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, 1999             Commission File Number 001-13855
                      -------------                                    ---------

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


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


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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X]  No [ ]

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

                Class                               Outstanding at June 30, 1999
-------------------------------                     ----------------------------
Common Stock, without par value                            4,424,863 shares
<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                                      December 31,    June 30,
                                                         1998          1999
                                                      -----------   -----------
                                                                    (Unaudited)
                                     ASSETS
Cash and cash equivalents                             $ 3,196,710   $ 1,560,328
Notes receivable, net                                  19,559,396    21,889,751
Resort property held for Vacation
  Ownership Interest sales                             20,834,225    20,928,018
Resort property under development                         485,933       625,622
Land held for sale                                      1,593,885     1,602,492
Deferred assets                                           262,877       289,249
Property and equipment, net                             4,006,991     4,633,383
Deferred income taxes                                     268,771            --
Other assets                                            1,788,470     2,743,942
                                                      -----------   -----------

     TOTAL ASSETS                                     $51,997,258   $54,272,785
                                                      ===========   ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
  Accounts payable                                    $ 1,186,088   $   764,866
  Accrued and other liabilities                         2,048,599     2,496,685
  Deferred income tax liability                                --        15,213
  Notes payable                                        22,107,444    24,118,899
  Notes payable to affiliates                             894,078       894,078
                                                      -----------   -----------

     Total liabilities                                 26,236,209    28,289,741
                                                      -----------   -----------

MINORITY INTERESTS                                         (3,271)        8,973
                                                      -----------   -----------

SHAREHOLDERS' EQUITY
  Preferred stock, $10 par value; 10,000,000
    shares authorized; 380,468 and 305,978 shares
    issued and outstanding; liquidation preference
    of $3,804,680 and $3,059,780, respectively          1,384,891     1,179,299
  Common stock, no par value; 30,000,000 shares
    authorized; 4,332,533 and 4,424,863 shares issued  19,818,183    20,097,623
Treasury stock, at cost, 339,640 and 446,140 shares    (1,273,843)   (1,487,618)
Additional paid in capital                                279,450       279,450
Retained earnings                                       5,555,639     5,905,317
                                                      -----------   -----------

Total shareholders' equity                             25,764,320    25,974,071
                                                      -----------   -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $51,997,258   $54,272,785
                                                      ===========   ===========

                 See notes to consolidated financial statements

                                        2
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                            Three months ended June 30,     Six months ended June 30,
                                            ---------------------------     --------------------------
                                               1998           1999              1998           1999
                                            ----------     -----------      -----------    -----------
<S>                                         <C>            <C>              <C>            <C>
TIMESHARE REVENUES:
 Sales of Vacation Ownership Interests      $5,686,991     $ 6,168,570      $11,247,814    $11,320,079
 Resort operating revenue                    3,068,945       3,357,742        5,587,278      6,220,745
 Interest income                               485,666         884,577          933,673      1,648,710
                                            ----------     -----------      -----------    -----------
     Total timeshare revenues                9,241,602      10,410,889       17,768,765     19,189,534
                                            ----------     -----------      -----------    -----------
COST OF SALES AND OPERATING EXPENSES:
 Cost of Vacation Ownership Interests sold     816,875         921,111        1,608,317      1,614,585
 Cost of resort operations                   2,933,587       3,045,256        5,548,727      5,858,297
 Sales and marketing                         3,488,551       3,730,893        6,819,821      7,139,859
 General and administrative                    617,308       1,101,582        1,277,680      2,032,142
 Provision for doubtful accounts               167,913         176,453          330,182        327,299
 Depreciation and amortization                  97,892         112,874          184,510        225,576
                                            ----------     -----------      -----------    -----------
     Total cost of sales and operating
       expenses                              8,122,126       9,088,169       15,769,237     17,197,758
                                            ----------     -----------      -----------    -----------

Timeshare operating income                   1,119,476       1,322,720        1,999,528      1,991,776

Income from land and other, net                  3,252          37,505           17,540         56,397
                                            ----------     -----------      -----------    -----------

Total operating income                       1,122,728       1,360,225        2,017,068      2,048,173

Interest expense                               401,618         698,094          907,133      1,370,375
                                            ----------     -----------      -----------    -----------
Income before income taxes and
  minority interests                           721,110         662,131        1,109,935        677,798

Income tax expense                             289,000         264,000          445,000        268,000
                                            ----------     -----------      -----------    -----------

Income before minority interests               432,110         398,131          664,935        409,798

Minority interests                                  --           5,454               --         12,244
                                            ----------     -----------      -----------    -----------

NET INCOME                                  $  432,110     $   392,677      $   664,935    $   397,554
                                            ==========     ===========      ===========    ===========
NET INCOME PER SHARE
     Basic                                  $     0.10     $      0.10      $      0.19    $      0.09
                                            ==========     ===========      ===========    ===========
     Diluted                                $     0.10     $      0.09      $      0.19    $      0.09
                                            ==========     ===========      ===========    ===========
</TABLE>

                 See notes to consolidated financial statements

                                       3
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                      Six months ended June 30,
                                                     --------------------------
                                                        1998           1999
                                                     -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                          $   664,935    $   397,554
 Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
   Undistributed minority interest                            --         12,244
   Deferred income taxes                                 442,000        283,984
   Provision for doubtful accounts                       330,182        327,299
   Depreciation and amortization                         184,510        225,576
   Amortization of guarantee fees                         35,675          4,200
 Change in assets and liabilities:
   Increase in resort property held for Vacation
    Ownership Interest sales                          (2,999,715)       (93,793)
   Increase in resort property under development              --       (139,689)
   Increase in land held for sale                        (35,511)        (8,607)
   Increase in other assets                             (235,207)      (956,472)
   Decrease in accounts payable                       (1,237,263)      (421,222)
   (Decrease) increase in accrued and other
     liabilities                                        (608,073)       521,934
                                                     -----------    -----------
Net cash (used in) provided by operating activities   (3,458,467)       153,008
                                                     -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Notes receivable, net                                (2,295,180)    (2,657,654)
 Increase in deferred assets                                (893)       (30,572)
 Purchases of plant and equipment, net                  (733,425)      (850,968)
                                                     -----------    -----------
Net cash used in investing activities                 (3,029,498)    (3,539,194)
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from notes payable                           7,040,435     10,963,477
 Principal payments on notes payable                  (9,860,556)    (8,952,022)
 Principal payments on notes payable to affiliates      (157,627)            --
 Net proceeds from issuance of common stock            9,537,150             --
 Preferred stock dividend payments                       (47,996)       (47,876)
 Acquisition of treasury stock                           (75,701)      (213,775)
                                                     -----------    -----------
Net cash provided by financing activities              6,435,705      1,749,804
                                                     -----------    -----------

DECREASE IN CASH AND CASH EQUIVALENTS                    (52,260)    (1,636,382)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD       3,226,038      3,196,710
                                                     -----------    -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD           $ 3,173,778    $ 1,560,328
                                                     ===========    ===========

                 See notes to consolidated financial statements

                                       4
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BUSINESS ACTIVITIES

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

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and the  instructions  to Form  10-Q and  Rule  10-01 of
Registration  S-X.  Accordingly,  they do not include all of the information and
notes  required  by  generally  accepted  accounting   principles  for  complete
financial  statements.  In  the  opinion  of  management,  all  adjustments  and
reclassifications  considered  necessary for a fair and comparable  presentation
have been included and are of a normal recurring  nature.  Operating results for
the six-month  period ended June 30, 1999 are not necessarily  indicative of the
results  that may be  expected  for the  year  ending  December  31,  1999.  The
accompanying  financial  statements  should  be read  in  conjunction  with  the
Company's most recent audited financial statements.

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

REVERSE STOCK SPLIT

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

REVENUE RECOGNITION

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                    Three Months Ended June 30,    Six Months Ended June 30,
                    ---------------------------    -------------------------
                        1998           1999           1998            1999
                        ----           ----           ----            ----
Interest paid         $602,000       $703,000      $1,141,000      $1,332,000
Income taxes paid     $     --       $     --      $    3,000      $       --
Capitalized interest  $178,000       $     --      $  323,000      $       --

                                       5
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Accounting Matters

         In June 1997, the Financial  Accounting Standards Board issued SFAS No.
130,  "Reporting  Comprehensive  Income"  ("SFAS 130"),  which was effective for
financial   statements  for  periods  beginning  after  December  15,  1997  and
establishes  standards for reporting and display of comprehensive income and its
components   (revenues,   expenses,   gains  and   losses)  in  a  full  set  of
general-purpose  financial  statements.  SFAS 130 was  adopted by the Company in
1998. There were no items of other comprehensive income, as that term is defined
in SFAS 130, in the six months ended June 30, 1998 or June 30, 1999.

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

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

NOTE 2. NET INCOME PER SHARE

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

                           BASIC NET INCOME PER SHARE
<TABLE>
<CAPTION>
                                             Three Months Ended June 30,     Six Months Ended June 30,
                                             ---------------------------     -------------------------
                                                1998            1999            1998            1999
                                             ----------      ----------      ----------      ----------
<S>                                             <C>             <C>             <C>             <C>
Net income                                   $  432,110      $  392,677      $  664,935      $  397,554
Less: Series A preferred stock dividends        (12,000)        (11,969)        (24,000)        (23,938)
Series C convertible preferred
 stock cumulation share dividends                (8,568)             --         (16,892)             --
                                             ----------      ----------      ----------      ----------
Net income available to common
 stockholders - basic                        $  411,542      $  380,708      $  624,043      $  373,616
                                             ==========      ==========      ==========      ==========
Weighted average shares of common
 stock outstanding - basic                    4,047,463       3,991,089       3,331,751       4,009,652
                                             ==========      ==========      ==========      ==========
Basic net income per share                   $     0.10      $     0.10      $     0.19      $     0.09
                                             ==========      ==========      ==========      ==========
</TABLE>

                                       6
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                          DILUTED NET INCOME PER SHARE
<TABLE>
<CAPTION>
                                           Three Months Ended June 30,     Six Months Ended June 30,
                                           ---------------------------    ---------------------------
                                              1998             1999           1998            1999
                                           -----------     -----------    -----------     -----------
<S>                                        <C>             <C>            <C>             <C>
Net income                                 $   432,110     $   392,677    $   664,935     $   397,554
Less: Series A preferred stock dividends       (12,000)        (11,969)       (24,000)        (23,938)
                                           -----------     -----------    -----------     -----------
Net income available to common
 stockholders - diluted                    $   420,110     $   380,708    $   640,935     $   373,616
                                           ===========     ===========    ===========     ===========
Weighted average shares of common
 stock outstanding                           4,047,463       3,991,089      3,331,751       4,009,652
Add: Convertible preferred stock
 (Series B and C) dilutive effect              110,541         110,268        110,541         110,404
                                           -----------     -----------    -----------     -----------
Weighted average shares of common stock
      outstanding - dilutive                 4,158,004       4,101,357      3,442,292       4,120,056
                                           ===========     ===========    ===========     ===========
Diluted net income per share               $      0.10     $      0.09    $      0.19     $      0.09
                                           ===========     ===========    ===========     ===========
</TABLE>

         Stock options and warrants to purchase  163,200  shares of common stock
at prices  ranging from $3.25 per share to $8.125 per share were  outstanding at
June 30, 1999 but were not included in the computation of diluted net income per
share because the options' and warrants'  exercise  prices were greater than the
average  market price of common  shares.  These options  expire at various dates
between 1999 and 2004.

         Series C Convertible  Preferred Stock  dividends are not required,  nor
were they declared, subsequent to November 1, 1998.

NOTE 3. SHAREHOLDERS' EQUITY

         During the six months ended June 30, 1999,  the Company  issued  67,500
shares of restricted common stock,  valued at $73,848,  to employees in exchange
for services provided.

         During  the six months  ended  June 30,  1999,  the  Company  purchased
106,500 shares of its common stock for $213,775.

         For the six months  ended  June 30,  1999,  the  Company  recorded  the
exchange  of 74,540  shares of Series C  Convertible  shares for  24,847  common
shares.

NOTE 4. EMPLOYEE STOCK OWNERSHIP PLAN

         On April 9, 1999  (effective  January 1, 1999),  the Company formed the
ILX Resorts Incorporated  Employee Stock Ownership Plan and Trust ("ESOP").  The
intent of the ESOP is to provide a retirement program for employees which aligns
their interests with those of the Company. During the second quarter of 1999 the
Company   declared  a  $200,000   contribution  to  the  ESOP  and  funded  that
contribution  in cash. The ESOP used the  contribution to purchase 93,400 shares
of the Company's  common stock in the open market in April and May 1999. In July
1999, the Company declared and contributed an additional $50,000 to the ESOP and
the ESOP purchased 20,500 shares of ILX common stock in the open market.

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

         THE  FOLLOWING  DISCUSSION  OF THE  COMPANY'S  FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS INCLUDES CERTAIN FORWARD-LOOKING  STATEMENTS. WHEN USED IN
THIS FORM 10-Q, THE WORDS "ESTIMATE,"  "PROJECTION," "INTEND," "ANTICIPATES" AND
SIMILAR TERMS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS THAT RELATE TO
THE COMPANY'S  FUTURE  PERFORMANCE.  SUCH  STATEMENTS ARE SUBJECT TO SUBSTANTIAL
UNCERTAINTY.   READERS  ARE  CAUTIONED  NOT  TO  PLACE  UNDUE  RELIANCE  ON  THE
FORWARD-LOOKING STATEMENTS SET FORTH BELOW. THE COMPANY UNDERTAKES NO OBLIGATION
TO PUBLICLY  UPDATE OR REVISE ANY OF THE  FORWARD-LOOKING  STATEMENTS  CONTAINED
HEREIN.

OVERVIEW

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

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

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

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

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                              Three Months Ended June 30,   Six Months Ended June 30,
                                              ---------------------------   -------------------------
                                                  1998           1999          1998          1999
                                                 -------       -------        -------      -------
<S>                                                 <C>           <C>            <C>          <C>
As a percentage of total timeshare revenues:
 Sales of Vacation Ownership Interests              61.5%         59.3%          63.3%        59.0%
 Resort operating revenue                           33.2%         32.3%          31.4%        32.4%
 Interest income                                     5.3%          8.4%           5.3%         8.6%
                                                 -------       -------        -------      -------
 Total timeshare revenues                          100.0%        100.0%         100.0%       100.0%
                                                 =======       =======        =======      =======
As a percentage of sales of Vacation
Ownership Interests:
 Cost of Vacation Ownership Interests sold          14.4%         14.9%          14.3%        14.3%
 Sales and marketing                                61.3%         60.5%          60.6%        63.1%
 Provision for doubtful accounts                     3.0%          2.9%           2.9%         2.9%

 Contribution margin percentage from sale of
  Vacation Ownership Interests (1)                  21.3%         21.7%          22.1%        19.7%

As a percentage of resort operating revenue:
 Cost of resort operations                          95.6%         90.7%          99.3%        94.2%

As a percentage of total timeshare revenues:
 General and administrative                          6.7%         10.6%           7.2%        10.6%
 Depreciation and amortization                       1.1%          1.1%           1.0%         1.2%
 Timeshare operating income                         12.1%         12.7%          11.3%        10.4%

Selected operating data:
 Vacation Ownership Interests sold (2) (3)           386           413            762          745
 Average sales price per Vacation Ownership
 Interest sold (excluding revenues from
  Upgrades) (2)                                  $12,963       $13,513        $12,919      $13,536
 Average sales price per Vacation Ownership
  Interest sold (including revenues from
  Upgrades) (2)                                  $14,752       $14,647        $14,771      $15,035
</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)  Vacation Ownership Interests consist of 180 annual and 411 biennial for the
     three  months  ended June 30, 1998 and 192 annual and 441  biennial for the
     three months  ended June 30, 1999,  and 360 annual and 803 biennial for the
     six months  ended June 30, 1998 and 353 annual and 783 biennial for the six
     months ended June 30, 1999.

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

COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 TO THE THREE AND SIX
MONTHS ENDED JUNE 30, 1999

         Sales of Vacation  Ownership  Interests  increased  8.5% or $481,579 to
$6,168,570  for the three months ended June 30, 1999,  from  $5,686,991  for the
same period in 1998 and  increased  0.6% or $72,265 to  $11,320,079  for the six
months  ended June 30, 1999 from  $11,247,814  for the same period in 1998.  The
increase in the second quarter largely reflects the improved closing rate (sales
as a percentage  of tours) at the Sedona sales  office.  The average sales price
per  Vacation  Ownership  Interest  sold  (excluding   revenues  from  Upgrades)
increased 4.2% or $550 to $13,513 for the three months ended June 30, 1999, from
$12,963  for the same period in 1998 and  increased  4.8% or $617 to $13,536 for
the six months  ended June 30,  1999 from  $12,919  for the same  period in 1998
reflecting  higher per unit sales prices for sales of ILX Premiere Vacation Club
Vacation   Ownership   Interests  than  for  single  resort  Vacation  Ownership
Interests. ILX Premiere Vacation Club was first introduced in June 1998.

         The number of Vacation Ownership Interests sold increased 7.0% from 386
in the three  months  ended June 30, 1998 to 413 for the same period in 1999 due
to the improved closing rate at the Sedona sales office, and decreased 2.2% from
762 in the six  months  ended June 30,  1998 to 745 for the same  period in 1999
largely due to lower tour flow to the South Bend sales office. Sales of Vacation
Ownership Interests in the three and six months ended June 30, 1999 included 441
and 783 biennial Vacation Ownership Interests (counted as 220.5 and 391.5 annual
Vacation  Ownership  Interests)  compared  to  411  and  803  biennial  Vacation
Ownership  Interests  (counted  as 205.5 and  401.5  annual  Vacation  Ownership
Interests) in the same periods in 1998, respectively.

         Upgrade  revenue,   included  in  Vacation  Ownership  Interest  sales,
decreased  32.2% to  $467,863  for the three  months  ended  June 30,  1999 from
$689,812 for the same period in 1998 and decreased  20.8% to $1,116,305  for the
six months  ended June 30,  1999 from  $1,409,825  for the same  period in 1998,
because  second  quarter  1998 sales  included the initial  introduction  of ILX
Premiere Vacation Club. The Company made special offers to introduce the program
to its existing  owners,  which generated  significant  upgrade  activity in the
second  quarter of 1998.  The second  quarter  average  sales price per Vacation
Ownership Interest sold (including  Upgrades) was comparable between periods and
increased to $15,035 for the six months ended June 30, 1999 from $14,771 for the
same period in 1998  because of the  inclusion in the 1999 sales mix of sales to
new customers of the higher priced ILX Premiere Vacation Club Vacation Ownership
Interests, net of reduced Upgrade Sales.

         Resort  operating  revenues  increased  9.4% and 11.3% or $288,797  and
$633,467 to $3,357,742 and $6,220,745 for the three and six month periods ending
June 30, 1999, respectively,  reflecting the opening of Varsity Clubs of America
- Tucson  Chapter in the third quarter of 1998.  Cost of resort  operations as a
percentage of resort operating revenue improved to 90.7% from 95.6% and to 94.2%
from 99.3% for the first quarter and first six months of 1999, respectively, due
to increased operating efficiency at Los Abrigados Resort & Spa and because 1998
expenses  included  the initial  operating  costs of Varsity  Clubs of America -
Tucson Chapter, which did not open to revenue paying guests until July 1998.

         Interest income  increased 82.1% to $884,577 for the three months ended
June 30, 1999 from $485,666 for the same period in 1998 and  increased  76.6% to
$1,648,710  for the six months  ended June 30, 1999 from  $933,673  for the same
period in 1998 as a result of the  increase  in customer  notes  retained by the
Company  consistent with its strategy to retain and borrow against,  rather than
sell, the majority of its customer notes.

         Cost of Vacation  Ownership  Interests sold as a percentage of Vacation
Ownership  Interest  sales  increased from 14.4% for the three months ended June
30, 1998 to 14.9% for the same period in 1999 and were  comparable  at 14.3% for
the six months ended June 30, 1998 and 1999.  The second  quarter 1999  increase
reflects the greater  upgrade  revenue in 1998, for which there is no associated
product cost, and variances in product mix between periods.

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

         Sales and  marketing  as a  percentage  of sales of Vacation  Ownership
Interests were comparable at 61% for the three-month periods ended June 30, 1999
and 1998, and increased to 63% for the six-month period ended June 30, 1999 from
61% for the same period in 1998,  reflecting greater costs of tour generation to
the South Bend sales  office in 1999,  lower  closing  rates in the Sedona sales
office in the first  quarter of 1999,  and greater  upgrade  sales in the second
quarter of 1998. Marketing and sales costs are generally a smaller percentage of
revenue on upgrade sales than on sales to new customers.

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

         General  and  administrative  expenses  increased  to  10.6%  of  total
timeshare  revenues in both the three and six month  periods ended June 30, 1999
compared to 6.7% and 7.2% for the same periods in 1998,  to  $1,101,582  for the
three months  ended June 30, 1999 from  $617,308 for the same period in 1998 and
to  $2,032,142  for the six months ended June 30, 1999 from  $1,277,680  for the
same  period  in  1998.   The   increases  in  1999  reflect   development   and
implementation of centralized reservations, owner services and reporting systems
to support ILX Premiere Vacation Club and to provide operating  efficiencies for
expected   future   growth.   In  addition,   first  quarter  1998  general  and
administrative  expenses  were  reduced by property  tax  reductions  related to
successful   appeals  of  property   tax   assessments   and  1999  general  and
administrative  expenses  include  property taxes,  insurance and other expenses
related to Varsity Clubs of America - Tucson Chapter.

         The 73.8%  increase in interest  expense  from  $401,618  for the three
months  ended June 30,  1998 to  $698,094  for the same period in 1999 and 51.1%
increase in interest  expense  from  $907,133  for the six months ended June 30,
1998 to $1,370,375  for the same period in 1999,  reflect  increased  borrowings
against  customer notes  receivable as the Company  retains and borrows  against
more of such notes,  net of decreases in interest rates and  fluctuations in the
balances of borrowings outstanding.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES OF CASH

         The  Company  generates  cash  primarily  from  the  sale  of  Vacation
Ownership Interests (including  Upgrades),  the financing of customer notes from
such sales and resort operations.  During the six months ended June 30, 1998 and
1999,  cash (used  in)/provided  by operations  was  $(3,458,467)  and $153,008,
respectively. The negative cash flow in 1998 was due primarily to an increase of
$2,999,715 in resort property under development,  which includes the development
of Varsity Clubs of America - Tucson  Chapter,  which was financed in large part
through a  construction  loan and lease  financing.  Because  the  Company  uses
significant  amounts  of cash  in the  development  and  marketing  of  Vacation
Ownership Interests, but collects the cash 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.

         Cash provided by financing  activities of $1,749,804  for the first six
months in 1999 was lower  than the  $6,435,705  of 1998  because  1999  reflects
greater  borrowings  against retained  customer notes receivable (as the Company
follows its post follow-on offering strategy of retaining and borrowing against,
rather than selling,  a greater portion of its customer notes), and because 1998
reflects the proceeds,  net of offering costs, of the follow-on  offering of 1.6
million shares of common stock.

                                       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 installment  payments
or from proceeds from the sale of the customer  note. The deferral of income tax
liability conserves cash resources on a current basis.  Interest may be imposed,
however,  on the amount of tax attributable to the installment  payments for the
period  beginning  on the date of sale and ending on the date the related tax is
paid.  If the Company is otherwise  not subject to tax in a particular  year, no
interest  is imposed  since the  interest  is based on the amount of tax paid in
that year. The consolidated  financial  statements do not contain an accrual for
any interest  expense that would be paid on the  deferred  taxes  related to the
installment method, as the interest expense is not estimable.

         At December 31, 1998,  the Company,  excluding its Genesis  subsidiary,
had NOL  carryforwards  of  approximately  $4.3  million,  which  expire in 2001
through 2012.  At December 31, 1998,  Genesis had federal NOL  carryforwards  of
approximately  $1.7  million,  which are limited as to usage  because they arise
from built in losses of an acquired company.  In addition,  such losses can only
be  utilized  through  the  earnings  of Genesis and are limited to a maximum of
$189,000 per year. To the extent the entire  $189,000 is not utilized in a given
year, the difference may be carried forward to future years.  Any unused Genesis
NOLs will expire in 2008.

         In  addition,   Section  382  of  the  Internal  Revenue  Code  imposes
additional  limitations on the  utilization  of NOLs by a corporation  following
various  types of ownership  changes,  which result in more than a 50% change in
ownership of a  corporation  within a six-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 for the
six  months  ended  June  30,  1998  and 1999  was  $3,029,498  and  $3,539,194,
respectively.

         The Company  requires funds to finance the acquisitions of property for
future resort  development and to further develop the existing resorts,  as well
as to make capital  improvements  and support  current  operations.  The Company
intends to build twelve  additional  cabins at Kohl's Ranch  commencing in 1999,
for which a financing commitment equal to the construction cost is in place.

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

         On April 9, 1999  (effective  January 1, 1999),  the Company formed the
ILX Resorts Incorporated  Employee Stock Ownership Plan and Trust ("ESOP").  The
intent of the ESOP is to provide a retirement program for employees which aligns
their interests with those of the Company. During the second quarter of 1999 the
Company   declared  a  $200,000   contribution  to  the  ESOP  and  funded  that
contribution  in cash. The ESOP used the  contribution to purchase 93,400 shares
of the Company's  common stock in the open market in April and May 1999. In July
1999, the Company declared and contributed an additional $50,000 to the ESOP and

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

the ESOP  purchased  20,500  shares of ILX common stock in the open  market.  No
additional contributions are expected for the 1999 Plan year. The Plan, however,
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

         The Company has an  agreement  with a financial  institution  for a $40
million  financing  commitment  under which the Company may sell  certain of its
customer  notes.  The  agreement  provides for sales on a recourse  basis with a
percentage  of the  amount  sold  held  back  by the  financial  institution  as
additional  collateral.  Customer  notes may be sold at discounts or premiums to
the principal  amount in order to yield the consumer  market rate, as defined by
the financial  institution.  At June 30, 1999,  approximately $37 million of the
$40 million in 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) and
prime plus 3% ($3.5  million).  The $3.5  million  and $40  million  commitments
expire in 2001 and 2002,  respectively.  At June 30, 1999,  approximately  $31.7
million is available under these commitments.

         In the future, the Company may negotiate  additional credit facilities,
issue corporate debt, issue equity securities,  or any combination of the above.
Any debt incurred or issued by the Company may be secured or unsecured, may bear
interest  at fixed or  variable  rates of  interest,  and may be subject to such
terms as management  deems prudent.  There is no assurance that the Company will
be able to secure  additional  corporate  debt or  equity  at or beyond  current
levels or that the Company will be able to maintain its current level of debt.

         The Company believes available borrowing  capacity,  together with cash
generated from operations,  will be sufficient to meet the Company's  liquidity,
operating and capital requirements for at least the next 12 months.

SEASONALITY

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

YEAR 2000 ISSUES

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

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

         In addition, the Company is communicating with others with whom it does
significant  business to determine their Year 2000 Compliance  readiness and the
extent  to which  the  Company  is  vulnerable  to any  third  party  Year  2000

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

Compliance issues.  However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted,  or that
a failure to convert by another  company,  or a conversion  that is incompatible
with the  Company's  systems,  would not have a material  adverse  effect on the
Company.

         The total cost to the Company of these Year 2000 Compliance  activities
has not been and is not anticipated to be material to its financial  position or
results  of  operations  in any given  year.  Since the  Company  commenced  its
assessment  of its Year 2000  Compliance  during  early  1998,  it has  expended
approximately  $70,000 and estimates  additional  future costs of  approximately
$30,000,  consisting primarily of software purchases and associated training and
consulting services. In addition,  certain employees of the Company have devoted
their time to assessing and implementing the Company's Year 2000 Compliance, the
costs of which have not been  separately  allocated by the Company.  These costs
and the date on which the Company  plans to complete the Year 2000  modification
and testing  processes  are based on  management's  best  estimates,  which were
derived utilizing numerous  assumptions of future events including the continued
availability of certain  resources and other factors.  However,  there can be no
guarantee that these  estimates will be achieved and actual results could differ
from those plans.

         The Company is in the process of developing a  contingency  plan in the
event that any of its  systems or the  systems of any third  party with which it
has a material relationship are not Year 2000 Compliant, and expects to have the
plan complete by September 30, 1999. In the event that the Company is vulnerable
to any such Year 2000  Compliance  issue,  the worst case scenario could include
any or all of the following:

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

INFLATION

         Inflation  and  changing  prices have not had a material  impact on the
Company's revenues,  operating income and net income during any of the Company's
six most recent fiscal years or the six months ended June 30, 1999.  However, to
the extent  inflationary  trends affect short-term  interest rates, a portion of
the  Company's  debt  service  costs  may be  affected  as well as the rates the
Company charges on its customer notes.

                                       14
<PAGE>
                                     PART II

ITEM I. LEGAL PROCEEDINGS

         A dispute had arisen between the general  contractor,  Summit Builders,
and the Company's wholly owned subsidiary, VCA Tucson Incorporated, with respect
to  amounts  owed for the  construction  of  Varsity  Clubs of  America - Tucson
Chapter.  In May 1999,  the dispute  was settled for an amount of $1.3  million.
Such cost is included in resort property held for sale at June 30, 1999.

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

         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 its  preliminary  stage.  The  defendant  has not yet filed an
answer to the complaint nor has discovery commenced.

         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 July 26, 1999, the Company held its Annual Meeting of  Shareholders.
At this Annual  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 Against
                                    Votes For       or Withheld      Non-votes
                                    ---------       -----------      ---------

         Steven R. Chanen            2,776,599         74,097         322,030
         Joseph A. Leonetti          2,576,147         74,097         322,030
         Joseph P. Martori           4,576,613         74,097         322,030
         Patrick J. McGroder III     2,776,613         74,097         322,030
         James W. Myers              2,776,613         74,097         322,030
         Nancy J. Stone              3,029,061         74,097         322,030
         Edward S. Zielinski         2,776,520         74,097         322,030

                                       15
<PAGE>
         Shareholder nominee proposed at the Annual Meeting:

         Joseph P. Martori, II                            4,000,000

         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
          Patrick J. McGroder III     James W. Myers       Nancy J. Stone
          Edward S. Zielinski

ITEM V. OTHER INFORMATION

         None

ITEM VI. EXHIBITS AND REPORTS ON FORM 8-K

          (i)  Exhibits

               Exhibit No.       Description
               -----------       -----------

                   27            Financial Data Schedule (filed herewith)

          (ii) Reports on Form 8-K

               None

                                       16
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the Registrant has duly caused its quarterly report on Form 10-Q to be
signed on its behalf by the undersigned thereunto duly authorized.



                            ILX RESORTS INCORPORATED
                                  (Registrant)



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



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



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


Date:  As of August 10, 1999

                                       17