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 June 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
 incorporation or organization)                           Identification Number)


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


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

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

            Class                                   Outstanding at June 30, 2001
            -----                                   ----------------------------
Common Stock, without par value                            3,225,405 shares
<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               December 31,           June 30,
                                                                                   2000                 2001
                                                                               ------------         ------------
                                                                                                    (Unaudited)
<S>                                                                            <C>                  <C>
                                     ASSETS
  Cash and cash equivalents                                                    $  2,518,122         $  2,058,120
  Notes receivable, net                                                          26,619,853           29,491,894
  Resort property held for Vacation Ownership Interest sales                     21,663,793           21,242,315
  Resort property under development                                               5,263,737            5,504,538
  Land held for sale                                                              1,667,298              765,908
  Deferred assets                                                                   170,440              151,697
  Property and equipment, net                                                     5,141,378            5,516,486
  Other assets                                                                    2,500,155            2,409,011
                                                                               ------------         ------------

       TOTAL ASSETS                                                            $ 65,544,776         $ 67,139,969
                                                                               ============         ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
  Accounts payable                                                             $  1,220,787         $  1,068,227
  Accrued and other liabilities                                                   3,126,940            3,604,762
  Notes payable                                                                  32,851,068           32,860,362
  Notes payable to affiliates                                                     1,000,000            1,000,000
  Deferred income taxes                                                           1,510,535            2,262,059
                                                                               ------------         ------------

       Total liabilities                                                         39,709,330           40,795,410
                                                                               ------------         ------------
Shareholders' Equity
  Preferred stock, $10 par value; 10,000,000 shares authorized;
    291,553 and 287,892 shares issued and outstanding; liquidation
    preference of $2,915,530 and $2,878,920                                       1,138,566            1,128,302
  Common stock, no par value; 30,000,000 shares authorized;
    4,105,192 and 4,130,505 shares issued                                        18,333,333           18,389,491
  Treasury stock, at cost, 657,500 and 905,100 shares, respectively              (1,308,655)          (1,943,107)
  Additional paid in capital                                                        225,742              225,857
  Guaranteed ESOP Obligation                                                       (250,000)            (250,000)
  Retained earnings                                                               7,696,460            8,794,016
                                                                               ------------         ------------

       Total shareholders' equity                                                25,835,446           26,344,559
                                                                               ------------         ------------

       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                              $ 65,544,776         $ 67,139,969
                                                                               ============         ============
</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 June 30,      Six months ended June 30,
                                                             ----------------------------    ----------------------------
                                                                 2000            2001            2000            2001
                                                             ------------    ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>             <C>
Timeshare revenues:
  Sales of Vacation Ownership Interests                      $  6,646,704    $  7,978,808    $ 12,593,560    $ 14,499,032
  Resort operating revenue                                      3,558,870       4,627,334       6,683,080       8,674,558
  Interest income                                                 801,853         551,077       1,741,808       1,242,599
                                                             ------------    ------------    ------------    ------------

       Total timeshare revenues                                11,007,427      13,157,219      21,018,448      24,416,189
                                                             ------------    ------------    ------------    ------------

Cost of sales and operating expenses:
  Cost of Vacation Ownership Interests sold                       913,443       1,358,800       1,729,834       2,467,446
  Cost of resort operations                                     3,183,597       3,846,927       6,179,178       7,095,357
  Sales and marketing                                           3,561,039       4,369,893       7,141,524       8,451,761
  General and administrative                                    1,150,576       1,174,123       2,232,208       2,221,762
  Provision for doubtful accounts                                 293,275         349,947         516,756         636,142
  Depreciation and amortization                                   142,606         202,407         279,141         300,461
                                                             ------------    ------------    ------------    ------------

       Total cost of sales and operating expenses               9,244,536      11,302,097      18,078,641      21,172,929
                                                             ------------    ------------    ------------    ------------

Timeshare operating income                                      1,762,891       1,855,122       2,939,807       3,243,260

Income from land and other, net                                     2,922          38,764           5,382          35,497
                                                             ------------    ------------    ------------    ------------

Total operating income                                          1,765,813       1,893,886       2,945,189       3,278,757

Interest expense                                                 (699,360)       (638,745)     (1,388,363)     (1,382,229)
                                                             ------------    ------------    ------------    ------------

Income before income taxes and minority interests               1,066,453       1,255,141       1,556,826       1,896,528

Income tax expense                                               (426,746)       (491,646)       (596,746)       (751,524)
                                                             ------------    ------------    ------------    ------------

Income before minority interests                                  639,707         763,495         960,080       1,145,004

Minority interests                                                 (6,145)             --         (70,422)             --
                                                             ------------    ------------    ------------    ------------

Net income                                                   $    633,562    $    763,495    $    889,658    $  1,145,004
                                                             ============    ============    ============    ============
Net income per share

  Basic                                                      $       0.17    $       0.23    $       0.23    $       0.34
                                                             ============    ============    ============    ============

  Diluted                                                    $       0.16    $       0.22    $       0.22    $       0.33
                                                             ============    ============    ============    ============
</TABLE>

            See notes to condensed consolidated financial statements

                                       3
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        Six months ended June 30,
                                                                      -----------------------------
                                                                         2000              2001
                                                                      -----------       -----------
<S>                                                                   <C>               <C>
Cash flows from operating activities:
  Net income                                                          $   889,658       $ 1,145,004
  Adjustments to reconcile net income to net cash provided by
   operating activities:
    Loss on sale of property and equipment                                     --            12,499
    Undistributed minority interest                                       (23,778)               --
    Deferred income taxes                                                 705,881           751,524
    Provision for doubtful accounts                                       516,756           636,142
    Depreciation and amortization                                         279,141           300,461
    Amortization of guarantee fees                                          1,150            18,743
    Contribution of common stock to ESOP Plan                                  --            41,904
    Common stock issued to employees for services                          31,425             4,210
    Change in assets and liabilities:
      Decrease in resort property held for Vacation
       Ownership Interest sales                                         1,058,242           421,478
      Increase in resort property under development                      (457,146)         (240,801)
      Increase in land held for sale                                       (5,838)          (11,578)
      Decrease in other assets                                            697,446            11,748
      Increase (decrease) in accounts payable                             222,001          (152,560)
      Increase in accrued and other liabilities                           671,342           611,612
      Decrease in due to affiliates                                       (26,282)               --
                                                                      -----------       -----------

Net cash provided by operating activities                               4,559,998         3,550,386
                                                                      -----------       -----------
Cash flows from investing activities:
  Increase in notes receivable, net                                    (1,912,104)       (2,837,794)
  Decrease in deferred assets                                              80,398                --
  Purchases of plant and equipment, net                                  (372,797)         (499,883)
                                                                      -----------       -----------

Net cash used in investing activities                                  (2,204,503)       (3,337,677)
                                                                      -----------       -----------
Cash flows from financing activities:
  Proceeds from notes payable                                           5,392,362         9,040,109
  Principal payments on notes payable                                  (7,248,887)       (9,030,815)
  Preferred stock dividends                                               (47,626)          (47,448)
  Redemption of preferred stock                                              (245)             (105)
  Acquisition of treasury stock and other                                (614,894)         (634,452)
                                                                      -----------       -----------

Net cash used in financing activities                                  (2,519,290)         (672,711)
                                                                      -----------       -----------

Decrease in cash and cash equivalents                                    (163,795)         (460,002)

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

Cash and cash equivalents at end of period                            $ 2,807,570       $ 2,058,120
                                                                      ===========       ===========
</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 six-month  period ended June 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 six month  periods ended June 30, 2000 and 2001.  The  following  summarizes
interest paid.

                         Three Months Ended June 30,   Six Months ended June 30,
                            --------------------       -------------------------
                            2000            2001          2000           2001
                            ----            ----          ----           ----
Interest paid            $  687,411     $  651,375     $1,393,411     $1,361,375

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 June 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:

                           BASIC NET INCOME PER SHARE

<TABLE>
<CAPTION>
                                                 Three Months Ended June 30,    Six Months Ended June 30,
                                                 --------------------------    --------------------------
                                                     2000           2001          2000           2001
                                                 -----------    -----------    -----------    -----------
<S>                                              <C>            <C>            <C>            <C>
Net income                                       $   633,562    $   763,495    $   889,658    $ 1,145,004
Less: Series A preferred stock dividends             (11,969)       (11,969)       (23,938)       (23,938)
                                                 -----------    -----------    -----------    -----------
Net income available to common
  stockholders - basic                           $   621,593    $   751,526    $   865,720    $ 1,121,066
                                                 ===========    ===========    ===========    ===========
Weighted average shares of common stock
  outstanding - basic                              3,726,730      3,280,072      3,809,234      3,337,501
                                                 ===========    ===========    ===========    ===========

Basic net income per share                       $      0.17    $      0.23    $      0.23    $      0.34
                                                 ===========    ===========    ===========    ===========
</TABLE>

                          DILUTED NET INCOME PER SHARE

<TABLE>
<CAPTION>
                                                 Three Months Ended June 30,    Six Months Ended June 30,
                                                 --------------------------    --------------------------
                                                     2000           2001          2000           2001
                                                 -----------    -----------    -----------    -----------
<S>                                              <C>            <C>            <C>            <C>
Net income                                       $   633,562    $   763,495    $   889,658    $ 1,145,004
Less: Series A preferred stock dividends             (11,969)       (11,969)       (23,938)       (23,938)
                                                 -----------    -----------    -----------    -----------
Net income available to common
  stockholders - diluted                         $   621,593    $   751,526    $   865,720    $ 1,121,066
                                                 ===========    ===========    ===========    ===========

Weighted average shares of common
  stock outstanding                                3,726,730      3,280,072      3,809,234      3,337,501
Add: Convertible preferred stock
  (Series B and C) dilutive effect                    85,711         80,141         83,730         80,420
                                                 -----------    -----------    -----------    -----------
Weighted average shares of common stock
  outstanding - dilutive                           3,812,441      3,360,213      3,892,964      3,417,921
                                                 ===========    ===========    ===========    ===========


Diluted net income per share                     $      0.16    $      0.22    $      0.22    $      0.33
                                                 ===========    ===========    ===========    ===========
</TABLE>

     Stock options to purchase  135,700 shares of common stock at prices ranging
from $3.25 per share to $8.125 per share were  outstanding  at June 30, 2001 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 2004.

NOTE 3. SHAREHOLDERS' EQUITY

     During the six months ended June 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 six months  ended  June 30,  2001 and 2000,  the  Company  recorded  the

                                       6
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

exchange  of 3,639 and 12,216  Series C  Convertible  shares for 1,213 and 4,072
common shares, respectively. Also during the six months ended June 30, 2001, the
Company  purchased  247,600 shares of its common stock for $634,452,  and issued
20,000 shares of its  restricted  common stock to the Employee  Stock  Ownership
Plan and Trust, valued at $41,904.

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 June 30, 2001.  In July 2001,  the Company
acquired for $95,500 cash an additional 62 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 the  Kaleidoscope  at McCarran,  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.

                                       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 six 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 662 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 June 30,      Six Months Ended June 30,
                                                                  ---------------------------      -------------------------
                                                                      2000            2001            2000            2001
                                                                   ---------       ---------       ---------       ---------
<S>                                                                <C>             <C>             <C>             <C>
As a percentage of total timeshare revenues:
  Sales of Vacation Ownership Interests                                 60.4%           60.6%           59.9%           59.4%
  Resort operating revenue                                              32.3%           35.2%           31.8%           35.5%
  Interest income                                                        7.3%            4.2%            8.3%            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                             13.7%           17.0%           13.7%           17.0%
  Sales and marketing                                                   53.6%           54.8%           56.7%           58.3%
  Provision for doubtful accounts                                        4.4%            4.4%            4.1%            4.4%
  Contribution margin percentage from sale of Vacation
    Ownership Interests (1)                                             28.3%           23.8%           25.5%           20.3%

As a percentage of resort operating revenue:
  Cost of resort operations                                             89.5%           83.1%           92.5%           81.8%

As a percentage of total timeshare revenues:
  General and administrative                                            10.5%            8.9%           10.6%            9.1%
  Depreciation and amortization                                          1.3%            1.5%            1.3%            1.2%
  Timeshare operating income                                            16.0%           14.1%           14.0%           13.3%

Selected operating data:
  Vacation Ownership Interests sold (2) (3)                              429             502             800             912
  Average sales price per Vacation  Ownership Interest sold
    (excluding revenues from Upgrades) (2)                         $  13,937       $  14,263       $  13,887       $  14,202
  Average sales price per Vacation  Ownership Interest sold
    (including revenues from Upgrades) (2)                         $  15,116       $  15,607       $  15,257       $  15,611
</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 675 and 766  biennial  and  annual  Vacation
     Ownership  Interests  for the three  months  ended June 30,  2000 and 2001,
     respectively,  and 1,264 and 1,411 biennial and annual  vacation  ownership
     interests  for the six  months  ended  June 30,  2000  and  June 30,  2001,
     respectively.

COMPARISON  OF THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 TO THE THREE AND SIX
MONTHS ENDED JUNE 30, 2001

     Sales of Vacation  Ownership  Interests  increased  20.0% or  $1,332,104 to
$7,978,808  for the three months ended June 30, 2001,  from  $6,646,704  for the
same period in 2000 and increased 15.1% or $1,905,472 to $14,499,032 for the six
months  ended June 30, 2001 from  $12,593,560  for the same period in 2000.  The

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

increases  reflect  primarily higher sales from the Sedona sales office,  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 a result  primarily of lower tour
flow and to a lesser  degree,  a lower  closing rate (sales as a  percentage  of
tours). 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 2.3% or $326 in 2001 to $14,263 for the three
months  ended  June  30,  2001  from  $13,937  for the same  period  in 2000 and
increased  2.3% or $315 to $14,202  for the six months  ended June 30, 2001 from
$13,887 for the same period in 2000. The number of Vacation Ownership  Interests
sold increased 17.0% from 429 in the three months ended June 30, 2000 to 502 for
the same  period in 2001 and  increased  14.0% from 800 in the six months  ended
June 30, 2000 to 912 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 six months ended June 30, 2001
included 528 and 998 biennial Vacation  Ownership  Interests (counted as 264 and
499  annual  Vacation  Ownership  Interests)  compared  to 492 and 928  biennial
Vacation  Ownership  Interests (counted as 246 and 464 annual Vacation Ownership
Interests) in the same periods in 2000, respectively.

     Upgrade revenue,  included in Vacation Ownership Interest sales,  increased
33.5% to $674,921 for the three months ended June 30, 2001 from $505,634 for the
same period in 2000 and increased  17.2% to $1,285,115  for the six months ended
June 30, 2001 from $1,096,499 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 $491 to $15,607 for the
three months ended June 30, 2001 from $15,116 in 2000 and increased 2.3% or $354
to $15,611  for the six months  ended June 30,  2001 from  $15,257  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  30.0%  and 29.8% or  $1,068,464  and
$1,991,478 to $4,627,334  and $8,674,558 for the three and six months ended June
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
89.5% to 83.1% and from  92.5% to 81.8% for the  second  quarter  and six months
ended June 30,  2001,  respectively,  as a result of the  increases  in revenue,
which includes both an increase in rates from vacation  interval  owners 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.

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

     Interest income decreased 31.3% to $551,077 for the three months ended June
30,  2001  from  $801,853  for the same  period in 2000 and  decreased  28.7% to
$1,242,599  for the six months ended June 30, 2001 from  $1,741,808 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 13.7% for the three and six months ended
June 30,  2000 to 17.0%  for the  three  and six  months  ended  June 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 increased to 54.8% for the three months ended June 30, 2001 from 53.6%
for the same period in 2000 and to 58.3% for the six months  ended June 30, 2001
from 56.7% for the same period in 2000, largely reflecting reduced efficiency at
the Sedona sales  office.  The  relocation to a new sales center in January with
significantly  greater  capacity and the  start-up  costs of several new offsite
marketing  locations in Sedona  impacted  efficiency,  particularly in the first
quarter of 2001.

     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 June 30,  2000 and 2001,  respectively.  The
provision  for doubtful  accounts  increased  from 4.1% for the six months ended
June 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  decreased  to 8.9% and 9.1% of total
timeshare  revenue for the second  quarter and six months  ended June 30,  2001,
from 10.5% and 10.6% for the same  periods  in 2000,  reflecting  the  Company's
continued focus on cost control and efficiency.

     The 8.7% and 0.4% decreases in interest  expense to $638,745 and $1,382,229
for the three and six months ended June 30, 2001 from  $699,360  and  $1,388,363
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.

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 six months ended June 30, 2000 and
2001, cash provided by operations was $4,559,998 and  $3,550,386,  respectively.
The  decrease  in cash  provided  by  operations  reflects an increase in resort
property held for sale for the June 2001  acquisition of 600 Vacation  Ownership
Interests in the  Carriage  House in Las Vegas and a decrease in other assets in
2000 as a result  of  advances  made to the  Sedona  Vacation  Club  Homeowners'
Association  for  renovations in 1999 which were reimbursed in the first quarter
of 2000. 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.

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

     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  $4.6 million,  which expire in 2001 through
2013.  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 six
months ended June 30, 2000 and 2001 was $2,204,503 and $3,337,677, respectively.
The  increase  reflects a larger  portion of Customer  Notes being  retained and
borrowed against, rather than sold.

     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 six months ended June 30,
2001,  the Company  issued 20,000 shares of its  restricted  common stock to the
ESOP,  valued at $41,904.  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
guaranteed. The ESOP line of credit had been used to purchase shares, which were
collateral  for the line.  At June 30,  2001,  the value of the  collateral  was
approximately  $543,000 and the line of credit balance was $250,000.  During the
six months ended June 30, 2001,  the Company paid,  and recognized as an expense
contribution, $13,404 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.

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

CREDIT FACILITIES AND CAPITAL

     At June 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 June 30, 2001,  $22.6  million of the $40 million
commitment was available to the Company. 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 change.

     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 June 30, 2001,  approximately  $26.7
million is available under these commitments.

     At June 30, 2000 and 2001, the Company had approximately  $18.6 million and
$14.1 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 six months of 2001,  the Company  purchased  247,600  treasury
shares for a cost of $634,452.

     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,  the Company  acquired an  additional  62 Vacation  Ownership
Interests in The Carriage House for $95,500.

     In January 2001, the Company  refinanced the  construction  note payable on
VCA-Tucson.  The new terms include extension of the maturity date to April 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 the  Kaleidoscope  at McCarran,  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%

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

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.

     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 six months ended June 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

     The action filed on June 11, 1999 between the Company and Deloitte & Touche
LLP was resolved by agreement and dismissed.

     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

     On  Wednesday,  June 20,  2001,  the  Company  held its  Annual  Meeting of
Shareholders.  At this  meeting,  the  Shareholders  were  asked  to vote on the
following proposal:

     To elect seven (7)  directors  to serve  until the next  annual  meeting of
Shareholders  of the  Company,  or until their  successors  are duly elected and
qualified.

     The voting results were as follows:

     Nominees recommended in the Proxy Statement:

                                   Votes For     Votes Against    Votes Withheld
                                   ---------     -------------    --------------
     Steven R. Chanen              3,138,073          0               73,131
     Joseph P. Martori             3,147,797          0               63,407
     Joseph P. Martori, II         3,123,973          0               87,230
     Patrick J. McGroder III       3,161,563          0               49,641
     James W. Myers                3,161,563          0               49,641
     Nancy J. Stone                3,147,797          0               63,407
     Edward S. Zielinski           3,147,929          0               63,275

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

     Steven R. Chanen, Joseph P. Martori, Joseph P. Martori, II, James W. Myers,
Patrick J. McGroder III, Nancy J. Stone, and Edward S. Zielinski.

ITEM V. OTHER INFORMATION

     None

ITEM VI. EXHIBITS AND 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/ Chris J. Scoggin
                      ------------------------------------
                                Chris J. Scoggin
               Executive Vice President & Chief Financial Officer



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

Date: As of August 9, 2001

                                       16