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 September 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 November 12, 1999
-------------------------------                ---------------------------------
Common Stock, without par value                         4,200,000 shares
<PAGE>
                                     PART I

ITEM I. FINANCIAL STATEMENTS

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

                                                    December 31,   September 30,
                                                       1998            1999
                                                    ------------   -------------
                                                                    (Unaudited)

                                     ASSETS

     Cash and cash equivalents                      $    68,406     $     5,013
     Accounts receivable                                    786             391
     Inventories                                        134,180         132,472
     Prepaid and other                                   77,022          80,966
                                                    -----------     -----------

         Total current assets                           280,394         218,842
     Property and equipment, net                         42,889          30,117
                                                    -----------     -----------

         TOTAL ASSETS                               $   323,283     $   248,959
                                                    ===========     ===========

                       LIABILITIES AND CAPITAL DEFICIENCY

     Accounts payable                               $    32,163     $     3,169
     Due to parent                                    2,366,635       2,492,096
     Accrued expenses                                    26,284          30,744
     Capital lease - current                             26,171           4,627
                                                    -----------     -----------

         Total current liabilities                    2,451,253       2,530,636
                                                    -----------     -----------

     Common stock                                     1,000,000       1,000,000
     Deficit                                         (3,127,970)     (3,281,677)
                                                    -----------     -----------

         Net capital deficiency                      (2,127,970)     (2,281,677)
                                                    -----------     -----------

              TOTAL LIABILITIES AND CAPITAL         $   323,283     $   248,959
                                                    ===========     ===========

                 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            Nine months ended
                                                 September 30,                 September 30,
                                           --------------------------    --------------------------
                                              1998           1999           1998           1999
                                           -----------    -----------    -----------    -----------
<S>                                        <C>            <C>            <C>            <C>
Net Sales:
     Customers                             $     9,289    $    11,380    $    27,377    $    57,990
     Affiliates                                 67,811         81,505        162,009        225,488
                                           -----------    -----------    -----------    -----------

         Total net sales                        77,100         92,885        189,386        283,478
                                           -----------    -----------    -----------    -----------

Cost of sales:                                  52,856         59,284        133,467        179,394
                                           -----------    -----------    -----------    -----------

     Gross profit                               24,244         33,601         55,919        104,084
Sales, General & Administrative Expense:       102,806         80,918        293,470        256,637
                                           -----------    -----------    -----------    -----------

     Loss from operations                      (78,562)       (47,317)      (237,551)      (152,553)
Interest expense                                   871            210          3,310          1,154
                                           -----------    -----------    -----------    -----------

     Net Loss                                  (79,433)       (47,527)      (240,861)      (153,707)
                                           ===========    ===========    ===========    ===========

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)   $     (0.01)   $     (0.06)   $     (0.04)
                                           ===========    ===========    ===========    ===========
</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)

                                                           Nine months ended
                                                             September 30,
                                                       ------------------------
                                                         1998           1999
                                                       ---------      ---------

Cash flows from OPERATING activities:
    Net loss                                           $(240,861)     $(153,707)
    Depreciation and amortization                         30,608         29,650
    Decrease in accounts receivable                          892            395
    (Increase) decrease in inventory                     (49,866)         1,708
    Increase in prepaid and other                        (16,407)        (3,944)
    Increase (decrease) in accounts payable                7,198        (28,994)
    Increase (decrease) in accrued expense                (9,088)         4,460
                                                       ---------      ---------

Net cash used in operating activities                   (277,524)      (150,432)
                                                       ---------      ---------
Cash flows from INVESTING activities:
     Purchase of property and equipment                  (22,034)       (16,879)
                                                       ---------      ---------
Cash flows from FINANCING activities:
    Principal payments on debt and leases                (22,076)       (21,544)
    Advances from parent                                 327,854        125,461
                                                       ---------      ---------

Net cash provided by financing activities                305,778        103,917
                                                       ---------      ---------

INCREASE/(decrease) in cash                                6,220        (63,393)

Cash at beginning of period                               17,296         68,406
                                                       ---------      ---------

Cash at end of period                                  $  23,516      $   5,013
                                                       =========      =========

                 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 nine-month  periods ended  September 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  September  30, 1998 and 1999,  the
Company incurred net losses of $(79,433) and $(47,527), respectively, and during
the nine months  ended  September  30, 1998 and 1999,  the Company  incurred net
losses of $(240,861) and $(153,707),  respectively.  As of December 31, 1998 and
September  30, 1999,  the  Company's  current  liabilities  exceeded its current
assets by $2,170,859  and  $2,311,794  respectively,  and its total  liabilities
exceeded its total assets by $2,127,970 and $2,281,677, 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  registration  statement on Form 10-SB on November 4, 1998,  to
register its common stock under the Securities Exchange Act of 1934, as amended.
The registration statement 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 nine-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 leases
are stated at the lesser of fair value or the  present  value of future  minimum
lease  payments  on  the  date  placed  in  service,  and  amortized  using  the
straight-line method over the term of the lease.

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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 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. SFAS 130 was adopted by the Company in 1998. There were no
items of other comprehensive income, as that term is defined in SFAS 130, in the
nine months ended September 30, 1998 or September 30, 1999.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosure  About Segments of
an  Enterprise  and Related  Information,"  which was 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 significant customer, ILX, 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 $(47,527)  and  $(153,707)  during the three- and  nine-month  periods
ended  September 30, 1999,  and as of the nine months ended  September 30, 1999,
the Company's current liabilities  exceeded its current assets by $2,311,794 and
its total  liabilities  exceeded its total assets by  $2,281,677.  These 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 $2,492,096 at September 30,
1999. However, 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  under
consideration  that could potentially  generate  sufficient  additional sales to
generate  profits,  there can be no assurance  that such  opportunities  will be
realized or that, even if realized, they will result in a profit to the Company.
Based upon the Company's  historical  results,  revenues  generated from current
sources are insufficient to support the Company's ongoing working capital needs.
Post  Spin-Off,  the Company may pursue debt or equity  financing  or a business
combination 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,  that any desired  business  combination  will be
consummated or that the marketing and distribution efforts will be successful in
generating  sufficient  sales to achieve  profitability.  The  Company  does not
currently have any agreements, binding or non-binding,  related to any potential
financing, business combination or marketing or distribution activities.

NOTE 3. SUBSEQUENT EVENTS

     In October  1999,  ILX agreed to provide up to $200,000 of working  capital
financing to the Company through  November 30, 2000. This agreement was executed
in anticipation of the  distribution by ILX of all of its shares of the Company,
representing 80% of the Company's total outstanding  shares of Common Stock. 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.  The entire
unpaid principal amount will be due on December 31, 2000.

                                        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.

     In November 1998, the Company filed a registration  statement on Form 10-SB
to register  its Common  Stock under the  Securities  Exchange  Act of 1934,  as
amended  (SEC File No.  000-25025).  This  registration  statement  was filed in
contemplation  of a distribution by ILX of the 3,360,000 shares of the Company's
outstanding  stock held by ILX. These shares,  representing 80% of the Company's
total  outstanding  shares,  will be distributed to ILX's  shareholders on a pro
rata basis as a dividend to those shareholders (the "Spin-Off").  Subject to the
completion  of that review by the SEC,  ILX intends to effect the Spin-Off as of
December 1, 1999 or as soon thereafter as practicable.

RESULTS OF OPERATIONS

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

                                         Three Months Ended    Nine Months Ended
                                            September 30,        September 30,
                                         ------------------    -----------------
                                           1998      1999        1998      1999
                                          -----     -----       -----     -----
Net sales:
Sales to affiliates (1)                    88.0%     87.7%       85.5%     79.5%
Sales to non-affiliates                    12.0%     12.3%       14.5%     20.5%
                                          -----     -----       -----     -----
Total sales                               100.0%    100.0%      100.0%    100.0%
                                          =====     =====       =====     =====
As a percentage of net sales:
Cost of sales                              68.6%     63.8%       70.5%     63.3%
Contribution margin                        31.4%     36.2%       29.5%     36.7%
Sales, general and administrative
  expense                                 133.3%     87.1%      155.0%     90.5%
Net Loss                                  103.0%     51.2%      127.2%     54.2%
----------
(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 NINE MONTHS ENDED SEPTEMBER 30, 1998 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1999

     Net sales  increased  20% or $15,785 to $92,885 for the three  months ended
September 30, 1999 from $77,100 for the same period in 1998 and increased 50% or
$94,092 to $283,478 for the nine months ended  September  30, 1999 from $189,386
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 63.8% for the three
months  ended  September  30,  1999 from  68.6% for the same  period in 1998 and
decreased to 63.3% for the nine months ended  September  30, 1999 from 70.5% 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 $21,888 to $80,918 for
the three months ended  September  30, 1999 from $102,806 for the same period in
1998 and decreased  $36,833 to $256,637 for the nine months ended  September 30,
1999,  from $293,470 for the same period in 1998,  reflecting cost reductions in
printing, supplies and advertising.

     Interest expense decreased to $210 for the three months ended September 30,
1999 from $871 for the same period in 1998, and decreased to $1,154 for the nine
months  ended  September  30,  1999  from  $3,310  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  September  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 nine-month periods ended
September 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  nine-month  periods ended  September 30, 1998 and 1999,
cash used in operations  was $277,524 and $150,432,  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  $327,854  and $125,461 in the  nine-month  periods  ended
September 30, 1998 and 1999,  respectively.  ILX has funded the  Company's  cash
shortfalls  since  inception  and has  agreed  to  continue  to do so until  the
completion  of the  Spin-Off,  although  it has no  obligation  to do so.  As of
September  30,  1999,  the Company was indebted to ILX in an amount in excess of
$2,492,000,  which is expected to be forgiven in conjunction  with the Spin-Off.
Following  the  Spin-Off  ILX has agreed to provide  up to  $200,000  of working
capital financing 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 21, 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  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.

     In light of the Company's inability to operate profitably,  its independent
auditors have qualified their opinion as to the Company's  financial  statements
for the years ended December 31, 1997 and 1998 with a statement that the Company
may be  unable  to  continue  as a "going  concern."  The  Company's  management
believes  that the  principal  reason for its  inability to generate  additional
revenues  is the lack of a larger  customer  base  and the  marketing  resources
needed to attract such customers. The Company intends to address these issues by
seeking to obtain third party financing to be used to more  aggressively  market
its products and services  and/or by seeking to identify a suitable  third party
with whom it may enter into a merger, acquisition or other business combination.
However, the Company currently has no agreement,  binding or non-binding, of any
nature for any such financing or any such business  combination and there can be
no assurance that it will be able to complete any such transaction or that, even
if completed,  they will adequately address the Company's liquidity problems. As
discussed below, if the Company is unable to generate  revenues in excess of its
expenses it may be unable to continue as a going concern.

                                       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 nine-month periods ended
September 30, 1998 and 1999 was $22,034 and $16,879, 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.

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.

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

     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 has been completed. In addition, the Company will seek
to ensure that  computer  applications  that it purchases in the future will not
have any Year 2000 Compliance 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 $18,000, 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 $10,000.  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 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.  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
nine-month periods ended September 30, 1998 or 1999.

                                       10
<PAGE>
                                     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

     None

ITEM V. OTHER INFORMATION

     None

ITEM VI. EXHIBITS AND REPORTS ON FORM 8-K

     (i)  Exhibits

          Exhibit No.    Description
          -----------    -----------
              10         Letter  agreement,  dated as of October 28, 1999, among
                         the Company and ILX Resorts Incorporated  (incorporated
                         by  reference  from  Amendment  No. 2 to the  Company's
                         registration   statement   on  Form  10-SB,   File  No.
                         000-25025, filed November 12, 1999)

              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 10, 1999

                                       12