to be voted in proportion to the votes
cast by all non-affiliated stockholders of the Company.

The provisions of the Settlement and the Olive Amendment terminated on April 28,
1999.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)  Exhibits:

Exhibit
Number                               Description
-------       ---------------------------------------------------------

 27.0         Financial Data Schedule, filed herewith.

(b)  Reports on Form 8-K as follows:

     None.

                                       12
<PAGE>

                                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 16, 1999           By:  /s/ Randall M. Paulson
     -------------------------       --------------------------------------
                                       Randall M. Paulson
                                       President



Date:   August 16, 1999           By:  /s/ Thomas A. Holland
     -------------------------       --------------------------------------
                                       Thomas A. Holland
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (Principal Financial and
                                       Accounting Officer)

                                       13
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.

                                  EXHIBITS TO
                         QUARTERLY REPORT ON FORM 10-Q

                    For the Six Months Ended June 30, 1999



Exhibit                                                             Page
Number                           Description                       Number
-------      -----------------------------------------------       ------

 27.0        Financial Data Schedule.                                15

                                       14