SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1

                   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 0-25025
                      -------------                                      -------

                          SEDONA WORLDWIDE INCORPORATED
             (Exact name of registrant as specified in its charter)


             ARIZONA                                    86-0718104
-------------------------------             ------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)


                 3840 North 16th Street, Phoenix, Arizona 85016
                 ----------------------------------------------
                    (Address of principal executive offices)

         Registrant's telephone number, including area code 602-263-9600
                                                            ------------

              ----------------------------------------------------
              Former name, former address, and former fiscal year,
                         if changed since last report.

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 [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
stock, as of the latest practicable date.

                Class                               Outstanding at June 30, 1999
-------------------------------                     ----------------------------
Common Stock, without par value                            4,200,000 shares
<PAGE>
                                EXPLANATORY NOTE

This  amendment is filed for the purpose of making the following  changes to the
Sedona Worldwide Incorporated Form 10-QSB for the quarter ended June 30, 1999:

     The Company has determined,  after  consultation  with its independent
     accountants,  that it is appropriate to record $16,500 as compensation
     expense paid to Todd Fisher and an  additional  $16,500 paid to Debbie
     Reynolds in 1997.  These  amounts  represent  the value of the 240,000
     shares  of the  Company's  Common  Stock  issued  to such  persons  as
     determined  by an  independent  appraisal  conducted as of the time of
     such issuance.

On November 15, 1999, Sedona Worldwide  Incorporated filed a Form 10-QSB for the
quarter  ended  September  30,  1999.  Please  refer to that  filing for updated
financial information and subsequent events.
<PAGE>
                                     PART I

ITEM I.   FINANCIAL STATEMENTS

                          SEDONA WORLDWIDE INCORPORATED
            (A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)
                                  BALANCE SHEET

                                                 December 31,         June 30,
                                                    1998                1999
                                                 -----------        -----------
                                                                    (Unaudited)
                                     ASSETS

Cash and cash equivalents                        $    68,406        $     7,097

Accounts receivable                                      786                 --

Inventories                                          134,180            104,022

Prepaid and other                                     77,022             91,419
                                                 -----------        -----------

     Total current assets                            280,394            202,538

Property and equipment, net                           42,889             24,001
                                                 -----------        -----------

     TOTAL ASSETS                                $   323,283        $   226,539
                                                 ===========        ===========

                       LIABILITIES AND CAPITAL DEFICIENCY

Accounts payable                                 $    32,163        $    24,103

Due to parent                                      2,366,635          2,396,946

Accrued expenses                                      26,284             27,655

Capital lease - current                               26,171             11,985
                                                 -----------        -----------

     Total current liabilities                     2,451,253          2,460,689
                                                 -----------        -----------

Common stock                                       1,000,000          1,000,000

Deficit                                           (3,127,970)        (3,234,150)
                                                 -----------        -----------

     Net capital deficiency                       (2,127,970)        (2,234,150)
                                                 -----------        -----------

          TOTAL LIABILITIES AND CAPITAL          $   323,283        $   226,539
                                                 ===========        ===========

                 See notes to consolidated financial statements

                                        2
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
            (A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)
                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                          Three months ended June 30,    Six months ended June 30,
                                          ---------------------------    -------------------------
                                             1998            1999            1998          1999
                                          -----------     -----------    -----------    -----------
<S>                                       <C>             <C>            <C>            <C>
Net Sales:

 Customers                                $    11,258     $    11,860    $    18,088    $    46,610

 Affiliates                                    54,367          74,801         94,198        143,983
                                          -----------     -----------    -----------    -----------

     Total net sales                           65,625          86,661        112,286        190,593
                                          -----------     -----------    -----------    -----------

Cost of sales:                                 46,237          54,761         80,611        120,110
                                          -----------     -----------    -----------    -----------

     Gross profit                              19,388          31,900         31,675         70,483

Sales, General & Administrative Expense:      111,678          95,590        190,664        175,719
                                          -----------     -----------    -----------    -----------

     Loss from operations                     (92,290)        (63,690)      (158,989)      (105,236)

Interest expense                                1,075             397          2,439            944
                                          -----------     -----------    -----------    -----------

     Net Loss                                  93,365         (64,087)      (161,428)      (106,180)
                                          ===========     ===========    ===========    ===========

Weighted average shares of common
  stock outstanding                         4,200,000       4,200,000      4,200,000      4,200,000

     Basic net loss per share             $     (0.02)    $     (0.02)   $     (0.04)   $     (0.03)
                                          ===========     ===========    ===========    ===========
</TABLE>

                 See notes to consolidated financial statements

                                        3
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
            (A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                     Six months ended June 30,
                                                     --------------------------
                                                       1998              1999
                                                     ---------        ---------
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                                           $(161,428)       $(106,180)

  Depreciation and amortization                         18,797           19,744

  Decrease in accounts receivable                           72              786

  (Increase) decrease in inventory                     (65,231)          30,158

  Increase in prepaid and other                        (14,210)         (14,397)

  Increase (decrease) in accounts payable               13,024           (8,060)

  Increase (decrease) in accrued expense               (10,158)           1,371
                                                     ---------        ---------
Net cash used in operating activities                 (219,134)         (76,578)
                                                     ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of property and equipment                   (19,411)            (856)
                                                     ---------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments on debt and leases                (15,592)         (14,186)

  Advances from parent                                 240,057           30,311
                                                     ---------        ---------

Net cash provided by financing activities              224,465           16,125
                                                     ---------        ---------

DECREASE IN CASH                                       (14,080)         (61,309)

CASH AT BEGINNING OF PERIOD                             17,296           68,406
                                                     ---------        ---------
CASH AT END OF PERIOD                                $   3,216        $   7,097
                                                     =========        =========

                 See notes to consolidated financial statements

                                        4
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
            (A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1. BUSINESS DESCRIPTION AND BASIS OF PRESENTATION

         Sedona   Worldwide   Incorporated,   formerly   Red   Rock   Collection
Incorporated  (the  "Company"),  commenced  operations  in  April  1992,  and is
incorporated  in the  State  of  Arizona.  The  Company  is an 80  percent-owned
subsidiary of ILX Resorts Incorporated ("ILX").

         The Company markets and distributes skin and hair care products through
ILX resorts  located in  Arizona,  Colorado  and Indiana and on a limited  basis
through sales primarily in the southwestern United States.

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and the  instructions  to Form  10-QSB and Rule 10-01 of
Registration  S-X.  Accordingly,  they do not include all of the information and
notes  required  by  generally  accepted  accounting   principles  for  complete
financial  statements.  In  the  opinion  of  management,  all  adjustments  and
reclassifications  considered  necessary for a fair and comparable  presentation
have been included and are of a normal recurring  nature.  Operating results for
the  three-  and  six-month  periods  ended  June 30,  1999 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
1999. The accompanying  financial  statements should be read in conjunction with
the Company's most recent audited financial statements.

         The  accompanying  financial  statements  have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal  course of  business.  As shown in the  financial
statements,  during the three months  ended June 30, 1998 and 1999,  the Company
incurred  net losses of $93,365 and  $64,087,  respectively,  and during the six
months ended June 30, 1998 and 1999, the Company incurred net losses of $161,428
and  $106,180,  respectively.  As of December  31, 1998 and June 30,  1999,  the
Company's  current  liabilities  exceeded its current  assets by $2,170,859  and
$2,258,151 respectively,  and its total liabilities exceeded its total assets by
$2,127,970 and $2,234,150, respectively.

         The Company's  continuation  as a going  concern is dependent  upon its
ability to generate  sufficient  cash flow to meet its  obligations  on a timely
basis,  to  obtain  financing  as may be  required,  and  ultimately  to  attain
profitable  operations.  ILX has  funded the  Company's  cash  shortfalls  since
inception.  The  Company  filed a Form 10-SB  Registration  on November 4, 1998,
which became  effective by lapse of time on January 3, 1999. ILX intends to make
a  distribution  of all of the shares of the  Company's  common  stock which ILX
holds to the ILX shareholders on a pro rata basis ("the Spin-Off").  The Company
is attempting to obtain a credit facility to address its cash flow needs.

STOCK SPLIT

         On August 24, 1998, the Company's shareholders approved an amendment to
the Company's  Articles of Incorporation to effect a six-for-one  stock split of
the Company's issued and outstanding shares of common stock. The stock split has
been retroactively reflected in the accompanying financial statements.

INVENTORIES

         Inventories are recorded at the lower of cost (first-in,  first-out) or
market.

PROPERTY AND EQUIPMENT

         Property and  equipment  are stated at cost.  Depreciation  is computed
using the  straight-line  method over the estimated  useful lives of the assets,
which range from three to five years.  Property and equipment under  capitalized

                                       5
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
            (A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

leases are stated at the  lesser of fair  value or the  present  value of future
minimum  lease  payments  at the date placed in service,  and  amortized  on the
straight-line method over the term of the lease.

INCOME TAXES

         Income taxes are accounted for using Statement of Financial  Accounting
Standards  ("SFAS") No. 109,  "Accounting For Income Taxes." Under SFAS No. 109,
deferred tax assets and liabilities are recognized for the estimated  future tax
effects  attributable to differences  between the financial  statement  carrying
amounts of existing assets and liabilities and their  respective tax basis.  The
Company  provides  for taxes as if the  Company had  operated  on a  stand-alone
basis.

REVENUE RECOGNITION

         The Company recognizes sales of products when the products are shipped.
Revenue  from  consigned  goods is  recognized  when sold and is not  considered
significant to the operations of the Company.

ACCOUNTING MATTERS

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income," which is effective for financial statements for periods beginning after
December  15,  1997 and  establishes  standards  for  reporting  and  display of
comprehensive income and its components (revenues,  expenses,  gains and losses)
in a full set of general purpose financial statements. During 1998, SFAS No. 130
was adopted  and had no material  impact on the  Company's  financial  statement
presentation or related disclosures.

         In June 1997, the FASB issued SFAS No. 131,  "Disclosure About Segments
of an Enterprise and Related  Information,"  which is effective for fiscal years
beginning  after  December 15, 1997 and  establishes  standards for the way that
public business  enterprises  report  information  about  operating  segments in
annual financial reports issued to shareholders.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers.  The  Company  has a single  segment in the  personal  care  products
industry.  Revenue  from the  Company's  only major  customer is reported on the
income statement under Affiliates.

NOTE 2. BUSINESS CONDITION

         As shown in the accompanying financial statements, the Company incurred
net losses of $64,087 and $106,180 during the three- and six-month periods ended
June 30,  1999,  and as of the six months  ended June 30,  1999,  the  Company's
current  liabilities  exceeded its current  assets by  $2,258,151  and its total
liabilities  exceeded its total assets by  $2,234,150.  Those factors  create an
uncertainty  about the  Company's  ability to continue as a going  concern.  The
financial  statements do not include any adjustments  that might be necessary if
the Company is unable to continue as a going concern.

         In conjunction with the Spin-Off, the Company believes ILX will forgive
the intercompany  indebtedness from the Company to ILX of $2,396,946 at June 30,
1999.  The Company has  incurred  net losses  since its  inception.  In order to
achieve  profitability  it will be  necessary  for the Company to  substantially
increase its revenue.  While there are presently some  opportunities in progress
that may generate sufficient additional sales to generate profits,  there can be
no assurance  that such revenues will be generated  from current  sources.  Post
Spin-Off, the Company may pursue debt or equity financing that will enable it to
invest in marketing and distribution  geared toward generating greater revenues.
However, there can be no assurance that such financing will be available or that
the  marketing  and  distribution  efforts  will  be  successful  in  generating
sufficient sales to achieve profitability.

                                       6
<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         THE  FOLLOWING  DISCUSSION  OF THE  COMPANY'S  FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS INCLUDES CERTAIN FORWARD-LOOKING  STATEMENTS. WHEN USED IN
THIS FORM 10-QSB, THE WORDS "ESTIMATE,"  "PROJECTION,"  "INTEND,"  "ANTICIPATES"
AND  SIMILAR  TERMS ARE  INTENDED TO IDENTIFY  FORWARD-LOOKING  STATEMENTS  THAT
RELATE TO THE  COMPANY'S  FUTURE  PERFORMANCE.  SUCH  STATEMENTS  ARE SUBJECT TO
SUBSTANTIAL  UNCERTAINTY.  READERS ARE CAUTIONED NOT TO PLACE UNDUE  RELIANCE ON
THE  FORWARD-LOOKING  STATEMENTS  SET FORTH  BELOW.  THE COMPANY  UNDERTAKES  NO
OBLIGATION TO PUBLICLY  UPDATE OR REVISE ANY OF THE  FORWARD-LOOKING  STATEMENTS
CONTAINED HEREIN.

OVERVIEW

         Sedona  Worldwide  Incorporated  was formed in 1992 to  develop,  test,
market and  distribute its own  proprietary  "Sedona Spa" branded lines of face,
hair and body care  products and apparels  containing  ingredients  or materials
indigenous  to, and  embodying  the appeal  of, the  Southwestern  region of the
United States and of Sedona,  Arizona in  particular.  To date,  the Company has
generated  revenue  primarily  through the sale of its face,  hair and body care
products to ILX, of which it is an 80% subsidiary. ILX distributes the Company's
products  as  in-room   amenities  at  its  resorts  and  hotels,   as  premiums
(incentives)   to  its  customers  for  attending   vacation   ownership   sales
presentations,  and for retail sales at its resort gift shops, and at the Sedona
Spa at Los  Abrigados  Resort & Spa.  The Company  also  generates  revenue from
direct mail sales to consumers  (many of whom were introduced to the products as
in-room amenities or premiums) and from limited retail distribution in specialty
shops.

RESULTS OF OPERATIONS

         The following  table sets forth certain  operating  information for the
Company:

                                          Three Months Ended    Six Months Ended
                                               June 30,              June 30,
                                           -----------------    ----------------
                                            1998       1999      1998      1999
                                            ----       ----      ----      ----
Net sales:
Sales to affiliates (1)                     82.8%      86.3%     83.9%     75.5%
Sales to non-affiliates                     17.2%      13.7%     16.1%     24.5%
                                           -----      -----     -----     -----
Total sales                                100.0%     100.0%    100.0%    100.0%
                                           =====      =====     =====     =====
As a percentage of net sales:
Cost of sales                               70.5%      63.2%     71.8%     63.0%
Contribution margin                         29.5%      36.8%     28.2%     37.0%
Sales, general and administrative expense  170.2%     110.3%    169.8%     92.2%
Net Loss                                   140.6%      73.5%    141.6%     55.2%
----------
(1)  Sales to affiliates  consist of sales made to ILX. Sales to ILX are made at
     lower  prices  (generally  cost  plus  a  small  mark  up)  than  sales  to
     non-affiliates.

COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 TO THE THREE AND SIX
MONTHS ENDED JUNE 30, 1999

         Net sales  increased  32% or $21,036 to  $86,661  for the three  months
ended June 30, 1999 from $65,625 for the same period in 1998 and  increased  70%
or $78,307 to $190,593 for the six months ended June 30, 1999 from  $112,286 for
the same  period in 1998,  reflecting  the  emphasis on  additional  channels of
distribution,  use of products as premiums by an additional ILX sales office and
higher product pricing.

         Cost of sales as a percentage of sales decreased to 63.2% for the three
months ended June 30, 1999 from 70.5% for the same period in 1998 and  decreased
to 63.0% for the six months  ended June 30,  1999 from 71.8% for the same period
in 1998, reflecting higher product prices.

                                       7
<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (CONTINUED)

         Sales, general and administrative expenses decreased $16,088 to $95,590
for the three  months  ended June 30, 1999 from  $111,678 for the same period in
1998 and  decreased  $14,945 to $175,719 for the six months ended June 30, 1999,
from  $190,664  for the same  period  in 1998,  reflecting  cost  reductions  in
printing and supplies.

         Interest expense  decreased to $397 for the three months ended June 30,
1999 from $1,075 for the same period in 1998,  and decreased to $944 for the six
months  ended June 30, 1999 from $2,439 for the same period in 1998,  reflecting
declining capital lease obligations.

         There is no income tax  benefit  recorded  in 1998 or 1999  because the
Company has  recorded a valuation  allowance  equal to its deferred tax asset at
December 31, 1998 and June 30, 1999, respectively.  Under SFAS No. 109, deferred
tax assets and liabilities  are recognized for the estimated  future tax effects
attributable to differences between the amounts of the Company's existing assets
and liabilities and their respective tax basis.  Because the Company has not yet
generated taxable income, and therefore  sufficient evidence does not exist that
differences in financial and taxable income and net operating loss carryforwards
will be utilized to reduce future  income taxes,  no income tax benefit has been
recorded for the three- and six-month periods ended June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES OF CASH

         The  Company  generates  cash  primarily  from  the  sale  of  its  own
proprietary  "Sedona Spa" branded lines of face, hair and body care products and
apparels  containing  ingredients or materials  indigenous to, and embodying the
appeal of, the Southwestern  region of the United States and of Sedona,  Arizona
in particular.  During the six-month  periods ended June 30, 1998 and 1999, cash
used in  operations  was $219,134 and $76,578,  respectively.  Historically  the
Company's  cash flows from product  sales have not been  sufficient  to fund its
operations,  and shortfalls  have been funded by its majority  parent,  ILX. ILX
advanced the Company  $240,057 and $30,311 in the  six-month  periods ended June
30, 1998 and 1999,  respectively.  ILX has funded the Company's cash  shortfalls
since inception and will continue to do so until the completion of the Spin-Off.
As of June 30,  1999,  the Company was indebted to ILX in an amount in excess of
$2,396,000,  which is expected to be forgiven in conjunction  with the Spin-Off.
Following  the  Spin-Off  there  can be no  assurances  that ILX  will  fund the
Company's  cash needs.  Without such a  commitment,  or other sources of working
capital  financing  which at present do not exist,  the  Company's  current cash
flows  will be  insufficient  to  meet  its  liquidity,  operating  and  capital
requirements.  The Company currently has no credit facility with a bank or other
financial  institution.  The Company will attempt to obtain a credit facility to
address its cash flow needs;  however,  there can be no assurance  that any such
financing  will be  available  if  needed,  or,  if  available  will be on terms
acceptable to the Company.

         The Company  anticipates  that its expenses will increase in the future
as it attempts to expand its business by acquiring  new products and  increasing
sales and  marketing  efforts  and other  operations.  The  Company  expects  to
continue  to incur  losses  until  such time,  if ever,  as it is able to sell a
sufficient  volume of products at prices that provide  adequate  gross profit to
cover operating costs. The Company's  working capital  requirements  will depend
upon numerous factors, including payment cycles for its shipped products, credit
arrangements with suppliers,  the scale-up of its sales and marketing resources,
acquisition of new products and the terms upon which such products are acquired,
competitive factors, and marketing  activities.  There can be no assurance when,
if ever,  the Company  will be able to  generate  sufficient  revenues  from its
operations to offset its expenses or to secure additional  capital  commitments.
IF THE COMPANY IS UNABLE TO GENERATE MORE CASH FLOWS THAN IT DOES CURRENTLY,  IT
WILL BE INSOLVENT AND MAY HAVE TO DISCONTINUE ITS BUSINESS OPERATIONS.

                                       8
<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (CONTINUED)

         The Company has  historically  filed its income tax returns as a member
of the ILX consolidated income tax return. There is no formal income tax sharing
agreement  to  allocate  income  taxes  among  the  members  of the  group  and,
historically,  the Company has not  recorded an income tax benefit for losses it
has incurred that were utilized or may be utilized by ILX.

         At December  31,  1998,  the Company had  approximately  $1,117,000  of
federal and state net operating loss ("NOL")  carryforwards  which will begin to
expire in 2011 for federal  income tax  purposes  and 2001 for state  income tax
purposes.  Section 382 of the Internal  Revenue Code imposes  limitations on the
utilization  of NOLs by a  corporation  following  various  types  of  ownership
changes  which result in more than a 50% change in  ownership  of a  corporation
within a  three-year  period.  Such a change  is  expected  to  result  from the
Spin-Off of the Company's Common Stock. As a result, following the Spin-Off, the
limitations  of  Section  382 are  expected  to apply  and may limit or deny the
future utilization of the NOL by the Company.

USES OF CASH

         Investing  activities typically reflect a net use of cash for equipment
purchases.  Net cash used in investing activities in the six-month periods ended
June 30, 1998 and 1999 was $19,411 and $856, respectively.

CREDIT FACILITIES AND CAPITAL

         The Company has never accessed commercial financing and to date, all of
its working  capital  needs have been  financed by ILX.  However,  following the
Spin-Off, ILX does not intend to fund the Company's future cash shortfalls. As a
result,  the Company  will need to secure  alternative  financing  sources if it
continues  to  operate  at a loss or,  even if  profitable,  it pursues a growth
strategy. There can be no assurance that such resources will be available to the
Company  when  needed  and on  favorable  terms.  In  addition,  any  commercial
financing  obtained is likely to impose certain  financial and other restrictive
covenants upon the Company and result in increased  interest  expense.  Further,
any issuance of  additional  equity or debt  securities  by the Company to raise
additional  capital or in connection with any future business  combination could
result in further dilution to the Company's'  stockholders,  including those who
receive shares as a result of the Spin-Off. Although the Company anticipates the
need for additional financing, it does not presently have any plans to engage in
an equity or debt financing transaction.

SEASONALITY

         Presently  the Company's  revenues are only  minimally  seasonal,  with
slightly  increased  sales during the second and third  quarters  and  December,
reflecting  seasonality  in resort  guests of its major  customer,  ILX.  If the
Company is able to expand  its  customer  base and  marketing  and  distribution
methods,  it may  experience  different  seasonality  dynamics  that  may  cause
operating results to fluctuate.

CONCENTRATION

         The  substantial  majority of the Company's  revenues to date have been
generated from its parent  company,  ILX. There are no long-term  commitments to
purchase by ILX and,  in the event ILX ceased to be a customer  of the  Company,
revenues would be significantly  impacted.  If ILX remains a customer,  revenues
are  expected  to  increase  as ILX adds more  resorts  (which  utilize  in-room
amenities) and sales offices (which offer premiums to touring guests),  although
there can be no assurances in this regard.

                                       9
<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (CONTINUED)

YEAR 2000 ISSUES

         The  inability of  computers,  software and other  equipment  utilizing
microprocessors  to  recognize  and properly  process  data fields  containing a
2-digit  calendar  year is commonly  referred  to as the "Year 2000  Compliance"
issue.  As the  calendar  year 2000  approaches,  such  systems may be unable to
accurately  process  certain  date-based   information,   resulting  in  program
malfunctions and interruptions.

         The Company has identified all significant  in-house  applications that
will require modifications or upgrades to ensure Year 2000 Compliance.  Internal
and external  resources  are being used to make the required  modifications  and
upgrades and to test Year 2000  Compliance.  The modification and upgrade of all
significant applications is currently in process and the Company expects to have
such modifications complete by September 30, 1999. In addition, the Company will
seek to ensure that  applications  that it purchases in the future will not have
any Year 2000 issues.

         Furthermore, the Company has communicated with others with whom it does
significant  business to determine their Year 2000 Compliance  readiness and the
extent  to which  the  Company  is  vulnerable  to any  third  party  Year  2000
Compliance issues. The Company expects to have completed these determinations by
the end of the third fiscal quarter of 1999. However,  there can be no guarantee
that the systems of other companies on which the Company's  systems rely will be
timely  converted,  or that a  failure  to  convert  by  another  company,  or a
conversion that is  incompatible  with the Company's  systems,  would not have a
material adverse effect on the Company's business or financial condition.

         The total cost to the Company of these Year 2000 Compliance  activities
has not been and is not anticipated to be material to its financial  position or
results  of  operations  in any given  year.  Since the  Company  commenced  its
assessment  of its Year 2000  Compliance  during  early  1998,  it has  expended
approximately $17,000, consisting primarily of software purchases and associated
training  and  consultation  services.  In  addition,  certain  employees of the
Company  and  ILX  have  devoted  a  portion  of  their  time to  assessing  and
implementing  the Company's  Year 2000  Compliance,  the costs of which have not
been  separately  allocated by the  Company.  The Company  anticipates  that its
additional expenses to be incurred in the future related to Year 2000 Compliance
will not exceed $20,000.  These costs and the date on which the Company plans to
complete the Year 2000 Compliance modifications,  upgrades and testing processes
are based on management's best estimates,  which were derived utilizing numerous
assumptions  of future events  including the continued  availability  of certain
resources  and other  factors.  However,  there can be no  guarantee  that these
estimates will be achieved and actual results could differ from those plans.

         The Company has not developed a contingency  plan in the event that any
of its  systems or the  systems of any third  party with which it has a material
relationship are not Year 2000 compliant.  However, it intends to develop such a
plan by September  30, 1999.  In the event that the Company is vulnerable to any
such Year 2000  Compliance  issue,  the worst  case  scenario  could  include an
inability to process orders or properly bill and collect its accounts receivable
and it could be forced to suspend its operations and/or become unable to collect
certain accounts owed to it.

INFLATION

         Inflation  and  changing  prices have not had a material  impact on the
Company's  revenues,  loss  from  operations  or net  loss  for the  three-  and
six-month periods ended June 30, 1998 or 1999.

                                       10
<PAGE>
                                     PART II


ITEM VI. EXHIBITS AND REPORTS ON FORM 8-K

         (i)  Exhibits

              Exhibit No.       Description
              -----------       -----------

                  27            Financial Data Schedule (filed herewith)

         (ii) Reports on Form 8-K

                  None

                                       11
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the Registrant has duly caused its quarterly report on Form 10-Q to be
signed on its behalf by the undersigned thereunto duly authorized.


                          SEDONA WORLDWIDE INCORPORATED
                                  (Registrant)


                           /s/ Patrick J. McGroder III
                        ---------------------------------
                             Patrick J. McGroder III
                              Chairman of the Board



                               /s/ Mia A. Martori
                        ---------------------------------
                                 Mia A. Martori
                        Director, President and Treasurer



                              /s/ Stephen W. Morgan
                        ---------------------------------
                                Stephen W. Morgan
                           Chief Financial Officer of
                            ILX Resorts Incorporated
                           (acting principal financial
                             and accounting officer)


Date: As of November 22, 1999

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