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 March 31, 1999            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 March 31, 1999
-------------------------------                    -----------------------------
Common Stock, without par value                           4,005,893 shares
<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                                December 31,         March 31,
                                                   1998                1999
                                                ------------       ------------
                                                                    (Unaudited)
ASSETS
Cash and cash equivalents                       $  3,196,710       $  4,063,682
Notes receivable, net                             19,559,396         20,845,172
Resort property held for Vacation
 Ownership Interest sales                         20,834,225         20,121,678
Resort property under development                    485,933            625,622
Land held for sale                                 1,593,885          1,602,492
Deferred assets                                      262,877            266,723
Property and equipment, net                        4,006,991          4,391,742
Deferred income taxes                                268,771            264,771
Other assets                                       1,788,470          2,306,293
                                                ------------       ------------

      TOTAL ASSETS                              $ 51,997,258       $ 54,488,175
                                                ============       ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
  Accounts payable                              $  1,186,088       $    937,379
  Accrued and other liabilities                    2,048,599          2,234,907
  Notes payable                                   22,107,444         24,653,972
  Notes payable to affiliates                        894,078            894,078
                                                ------------       ------------

      Total liabilities                           26,236,209         28,720,336
                                                ------------       ------------

MINORITY INTERESTS                                    (3,271)             3,519
                                                ------------       ------------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Preferred stock, $10 par value; 10,000,000
    shares authorized; 380,468 shares issued
    and outstanding; liquidation preference
    of $3,804,680                                  1,384,891          1,384,891

  Common stock, no par value; 30,000,000
    shares authorized; 4,332,533 and
    4,378,033 shares issued                       19,818,183         19,867,281

  Treasury stock, at cost, 339,640 and
    372,140 shares                                (1,273,843)        (1,327,818)

  Additional paid in capital                         279,450            279,450

  Retained earnings                                5,555,639          5,560,516
                                                ------------       ------------
      Total shareholders' equity                  25,764,320         25,764,320
                                                ------------       ------------
        TOTAL LIABILITIES AND SHAREHOLDERS'
          EQUITY                                $ 51,997,258       $ 54,488,175
                                                ============       ============

                 See notes to consolidated financial statements

                                       2
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                   Three months ended March 31,
                                                   ----------------------------
                                                      1998               1999
                                                   ----------         ----------
Timeshare revenues:
  Sales of Vacation Ownership Interests            $5,560,823         $5,151,509
  Resort operating revenue                          2,518,333          2,863,003
  Interest income                                     448,007            764,133
                                                   ----------         ----------

      Total timeshare revenues                      8,527,163          8,778,645
                                                   ----------         ----------
Cost of sales and operating expenses:
  Cost of Vacation Ownership Interests sold           791,442            693,474
  Cost of resort operations                         2,615,140          2,813,041
  Sales and marketing                               3,331,270          3,408,966
  General and administrative                          660,372            930,560
  Provision for doubtful accounts                     162,269            150,846
  Depreciation and amortization                        86,618            112,702
                                                   ----------         ----------

      Total cost of sales and operating expenses    7,647,111          8,109,589
                                                   ----------         ----------

Timeshare operating income                            880,052            669,056

Income from land and other, net                        14,288             18,892
                                                   ----------         ----------

Total operating income                                894,340            687,948

Interest expense                                      505,515            672,281
                                                   ----------         ----------

Income before income taxes and minority interests     388,825             15,667

Income tax expense                                    156,000              4,000
                                                   ----------         ----------

Income before minority interests                      232,825             11,667

Minority interests                                         --              6,790
                                                   ----------         ----------

Net income                                            232,825              4,877
                                                   ==========         ==========
Net income per share

  Basic                                            $     0.08         $     0.00
                                                   ==========         ==========

  Diluted                                          $     0.08         $     0.00
                                                   ==========         ==========

                 See notes to consolidated financial statements

                                       3
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                            Three months ended March 31,
                                                            ----------------------------
                                                               1998              1999
                                                            -----------      -----------
<S>                                                         <C>              <C>
Cash flows from operating activities:
  Net income                                                $   232,825      $     4,877
  Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
   Undistributed minority interest                                   --            6,790
   Deferred income taxes                                        156,000            4,000
   Provision for doubtful accounts                              162,269          150,846
   Depreciation and amortization                                 86,618          112,702
   Amortization of guarantee fees                                24,000            2,900
   Change in assets and liabilities:
     Decrease in resort property held for Vacation
      Ownership Interest sales                                  396,959          712,547
     Increase in resort property under development           (1,443,791)        (139,689)
     (Increase) decrease in land held for sale                      500           (8,607)
     Increase in other assets                                  (450,359)        (517,823)
     Decrease in accounts payable                            (1,060,344)        (248,709)
     Increase (decrease) in accrued and other liabilities       (30,474)         235,406
                                                            -----------      -----------

Net cash provided by (used in) operating activities          (1,925,797)         315,240
                                                            -----------      -----------
Cash flows from investing activities:
    Notes receivable, net                                      (546,560)      (1,436,622)
    Decrease (increase) in deferred assets                        2,680           (6,746)
    Purchases of plant and equipment, net                      (232,435)        (497,453)
                                                            -----------      -----------

Net cash used in investing activities                          (776,315)      (1,940,821)
                                                            -----------      -----------
Cash flows from financing activities:
    Proceeds from notes payable                               3,053,079        7,352,450
    Principal payments on notes payable                      (1,594,712)      (4,805,922)
    Principal payments on notes payable to affiliates           (18,638)              --
    Acquisition of treasury stock                                    --          (53,975)
                                                            -----------      -----------

Net cash provided by financing activities                     1,439,729        2,492,553
                                                            -----------      -----------

Increase (decrease) in cash and cash equivalents             (1,262,383)         866,972

Cash and cash equivalents at beginning of period              3,226,038        3,196,710
                                                            -----------      -----------

Cash and cash equivalents at end of period                  $ 1,963,655      $ 4,063,682
                                                            ===========      ===========
</TABLE>
                 See notes to consolidated financial statements

                                       4
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BUSINESS ACTIVITIES

         The  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 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 three-month  period ended March 31, 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  Company's  significant  business  activities  include  developing,
operating,  marketing and financing  ownership  interests  ("Vacation  Ownership
Interests") in resort properties located in Arizona, Colorado,  Florida, Indiana
and Mexico.  The Company's  operations  also include  marketing of skin and hair
care products, which are not considered significant to resort operations.

REVERSE STOCK SPLIT

         On January 9, 1998, the Company's shareholders approved an amendment to
the Company's  Articles of Incorporation to effect a one-for-five  reverse stock
split of the  Company's  issued  and  outstanding  shares of common  stock.  The
reverse  stock  split  has  been  retroactively  reflected  in the  accompanying
financial statements.

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.

CONSOLIDATED STATEMENTS OF CASH FLOWS

         Cash equivalents are liquid  investments  with an original  maturity of
three months or less. The following  summarizes interest paid, income taxes paid
and capitalized interest.

                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                     1998              1999
                                                     ----              ----
         Interest paid                             $413,000          $629,000
         Income taxes paid                               --                --
         Capitalized interest                       129,000                --

                                       5
<PAGE>
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 three months ended March 31, 1998 or March 31, 1999.

         In June 1997, the Financial  Accounting Standards Board issued SFAS No.
131, "Disclosure about Segments of an Enterprise and Related Information" ("SFAS
131"), which is effective for fiscal years beginning after December 15, 1997 and
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports issued to shareholders.  It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers.  The Company has a single segment in the timeshare  resort  industry.
Revenue from products and services are reflected on the income  statement  under
Sales of Vacation Ownership Interests and Resort Operating Revenue.

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133"), which is effective for the Company in 2000. SFAS No. 133 requires that an
entity  recognize all derivatives as either assets or liabilities in the balance
sheet and measure those  instruments  at fair value.  The standard also provides
specific   guidance  for  accounting  for  derivatives   designated  as  hedging
instruments.  The Company is currently evaluating what impact this standard will
have on its financial statements.

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:

                           BASIC NET INCOME PER SHARE

                                                  Three Months Ended March 31,
                                                -------------------------------
                                                   1998                 1999
                                                -----------         -----------
Net income                                      $   232,825         $     4,877
Less: Series A preferred stock dividends            (12,000)            (11,969)
Series C convertible preferred stock
 cumulation share dividends                          (8,323)                 --
                                                -----------         -----------
Net income available to common
 stockholders - basic                           $   212,502         $    (7,092)
                                                ===========         ===========
Weighted average shares of common stock
 outstanding - basic                              2,605,086           4,028,421
                                                ===========         ===========
Basic net income per share                      $      0.08         $      0.00
                                                ===========         ===========

                                       6
<PAGE>
                          DILUTED NET INCOME PER SHARE

                                                  Three Months Ended March 31,
                                                -------------------------------
                                                   1998                 1999
                                                -----------         -----------

Net income                                      $   232,825         $     4,877
Less: Series A preferred stock dividends            (12,000)            (11,969)
                                                -----------         -----------

Net income available to common
 stockholders - diluted                         $   220,825         $    (7,092)
                                                ===========         ===========

Weighted average shares of common
 stock outstanding                                2,608,086           4,028,421
Add: Convertible preferred stock
 (Series B and C) dilutive effect                   110,541             110,541
                                                -----------         -----------

Weighted average shares of common stock
 outstanding - diluted                            2,718,627           4,138,962
                                                ===========         ===========

Diluted net income per share                    $      0.08         $      0.00
                                                ===========         ===========

         Stock  options to  purchase  163,200  shares of common  stock at prices
ranging from $3.25 per share to $8.125 per share were  outstanding  at March 31,
1999 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 1999 and 2004.

NOTE 3. SHAREHOLDERS' EQUITY

         During the first quarter of 1999,  the Company  issued 45,500 shares of
restricted  common  stock,  valued at $49,098,  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.
Also during the first quarter of 1999,  the Company  purchased  32,500 shares of
its common stock for $53,975.

                                       7
<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-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  was  formed in 1986 to enter  the  Vacation
Ownership  Interest  business.  The Company generates revenue primarily from the
sale and financing of Vacation Ownership  Interests.  The Company also generates
revenue  from the rental of its unused or unsold  inventory  of units at the ILX
Resorts and from the sale of food,  beverages or other services at such resorts.
The Company  currently  owns five resorts in Arizona,  one in Indiana and one in
Colorado.

         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:

                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                    1998                 1999
                                                   -------             -------
As a percentage of total timeshare revenues:
  Sales of Vacation Ownership Interests               65.2%               58.7%
  Resort operating revenue                            29.5%               32.6%
  Interest income                                      5.3%                8.7%
                                                   -------             -------
  Total timeshare revenues                           100.0%              100.0%
                                                   =======             =======
As a percentage of sales of Vacation Ownership
 Interests:
  Cost of Vacation Ownership Interests sold           14.2%               13.5%
  Sales and marketing                                 59.9%               66.2%
  Provision for doubtful accounts                      2.9%                2.9%
  Contribution margin percentage from sale of
    Vacation Ownership Interests (1)                  23.0%               17.4%

As a percentage of resort operating revenue:
  Cost of resort operations                          103.8%               98.3%

As a percentage of total timeshare revenues:
  General and administrative                           7.7%               10.6%
  Depreciation and amortization                        1.0%                1.3%
  Timeshare operating income                          10.3%                7.6%

Selected operating data:
  Vacation Ownership Interests sold (2) (3)            376                 332
  Average sales price per Vacation Ownership
    Interest sold (excluding revenues from
    Upgrades) (2)                                  $12,874             $13,563
  Average sales price per Vacation Ownership
    Interest sold (including revenues from
    Upgrades) (2)                                  $14,789             $15,517

(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 572 and 503  biennial  and  annual  Vacation
     Ownership  Interests  for the three  months  ended March 31, 1998 and 1999,
     respectively.

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 TO THE THREE MONTHS ENDED
MARCH 31, 1999

         Sales of Vacation  Ownership  Interests  decreased  7.4% or $409,314 in
1999 to $5,151,509 from $5,560,823 in 1998 primarily as a result of a lower tour
flow at the South Bend sales office and a lower closing rate (number of sales as
a percentage of number of tours) at the Sedona sales  office.  The average sales
price per Vacation  Ownership  Interest sold (excluding  revenues from Upgrades)
increased  5.4% or $689 in 1999 to $13,563 from $12,874 in 1998  reflecting  the
higher per unit sales prices  achieved for sales of ILX Premiere  Vacation  Club
Vacation Ownership Interests, which were first introduced in June 1998.

         The number of Vacation  Ownership  Interests sold decreased  11.7% from
376 in 1998 to 332 in 1999  largely  due to lower  tour flow to the  South  Bend
sales  office and a lower  closing  rate at the Sedona  sales  office.  Sales of
Vacation  Ownership  Interests in 1999 included 342 biennial Vacation  Ownership
Interests (counted as 171 annual Vacation Ownership  Interests)  compared to 392

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

biennial Vacation Ownership  Interests (counted as 196 annual Vacation Ownership
Interests) in 1998.

         Upgrade  revenue,   included  in  Vacation  Ownership  Interest  sales,
decreased  9.9% from $720,013 in 1998 to $648,442 in 1999 because of a change in
trade-in  mix.  1998  Upgrades  include a greater  number of trade-ins of Golden
Eagle  Vacation  Ownership  Interests,  which have a higher  trade-in value than
Vacation  Ownership  Interests in other  properties.  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 from $14,789 in 1998 to $15,517 in
1999 due to the 1999  sales mix  including  the  higher  prices of ILX  Premiere
Vacation Club Vacation Ownership Interests.

         Resort  operating  revenues  increased  13.7%  or  $344,670  in 1999 to
$2,863,003  from  $2,518,333 in 1998,  reflecting the opening of VCA - Tucson in
the third quarter of 1998. Cost of resort operations  increased 7.6% or $197,901
in 1999 to $2,813,041 from $2,615,140 in 1998 due to greater  operating costs as
a percentage of revenue of the start-up VCA - Tucson operation.

         The 70.6% increase in interest income from $448,007 in 1998 to $764,133
in 1999 is a result of the increased  Customer Notes retained by the Company and
an increase in interest rates charged by the Company on its Customer Notes.

         Cost of Vacation  Ownership  Interests sold as a percentage of Vacation
Ownership  Interest  sales  decreased from 14.2% in 1998 to 13.5% in 1999 due to
the inclusion in 1999 of sales of ILX Premiere Vacation Club Vacation  Ownership
Interests,  which sell for higher  prices than Vacation  Ownership  Interests in
individual resorts.

         Sales and  marketing  as a  percentage  of sales of Vacation  Ownership
Interests  increased  to 66.2% in 1999 from  59.9% in 1998 due to high  costs of
tour  generation  to the South Bend sales office and lower  closing rates in the
Sedona sales office.

         The  provision  for  doubtful  accounts  as a  percentage  of  Vacation
Ownership Interest sales is comparable between years.

         General and administrative expenses increased 40.9% to $930,560 in 1999
from $660,372 in 1998. General and administrative expenses increased to 10.6% as
a percentage of total  timeshare  revenues in 1999 compared to 7.7% in 1998. The
change reflects that first quarter 1998 general and administrative expenses were
reduced by property tax reductions related to successful appeals of property tax
assessments and that 1999 general and  administrative  expenses include property
taxes, insurance and other expenses related to VCA - Tucson.

         The  33.0%  increase  in  interest  expense  from  $505,515  in 1998 to
$672,281  in 1999  reflects an increase in  borrowings  against  customer  notes
receivable  as the  Company  retains and borrows  against  more of its  consumer
paper,  net of decreases in interest rates and  fluctuations  in the balances of
borrowings outstanding.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES OF CASH

         The  Company  generates  cash  primarily  from  the  sale  of  Vacation
Ownership Interests (including  Upgrades),  the financing of customer notes from
such sales and resort operations.  During 1998 and 1999, cash (used in) provided
by operations was  $(1,925,797)  and $315,240,  respectively.  The negative cash
flow in 1998 was due primarily to an increase of  $1,443,791 in resort  property
under  development,  which was financed  through a  construction  loan and lease
financing.  Because  the  Company  uses  significant  amounts  of  cash  in  the
development and marketing of Vacation Ownership Interests, but collects the cash

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

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 installment  payments
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 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, 1998,  the Company,  excluding its Genesis  subsidiary,
had NOL  carryforwards  of  approximately  $4.3  million,  which  expire in 2001
through 2012.  At December 31, 1998,  Genesis had federal NOL  carryforwards  of
approximately  $1.7  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
three  months  ended  March  31,  1998  and  1999 was  $776,315  and  $1,940,821
respectively.  In 1999, the Company retained and borrowed  against,  rather than
sold, a greater portion of its customer notes.

         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.  The Company
intends to build twelve  additional  cabins at Kohl's Ranch in 1999, for which a
financing commitment equal to the construction cost is in place.

         Customer  defaults have a significant  impact on cash  available to the
Company from financing  customer notes  receivables 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.

CREDIT FACILITIES AND CAPITAL

         The Company has an  agreement  with a financial  institution  for a $40
million  financing  commitment  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.  At March 31, 1999, $39.5 million of the $40 million
in commitment was available to the Company.

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

         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% to prime plus 3% and
expire at various dates from 2001 through 2002. At March 31, 1999, approximately
$34.4 million is available under these commitments.

         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.  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 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 12 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.

YEAR 2000 ISSUES

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

         The Company  believes it has  identified all  significant  applications
that will require  modifications  to ensure Year 2000  Compliance.  Internal and
external  resources are currently  being used to test Year 2000  Compliance  and
make any additional  modifications where required.  The identification of needed
modifications and upgrades of all significant internal applications was complete
at December 31, 1998.

         In addition, the Company is communicating 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.  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.

         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  $60,000 and estimates  additional  future costs of  approximately
$40,000,  consisting primarily of software purchases and associated training and
consulting services. In addition,  certain employees of the Company have devoted
their time to assessing and implementing the Company's Year 2000 Compliance, the
costs of which have not been  separately  allocated by the Company.  These costs
and the date on which the Company  plans to complete the Year 2000  modification
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.

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

         The Company is in the process of developing 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, and expects to have the
plan complete by August 31, 1999. In the event that the Company is vulnerable to
any such Year 2000 Compliance  issue,  the worst case scenario could include any
or all of the following:

1.   Inability to timely collect payments on Customer Notes;
2.   Inability to timely or properly bill customers for resort charges;
3.   Reduction in effectiveness of generating tours to sales offices;
4.   Inability  to purchase  goods  (including  food,  beverages  and  operating
     supplies)  from  existing  sources,  thereby  forcing  the  Company  to use
     alternative vendors at potentially less favorable pricing;
5.   Inability to process payroll and/or perform other  accounting  functions on
     an efficient basis; and
6.   Suspension of some or all operations.

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 three  months  ended  March 31,  1999.
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.

                                       13
<PAGE>
                                     PART II

ITEM I. LEGAL PROCEEDINGS

         A dispute has arisen between the general  contractor,  Summit Builders,
and the Company's wholly owned subsidiary,  VCA Tucson Incorporated with respect
to amounts owing under the  guaranteed  maximum price  contract  relating to the
construction  of  VCA-Tucson.  Jeffrey C. Stone dba Summit  Builders has filed a
demand for  arbitration  with the  American  Arbitration  Association,  claiming
damages of $1,763,085.  The Company is contesting  the claim  vigorously and has
filed a  counterclaim  in the  original  amount of  $2,372,427.  The Company has
obtained  a payment  bond in the amount of  $2,645,227  in  accordance  with the
provisions  of Arizona  law.  In  February  1999,  the  parties  entered  into a
stipulation  agreement under which Summit Builders reduced certain of its claims
totaling  $197,239,  the Company agreed to claims  totaling  $226,854,  of which
$116,714 represents undisputed change orders previously approved by the Company,
and both parties dismissed fraud claims previously sought. In the event that the
arbitration results in any liability to the Company greater than amounts accrued
for the guaranteed  maximum price plus approved  change orders,  such additional
liability will increase the amount recorded as resort property held for sale for
VCA-Tucson  and will be  amortized  to cost of sales  prospectively  as Vacation
Ownership Interests are sold.

         A dispute has arisen between Bowne of Phoenix, Inc. ("Bowne"),  and the
Company  regarding  amounts  owing for printing  related to the  Company's  1998
follow-on public offering.  Bowne and the Company reached agreement on a payment
of $110,000 for such services,  which Bowne subsequently sought to change. Bowne
has filed  suit in the  Superior  Court of  Arizona  seeking  total  payment  of
$154,720 plus interest and attorneys' fees. The Company is vigorously contesting
the claim and believes the matter will be resolved for less than the  settlement
previously  agreed to by Bowne prior to its  institution  of litigation and that
the Company will recover its attorneys' fees and other costs of litigation.

         Other  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
               -----------         -----------
                   27            Financial Data Schedule (filed herewith)

          (ii) Reports on Form 8-K

         As reported on the  Company's  Form 8-K filed with the  Securities  and
Exchange  Commission  on February  16,  1999,  on February 8, 1999,  the Company
engaged Hansen,  Barnett & Maxwell, a professional  corporation ("HB&M"), as its

                                       14
<PAGE>
principal  accountant to audit the Company's  financial  statements for the year
ended December 31, 1998. Prior to its engagement,  the Company had not consulted
HB&M with respect to the  application  of  accounting  principles to a specified
transaction or any matter that was the subject of a disagreement or a reportable
event (as described in Item  301(a)(1)(v)  of Regulation  S-K).  The Company has
authorized  the  predecessor  auditor  to  respond  fully  to  inquiries  of the
successor accountant.

                                       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/ Stephen W. Morgan
                                      --------------------------------
                                          Stephen W. Morgan
                                          Chief Financial Officer

Date: As of May 14, 1999

                                       16