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, 2001            Commission File Number 001-13855


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


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


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


                                  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 March 31, 2001
-------------------------------                    -----------------------------
Common Stock, without par value                           3,319,505 shares
<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                 December 31,          March 31,
                                                                     2000                2001
                                                                 ------------        ------------
<S>                                                              <C>                 <C>
                                                                                      (Unaudited)
                                     ASSETS
Cash and cash equivalents                                        $  2,518,122        $  2,564,231
Notes receivable, net                                              26,619,853          27,907,470
Resort property held for Vacation Ownership Interest sales         21,663,793          21,042,492
Resort property under development                                     254,441           5,362,054
Land held for sale                                                  1,667,298           1,667,298
Deferred assets                                                       170,440             170,290
Property and equipment, net                                        10,150,674           5,422,034
Other assets                                                        2,500,155           2,583,046
                                                                 ------------        ------------

       TOTAL ASSETS                                              $ 65,544,776        $ 66,718,915
                                                                 ============        ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
  Accounts payable                                               $  1,220,787        $    953,055
  Accrued and other liabilities                                     3,126,940           4,121,155
  Due to affiliates                                                        --              23,500
  Notes payable                                                    32,851,068          32,904,842
  Notes payable to affiliates                                       1,000,000           1,000,000
  Deferred income taxes                                             1,510,535           1,770,413
                                                                 ------------        ------------

       TOTAL LIABILITIES                                           39,709,330          40,772,965
                                                                 ------------        ------------
SHAREHOLDERS' EQUITY
  Preferred stock, $10 par value; 10,000,000 shares
    authorized; 291,553 and 290,014 shares issued
    and outstanding; liquidation preference of
    $2,915,530 and $2,900,140                                       1,138,566           1,134,318
  Common stock, no par value; 30,000,000 shares
    authorized;  4,105,192 and 4,119,705 shares issued             18,333,333          18,359,685
  Treasury stock, at cost, 657,500 and 800,200 shares,
    respectively                                                   (1,308,655)         (1,601,764)
  Additional paid in capital                                          225,742             225,742
  Guaranteed ESOP Obligation                                         (250,000)           (250,000)
  Retained earnings                                                 7,696,460           8,077,969
                                                                 ------------        ------------

       Total shareholders' equity                                  25,835,446          25,945,950
                                                                 ------------        ------------

          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $ 65,544,776        $ 66,718,915
                                                                 ============        ============
</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 March 31,
                                                                      -------------------------------------
                                                                          2000                     2001
                                                                      ------------             ------------
<S>                                                                   <C>                      <C>
TIMESHARE REVENUES:
  Sales of Vacation Ownership Interests                               $  5,946,856             $  6,520,224
  Resort operating revenue                                               3,124,210                4,047,224
  Interest income                                                          939,955                  691,522
                                                                      ------------             ------------

       Total timeshare revenues                                         10,011,021               11,258,970
                                                                      ------------             ------------
COST OF SALES AND OPERATING EXPENSES:
  Cost of Vacation Ownership Interests sold                                816,391                1,108,646
  Cost of resort operations                                              2,995,581                3,248,430
  Sales and marketing                                                    3,580,485                4,081,868
  General and administrative                                             1,081,632                1,047,639
  Provision for doubtful accounts                                          223,481                  286,195
  Depreciation and amortization                                            136,535                   98,054
                                                                      ------------             ------------

       Total cost of sales and operating expenses                        8,834,105                9,870,832
                                                                      ------------             ------------

Timeshare operating income                                               1,176,916                1,388,138

Income (expense) from land and other, net                                    2,460                   (3,267)
                                                                      ------------             ------------

Total operating income                                                   1,179,376                1,384,871

Interest expense                                                          (689,003)                (743,484)
                                                                      ------------             ------------

Income before income taxes and minority interests                          490,373                  641,387

Income tax expense                                                        (170,000)                (259,878)
                                                                      ------------             ------------

Income before minority interests                                           320,373                  381,509

Minority interests                                                         (64,277)                      --
                                                                      ------------             ------------

NET INCOME                                                            $    256,096             $    381,509
                                                                      ============             ============
NET INCOME PER SHARE

  Basic                                                               $       0.06             $       0.11
                                                                      ============             ============

  Diluted                                                             $       0.06             $       0.11
                                                                      ============             ============
</TABLE>

            See notes to condensed consolidated financial statements

                                       3
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           Three months ended March 31,
                                                                        ----------------------------------
                                                                           2000                   2001
                                                                        -----------            -----------
<S>                                                                     <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                            $   256,096            $   381,509
  Adjustments to reconcile net income to net cash
   provided by operating activities:
   Undistributed minority interest                                           64,277                     --
   Deferred income taxes                                                    279,486                259,878
   Provision for doubtful accounts                                          223,481                286,195
   Depreciation and amortization                                            136,535                 98,054
   Amortization of guarantee fees                                               700                    150
   Contribution of common stock to ESOP Plan                                     --                 18,104
   Common stock issued to employees for services                             29,675                  4,000
   Change in assets and liabilities:
     Decrease in resort property held for Vacation Ownership
       Interest sales                                                       432,600                621,301
     Increase in resort property under development                          (59,166)               (98,317)
     Increase in land held for sale                                          (5,838)                    --
     (Increase) decrease in other assets                                    928,591               (121,597)
     Decrease in accounts payable                                          (297,989)              (267,732)
     Increase in accrued and other liabilities                              259,279                994,215
     Increase (decrease) in due to affiliates                               (26,282)                23,500
                                                                        -----------            -----------

          Net cash provided by operating activities                       2,221,445              2,199,260
                                                                        -----------            -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in notes receivable, net                                        (697,437)            (1,573,812)
  Decrease in deferred assets                                                54,452                     --
  Purchases of plant and equipment, net                                    (271,854)              (340,004)
                                                                        -----------            -----------

          Net cash used in investing activities                            (914,839)            (1,913,816)
                                                                        -----------            -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes payable                                             2,563,387              4,253,336
  Principal payments on notes payable                                    (3,654,496)            (4,199,562)
  Acquisition of treasury stock and other                                  (341,757)              (293,109)
                                                                        -----------            -----------

          Net cash used in financing activities                          (1,432,866)              (239,335)
                                                                        -----------            -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (126,260)                46,109

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                          2,971,365              2,518,122
                                                                        -----------            -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $ 2,845,105            $ 2,564,231
                                                                        ===========            ===========
</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 three-month  period ended March 31, 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 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.  The following  summarizes  interest  paid. No income taxes were
paid and no interest  was  capitalized  during the three  months ended March 31,
2000 and 2001.

                                             Three Months Ended March 31,
                                             ----------------------------
                                                  2000          2001
                                               ---------      ---------
Interest paid                                  $ 706,000      $ 710,000

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 of 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 the  property as  Vacation  Ownership  Interests
through ILX Premiere Vacation Club.

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:

                                       5
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                           BASIC NET INCOME PER SHARE

<TABLE>
<CAPTION>
                                                                      Three Months Ended March 31,
                                                                      ----------------------------
                                                                         2000              2001
                                                                      -----------      -----------
<S>                                                                   <C>              <C>
Net income                                                            $   256,096      $   381,509
Less: Series A preferred stock dividends                                  (11,969)         (11,969)
                                                                      -----------      -----------
Net income available to common stockholders - basic                   $   244,127      $   369,540
                                                                      ===========      ===========
Weighted average shares of common stock outstanding - basic             3,884,086        3,395,543
                                                                      ===========      ===========
Basic net income per share                                            $      0.06      $      0.11
                                                                      ===========      ===========

                          DILUTED NET INCOME PER SHARE
                                                                      Three Months Ended March 31,
                                                                      ----------------------------
                                                                         2000              2001
                                                                      -----------      -----------
Net income                                                            $   256,096      $   381,509
Less: Series A preferred stock dividends                                  (11,969)         (11,969)
                                                                      -----------      -----------
Net income available to common stockholders - diluted                 $   244,127      $   369,540
                                                                      ===========      ===========
Weighted average shares of common stock outstanding                     3,884,086        3,395,543
Add: Convertible preferred stock (Series B and C) dilutive effect          85,711           80,752
                                                                      -----------      -----------
Weighted average shares of common stock outstanding - diluted           3,969,797        3,476,295
                                                                      ===========      ===========
Diluted net income per share                                          $      0.06      $      0.11
                                                                      ===========      ===========
</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 March 31, 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 first  quarter  of 2001,  the  Company  issued  4,000  shares of
restricted common stock, valued at $4,000, 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 2001,  the Company  purchased  142,700 shares of its common
stock for $293,109,  and issued 10,000 shares of its restricted  common stock to
the Employee Stock Ownership Plan and Trust, valued at $18,104.

NOTE 4. OTHER

     In August 2000, the Company entered into a definitive  agreement to acquire
a  leasehold  interest  in a 44-acre  parcel in Las Vegas,  Nevada near the "Las
Vegas Strip" and the University of Nevada - Las Vegas. If acquired,  the Company
intends  to develop  the  property  into a mixed use  development,  which  could
include  construction  of a Varsity  Clubs of America,  operation  of a vacation
ownership  sales  office,  as well as  subletting  portions  of the  parcel  for
traditional hotel,  restaurant,  golf and other ancillary uses. Earnest money in
the amount of $100,000 was deposited  with an escrow agent at the signing of the
agreement.  The Company had an original eight-month period, which has since been
extended through June 30, 2001, in which to secure  financing,  extend the lease
term,  receive  government  approvals,  complete  its due  diligence  and make a
determination whether to proceed with the acquisition.

                                       6
<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     THE FOLLOWING  DISCUSSION OF THE COMPANY'S  FINANCIAL CONDITION AND RESULTS
OF OPERATIONS  INCLUDES CERTAIN  FORWARD-LOOKING  STATEMENTS.  WHEN USED IN THIS
FORM 10-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. 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 currently under construction 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 being  marketed for sale as Vacation
Ownership  Interests,  and one of the two resorts is operated  under a long-term
lease arrangement.

     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.

                                       7
<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 March 31,
                                                                      ----------------------------
                                                                        2000               2001
                                                                      ---------         ---------
<S>                                                                        <C>               <C>
As a percentage of total timeshare revenues:
  Sales of Vacation Ownership Interests                                    59.4%             57.9%
  Resort operating revenue                                                 31.2%             35.9%
  Interest income                                                           9.4%              6.2%
                                                                      ---------         ---------
  Total timeshare revenues                                                100.0%            100.0%
                                                                      =========         =========
As a percentage of sales of Vacation Ownership Interests:
  Cost of Vacation Ownership Interests sold                                13.7%             17.0%
  Sales and marketing                                                      60.2%             62.6%
  Provision for doubtful accounts                                           3.8%              4.4%
  Contribution  margin  percentage from sale of Vacation
    Ownership Interests (1)                                                22.3%             16.0%

As a percentage of resort operating revenue:
  Cost of resort operations                                                95.9%             80.3%

As a percentage of total timeshare revenues:
  General and administrative                                               10.8%              9.3%
  Depreciation and amortization                                             1.4%              0.9%
  Timeshare operating income                                               11.8%             12.3%

Selected operating data:
     Vacation Ownership Interests sold (2) (3)                              371               410
     Average sales price per Vacation Ownership Interest
       sold (excluding revenues from Upgrades) (2)                    $  13,828         $  14,128
     Average sales price per Vacation Ownership Interest
       sold (including revenues from Upgrades) (2)                    $  15,421         $  15,616
</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 589 and 645  biennial  and  annual  Vacation
     Ownership  Interests  for the three  months  ended March 31, 2000 and 2001,
     respectively.

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 TO THE THREE MONTHS ENDED
MARCH 31, 2001

     Sales of Vacation Ownership Interests increased 9.6% or $573,368 in 2001 to
$6,520,224  from $5,946,856 in 2000,  reflecting  primarily an increase in 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, in large part due to unfavorable weather. The decrease in sales from the

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

VCA-Tucson  sales  office  is a  result  of a lower  closing  rate  (sales  as a
percentage of tours).  The average sales price per Vacation  Ownership  Interest
sold  (excluding  revenues from  Upgrades)  increased 2.2% or by $300 in 2001 to
$14,128 from $13,828 in 2000,  reflecting a greater percentage of sales from the
Sedona sales office,  which  generally  achieves  higher average prices than the
Company's other sales offices.

     The number of Vacation Ownership Interests sold increased 10.5% from 371 in
2000 to 410 in 2001  largely  due to the greater  tour flow to the Sedona  sales
office.  Sales of Vacation  Ownership  Interests  in 2001  included 470 biennial
Vacation   Ownership   Interests  (counted  as  235  annual  Vacation  Ownership
Interests) compared to 436 biennial Vacation Ownership Interests (counted as 218
annual Vacation Ownership Interests) in 2000.

     Upgrade revenue,  included in Vacation Ownership Interest sales,  increased
3.3% from  $590,865  in 2000 to  $610,194  in 2001.  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. While Upgrade revenue increased by 3.3%, and
average sales price excluding  Upgrades by $300 per Vacation  Ownership Interest
sold, the average sales price per Vacation  Ownership  Interest sold  (including
Upgrades)  increased  by only  $195,  from  $15,421  in 2000 to  $15,616 in 2001
because of the greater increase in total sales of Vacation  Ownership  Interests
than in Upgrade revenue.

     Resort operating  revenue increased 29.5% or $923,014 in 2001 to $4,047,224
from  $3,124,210  in 2000,  reflecting an increase in both revenue from vacation
interval owners and hotel room rentals.  Hotel room rentals increased due to the
addition of the Bell Rock Inn and Los Abrigados  Lodge in the fourth  quarter of
2000.  Cost of resort  operations  as a percentage of resort  operating  revenue
decreased  from 95.9% in 2000 to 80.3% in 2001 as a result of the  increases  in
revenue,  which includes both timing  differences in recognizing  revenue and an
increase in rates from  vacation  interval  owners in 2001,  improved  operating
efficiencies  at Kohl's Ranch Lodge,  and lower  overhead and  temporarily  more
limited services and amenities at the newly acquired Sedona resorts.

     Interest  income  decreased  by 26.4% to $691,522 in 2001 from  $939,955 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%  in 2000 to  17.0%  in  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 62.6% in 2001 from  60.2% in 2000,  reflecting  reduced
efficiency  at the Sedona  sales office as a result of the  relocation  to a new
sales center in the first  quarter and also  reflecting  the  start-up  costs of
several new offsite marketing  locations in Sedona.  The new Sedona sales center
has a greater  capacity and the new marketing  locations will help contribute to
the increased tour flow to capitalize on that capacity.

     The provision for doubtful  accounts as a percentage of Vacation  Ownership
Interest  sales  increased to 4.4% of sales of Vacation  Ownership  Interests in
2001,  compared to 3.8% in 2000,  reflecting the Company's  decision to increase
the provision on new sales effective in the second quarter of 2000.

     General and  administrative  expenses  decreased 3.1% to $1,047,639 in 2001
from $1,081,632 in 2000, and to 9.3% as a percentage of total timeshare revenues
in 2001  compared to 10.8% in 2000,  reflecting a small  decrease in expenses in
spite of the growth in revenue between years.

     The 7.9% increase in interest  expense from $689,003 in 2000 to $743,484 in
2001  reflects the combined net effect of  fluctuations  in  borrowings  between
periods and lower borrowing rates on its variable rate loans. During the quarter
ended March 31, 2001,  the Company  retained and borrowed  against,  rather than
sold, a greater portion of its Customer Notes. In addition,  the Company assumed

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

an existing  mortgage to acquire the Bell Rock Inn in December 2000 and borrowed
$808,000 in March 2001 to finance the fourth quarter 2000 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),  the financing of Customer Notes from such sales
and resort  operations.  During the three  months ended March 31, 2000 and 2001,
cash provided by operations  was $2,221,445 and  $2,199,260,  respectively.  The
increase in other  assets in 2001 is related to an increase in prepaid loan fees
from the  refinancing  of the  VCA-Tucson  construction  loan.  The  increase in
accrued and other  liabilities  reflects  timing  differences  between  years in
drawing funds from the homeowner associations for operating activities.  Because
the Company uses significant amounts of cash in the development and marketing of
Vacation  Ownership  Interests,  but  collects  the cash on the  Customer  Notes
receivable  over a  long  period  of  time,  borrowing  against  and/or  selling
receivables is a necessary part of its normal operations.

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

     At December 31, 2000, the Company,  excluding its Genesis  subsidiary,  had
NOL  carryforwards of approximately  $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 three
months ended March 31, 2000 and 2001 was $914,839 and $1,913,816,  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.

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

     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 quarter ended March 31,
2001,  the Company  issued 10,000 shares of its  restricted  common stock to the
ESOP valued at $18,104,  and in May 2001, an additional  10,000 shares valued at
$23,800. The Company intends to make a $250,000 cash contribution to the ESOP in
2001 for the  repayment  by the ESOP of its line of  credit,  which the  Company
guarantees.  The ESOP  line of credit  was used to  purchase  shares,  which are
collateral  for the line.  At March 31, 2001,  the value of the  collateral  was
approximately  $345,000 and the line of credit balance was $250,000.  During the
quarter  ended March 31,  2001,  the Company paid and  recognized  as an expense
contribution $6,992 for interest on the line.

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

CREDIT FACILITIES AND CAPITAL

     At  March  31,  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 March 31, 2001, $22.8 million of the $40
million commitment was available to the Company.

     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 March 31, 2001,  approximately $27.9
million is available under these commitments.

     At March 31, 2000 and 2001, the Company had approximately $18.8 million and
$16.9 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 quarter of 2001, the Company purchased 142,700 treasury shares
for a cost of $293,109.

     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 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 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

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

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 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 three  months  ended  March 31,  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.

                                       12
<PAGE>
                                     PART II

ITEM I. LEGAL PROCEEDINGS

     In June 1999,  the Company  brought suit in The Superior Court of the State
of Arizona  against  Deloitte & Touche LLP  seeking  compensatory  and  punitive
damages for breach of contract,  breach of fiduciary duty and  negligence.  This
litigation is in the discovery stage.

     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

     None

                                       13
<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/ Taryn L. Chmielewski
                                        ----------------------------------------
                                        Taryn L. Chmielewski
                                        Vice President
                                        Corporate Controller


Date: As of May 8, 2001

                                       14