SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For The Quarter Ended June 30, 2000               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, 2000
-------------------------------                     ----------------------------
Common Stock, without par value                           4,675,800 shares
<PAGE>
                                     PART I

ITEM I. FINANCIAL STATEMENTS

                          SEDONA WORLDWIDE INCORPORATED
                                  BALANCE SHEET



                                                     December 31,     June 30,
                                                        1999           2000
                                                     -----------    -----------
                                                                    (Unaudited)
                                     ASSETS

Cash and cash equivalents                            $     9,564    $    20,624

Accounts receivable                                       12,988         17,327

Inventories                                              157,546        141,139

Prepaid expenses and other current assets                 30,077         29,151
                                                     -----------    -----------
    Total current assets                                 210,175        208,241

Property and equipment, net                               44,077         24,990
                                                     -----------    -----------
    TOTAL ASSETS                                     $   254,252    $   233,231
                                                     ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES & STOCKHOLDERS' EQUITY:

Accounts payable                                     $     4,523    $    16,814

Accrued expenses                                          24,309          8,859
                                                     -----------    -----------
    Total current liabilities                             28,832         25,673
                                                     -----------    -----------
Common stock, no par value; 50,000,000 shares
  authorized; 4,200,000 and 4,675,800 shares
  issued and outstanding                               1,000,000      1,009,783

Contributed capital                                    2,545,730      2,545,730

Deficit                                               (3,320,310)    (3,347,955)
                                                     -----------    -----------
    Total stockholders' equity                           225,420        207,558
                                                     -----------    -----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $   254,252    $   233,231
                                                     ===========    ===========

                 See notes to consolidated financial statements

                                        2
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                             Three months ended June 30,   Six months ended June 30,
                                             --------------------------    --------------------------
                                                1999           2000           1999           2000
                                             -----------    -----------    -----------    -----------
<S>                                          <C>            <C>            <C>            <C>
Net Sales:
  Customers                                  $    11,860    $    91,182    $    46,610    $   204,259

  Affiliates                                      74,801             --        143,983             --
                                             -----------    -----------    -----------    -----------

       Total net sales                            86,661         91,182        190,593        204,259
                                             -----------    -----------    -----------    -----------

Cost of sales:                                    54,761         51,822        120,110        101,443
                                             -----------    -----------    -----------    -----------

       Gross profit                               31,900         39,360         70,483        102,816

Selling, general & administrative expense         95,590         75,338        175,719        130,462
                                             -----------    -----------    -----------    -----------

Income (loss) from operations                    (63,690)       (35,978)      (105,236)       (27,646)

Interest expense                                     397             --            944             --
                                             -----------    -----------    -----------    -----------

       Net Income (loss)                         (64,087)       (35,978)      (106,180)       (27,646)
                                             ===========    ===========    ===========    ===========
Weighted average shares of common
stock outstanding                              4,200,000      4,343,011      4,200,000      4,271,505

  Basic income (loss) per share              $     (0.02)   $     (0.01)   $     (0.03)   $     (0.01)
                                             ===========    ===========    ===========    ===========

  Diluted income (loss) per share            $     (0.02)   $     (0.01)   $     (0.03)   $     (0.01)
                                             ===========    ===========    ===========    ===========
</TABLE>

                 See notes to consolidated financial statements

                                        3
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)


                                                       Six months ended June 30,
                                                       -------------------------
                                                         1999            2000
                                                       ----------     ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                             $(106,180)     $ (27,646)

  Depreciation and amortization                           19,744         19,088

  (Increase) decrease in accounts receivable                 786         (4,339)

  Decrease in inventory                                   30,158         16,407

  Decrease (increase) in prepaid and other               (14,397)           926

  Increase (decrease) in accounts payable                 (8,060)        12,291

  (Decrease) increase in accrued expense                   1,371        (15,450)
                                                       ---------      ---------
Net cash generated by (used in) operating activities     (76,578)         1,277
                                                       ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                        (856)            --
                                                       ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from issuance of common stock                  --          9,783

  Principal payments on debt and leases                  (14,186)            --

  Advances from parent                                    30,311             --
                                                       ---------      ---------
Net cash provided by (used in) financing activities       16,125          9,783
                                                       ---------      ---------
INCREASE (DECREASE) IN CASH                              (61,309)        11,060

CASH AT BEGINNING OF PERIOD                               68,406          9,564
                                                       ---------      ---------

CASH AT END OF PERIOD                                  $   7,097      $  20,624
                                                       =========      =========

                 See notes to consolidated financial statements

                                        4
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1. BUSINESS DESCRIPTION AND BASIS OF PRESENTATION

     Sedona  Worldwide  Incorporated,  an  Arizona  corporation  ("SWI"  or  the
"Company"),  was  incorporated  in 1992  under  the  name  Red  Rock  Collection
Incorporated.  In  1997,  the  Company  changed  its  name to  Sedona  Worldwide
Incorporated.  The  Company  was a  majority-owned  subsidiary  of  ILX  Resorts
Incorporated,  an Arizona  corporation ("ILX") until December 31, 1999, when ILX
effected a distribution of all of the shares of the Company's  Common Stock that
ILX held to the ILX  shareholders  of record as of December 21,  1999,  on a pro
rata basis (the  "Spin-Off").  As a result of the Spin-Off,  ILX's  shareholders
became owners of, in the  aggregate,  80% of the Company's  outstanding  capital
stock.  ILX  registered  the Company's  Common Stock  pursuant to a Registration
Statement on Form 10-SB on a voluntary  basis,  in order to effect the Spin-Off,
without the need to register the  distribution of the Company's  Common Stock to
ILX's shareholders under the Securities Act of 1933, as amended (the "Securities
Act"). In January 2000, ILX distributed an Information Statement, which contains
substantially  the same kind of  information  as is  typically  found in a Proxy
Statement,  to ILX  shareholders.  The Information  Statement  disclosed certain
material  information  about the  Company  and the shares of Common  Stock to be
distributed to ILX shareholders in the Spin-Off.

     The Company is principally engaged in the development,  testing, marketing,
and distribution 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 U.S.
and of Sedona, Arizona in particular. In addition, the Company has established a
marketing  alliance with Robert  Shields,  founder of Robert Shields  Design,  a
jewelry and art design  company  based in Sedona,  Arizona,  whereby the Company
will be able to offer a line of  Southwestern-style  jewelry and artwork similar
to Mr.  Shield's  existing  line of  products.  In  addition,  the  Company  has
developed a line of apparel under the brand name "Red Rock Gear." No significant
sales of apparel or jewelry have occurred to date.

     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,  2000  are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2000. The accompanying  financial  statements should be read in conjunction with
the Company's most recent audited 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 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.

                                        5
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


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.

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 February 1997, the Financial  Accounting Standards Board issued SFAS No.
129, "Disclosure of Information about Capital Structure" ("SFAS 129"), which was
effective for financial  statements  for periods  ending after December 15, 1997
and establishes  standards for disclosing  information about an entity's capital
structure.  SFAS  129  was  adopted  by the  Company  in  1997.  There  were  no
significant effects on the Company's disclosures about its capital structure, as
that term is defined in SFAS 129, in the six months ended June 30, 1999 or 2000.

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" ("SFAS 130"), which was 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.  The Company adopted SFAS 130 in 1998. There were no items
of other  comprehensive  income, as that term is defined in SFAS 130, in the six
months ended June 30, 1999 or 2000.

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure  about  Segments of an Enterprise  and Related  Information"  ("SFAS
131"), 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 statements and requires
that those enterprises  report selected  information about operating segments in
interim 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
Statement  of  Operations  under  Affiliates  in 1999 and in  Customers  in 2000
following the Spin-Off.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities"  ("SFAS 133"),
which  requires  that an entity  recognize all  derivatives  as either assets or
liabilities  in the balance sheet and measure those  instruments  at fair value.
The standard also provides  specific  guidance for  accounting  for  derivatives
designated  as hedging  instruments.  In June  1999,  the  Financial  Accounting
Standards Board issued SFAS No. 137, "Accounting for Derivative  Instruments and
Hedging Activities - Deferral of the Effective Date of Statement No. 133" ("SFAS
No.  137"),  which  delayed the  effective  date of SFAS No. 133 for the Company
until 2001. The Company is currently  evaluating  what impact this standard will
have on its financial statements.

                                        6
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


NOTE 2. BUSINESS CONDITION

     As shown in the accompanying financial statements,  the Company operated at
a net loss of $35,978 and $27,646 during the three and six months ended June 30,
2000.  As of that date,  the  Company's  current  assets  exceeded  its  current
liabilities by $182,568 and its total assets  exceeded its total  liabilities by
$207,557 due to ILX contributing in excess of $2,545,000 of intercompany debt to
capital at  December  31,  1999.  However,  the Company  incurred  net losses of
$376,629, $317,084 and $192,340 in 1997, 1998 and 1999, respectively, and has an
accumulated  deficit of  $3,347,955 at June 30, 2000.  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.

     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.  At the time of the Spin-Off,  the Company was indebted to ILX in an
amount in excess of $2,545,000,  which ILX contributed to capital in conjunction
with the Spin-Off.  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.  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.  ILX has  agreed to  provide up to
$200,000 of additional  financing  following  completion of the Spin-Off through
November 30, 2000. All amounts  borrowed by the Company will bear interest equal
to the prime rate plus 3% per annum, and is payable  monthly.  The entire unpaid
principal will be due on December 31, 2000. At June 30, 2000,  there had been no
funds advanced under this agreement.

NOTE 3. STOCKHOLDERS' EQUITY

     During the six months ended June 30, 2000, the Company issued 60,000 shares
of  restricted  common  stock,  valued at $5,625,  to  employees in exchange for
services  provided.  These restricted shares of common stock issued to employees
are exempt from  registration  under Section 4(2) of the Securities Act of 1933.
An additional 415,800 restricted shares,  valued at $4,158 were issued to Hudson
Consulting Group, Inc. in exchange for services to be provided (Note 4).

NOTE 4. OTHER

     On June 1, 2000, the Company entered into an Advisory Agreement with Hudson
Consulting  Group,  Inc., a Nevada  corporation  ("Hudson"),  under the terms of
which  Hudson  will  assist the  Company in (i) its  effecting  the  purchase of
businesses  and  assets  relative  to its  business  and growth  strategy,  (ii)
preparation  of documents for its listing on the OTC Bulletin  Board,  and (iii)
its introduction to brokers and dealers,  potential investors,  public relations
firms,  consultants  and others  that may  assist  the  Company in its plans and
future  developments.  In exchange  for these  services,  the Company  delivered
415,800  shares of  non-restricted  SWI common stock,  registered by the Company

                                        7
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


with the  Securities  and Exchange  Commission,  to Hudson upon execution of the
Agreement.  SWI and Hudson  intend for the  agreement  to remain in effect for a
minimum  of  one  year,  with  automatic  extension  on an  annual  basis  until
termination by either party.

NOTE 5. SUBSEQUENT EVENTS

     On June 29, 2000,  the Company  entered into a Distributor  Agreement  with
TSEuro,  Inc., an Arizona based corporation  ("TSEI"),  under the terms of which
the Company  exclusively  engaged TSEI to solicit and obtain purchase orders for
its product and to assist the Company in the  marketing,  promotion  and sale of
its products,  and in the exhibition of its products in industry trade shows and
exhibits,  throughout  Europe,  with the  exception  of England and Italy,  with
initial marketing efforts expected to be focused in Germany.  The parties intend
for the agreement to remain in effect for a minimum of one year.

     Effective July 1, 2000, the Company commenced retail operations at a second
location in Sedona, Arizona.

                                        8
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
           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. 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,
                                        ------------------     ----------------
                                         1999        2000       1999      2000
                                         ----        ----       ----      ----
Net sales:
Sales to ILX (1)                         82.8%       72.6%      83.9%     63.0%
Sales to customers other than ILX        17.2%       27.4%      16.1%     30.4%
Sales previously deferred (2)             0.0%        0.0%       0.0%      6.6%
                                        -----       -----      -----     -----
Total sales                             100.0%      100.0%     100.0%    100.0%
                                        =====       =====      =====     =====
As a percentage of net sales:
Cost of sales                            70.5%       56.8%      71.8%     49.7%
Contribution margin                      29.5%       43.2%      28.2%     50.3%
Sales, general and administrative
 expense                                170.2%       82.6%     169.8%     63.9%
Net loss                               (140.6%)     (39.5%)   (141.6%)   (13.5%)

----------
(1)  Sales  made to ILX are made at lower  prices  (generally  cost plus a small
     mark up) than sales made to customers other than ILX.
(2)  Sales  previously  deferred  refers to a  one-time  recognition  of revenue
     related to unredeemed product certificates.

COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 TO THE THREE AND SIX
MONTHS ENDED JUNE 30, 2000

     Net  sales  increased  5.2%  or  $4,521  to  $91,182 for the  quarter ended
June 30, 2000 from  $86,661 for the same  period in 1999 and  increased  7.2% or
$13,666 to $204,259 for the six months ended June 30, 2000 from $190,593 for the
same  period in 1999.  The small  increase  in the  current  quarter is due to a

                                        9
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

larger  percentage of sales to customers  other than ILX.  Sales made to ILX are
generally at lower  prices than sales to customers  other than ILX. The increase
for the year to date is due to a  combination  of  increased  sales  to  non-ILX
customers and to a one-time  realization of previously  deferred revenue related
to unredeemed product certificates.

     Cost of sales as a  percentage  of sales  decreased  to 56.8% for the three
months ended June 30, 2000 from 70.5% for the same period in 1999 and  decreased
to 49.7% for the six months  ended June 30,  2000 from 71.8% for the same period
in 1999  because of a lower  percentage  of sales to ILX  resorts,  which have a
lower profit  margin,  reduced  product costs as a result of discounts  achieved
through  higher  volume  purchasing,  as well  as the  one-time  recognition  of
previously deferred income.

     Sales, general and administrative expenses decreased $20,252 to $75,338 for
the three  months  ended June 30, 2000 from  $95,590 for the same period in 1999
and  decreased  $45,257 to $130,462  for the six months ended June 30, 2000 from
$175,719 for the same period in 1999, due to decreased overhead expenses related
to the Spin-Off.

     Interest  expense  decreased  to $0  for  the  three and  six months  ended
June 30,  2000 from $397 and $944 for the same  periods  in 1999,  respectively,
reflecting the fulfillment of capital lease obligations.

     There is no income tax benefit  recorded  in 1999 or 2000.  The Company has
recorded a valuation allowance equal to its deferred tax asset at June 30, 2000.
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, 2000.

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  period  ended  June 30,  1999,  cash used in
operations  was $76,578.  During the six month period ended June 30, 2000,  cash
generated by operations  was equal to $1,277.  Historically  the Company's  cash
flows from product sales have not been  sufficient to fund its  operations,  and
shortfalls  have been funded by ILX. ILX advanced the Company $30,311 in the six
months  ended June 30,  1999;  no funds were  advanced  in the six months  ended
June 30, 2000. ILX has funded the Company's cash shortfalls since inception.  At
the time of the Spin-Off, the Company was indebted to ILX in an amount in excess
of  $2,545,000,  which  ILX  contributed  to  capital  in  conjunction  with the
Spin-Off.  ILX has agreed to  provide up to  $200,000  of  additional  financing
following  completion  of the Spin-Off  through  November 30, 2000.  All amounts
borrowed by the Company will bear  interest  equal to the prime rate plus 3% per
annum, with interest payable monthly. The entire unpaid principal will be due on
December  31,  2000.  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

                                       10
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)


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.

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

     As  part  of the  consolidated  financial  statements  of ILX  the  Company
recorded a valuation  allowance  equal to its deferred tax asset at December 31,
1998. At December 31, 1999, as a result of the Spin-Off, the Company recorded no
deferred  tax asset nor a  corresponding  valuation  allowance  because  all tax
benefits  created by the Company's  net  operating  losses were retained by ILX.
This  treatment  results  in no  income tax  benefit being  recorded  at  either
June 30, 1999 or at June 30, 2000.

USES OF CASH

     Investing  activities  typically  reflect  a net use of cash for  equipment
purchases.  Net cash  used  in  investing  activities in  the  six  months ended
June 30, 1999 was $856. There were no purchases of property and equipment during
the six months ended June 30, 2000.

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,
except as  follows:  In October  1999,  ILX agreed to provide up to  $200,000 of
working capital  financing to the Company through November 30, 2000. All amounts
borrowed by the Company under this  agreement  will bear  interest  equal to the
prime rate plus 3% per annum,  with  interest  payable  monthly,  and the entire
unpaid principal amount due on December 31, 2000. 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.  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.

                                       11
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)


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 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.

INFLATION

     Inflation  and  changing  prices  have  not had a  material  impact  on the
Company's revenues, income or loss from operations or net income or loss for the
six months ended June 30, 1999 or 2000.

                                       12
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                                     PART II


ITEM I. LEGAL PROCEEDINGS

     The  Company  is not  currently  the  subject  of any  pending  or,  to its
knowledge, threatened legal claims.

ITEM II. CHANGES IN SECURITIES AND USE OF PROCEEDS

     None

ITEM III. DEFAULTS UPON SENIOR SECURITIES

     None

ITEM IV. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On June 22, 2000, the Company held its Annual Meeting of  Shareholders.  At
this  Annual  Meeting  the  shareholders  were  asked  to vote on the  following
proposal:

     To elect  five (5)  directors  to serve  until the next  annual  meeting of
     shareholders of the Company, or until their successors are duly elected and
     qualified.  Prior to the meeting Robert  Shields  resigned as a director of
     the Company and, by consent  action,  Saundra J.  McFadden was appointed by
     the Company's Board of Directors to fill the vacancy.

     The voting results were as follows:

     Nominees recommended in the Proxy Statement:

                                                   Votes Against
                                     Votes For      or Withheld       Non-votes
                                     ---------      -----------       ---------
     Todd Fisher                     3,115,051           0              81,548
     Mia A. Martori                  3,113,843           0              82,756
     Saundra J. McFadden             3,109,387           0              87,212
     Patrick J. McGroder III         3,106,897           0              89,702
     James W. Myers                  3,115,394           0              81,205

     As a result of the vote,  the following five directors will serve until the
next annual meeting or until his or her successor is elected and qualified:

     Todd Fisher                Mia A. Martori        Saundra J. McFadden
     Patrick J. McGroder III    James W. Myers

ITEM V. OTHER INFORMATION

     None

                                       13
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED
                                     PART II


ITEM VI. EXHIBITS AND REPORTS ON FORM 8-K

     (i)  Exhibits

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

             10.1        ADVISORY  AGREEMENT  between Hudson  Consulting  Group,
                         Inc.,  a  Nevada   corporation  and  Sedona   Worldwide
                         Incorporated,  an   Arizona  corporation  dated  as  of
                         June 1, 2000

             10.2        DISTRIBUTOR    AGREEMENT   between   Sedona   Worldwide
                         Incorporated,  an Arizona corporation and TSEuro, Inc.,
                         an Arizona based corporation dated as of June 29, 2000

             27          Financial Data Schedule

     (ii) Reports on Form 8-K

          None

                                       14
<PAGE>
                          SEDONA WORLDWIDE INCORPORATED

                                   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/ Margaret M. Eardley
                        ---------------------------------
                               Margaret M. Eardley
                           Chief Financial Officer of
                            ILX Resorts Incorporated
                           (acting principal financial
                             and accounting officer)


Date: As of August 7, 2000

                                       15