SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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


For The Quarter Ended September 30, 2001        Commission File Number 001-13855


                            ILX RESORTS INCORPORATED
             (Exact name of registrant as specified in its charter)


          ARIZONA                                       86-0564171
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)


          2111 East Highland Avenue, Suite 210, Phoenix, Arizona 85016
                    (Address of principal executive offices)


         Registrant's telephone number, including area code 602-957-2777


              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 September 30, 2001
-------------------------------                ---------------------------------
Common Stock, without par value                        2,989,682 shares
<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  December 31,       September 30,
                                                                      2000               2001
                                                                  ------------       ------------
                                                                                     (Unaudited)
<S>                                                               <C>                <C>
                                     ASSETS
Cash and cash equivalents                                         $  2,518,122       $  2,638,830
Notes receivable, net                                               26,619,853         30,101,226
Resort property held for Vacation Ownership Interest sales          21,663,793         20,554,519
Resort property under development                                    5,263,737          5,273,196
Land held for sale                                                   1,667,298            775,467
Deferred assets                                                        170,440            141,154
Property and equipment, net                                          5,141,378          5,820,312
Other assets                                                         2,500,155          7,514,451
                                                                  ------------       ------------

       TOTAL ASSETS                                               $ 65,544,776       $ 72,819,155
                                                                  ============       ============

                 LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
  Accounts payable                                                $  1,220,787       $  1,165,934
  Accrued and other liabilities                                      3,126,940          2,806,330
  Due to affiliates                                                         --             24,022
  Notes payable                                                     32,851,068         39,448,924
  Notes payable to affiliates                                        1,000,000          1,000,000
  Deferred income taxes                                              1,510,535          2,607,781
                                                                  ------------       ------------

       Total liabilities                                            39,709,330         47,052,991
                                                                  ------------       ------------
Shareholders' Equity
  Preferred stock, $10 par value; 10,000,000 shares
    authorized; 291,553 and 283,376 shares issued
    and outstanding; liquidation preference of
    $2,915,530 and $2,833,760                                        1,138,566          1,113,051
  Common stock, no par value; 30,000,000 shares
    authorized; 4,105,192 and 4,131,882 shares issued               18,333,333         18,400,893
  Treasury stock, at cost, 657,500 and 1,142,200
    shares, respectively                                            (1,308,655)        (3,330,248)
  Additional paid in capital                                           225,742            269,869
  Guaranteed ESOP Obligation                                          (250,000)                --
  Retained earnings                                                  7,696,460          9,312,599
                                                                  ------------       ------------

       Total shareholders' equity                                   25,835,446         25,766,164
                                                                  ------------       ------------

       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 $ 65,544,776       $ 72,819,155
                                                                  ============       ============
</TABLE>

            See notes to condensed consolidated financial statements

                                       2
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Three months ended September 30,   Nine months ended September 30,
                                                       --------------------------------   -------------------------------
                                                             2000            2001              2000            2001
                                                         ------------    ------------      ------------    ------------
<S>                                                      <C>             <C>               <C>             <C>
Timeshare revenues:
  Sales of Vacation Ownership Interests                  $  6,652,826    $  7,405,043      $ 19,246,386    $ 21,904,075
  Resort operating revenue                                  3,402,251       4,236,122        10,085,331      12,910,680
  Interest income                                             764,072         658,261         2,505,880       1,900,860
                                                         ------------    ------------      ------------    ------------

      Total timeshare revenues                             10,819,149      12,299,426        31,837,597      36,715,615
                                                         ------------    ------------      ------------    ------------
Cost of sales and operating expenses:
  Cost of Vacation Ownership Interests sold                   963,072       1,257,615         2,692,906       3,725,061
  Cost of resort operations                                 3,284,223       3,834,829         9,463,401      10,930,186
  Sales and marketing                                       3,674,672       3,890,638        10,816,196      12,342,399
  General and administrative                                1,124,466       1,274,569         3,356,674       3,496,331
  Provision for doubtful accounts                             295,359         323,930           812,115         960,072
  Depreciation and amortization                               164,292         245,281           443,433         545,742
                                                         ------------    ------------      ------------    ------------

      Total cost of sales and operating expenses            9,506,084      10,826,862        27,584,725      31,999,791
                                                         ------------    ------------      ------------    ------------

Timeshare operating income                                  1,313,065       1,472,564         4,252,872       4,715,824

Income from land and other, net                                (2,232)          7,233             3,150          42,730
                                                         ------------    ------------      ------------    ------------

Total operating income                                      1,310,833       1,479,797         4,256,022       4,758,554

Interest expense                                             (671,366)       (615,492)       (2,059,729)     (1,997,721)
                                                         ------------    ------------      ------------    ------------

Income before income taxes and minority interests             639,467         864,305         2,196,293       2,760,833

Income tax expense                                           (256,618)       (345,722)         (853,364)     (1,097,246)
                                                         ------------    ------------      ------------    ------------

Income before minority interests                              382,849         518,583         1,342,929       1,663,587

Minority interests                                                 --              --           (70,422)             --
                                                         ------------    ------------      ------------    ------------

Net income                                               $    382,849    $    518,583      $  1,272,507    $  1,663,587
                                                         ============    ============      ============    ============
Net income per share
     Basic                                               $       0.10    $       0.16      $       0.33    $       0.50
                                                         ============    ============      ============    ============

     Diluted                                             $       0.10    $       0.16      $       0.32    $       0.49
                                                         ============    ============      ============    ============

</TABLE>
            See notes to condensed consolidated financial statements

                                       3
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Nine months ended September 30,
                                                                    -------------------------------
                                                                         2000            2001
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
Cash flows from operating activities:
  Net income                                                         $  1,272,507    $  1,663,587
  Adjustments to reconcile net income to net cash provided by
   operating activities:
   Loss on sale of property and equipment                                      --          13,373
   Undistributed minority interest                                        (23,778)             --
   Deferred income taxes                                                  962,500       1,097,246
   Provision for doubtful accounts                                        812,115         960,072
   Depreciation and amortization                                          443,433         545,742
   Amortization of guarantee fees                                           1,350          29,286
   Contribution of common stock to ESOP Plan                              146,094          41,905
   Common stock issued to employees for services                           48,988           4,210
   Change in assets and liabilities:
     Decrease in resort property held for Vacation Ownership
         Interest sales                                                 1,949,647       1,109,274
     Increase in resort property under development                     (1,459,658)         (9,459)
     Decrease (increase) in land held for sale                                109         (21,137)
     Decrease (increase) in other assets                                  803,257        (256,912)
     Increase (decrease) in accounts payable                              240,763         (54,853)
     Increase in accrued and other liabilities                            604,411         104,042
     (Decrease) increase in due to affiliates                             (26,282)         24,022
                                                                     ------------    ------------

Net cash provided by operating activities                               5,775,456       5,250,398
                                                                     ------------    ------------
Cash flows from investing activities:
  Increase in notes receivable, net                                    (3,350,559)     (3,771,056)
  Decrease in deferred assets                                              80,398              --
  Purchases of plant and equipment, net                                  (544,697)       (986,644)
                                                                     ------------    ------------

Net cash used in investing activities                                  (3,814,858)     (4,757,700)
                                                                     ------------    ------------
Cash flows from financing activities:
  Proceeds from notes payable                                          10,310,410      15,217,156
  Principal payments on notes payable                                 (11,199,398)    (13,519,300)
  Preferred stock dividends                                               (47,616)        (47,448)
  Redemption of preferred stock                                              (245)           (805)
  Acquisition of treasury stock and other                                (994,284)     (2,021,593)
                                                                     ------------    ------------

Net cash used in financing activities                                  (1,931,133)       (371,990)
                                                                     ------------    ------------

Increase in cash and cash equivalents                                      29,465         120,708

Cash and cash equivalents at beginning of period                        2,971,365       2,518,122
                                                                     ------------    ------------

Cash and cash equivalents at end of period                           $  3,000,830    $  2,638,830
                                                                     ============    ============
</TABLE>

            See notes to condensed consolidated financial statements

                                       4
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BUSINESS ACTIVITIES

     The condensed consolidated financial statements include the accounts of ILX
Resorts  Incorporated,  formerly  ILX  Incorporated,  and its  wholly  owned and
majority-owned   subsidiaries   ("ILX"  or  the   "Company").   All  significant
intercompany transactions and balances have been eliminated in consolidation.

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information and the instructions to Form 10-Q 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 nine-month period ended September 30, 2001 are not necessarily indicative of
the results  that may be expected for the year ending  December  31,  2001.  The
accompanying  financial  statements  should  be read  in  conjunction  with  the
Company's most recent audited financial statements.

     The  Company's   significant   business   activities  include   developing,
operating,  marketing and financing  ownership  interests  ("Vacation  Ownership
Interests") in resort properties located in Arizona,  Colorado,  Indiana, Nevada
and Mexico.

REVENUE RECOGNITION

     Revenue  from  sales of  Vacation  Ownership  Interests  is  recognized  in
accordance with Statement of Financial  Accounting  Standard No. 66,  Accounting
for Sales of Real Estate ("SFAS 66"). No sales are recognized until such time as
a minimum of 10% of the purchase  price has been received in cash, the statutory
rescission period has expired,  the buyer is committed to continued  payments of
the  remaining  purchase  price and the Company has been  released of all future
obligations  for the  Vacation  Ownership  Interest.  Resort  operating  revenue
represents  daily room rentals and revenues from food and other resort services.
Such  revenues  are  recorded  as the  rooms  are  rented  or the  services  are
performed.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

     Cash equivalents are liquid  investments with an original maturity of three
months or less. No income taxes were paid and no interest was capitalized during
the nine  month  periods  ended  September  30,  2000 and  2001.  The  following
summarizes interest paid.

               Three Months Ended September 30,  Nine Months ended September 30,
               --------------------------------  -------------------------------
                      2000         2001                 2000         2001
                   ----------   ----------           ----------   ----------
Interest paid      $  710,431   $  623,698           $2,015,616   $1,985,073

RECLASSIFICATIONS

     The financial  statements  for prior periods have been  reclassified  to be
consistent  with the current  period  financial  statement  presentation.  These
reclassifications had no effect on previously reported net income.

     In the first  quarter  2001,  the  carrying  value of the Bell Rock Inn was
reclassified  to Resort  Property  Under  Development  to reflect the  Company's
intent to register and market Vacation Ownership Interests in the property.  The
resort is not at this time registered with the Arizona Department of Real Estate
nor has marketing of Vacation Ownership Interests in the property commenced. The
reclassification  has been applied to the December  31, 2000 and  September  30,
2001 financial statements.

                                       5
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2. NET INCOME PER SHARE

     In  accordance  with SFAS No. 128,  "Earnings  Per  Share,"  the  following
presents the computation of basic and diluted net income per share:

<TABLE>
<CAPTION>
                           BASIC NET INCOME PER SHARE
                                                              Three Months Ended            Nine Months Ended
                                                                 September 30,                September 30,
                                                          --------------------------    --------------------------
                                                             2000            2001           2000          2001
                                                          -----------    -----------    -----------    -----------
<S>                                                       <C>            <C>            <C>            <C>
Net income                                                $   382,849    $   518,583    $ 1,272,507    $ 1,663,587
Less: Series A preferred stock dividends                      (11,969)       (11,969)       (35,907)       (35,907)
                                                          -----------    -----------    -----------    -----------
Net income available to common
  stockholders - basic                                    $   370,880    $   506,614    $ 1,236,600    $ 1,627,680
                                                          ===========    ===========    ===========    ===========
Weighted average shares of common stock
  outstanding - basic                                       3,632,076      3,132,475      3,749,751      3,268,408
                                                          ===========    ===========    ===========    ===========
Basic net income per share                                $      0.10    $      0.16    $      0.33    $      0.50
                                                          ===========    ===========    ===========    ===========

                          DILUTED NET INCOME PER SHARE

                                                              Three Months Ended            Nine Months Ended
                                                                 September 30,                September 30,
                                                          --------------------------    --------------------------
                                                             2000            2001           2000          2001
                                                          -----------    -----------    -----------    -----------
Net income                                                $   382,849    $   518,583    $ 1,272,507    $ 1,663,587
Less: Series A preferred stock dividends                      (11,969)       (11,969)       (35,907)       (35,907)
                                                          -----------    -----------    -----------    -----------
Net income available to common stockholders -
    diluted                                               $   370,880    $   506,614    $ 1,236,600    $ 1,627,680
                                                          ===========    ===========    ===========    ===========

Weighted average shares of common stock outstanding         3,632,076      3,132,475      3,749,751      3,268,408
Add: Convertible preferred stock (Series B and C)
       dilutive effect                                         81,578         78,603         83,008         79,808

     Stock options dilutive effect                                 --         34,127             --            593
                                                          -----------    -----------    -----------    -----------
Weighted average shares of common stock
  outstanding - dilutive                                    3,713,654      3,245,205      3,832,759      3,348,809
                                                          ===========    ===========    ===========    ===========

Diluted net income per share                              $      0.10    $      0.16    $      0.32    $      0.49
                                                          ===========    ===========    ===========    ===========
</TABLE>

     Stock options to purchase  70,700 shares of common stock at prices  ranging
from $6.82 per share to $8.125 per share and options to purchase  170,700 shares
of common stock at prices  ranging from $4.00 per share to $8.125 per share were
outstanding   for  the  three  and  nine  months  ended   September   30,  2001,
respectively, but were not included in the computation of diluted net income per
share because the options'  exercise prices were greater than the average market
price of common  shares.  These options expire at various dates between 2002 and
2005.

                                       6
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 3. SHAREHOLDERS' EQUITY

     During the nine months ended  September 30, 2001,  the Company issued 4,100
shares of restricted  common stock,  valued at $4,210,  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.  For the nine months  ended  September  30, 2001 and 2000,  the Company
recorded the exchange of 7,770 and 12,762 Series C Convertible  shares for 2,590
and 4,254  common  shares,  respectively.  Also  during  the nine  months  ended
September 30, 2001, the Company purchased 484,700 shares of its common stock for
$2,021,593,  and issued  20,000  shares of its  restricted  common  stock to the
Employee Stock Ownership Plan and Trust, valued at $41,905.

NOTE 4. OTHER

     In May 2001,  the  Company  sold  land  held for sale with a book  value of
$912,968  and  received  a  note  receivable  in the  amount  of  $1,139,400  as
consideration.  This land,  located in  Bullhead  City,  Arizona,  is subject to
unpaid  property taxes of $469,011.  The note receivable will accrue interest at
8% per annum  beginning  October 1, 2001, and is due in full on January 1, 2003.
Note payments will  initially be applied to accrued  property taxes of $469,011,
which have been netted against the receivable.

     In June 2001, the Company acquired for $900,000 cash 600 Vacation Ownership
Interests in The Carriage House, an existing  vacation  ownership  resort in Las
Vegas.  These 600  Vacation  Ownership  Interests,  along with  2,400  timeshare
intervals in the Company's existing resorts, were annexed into Premiere Vacation
Club in June 2001,  bringing the total number of Vacation Ownership Interests in
Premiere Vacation Club to 11,000 at September 30, 2001. In July 2001 and October
2001,  respectively,  the Company  acquired  for  $95,500  and  $57,875  cash an
additional 62 and 61 Vacation  Ownership  Interests in The Carriage House, which
have not yet been annexed into Premiere Vacation Club.

     In July 2001,  the  Company  acquired  a 50-year  leasehold  interest  in a
44-acre parcel located proximate to the Las Vegas Airport,  University of Nevada
- Las Vegas ("UNLV") and the "Strip" in Las Vegas,  Nevada.  The Company intends
to  develop  the  property,  to be  known as  Premiere  Park,  into a mixed  use
development,  including a vacation ownership sales office, museums, restaurants,
golf,  retail and other ancillary uses. The parcel  presently  includes a 25,000
square foot building which will contain a vacation  ownership sales office to be
operated by the Company, provide club facilities for the UNLV golf team, and the
remainder  has been leased for a  golf-related  use. In addition to the existing
building,  the Company intends to lease the remaining  developable  space on the
44-acre site, to be built by tenants to specifications  approved by the Company.
The $5 million purchase price for the leasehold  interest consists of a $100,000
earnest money deposit made in August,  2000 and a $4.9 million  promissory note.
Interest  begins  accruing on the note on February 1, 2002,  with  interest only
payable monthly through September 1, 2006. The interest rate is 6% from February
1, 2002 through August 31, 2003, 7% for the next twelve months,  8% for the next
24 months and twelve percent  thereafter until the August 1, 2011 maturity date.
Commencing September 1, 2006, monthly principal and interest payments of $53,953
are payable  monthly  through  maturity.  The purchase  price for the  leasehold
interest is included in other assets on the balance sheet.

                                       7
<PAGE>
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

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-Q,  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

     ILX Resorts  Incorporated  ("ILX" or the  "Company")  is one of the leading
developers,  marketers and operators of timeshare  resorts in the western United
States and Mexico. The Company's principal  operations consist of (i) acquiring,
developing and operating timeshare resorts,  marketed by the Company as vacation
ownership resorts,  (ii) marketing and selling vacation  ownership  interests in
the timeshare  resorts,  which  typically  have  entitled the buyers  thereof to
ownership of a fully-furnished unit for a one-week period on either an annual or
an alternate year (i.e., biennial) basis ("Vacation Ownership  Interests"),  and
(iii)  providing  purchase money  financing to the buyers of Vacation  Ownership
Interests at its resorts.  In addition,  the Company receives  revenues from the
rental of its  unused or unsold  inventory  of units at its  vacation  ownership
resorts,  and from  the  sale of food,  beverages  and  other  services  at such
resorts.  The Company's current portfolio of resorts consists of nine resorts in
Arizona,  one in Indiana, one in Colorado,  one in San Carlos,  Mexico, and land
adjacent to an existing  resort for which the Company holds  development  rights
(the Roundhouse Resort) (collectively, the "ILX Resorts"). Two of the resorts in
Arizona  are not at this time  registered  with the Arizona  Department  of Real
Estate nor are being marketed for sale as Vacation Ownership Interests,  and one
of the two resorts is operated under a long-term lease arrangement.  The Company
also owns 723 Vacation Ownership Interests in a resort in Las Vegas, Nevada, 600
of which have been annexed into Premiere Vacation Club.

     The  Company  recognizes  revenue  from  the  sale  of  Vacation  Ownership
Interests  at such  time as a  minimum  of 10% of the  purchase  price  has been
received in cash,  the  statutory  rescission  period has expired,  the buyer is
committed  to  continued  payments  of the  remaining  purchase  price  and  the
Company's  future  obligations  for the Vacation  Ownership  Interests have been
released.  Resort operating revenues are recorded as the rooms are rented or the
services are performed.

     Costs associated with the acquisition and development of Vacation Ownership
Interests,  including carrying costs such as interest and taxes, are capitalized
and amortized to cost of sales as the respective revenue is recognized.

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

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                              Three Months Ended         Nine Months Ended
                                                                                 September 30,             September 30,
                                                                             ----------------------    ----------------------
                                                                                2000        2001         2000          2001
                                                                             ---------    ---------    ---------    ---------
<S>                                                                               <C>          <C>          <C>          <C>
As a percentage of total timeshare revenues:
  Sales of Vacation Ownership Interests                                           61.5%        60.2%        60.5%        59.7%
  Resort operating revenue                                                        31.4%        34.4%        31.7%        35.2%
  Interest income                                                                  7.1%         5.4%         7.8%         5.1%
                                                                             ---------    ---------    ---------    ---------
  Total timeshare revenues                                                       100.0%       100.0%       100.0%       100.0%
                                                                             =========    =========    =========    =========
As a percentage of sales of Vacation Ownership Interests:
  Cost of Vacation Ownership Interests sold                                       14.5%        17.0%        14.0%        17.0%
  Sales and marketing                                                             55.2%        52.5%        56.2%        56.3%
  Provision for doubtful accounts                                                  4.4%         4.4%         4.2%         4.4%
  Contribution margin percentage from sale of Vacation Ownership
      Interests (1)                                                               25.8%        26.1%        25.6%        22.3%

As a percentage of resort operating revenue:
  Cost of resort operations                                                       96.5%        90.5%        93.8%        84.7%

As a percentage of total timeshare revenues:
  General and administrative                                                      10.4%        10.4%        10.5%         9.5%
  Depreciation and amortization                                                    1.5%         2.0%         1.4%         1.5%
  Timeshare operating income                                                      12.1%        12.0%        13.4%        12.8%

Selected operating data:
  Vacation Ownership Interests sold (2) (3)                                        423          448        1,223        1,360
  Average sales price per Vacation  Ownership Interest sold (excluding
    revenues from Upgrades) (2)                                              $  13,993    $  14,258    $  13,924    $  14,221
  Average sales price per Vacation  Ownership Interest sold (including
    revenues from Upgrades) (2)                                              $  15,748    $  16,249    $  15,427    $  15,821
</TABLE>

----------
(1)  Defined as: the sum of Vacation  Ownership  Interest sales less the cost of
     Vacation Ownership  Interests sold less sales and marketing expenses less a
     provision  for doubtful  accounts,  divided by sales of Vacation  Ownership
     Interests.
(2)  Reflects all Vacation Ownership Interests on an annual basis.
(3)  Consists  of an  aggregate  of 656 and 690  biennial  and  annual  Vacation
     Ownership Interests for the three months ended September 30, 2000 and 2001,
     respectively,  and 1,920 and 2,101 biennial and annual  vacation  ownership
     interests  for the nine months ended  September  30, 2000 and September 30,
     2001, respectively.

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

COMPARISON  OF THE THREE AND NINE MONTHS ENDED  SEPTEMBER  30, 2000 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2001

     Sales of  Vacation  Ownership  Interests  increased  11.3% or  $752,217  to
$7,405,043 for the three months ended  September 30, 2001,  from  $6,652,826 for
the same period in 2000 and increased 13.8% or $2,657,689 to $21,904,075 for the
nine months ended  September  30, 2001 from  $19,246,386  for the same period in
2000. The increases  reflect primarily higher sales from the Sedona sales office
and greater Upgrade revenue, net of decreases in sales from the Kohl's Ranch and
VCA-Tucson sales offices.  The increase in sales from the Sedona sales office is
due to greater tour flow from the marketing venues in Sedona,  including the new
locations  added in the first  quarter of 2001.  The  decrease in sales from the
Kohl's  Ranch sales  office  reflects a reduction in the number of tours to this
office.  The reduced tour flow reflects  unfavorable  weather  conditions in the
first  quarter of 2001 and a reduction in the number of non-owner  guests at the
resort for private  functions,  due to the  construction  of new cabins in space
previously  utilized  for this  purpose.  Non-owner  visitors  to the resort are
offered the  opportunity  to attend a sales  presentation  either  during  their
visit,  or at a later  date.  The  decrease in sales from the  VCA-Tucson  sales
office is primarily a result of lower tour flow.  The  reduction in tour flow is
consistent  with the Company's  expectations  as its tenure in the Tucson market
lengthens and, accordingly, an increasing portion of the qualified population in
Tucson has  previously  toured and/or  purchased.  In January 2000,  the Company
opened an off-site  sales office in Phoenix.  While  off-site  sales  operations
typically operate at lower closing rates than on-site sales offices at which the
touring  guest takes part in the resort  experience,  an off-site  sales  office
located  proximate  to a customer  base can provide more  convenient  access and
therefore a broader  audience as well as a lower per tour cost. The cost and the
effectiveness of tour generation to the Phoenix office did not justify the lower
efficiencies  of this off-site sales office and the Company closed the office on
May 31,  2001.  This  office  generated  37  annualized  sales (11 annual and 52
biennial) during the first five months of 2001.

     The average sales price per Vacation  Ownership  Interest  sold  (excluding
revenues from Upgrades)  increased 1.9% or $265 in 2001 to $14,258 for the three
months  ended  September  30, 2001 from  $13,993 for the same period in 2000 and
increased  2.1% or $297 to $14,221 for the nine months ended  September 30, 2001
from  $13,924  for the same  period in 2000.  The number of  Vacation  Ownership
Interests sold  increased 5.9% from 423 in the three months ended  September 30,
2000 to 448 for the same  period in 2001 and  increased  11.2% from 1,223 in the
nine months ended September 30, 2000 to 1,360 for the same period in 2001 due to
greater tour flow at the Sedona sales office, net of reduced sales in the Kohl's
Ranch and  VCA--Tucson  sales  offices as  described  above.  The three and nine
months  ended  September  30,  2001  included  485 and 1,483  biennial  Vacation
Ownership  Interests  (counted  as 242.5 and  741.5  annual  Vacation  Ownership
Interests)  compared  to 466 and 1,394  biennial  Vacation  Ownership  Interests
(counted as 233 and 697 annual Vacation Ownership Interests) in the same periods
in 2000, respectively.

     Upgrade revenue,  included in Vacation Ownership Interest sales,  increased
20.0% to $890,790 for the three months ended  September  30, 2001 from  $742,048
for the same  period  in 2000 and  increased  18.3% to  $2,175,905  for the nine
months ended  September  30, 2001 from  $1,838,546  for the same period in 2000.
Upgrades  generally  do not involve the sale of  additional  Vacation  Ownership
Interests  (merely their exchange) and,  therefore,  such Upgrades  increase the
average  sales price per Vacation  Ownership  Interest  sold.  The average sales
price per Vacation Ownership Interest sold (including  Upgrades)  increased 3.2%
or $501 to $16,249 for the three months ended September 30, 2001 from $15,748 in
2000 and increased  2.6% or $394 to $15,821 for the nine months ended  September
30, 2001 from  $15,427 for the same period in 2000.  The  percentage  changes in
average sales price per Vacation  Ownership  Interest sold (including  Upgrades)
between  periods  reflect  the  combination  of  increased  average  sales price
(excluding  Upgrades),  the increase in Upgrade  revenue,  spread over increased
sales revenue in the current year.

     Resort  operating  revenue  increased  24.5%  and  28.0%  or  $833,871  and
$2,825,349 to  $4,236,122  and  $12,910,680  for the three and nine months ended
September  30, 2001,  respectively,  reflecting an increase in both revenue from
vacation  interval owners and hotel room rentals.  Hotel room rentals  increased
due to the  acquisition  of the  Bell  Rock Inn and Los  Abrigados  Lodge in the
fourth  quarter of 2000 as well as the  addition  of twelve new cabins at Kohl's
Ranch  Lodge.  Cost of resort  operations  as a percentage  of resort  operating
revenue  decreased  from  96.5% to 90.5%  and from  93.8% to 84.7% for the third
quarter and nine months ended September 30, 2001,  respectively,  as a result of
increased revenue,  including an increase in rates from vacation interval owners

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

in 2001, and timing differences in recognizing revenue,  increased occupancy and
improved  operating  efficiencies at Kohl's Ranch Lodge,  and lower overhead and
the ability to offer more limited  services and amenities at the newly  acquired
Sedona resorts made possible in part by cross utilizing the Los Abrigados Resort
and Spa amenities.

     Interest  income  decreased  13.8% to $658,261  for the three  months ended
September 30, 2001 from $764,072 for the same period in 2000 and decreased 24.1%
to $1,900,860 for the nine months ended  September 30, 2001 from  $2,505,880 for
the same period in 2000,  reflecting  an increase in the  percentage of Customer
Notes  retained by the Company,  on which the Company will collect  revenue over
the term of the note,  and a decrease in the  percentage of Customer Notes sold,
for which the Company recognizes the interest premium upon sale of the note.

     Cost of  Vacation  Ownership  Interests  sold as a  percentage  of Vacation
Ownership  Interest sales  increased from 14.5% and 14.0% for the three and nine
months  ended  September  30, 2000 to 17.0% for the three and nine months  ended
September 30, 2001, reflecting variations in product mix, an increase in cost of
sales recognized on Upgrades, and improvements made to resort properties.

     Sales  and  marketing  as a  percentage  of  sales  of  Vacation  Ownership
Interests  decreased to 52.5% for the three months ended September 30, 2001 from
55.2%  for the same  period  in 2000 and were  comparable  at 56.3% for the nine
months  ended  September  30,  2001 and 56.2% for the same  period in 2000.  The
decrease for the third quarter of 2001 largely reflects  increased  efficiencies
in telemarketing operations.

     The provision for doubtful  accounts as a percentage of Vacation  Ownership
Interest sales was consistent at 4.4% of sales of Vacation  Ownership  Interests
in the three month periods ended September 30, 2000 and 2001, respectively.  The
provision for doubtful  accounts  increased  from 4.2% for the nine months ended
September 30, 2000 to 4.4% for the same period in 2001, reflecting the Company's
decision to increase the provision on new sales  effective in the second quarter
of 2000.

     General and  administrative  expenses were 10.4% of total timeshare revenue
for the three month periods ended September 30, 2001 and 2000,  respectively and
decreased to 9.5% of total timeshare revenue for the nine months ended September
30,  2001,  from 10.5% for the same  period in 2000,  reflecting  the  Company's
continued focus on cost control and efficiency.

     The 8.3% and 3.0% decreases in interest  expense to $615,492 and $1,997,721
for the three and nine  months  ended  September  30,  2001  from  $671,366  and
$2,059,729  for the same periods in 2000,  respectively,  reflect an increase in
borrowings against Customer Notes receivable, net of interest rate reductions on
the Company's  variable rate notes.  During the first half of 2001,  the Company
retained  and  borrowed  against,  rather  than sold,  a greater  portion of its
Customer Notes.  The Company's  borrowings  against  Customer Notes are at rates
which vary with prime,  and  therefore  the Company  benefited by interest  rate
reductions between years on Customer Notes  hypothecated in prior periods.  2001
interest  expense includes  interest on the assumption of the existing  mortgage
($4,473,000)  to  acquire  Bell  Rock  Inn in  December  2000  and the  $808,000
borrowing in March 2001 to finance the purchase of the Sedona Station,  the site
of the new Sedona  Sales  Center.  Interest  on the  acquisition  of the 44-acre
parcel in Las Vegas will be capitalized.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES OF CASH

     The Company  generates cash  primarily from the sale of Vacation  Ownership
Interests (including  Upgrades),  from the financing of Customer Notes from such
sales and from resort  operations.  During the nine months ended  September  30,
2000 and 2001,  cash  provided by  operations  was  $5,775,456  and  $5,250,398,
respectively.  The decrease in cash provided by operations reflects the combined
effect  of an  increase  in  resort  property  held  for  sale in  2001  for the
acquisition  of 662 Vacation  Ownership  Interests in the Carriage  House in Las
Vegas,  and  completion  of the twelve new  cabins and the  renovation  of three
additional  units at Kohl's Ranch Lodge; a decrease in other assets in 2000 as a
result of advances made to the Sedona Vacation Club Homeowners'  Association for

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

renovations  in 1999 which were  reimbursed  in the first  quarter of 2000;  and
timing  differences  in payments of accrued and other  liabilities.  Because the
Company uses  significant  amounts of cash in the  development  and marketing of
Vacation  Ownership  Interests,  but  collects  the cash on the  Customer  Notes
receivable  over a  long  period  of  time,  borrowing  against  and/or  selling
receivables is a necessary part of its normal operations.

     For regular federal income tax purposes,  the Company reports substantially
all of its non-factored  financed  Vacation  Ownership  Interest sales under the
installment method.  Under the installment method, the Company recognizes income
on sales of  Vacation  Ownership  Interests  only when cash is  received  by the
Company  in the  form of a down  payment,  as an  installment  payment,  or from
proceeds  from the  sale of the  Customer  Note.  The  deferral  of  income  tax
liability conserves cash resources on a current basis.  Interest may be imposed,
however,  on the amount of tax attributable to the installment  payments for the
period  beginning  on the date of sale and ending on the date the related tax is
paid.  If the Company is otherwise  not subject to tax in a particular  year, no
interest  is imposed  since the  interest  is based on the amount of tax paid in
that year.  The condensed  consolidated  financial  statements do not contain an
accrual  for any  interest  expense  that  would be paid on the  deferred  taxes
related to the installment method, as the interest expense is not estimable.

     At December 31, 2000, the Company,  excluding its Genesis  subsidiary,  had
NOL  carryforwards of approximately  $7.5 million,  which expire in 2010 through
2020.  At  December  31,  2000,   Genesis  had  federal  NOL   carryforwards  of
approximately  $1.4  million,  which are limited as to usage  because they arise
from built in losses of an acquired company.  In addition,  such losses can only
be  utilized  through  the  earnings  of Genesis and are limited to a maximum of
$189,000 per year. To the extent the entire  $189,000 is not utilized in a given
year, the difference may be carried forward to future years.  Any unused Genesis
NOLs will expire in 2008.

     In addition,  Section 382 of the Internal  Revenue Code imposes  additional
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 changes may result from new Common
Stock issuances by the Company or changes  occurring as a result of filings with
the  Securities  and Exchange  Commission of Schedules 13D and 13G by holders of
more  than  5% of  the  Common  Stock,  whether  involving  the  acquisition  or
disposition of Common Stock. If such a subsequent change occurs, the limitations
of Section 382 would apply and may limit or deny the future  utilization  of the
NOL by the  Company,  which  could  result  in the  Company  paying  substantial
additional federal and state taxes.

USES OF CASH

     Investing activities typically reflect a net use of cash because of capital
additions  and loans to  customers in  connection  with the  Company's  Vacation
Ownership  Interest  sales.  Net cash used in investing  activities  in the nine
months  ended  September  30,  2000  and  2001 was  $3,814,858  and  $4,757,700,
respectively.  The increase  reflects a larger  portion of Customer  Notes being
retained and borrowed  against,  rather than sold in addition to the purchase of
new computer equipment and the assumption of capital leases from the prior owner
of the leasehold interest in Las Vegas, Nevada.

     The Company  requires  funds to finance the  acquisitions  of property  for
future resort  development and to further develop the existing resorts,  as well
as to make capital improvements and support current operations.

     Customer  defaults  have a  significant  impact  on cash  available  to the
Company from financing  Customer  Notes  receivable in that notes which are more
than 60 to 90 days past due are not  eligible as  collateral.  As a result,  the
Company in effect  must  repay  borrowings  against  such notes or buy back such
notes if they were sold with recourse.

     On April 9, 1999  (effective  January 1, 1999),  the Company formed the ILX
Resorts  Incorporated  Employee Stock Ownership Plan and Trust (the "ESOP"). The
intent of the ESOP is to provide a retirement  program for employees that aligns
their  interests  with  those  of the  Company.  During  the nine  months  ended
September 30, 2001, the Company  issued 20,000 shares of its  restricted  common
stock to the ESOP, valued at $41,905.  In July 2001, the Company made a total of
$250,000 in cash contributions to the ESOP for the repayment in full by the ESOP
of the outstanding  principal  balance on its line of credit,  which the Company

                                       12
<PAGE>
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

guaranteed. The ESOP line of credit had been used to purchase shares, which were
collateral  for the line.  During the nine months ended  September 30, 2001, the
Company paid, and recognized as an expense  contribution of $13,979 for interest
on the line.

     The ESOP may  purchase  additional  shares  for future  year  contributions
through  loans made  directly to the ESOP and  guaranteed  by the Company.  Such
borrowings are not expected to exceed $1,000,000.

CREDIT FACILITIES AND CAPITAL

     At  September  30,  2001,  the  Company has an  agreement  with a financial
institution  for a commitment  of $40 million,  under which the Company may sell
certain of its Customer  Notes.  The agreement  provides for sales on a recourse
basis  with  a  percentage  of the  amount  sold  held  back  by  the  financial
institution as additional collateral. Customer Notes may be sold at discounts or
premiums to the principal  amount in order to yield the consumer market rate, as
defined by the  financial  institution.  If a customer  pays off a note prior to
maturity of the note, the financial institution may recover from the Company the
unearned interest premium,  if any. At September 30, 2001, $22.3 million of such
commitment was ostensibly available to the Company although the Company has been
informed that this financial  institution is ceasing the portion of its business
activities  that includes the financing of Customer  Notes.  The Company has not
yet fully  assessed how it will be affected by this or other changes  related to
such financial institution.

     The  Company  also has  financing  commitments  aggregating  $43.5  million
whereby the Company may borrow against notes  receivable  pledged as collateral.
These  borrowings  bear  interest at a rate of prime plus 1.5% ($40  million) to
prime plus 3% ($3.5  million).  The $3.5  million  and $40  million  commitments
expire in 2001 and 2002,  respectively.  At September  30,  2001,  approximately
$25.3 million is available under these commitments.

     At September 30, 2000 and 2001, the Company had approximately $18.6 million
and $12.4 million,  respectively,  in  outstanding  notes  receivable  sold on a
recourse basis.  Portions of the notes  receivable are secured by deeds of trust
on Los Abrigados Resort & Spa, VCA-South Bend and VCA-Tucson.

     In the first nine months of 2001, the Company  purchased  484,700  treasury
shares for a cost of $2,021,593.

     In December  2000,  the Company  acquired  for  $1,010,000  cash the Sedona
Station adjacent to Los Abrigados to be the site of its new Sedona sales center.
In March 2001, the Company borrowed  $808,000,  which is secured by the property
and bears  interest  at a fixed  rate of  8.625%.  The debt is  payable in equal
monthly  payments of principal and interest over a ten-year  term,  ending April
2011.

     In June 2001, the Company acquired 600 Vacation Ownership  Interests in the
Carriage  House in Las Vegas,  Nevada  for  $900,000  in cash.  In July 2001 and
October  2001,  the Company  acquired for cash an  additional 62 and 61 Vacation
Ownership Interests in The Carriage House for $95,500 and $57,875, respectively.

     In January 2001, the Company  refinanced the  construction  note payable on
VCA-Tucson.  The new terms include  extension of the maturity date to June 2004,
modification  of the interest rate to prime plus 1% from a 12% fixed rate, and a
change in the  principal  payments and release  provisions to include a $100,000
minimum monthly  principal  payment.  In August 2001, the terms of the note were
further  modified to include the addition of  $1,000,000  in  borrowings  and to
increase  the minimum  monthly  principal  payment to $134,000.  The  additional
$1,000,000 was advanced in August 2001.

     In July 2001,  the  Company  acquired  a 50-year  leasehold  interest  in a
44-acre parcel located proximate to the Las Vegas Airport,  University of Nevada
- Las Vegas ("UNLV") and the "Strip" in Las Vegas,  Nevada.  The Company intends
to  develop  the  property,  to be  known as  Premiere  Park,  into a mixed  use
development,  including a vacation ownership sales office, museums, restaurants,
golf,  retail and other ancillary uses. The parcel  presently  includes a 25,000
square foot building which will contain a vacation  ownership sales office to be

                                       13
<PAGE>
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

operated by the Company, provide club facilities for the UNLV golf team, and the
remainder  has been leased for a  golf-related  use. In addition to the existing
building,  the Company intends to lease the remaining  developable  space on the
44-acre site, to be built by tenants to specifications  approved by the Company.
The $5 million purchase price for the leasehold  interest consists of a $100,000
earnest money deposit made in August,  2000 and a $4.9 million  promissory note.
Interest  begins  accruing on the note on February 1, 2002,  with  interest only
payable monthly through September 1, 2006. The interest rate is 6% from February
1, 2002 through August 31, 2003, 7% for the next twelve months,  8% for the next
24 months and twelve percent  thereafter until the August 1, 2011 maturity date.
Commencing September 1, 2006, monthly principal and interest payments of $53,953
are payable  monthly  through  maturity.  The  purchase  price of the  leasehold
interest is included in other assets on the balance sheet.

     In the future,  the Company may  negotiate  additional  credit  facilities,
issue corporate debt, issue equity securities,  or any combination of the above.
Any debt incurred or issued by the Company may be secured or unsecured, may bear
interest  at fixed or  variable  rates of  interest,  and may be subject to such
terms as  management  deems  prudent.  While the Company  believes it  maintains
excellent relationships with its lenders and will seek renewal or replacement of
existing lines upon their maturity,  there is no assurance that the Company will
be able to secure  additional  corporate  debt or  equity  at or beyond  current
levels or that the Company will be able to maintain  its current  level of debt.
The Company has been  negotiating  with  additional  lenders to  supplement  its
existing credit facilities.

     The Company  believes  available  borrowing  capacity,  together  with cash
generated from operations,  will be sufficient to meet the Company's  liquidity,
operating and capital requirements for at least the next twelve months.

SEASONALITY

     The  Company's  revenues  are  moderately  seasonal  with the volume of ILX
owners,  hotel  guests and Vacation  Ownership  Interest  exchange  participants
typically  greatest  in the second and third  fiscal  quarters.  As the  Company
expands into new markets and geographic locations it may experience increased or
additional  seasonality dynamics which may cause the Company's operating results
to fluctuate.

INFLATION

     Inflation  and  changing  prices  have  not had a  material  impact  on the
Company's revenues,  operating income and net income during any of the Company's
three most recent  fiscal  years or the nine months  ended  September  30, 2001.
However,  to the extent  inflationary trends affect short-term interest rates, a
portion of the Company's debt service costs may be affected as well as the rates
the Company charges on its Customer Notes.

                                       14
<PAGE>
                                     PART II

ITEM I. LEGAL PROCEEDINGS

     Litigation has arisen in the normal course of the Company's business,  none
of which is deemed to be material.

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
          -----------                   -----------
            10.1                PURCHASE AND SALE AGREEMENT between ILX Resorts
                                Incorporated and John L. Fox, M.D., dated
                                October 23, 2000

            10.2                SECURED PROMISSORY NOTE ($4,900,000) by VCA
                                Nevada Incorporated to Las Vegas Golf Center,
                                L.L.C., dated July 31, 2001

            10.3                FIRST MODIFICATION AGREEMENT dated September
                                13, 2001 between ILX Resorts Incorporated and
                                The Steele Foundation, Inc.

     (ii) Reports on Form 8-K

          None

                                       15
<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.



                                        ILX RESORTS INCORPORATED
                                        (Registrant)




                                        /s/ Joseph P. Martori
                                        ----------------------------------------
                                        Joseph P. Martori
                                        Chief Executive Officer




                                        /s/ Nancy J. Stone
                                        ----------------------------------------
                                        Nancy J. Stone
                                        President



                                        /s/ Margaret M. Eardley
                                        ----------------------------------------
                                        Margaret M. Eardley
                                        Executive Vice President & Chief
                                        Financial Officer





                                        /s/ Taryn L. Chmielewski
                                        ----------------------------------------
                                        Taryn L. Chmielewski
                                        Vice President
                                        Corporate Controller


Date: As of __________, 2001

                                       16