SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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


For The Quarter Ended September 30, 2002        Commission File Number 001-13855


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


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


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


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


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


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

                               Yes [X]     No [ ]

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

            Class                              Outstanding at September 30, 2002
            -----                              ---------------------------------
Common Stock, without par value                         2,940,286 shares
<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  December 31,    September 30,
                                                                     2001            2002
                                                                  ------------    ------------
                                                                                   (Unaudited)
<S>                                                               <C>             <C>
                                     ASSETS
  Cash and cash equivalents                                       $  3,548,058    $  2,466,297
  Notes receivable, net                                             30,365,225      33,333,797
  Resort property held for Vacation Ownership Interest sales        20,270,872      24,235,517
  Resort property under development                                  5,116,227         466,831
  Land held for sale                                                   830,686         793,100
  Deferred assets                                                      131,794          97,383
  Property and equipment, net                                        6,189,082       8,473,767
  Other assets                                                       7,672,891      10,128,751
                                                                  ------------    ------------

      TOTAL ASSETS                                                $ 74,124,835    $ 79,995,443
                                                                  ============    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
  Accounts payable                                                $  1,488,456    $  1,222,245
  Accrued and other liabilities                                      2,354,911       3,734,966
  Income taxes payable                                                 689,923              --
  Due to affiliates                                                     24,022              --
  Notes payable                                                     40,619,303      43,553,006
  Notes payable to affiliates                                        1,000,000              --
  Deferred income taxes                                              2,163,207       3,936,279
                                                                  ------------    ------------

      Total liabilities                                             48,339,822      52,446,496
                                                                  ------------    ------------

Shareholders' Equity
  Preferred stock, $10 par value; 10,000,000 shares authorized;
    284,816 and 182,310 shares issued and outstanding;
    liquidation preference of $2,848,160 and $1,823,100              1,117,025         929,750
  Common stock, no par value; 30,000,000 shares authorized;
    4,132,702 and 4,277,381 shares issued                           18,405,576      19,201,143
  Treasury stock, at cost, 1,200,700 and 1,337,095 shares,
    respectively                                                    (3,688,083)     (4,718,769)
  Guaranteed ESOP obligation                                                --        (181,500)
  Additional paid in capital                                           269,869          79,556
  Retained earnings                                                  9,680,626      12,238,767
                                                                  ------------    ------------

      Total shareholders' equity                                    25,785,013      27,548,947
                                                                  ------------    ------------

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $ 74,124,835    $ 79,995,443
                                                                  ============    ============
</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              Nine months ended
                                                           September 30,                  September 30,
                                                   ----------------------------    ----------------------------
                                                       2001            2002            2001            2002
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>
REVENUES:
  Sales of Vacation Ownership Interests            $  7,405,043    $  9,629,403    $ 21,904,075    $ 26,520,385
  Resort operating revenue                            4,236,122       4,091,017      12,910,680      12,244,187
  Interest income                                       658,261       1,484,663       1,900,860       4,340,829
                                                   ------------    ------------    ------------    ------------

      Total revenues                                 12,299,426      15,205,083      36,715,615      43,105,401
                                                   ------------    ------------    ------------    ------------
COST OF SALES AND OPERATING EXPENSES:
  Cost of Vacation Ownership Interests sold           1,257,615       1,398,031       3,725,061       3,855,881
  Cost of resort operations                           3,834,829       3,842,998      10,930,186      10,862,258
  Sales and marketing                                 3,890,638       6,120,823      12,342,399      16,552,596
  General and administrative                          1,274,569       1,583,769       3,496,331       4,556,622
  Provision for doubtful accounts                       323,930         423,063         960,072       1,165,194
  Depreciation and amortization                         245,281         304,621         545,742         799,105
                                                   ------------    ------------    ------------    ------------

      Total cost of sales and operating expenses     10,826,862      13,673,305      31,999,791      37,791,656
                                                   ------------    ------------    ------------    ------------

Operating income                                      1,472,564       1,531,778       4,715,824       5,313,745

Income from land and other, net (Related Party)           7,233         122,331          42,730         594,082
                                                   ------------    ------------    ------------    ------------

Total operating income                                1,479,797       1,654,109       4,758,554       5,907,827

Interest expense                                       (615,492)       (552,209)     (1,997,721)     (1,519,995)
Equity in loss of related party                              --         (45,396)             --         (45,396)
                                                   ------------    ------------    ------------    ------------

Income before income taxes                              864,305       1,056,504       2,760,833       4,342,436

Income tax expense                                     (345,722)       (422,601)     (1,097,246)     (1,736,974)
                                                   ------------    ------------    ------------    ------------

NET INCOME                                         $    518,583    $    633,903    $  1,663,587    $  2,605,462
                                                   ============    ============    ============    ============
NET INCOME PER SHARE
  Basic                                            $       0.16    $       0.21    $       0.50    $       0.88
                                                   ============    ============    ============    ============
  Diluted                                          $       0.16    $       0.20    $       0.49    $       0.85
                                                   ============    ============    ============    ============
</TABLE>

            See notes to condensed consolidated financial statements

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

<TABLE>
<CAPTION>
                                                                                Nine months ended
                                                                                   September 30,
                                                                           ----------------------------
                                                                               2001            2002
                                                                           ------------    ------------
<S>                                                                        <C>             <C>
Cash flows from operating activities:
  Net income                                                               $  1,663,587    $  2,605,462
  Adjustments to reconcile net income to net cash provided by
    operating activities:
    Loss (gain) on sale of property and equipment                                13,373        (564,658)
    Undistributed losses of equity investment in a related party                     --          45,396
    Loss on assumption of Sedona Worldwide Incorporated assets
      and liabilities                                                                --          48,887
    Income tax expense                                                        1,097,246       1,736,974
    Provision for doubtful accounts                                             960,072       1,165,194
    Depreciation and amortization                                               545,742         799,105
    Amortization of guarantee fees                                               29,286          34,411
    Contribution of common stock to ESOP Plan                                    41,905              --
    Common stock issued in exchange for services                                  4,210         449,892
    Change in assets and liabilities:
      Decrease (increase) in resort property held for Vacation Ownership
        Interest sales                                                        1,109,274      (3,964,645)
      (Increase) decrease in resort property under development                   (9,459)      4,649,396
      (Increase) decrease in land held for sale                                 (21,137)         37,586
      Increase in other assets                                                 (256,912)     (2,666,232)
      Decrease in accounts payable                                              (54,853)       (266,211)
      Increase in accrued and other liabilities                                 104,042       1,295,878
      Decrease in income taxes payable                                               --        (653,825)
      Increase (decrease) in due to affiliates                                   24,022         (24,022)
                                                                           ------------    ------------
Net ash provided by operating activities                                      5,250,398       4,728,588
                                                                           ------------    ------------
Cash flows from investing activities:
  Increase in notes receivable, net                                          (3,771,056)     (4,133,766)
  Cash acquired from Sedona Worldwide Incorporated                                   --          30,457
  Purchases of plant and equipment, net                                        (986,644)     (3,843,668)
                                                                           ------------    ------------
Net cash used in investing activities                                        (4,757,700)     (7,946,977)
                                                                           ------------    ------------
Cash flows from financing activities:
  Proceeds from notes payable                                                15,217,156      18,860,642
  Principal payments on notes payable                                       (13,519,300)    (15,314,094)
  Principal payments on notes payable to affiliates                                  --        (300,000)
  Preferred stock dividends                                                     (47,448)        (47,321)
  Redemption of preferred stock                                                    (805)           (770)
   Elimination of preferred stock liquidation preference                             --        (191,143)
  Exercise of options by ESOP Plan                                                   --         160,000
  Acquisition of treasury stock and other                                    (2,021,593)     (1,030,686)
                                                                           ------------    ------------
Net cash (used in) provided by financing activities                            (371,990)      2,136,628
                                                                           ------------    ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                120,708      (1,081,761)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                              2,518,122       3,548,058
                                                                           ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $  2,638,830    $  2,466,297
                                                                           ============    ============
</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 accounting principles generally accepted in the
United States of America for interim financial  information and the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,  they do not include
all of the  information  and notes required by accounting  principles  generally
accepted in the United States of America for complete financial  statements.  In
the opinion of management,  all  adjustments  and  reclassifications  considered
necessary for a fair and comparable presentation have been included and are of a
normal  recurring  nature.  Operating  results for the  nine-month  period ended
September  30, 2002 are not  necessarily  indicative  of the results that may be
expected  for the year ending  December  31, 2002.  The  accompanying  financial
statements  should be read in conjunction with the Company's most recent audited
financial statements.

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

REVENUE RECOGNITION

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                              Three Months Ended          Nine Months Ended
                                 September 30,               September 30,
                           -------------------------   -------------------------
                              2001          2002          2001          2002
                           -----------   -----------   -----------   -----------
Interest paid              $   623,698   $   582,315   $ 1,985,073   $ 1,555,569
Income taxes paid                   --       335,409            --     1,216,092
Interest capitalized                --        83,339            --       258,300

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

NOTE 2. NET INCOME PER SHARE

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

                           BASIC NET INCOME PER SHARE

<TABLE>
<CAPTION>
                                                Three Months Ended              Nine Months Ended
                                                   September 30                    September 30
                                           ----------------------------    ----------------------------
                                               2001            2002            2001            2002
                                           ------------    ------------    ------------    ------------
<S>                                        <C>             <C>             <C>             <C>
Net income                                 $    518,583    $    633,903    $  1,663,587    $  2,605,462
Less: Series A preferred stock dividends        (11,969)        (11,830)        (35,907)        (35,491)
                                           ------------    ------------    ------------    ------------
Net income available to common
  stockholders - basic                     $    506,614    $    622,073    $  1,627,680    $  2,569,971
                                           ============    ============    ============    ============
Weighted average shares of common
  stock outstanding - basic                   3,132,475       2,940,462       3,268,408       2,935,972
                                           ============    ============    ============    ============

Basic net income per share                 $       0.16    $       0.21    $       0.50    $       0.88
                                           ============    ============    ============    ============
</TABLE>

                          DILUTED NET INCOME PER SHARE

<TABLE>
<CAPTION>
                                                Three Months Ended              Nine Months Ended
                                                  September 30                     September 30
                                           ----------------------------    ----------------------------
                                               2001            2002            2001            2002
                                           ------------    ------------    ------------    ------------
<S>                                        <C>             <C>             <C>             <C>
Net income                                 $    518,583    $    633,903    $  1,663,587    $  2,605,462
Less: Series A preferred stock dividends        (11,969)        (11,830)        (35,907)        (35,491)
                                           ------------    ------------    ------------    ------------
Net income available to common
  stockholders - diluted                   $    506,614    $    622,073    $  1,627,680    $  2,569,971
                                           ============    ============    ============    ============

Weighted average shares of common
  stock outstanding                           3,132,475       2,940,462       3,268,408       2,935,972
Add: Convertible preferred stock (Series
  B and C) dilutive effect                       78,603          55,620          79,808          68,521
    Stock options dilutive effect                34,127          38,760             593          36,329
                                           ------------    ------------    ------------    ------------
Weighted average shares of common stock
  outstanding - dilutive                      3,245,205       3,034,842       3,348,809       3,040,822
                                           ============    ============    ============    ============

Diluted net income per share               $       0.16    $       0.20    $       0.49    $       0.85
                                           ============    ============    ============    ============
</TABLE>

     Stock  options  to  purchase  30,700  shares of common  stock at a price of
$8.125  per  share  were  outstanding  for the three  and nine  months  ended at
September  30,  2002 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.  Stock options to purchase  70,700 shares
of common  stock at prices  ranging from $6.82 per share to $8.125 per share and
options to purchase  170,700 shares of common stock at prices ranging from $4.00
per share to $8.125 per share  were  outstanding  for the three and nine  months
ended September 30, 2001,  respectively but were not included in the computation
of diluted  net income per share  because  the  options'  exercise  prices  were
greater than the average market prices of common shares. These options expire in
2004.

                                       6
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 3. SHAREHOLDERS' EQUITY

     During the nine months ended  September 30, 2002,  the Company issued 4,300
shares of restricted common stock, valued at $16,415 and 62,597 shares of common
stock, valued at $433,477,  to employees and a professional  service provider in
exchange for services  provided.  The shares of common stock issued to employees
are exempt from  registration  under Section 4(2) of the Securities Act of 1933.
For the nine months ended September 30, 2002 and 2001, the Company  recorded the
exchange of 47,346 and 7,770  Series C  Convertible  shares for 15,782 and 2,590
common  shares,  respectively.  Also during the nine months ended  September 30,
2002, the Company purchased 136,395 shares of its common stock for $1,030,686.

     In August 2002, the Series B Convertible Preferred  shareholders  converted
the remaining 55,000 outstanding shares of Series B Convertible  Preferred Stock
for 22,000 shares of common  stock,  and the ILX Resorts  Incorporated  Employee
Stock  Ownership  Plan and Trust (the  "ESOP")  agreed to  purchase  such common
shares at $8.25 per share in exchange for notes  payable of $181,500.  The notes
bear  interest at 6%,  payable in quarterly  payments of principal  and interest
through 2003, and are secured by the common shares.  The principal amount of the
notes is guaranteed  by the Company and has been  recorded as a guaranteed  ESOP
obligation.  The transaction  eliminated the liquidation  preference of $550,000
and the payment of $191,143 has been recorded as a reduction to additional  paid
in capital.

NOTE 4. RELATED PARTY TRANSACTION

     In March 2002, the Company completed a transaction with Edward John Martori
(EJM). EJM has been a creditor of the company and is a direct and indirect major
shareholder  of the Company.  EJM purchased the Sedona Station (the Sedona sales
office)  for  $1,650,000  and the  Company  recorded a gain of  $586,111  on the
transaction.  The loan to the  Company  secured  by the  property,  which  had a
balance of  $794,345,  was assumed by EJM and a note payable from the Company to
EJM of $700,000 was paid in full as part of the transaction.  The balance of the
purchase price was paid to the Company in cash. The Company is leasing the space
back from EJM under a nine-year  lease agreement (at $165,000 per annum) and has
paid $82,500 in rent expense for the nine months ended September 30, 2002.

NOTE 5. OTHER

     In  April  2002,   the  Company   borrowed  $2.0  million  to  finance  the
construction  of 21 new units on land owned by the Company in Pinetop,  Arizona.
The promissory note payable bears interest at prime plus 1.5%,  however the rate
shall never be less than 7.0%. The debt is payable in equal monthly  payments of
principal and interest over a five-year term ending May 2007.

     In May 2002, the Company  annexed the Bell Rock Inn into Premiere  Vacation
Club  and  consequently  transferred  $4,975,203  to  resort  property  held for
Vacation Ownership Interest sales from resort property under development.

     In July 2001,  the  Company  acquired  a 50-year  leasehold  interest  in a
44-acre parcel located proximate to the Las Vegas Airport,  University of Nevada
- Las Vegas  ("UNLV")  and the  "Strip"  in Las  Vegas,  Nevada.  The $5 million
purchase price for the leasehold  interest consisted of a $100,000 earnest money
deposit made in August 2000 and a $4.9 million promissory note from a subsidiary
of the  Company to an  unrelated  third party ("the  Note").  In June 2002,  the
Company purchased the Note for $3.325 million.  Both the $4.9 million receivable
and  the  Note  are  eliminated  in  consolidation.  The  original  discount  of
$1,575,000  is  being  amortized  to  income  over the  term of the  Note.  That
discount,  net of accumulated  amortization,  is included in notes payable.  The
Company amortized $36,432 during the third quarter of 2002. The Company borrowed
$3.8  million in June 2002, a portion of which was used to purchase the Note and
the Note is collateral for the borrowing. The $3.8 million promissory note bears
interest at prime plus 1.0%, with a minimum  interest rate of 7%, and is payable
in equal monthly payments of principal and interest over a five-year term ending
June 2007.

                                       7
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

     In July 2002, the Company invested $1,000,000 in cash for 8,000,000 shares,
or an approximately 36.4% ownership interest,  in Greens Worldwide  Incorporated
("GWWI").  The investment in GWWI is included in other assets and the Company is
accounting for its interest in GWWI on the equity method.

     In  August  2002,  the  Company  entered  into a  sublease  with  GWWI  for
approximately  20 acres of real  property and 13,000  square feet of an existing
building on the 44-acre  parcel in Las Vegas.  The monthly rent of $31,792.50 is
subject to adjustment in future years over the 49 year term of the lease.

     In June 2002, the Company  acquired land and two buildings  adjacent to Los
Abrigados for $444,000 cash. In August 2002, the Company borrowed $337,500 which
is secured  by the  property,  bears  interest  at a fixed rate of 7.5%,  and is
payable in monthly  payments of $1,406.25  principal plus accrued interest until
July 2007 when the unpaid balance is due in full.

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


ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

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

OVERVIEW

     ILX Resorts  Incorporated  ("ILX" or the  "Company")  is one of the leading
developers,  marketers and operators of timeshare  resorts in the western United
States and Mexico. The Company's principal  operations consist of (i) acquiring,
developing and operating timeshare resorts,  marketed by the Company as vacation
ownership resorts,  (ii) marketing and selling vacation  ownership  interests in
the timeshare  resorts,  which  typically  have  entitled the buyers  thereof to
ownership of a fully-furnished unit for a one-week period on either an annual or
an alternate year (i.e., biennial) basis ("Vacation Ownership  Interests"),  and
(iii)  providing  purchase money  financing to the buyers of Vacation  Ownership
Interests at its resorts.  In addition,  the Company receives  revenues from the
rental of its  unused or unsold  inventory  of units at its  vacation  ownership
resorts,  and from  the  sale of food,  beverages  and  other  services  at such
resorts.  The Company's  current portfolio of resorts consists of six resorts in
Arizona,  one in Indiana, one in Colorado,  one in San Carlos,  Mexico, and land
adjacent to an existing  resort for which the Company holds  development  rights
(the Roundhouse Resort) (collectively, the "ILX Resorts"). One of the resorts in
Arizona  is not at this time  registered  with the  Arizona  Department  of Real
Estate nor is being marketed for sale as Vacation  Ownership  Interests,  and is
operated  under a  long-term  lease  arrangement.  The  Company  also owns 1,128
Vacation Ownership Interests in a resort in Las Vegas, Nevada, 600 of which have
been annexed into Premiere Vacation Club.

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

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

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

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                              Three Months Ended        Nine Months Ended
                                                                 September 30,             September 30,
                                                            ----------------------    ----------------------
                                                              2001         2002         2001         2002
                                                            ---------    ---------    ---------    ---------
<S>                                                         <C>          <C>          <C>          <C>
As a percentage of total revenues:
  Sales of Vacation Ownership Interests                          60.2%        63.3%        59.7%        61.5%
  Resort operating revenue                                       34.4%        26.9%        35.2%        28.4%
  Interest income                                                 5.4%         9.8%         5.1%        10.1%
                                                            ---------    ---------    ---------    ---------
  Total revenues                                                100.0%       100.0%       100.0%       100.0%
                                                            =========    =========    =========    =========

As a percentage of sales of Vacation Ownership Interests:
  Cost of Vacation Ownership Interests sold                      17.0%        14.5%        17.0%        14.5%
  Sales and marketing                                            52.5%        63.6%        56.3%        62.4%
  Provision for doubtful accounts                                 4.4%         4.4%         4.4%         4.4%
  Contribution margin percentage from sale of Vacation
    Ownership Interests (1)                                      26.1%        17.5%        22.3%        18.7%

As a percentage of resort operating revenue:
  Cost of resort operations                                      90.5%        93.9%        84.7%        88.7%

As a percentage of total revenues:
  General and administrative                                     10.4%        10.4%         9.5%        10.6%
  Depreciation and amortization                                   2.0%         2.0%         1.5%         1.9%
  Operating income                                               12.0%        10.1%        12.8%        12.3%

Selected operating data:
  Vacation Ownership Interests sold (2) (3)                       448          515        1,360        1,493
  Average sales price per Vacation Ownership Interest
    sold (excluding revenues from Upgrades) (2)             $  14,258    $  15,072    $  14,221    $  14,621
  Average sales price per Vacation  Ownership Interest
    sold (including revenues from Upgrades) (2)             $  16,249    $  18,414    $  15,821    $  17,495
</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 690 and 792  biennial  and  annual  Vacation
     Ownership Interests for the three months ended September 30, 2001 and 2002,
     respectively,  and 2,101 and 2,254 biennial and annual  vacation  ownership
     interests  for  the  nine  months  ended   September  30,  2001  and  2002,
     respectively.

COMPARISON  OF THE THREE AND NINE MONTHS ENDED  SEPTEMBER  30, 2001 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2002

     Sales of Vacation  Ownership  Interests  increased  30.0% or  $2,224,360 to
$9,629,403 for the three months ended  September 30, 2002,  from  $7,405,043 for
the same period in 2001 and increased 21.1% or $4,616,310 to $26,520,385 for the

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

nine months ended  September  30, 2002 from  $21,904,075  for the same period in
2001.  The  increases  reflect  primarily  sales from the Las Vegas sales office
which opened in mid January 2002 and greater  sales to existing  owners,  net of
decreased  sales from the  Sedona  sales  office  due to  reduced  tour flow and
decreased  sales from the Kohl's Ranch sales office due to lower closing  rates.
The decrease in tours to the Sedona sales office  reflects fewer tours generated
from outside vendors and the reduction of certain telemarketing programs.  While
total  revenue  decreased to this sales  office as a result of fewer tours,  the
efficiency increased.

     The average sales price per Vacation  Ownership  Interest  sold  (excluding
revenues from  Upgrades)  increased 5.7% or $814 to $15,072 for the three months
ended  September 30, 2002 from $14,258 for the same period in 2001 and increased
2.8% or $400 to  $14,621  for the nine  months  ended  September  30,  2002 from
$14,221 for the same period in 2001. The number of Vacation Ownership  Interests
sold  increased  15.0% from 448 in the three months ended  September 30, 2001 to
515 for the same period in 2002 and increased 9.8% from 1,360 in the nine months
ended September 30, 2001 to 1,493 for the same period in 2002 due to the opening
of the Las Vegas  office,  net of reduced  sales in the Sedona and Kohl's  Ranch
sales  offices as described  above,  as well as the closure of the Phoenix sales
office in May 2001. The three and nine months ended  September 30, 2002 included
555 and 1,523 biennial Vacation Ownership  Interests (counted as 277.5 and 761.5
annual Vacation Ownership Interests) compared to 485 and 1,483 biennial Vacation
Ownership  Interests  (counted  as 242.5 and  741.5  annual  Vacation  Ownership
Interests) in the same periods in 2001, respectively.

     Upgrade revenue,  included in Vacation Ownership Interest sales,  increased
93.0% to $1,719,459 for the three months ended  September 30, 2002 from $890,790
for the same  period  in 2001 and  increased  97.2% to  $4,290,796  for the nine
months ended  September  30, 2002 from  $2,175,905  for the same period in 2001.
Upgrades  often  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.  Upgrade revenue has
increased  due to expanded  marketing  efforts to existing  owners.  The average
sales price per Vacation Ownership Interest sold (including  Upgrades) increased
13.3% or $2,165 to $18,414 for the three  months ended  September  30, 2002 from
$16,249 in 2001 and  increased  10.6% or $1,674 to $17,495  for the nine  months
ended September 30, 2002 from $15,821 for the same period in 2001.

     Resort operating  revenue  decreased 3.4% and 5.2% or $145,105 and $666,493
to $4,091,017 and  $12,244,187 for the three and nine months ended September 30,
2002,  respectively,  reflecting  a decrease in business  and tourist  travel by
non-owners  in the first nine months of 2002, as well as timing  differences  in
revenue  from  vacation  interval  owners in the first  quarter.  Cost of resort
operations as a percentage of resort operating  revenue  increased from 90.5% to
93.9% for the third quarter ended September 30, 2002 and increased from 84.7% to
88.7% for the nine months ended  September 30, 2002.  Because of the large fixed
cost component of resort  operations,  reductions in revenue resulted in greater
costs as a percentage of revenue.  Actual resort operating costs were comparable
between  quarters and lower year to date September 30, 2002 than the same period
in 2001.

     Interest income  increased  125.5% to $1,484,663 for the three months ended
September  30,  2002 from  $658,261  for the same  period in 2001 and  increased
128.4%  to  $4,340,829  for the  nine  months  ended  September  30,  2002  from
$1,900,860 for the same period in 2001, reflecting an increase in the percentage
of Customer  Notes sold in 2002,  for which the Company  recognizes the interest
premium upon sale of the note and the  increased  portfolio of interest  bearing
retained notes.

     Cost of  Vacation  Ownership  Interests  sold as a  percentage  of Vacation
Ownership  Interest  sales  decreased  from 17.0% for the three and nine  months
ended  September 30, 2001 to 14.5% for the three and nine months ended September
30,  2002,  respectively,  reflecting  favorable  costs for the  acquisition  of
vacation ownership interests in the Carriage House and the Bell Rock Inn, net of
improvements made to resort properties.

                                       11
<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  increased to 63.6% for the three months ended September 30, 2002 from
52.5%  for the  same  period  in 2001 and to 62.4%  for the  nine  months  ended
September  30,  2002 from  56.3% for the same  period  in 2001,  reflecting  the
start-up of the Las Vegas sales  office which opened in January 2002.

     The provision for doubtful  accounts as a percentage of Vacation  Ownership
Interest sales was consistent at 4.4% of sales of Vacation  Ownership  Interests
in the three and nine month periods ended September 30, 2001 and 2002.

     General  and  administrative  expenses  were  consistent  at 10.4% of total
revenue  for the three  month  periods  ended  September  30,  2002 and 2001 and
increased  to 10.6% of total  revenue for the nine months  ended  September  30,
2002,  from 9.5% for the same period in 2001.  The  increase  for the nine month
period reflects increased  professional fees,  including fees for development of
an enhanced website and expenses for Premiere Park in Las Vegas.

     Income  from land and other,  net  (including  Related  Party) for the nine
months ended September 30, 2002 includes a gain of $586,111 on the sale in March
2002 of the Sedona Station (the Sedona sales office) offset by a loss of $48,884
on the assumption of the assets and liabilities of Sedona Worldwide Incorporated
as of January 2, 2002.  The Sedona  Station  was sold to EJM, a creditor  of the
company and a direct and  indirect  major  shareholder,  for  $1,650,000  and is
leased back from EJM by the Company under a nine-year lease agreement. The sales
price was  negotiated and agreed to by the parties to the  transaction  based on
current market  values.  The market price was predicated on the knowledge of the
Company,  its  counsel and  advisors  of the Sedona  real estate  market and the
capitalization  of rent. At the time of the transaction,  the Company owned five
properties and leased several other locations in Sedona.  In connection with the
financing  of some of  these  other  transactions,  recent  appraisals  had been
obtained  by  financial  institutions  on  comparable  properties.  The  Company
compared the sales price and lease rate to comparable  properties and found them
within the range of  transactions  related to those and other  properties.  This
transaction  enabled the Company to pay in full a $700,000  note  payable to the
affiliate  which  otherwise  would have been due and payable in full in December
2003. The lease capitalization rate of ten percent is equivalent to the interest
rate on that note.

     The  10.3%  and  23.9%  decreases  in  interest  expense  to  $552,209  and
$1,519,995 for the three and nine months ended  September 30, 2002 from $615,492
and $1,997,721 for the same periods in 2001, respectively, reflect interest rate
reductions on the Company's variable rate notes and capitalized interest related
to construction in Las Vegas and Arizona in 2002.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES OF CASH

     The Company  generates cash  primarily from the sale of Vacation  Ownership
Interests (including  Upgrades),  from the financing of Customer Notes from such
sales and from resort  operations.  During the nine months ended  September  30,
2001 and 2002,  cash  provided by  operations  was  $5,250,398  and  $4,728,588,
respectively. The decrease in cash provided by operations reflects cash paid for
2001 income taxes and an increase in other assets for an investment in a related
party,  estimated tax payments for 2002, and increased escrow  balances,  net of
increased net income and related income tax expense,  the effect of common stock
issued  in lieu of cash  compensation,  and an  increase  in  accrued  and other
liabilities,  reflecting timing differences  between years in drawing funds from
the homeowners associations for operating activities.

     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,

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

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, 2001, the Company,  excluding its Genesis  subsidiary,  had
Net Operating Loss (NOL)  carryforwards  of  approximately  $4.7 million,  which
expire in 2002  through  2020.  At December  31,  2001,  Genesis had federal NOL
carryforwards  of  approximately  $2.0  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 during the nine
months  ended  September  30,  2001  and  2002 was  $4,757,700  and  $7,946,977,
respectively.  The  increase  reflects  construction  activities  in Las  Vegas,
including construction of a restaurant at the Carriage House and renovation of a
portion of the  existing  building at Premiere  Park into a sales center and the
addition of a model suite and sales lounge.

     Net cash used in financing  activities for the nine months ended  September
30, 2001 was $371,990  compared to net cash provided by financing  activities of
$2,136,628  for the nine months  ended  September  30,  2002.  Cash  provided by
financing  activities  in 2002 includes the borrowing of $2.0 million to finance
the construction of 21 new units in Pinetop,  Arizona, and additional borrowings
to finance the purchase of a building and  equipment,  net of greater  principal
payments on notes payable.

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

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

     On April 9, 1999  (effective  January 1, 1999),  the Company formed the ILX
Resorts  Incorporated  Employee Stock Ownership Plan and Trust (the "ESOP"). The
intent of the ESOP is to provide a retirement  program for employees that aligns
their  interests  with  those  of the  Company.  During  the nine  months  ended
September 30, 2002,  the Company  contributed  $160,000 to the ESOP and the ESOP
used the funds to exercise  options for 40,000  shares of the  Company's  common
stock at $4.00 per share.  In August 2002, the ESOP entered into an agreement to
purchase  22,000 shares of common stock for $181,500 in notes payable secured by
the stock. The notes bear interest at 6% and mature in 2003.

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

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

CREDIT FACILITIES AND CAPITAL

     At  September  30,  2002,  the  Company has an  agreement  with a financial
institution  for a commitment  of $40 million,  under which the Company may sell
certain of its Customer  Notes.  The agreement  provides for sales on a recourse
basis  with  a  percentage  of the  amount  sold  held  back  by  the  financial
institution as additional collateral. Customer Notes may be sold at discounts or
premiums to the principal  amount in order to yield the consumer market rate, as
defined by the  financial  institution.  If a customer  pays off a note prior to
maturity of the note, the financial institution may recover from the Company the
unearned interest  premium,  if any. At September 30, 2002, $14.3 million of the
$40 million commitment was available to the Company.

     The Company also has a financing commitment aggregating $30 million whereby
the Company may borrow against notes  receivable  pledged as  collateral.  These
borrowings  bear  interest  at a rate  of  prime  plus  1.5%.  The  $30  million
commitment expires in 2003. At September 30, 2002,  approximately  $11.6 million
is available under this commitment.

     At September 30, 2001 and 2002, the Company had approximately $12.4 million
and $12.8 million,  respectively,  in  outstanding  notes  receivable  sold on a
recourse basis.  Portions of the notes  receivable are secured by deeds of trust
on Los Abrigados Resort & Spa, VCA-South Bend and VCA-Tucson.

     In the first nine months of 2002, the Company  purchased  136,395  treasury
shares for a cost of $1,030,686.

     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 was secured by the property
and bore interest at a fixed rate of 8.625%. In March 2002, the Company sold the
property to EJM for  $1,650,000  and the Company  recorded a gain of $586,111 on
the  transaction.  The loan  secured  by the  property,  which had a balance  of
$794,345, was assumed by the purchaser and a note payable to EJM of $700,000 was
paid in full as part of the  transaction.  The balance of the purchase price was
paid to the  Company in cash.  The  Company  is leasing  the space back from EJM
under a nine-year  lease  agreement  (at $165,000 per annum) and has  recognized
$82,500 in rent expense for the nine months ended September 30, 2002.

     In the nine months ended  September  30, 2002,  the Company  purchased  386
Vacation   Ownership   Interests  in  the  Carriage   House  in  Las  Vegas  for
approximately $424,500, which it intends to annex into Premiere Vacation Club in
the future.

     In  April  2002,   the  Company   borrowed  $2.0  million  to  finance  the
construction  of 21 new units on land owned by the Company in Pinetop,  Arizona.
The  promissory  note  payable  bears  interest at prime plus 1.5%.  The debt is
payable in equal  monthly  payments of principal  and interest  over a five-year
term ending May 2007.

     In June 2002,  the Company  borrowed $3.8 million and utilized a portion of
the  proceeds to purchase  for $3.325  million a $4.9  million note payable by a
subsidiary to a third party.  The  promissory  note bears interest at prime plus
1.0% with a minimum  interest  rate of 7%. The debt is payable in equal  monthly
payments of principal and interest over a five-year term ending June 2007.

     In June 2002, the Company  acquired land and two buildings  adjacent to Los
Abrigados for $444,000 cash. In August 2002, the Company borrowed $337,500 which
is secured  by the  property,  bears  interest  at a fixed rate of 7.5%,  and is
payable in monthly  payments of $1,406.25  principal plus accrued interest until
July 2007 when the unpaid balance is due in full.

                                       14
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (CONTINUED)

     In October 2002, the Company  contributed an additional $80,000 to the ESOP
and the ESOP  used the  funds to  exercise  options  for  20,000  shares  of the
Company's common stock at $4.00 per share.

     In December 1999,  the Company  completed the spin-off of its 80% ownership
interest  in  Sedona  Worldwide  Incorporated  to the  shareholders  of ILX.  In
conjunction  with the spin-off,  the Company agreed to provide up to $200,000 of
working capital  financing to SWI through  November 30, 2001 at an interest rate
of prime plus 3%, with interest payable monthly, and a maturity date of December
31, 2001. Pursuant to the agreement, the Company had advanced SWI $108,000 as of
December 31 2001. On January 2, 2002, the Company entered into a General Bill of
Sale,  Assignment and Assumption  Agreement with SWI whereby the Company assumed
all of the assets and liabilities of SWI.

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

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

CONTRACTUAL CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS

     The  following  table  presents  the  contractual   cash   obligations  and
commercial commitments as of September 30, 2002. The Company also sells consumer
notes  with  recourse.   The  Company  has  no  other  significant   contractual
obligations or commercial  commitments either on or off balance sheet as of this
date.

<TABLE>
<CAPTION>
                                                  PAYMENTS DUE BY PERIOD
CONTRACTUAL CASH            -------------------------------------------------------------------
OBLIGATIONS                    TOTAL       < 1 YEAR      1-3 YEARS     4-5 YEARS     > 5 YEARS
-----------                 -----------   -----------   -----------   -----------   -----------
<S>                         <C>           <C>           <C>           <C>           <C>
LONG-TERM DEBT              $43,489,000   $ 6,315,000   $13,105,000   $13,784,000   $10,285,000
CAPITAL LEASE OBLIGATIONS        64,000        36,000        28,000            --            --
OPERATING LEASES             16,785,000     1,518,000     2,668,000     2,066,000    10,533,000
                            -----------   -----------   -----------   -----------   -----------
TOTAL                       $60,338,000   $ 7,869,000   $15,801,000   $15,850,000   $20,818,000
                            ===========   ===========   ===========   ===========   ===========
</TABLE>

SEASONALITY

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

INFLATION

     Inflation  and  changing  prices  have  not had a  material  impact  on the
Company's revenues,  operating income and net income during any of the Company's
three most recent  fiscal  years or the nine months  ended  September  30, 2002.
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.

                                       15
<PAGE>
                             CONTROLS AND PROCEDURES

ITEM IV. CONTROLS AND PROCEDURES

     Within 90 days prior to the filing of this quarterly report,  the Company's
Chief Executive  Officer and its Chief Financial Officer evaluated the Company's
disclosure controls and procedures as required pursuant to Rule 13a-14 under the
Securities and Exchange Act of 1934, as amended.  Based on this evaluation,  the
Chief  Executive  Officer and its Chief  Financial  Officer determined that such
controls and procedures  were  effective.  There were no significant  changes in
internal controls that could  significantly  affect the disclosure  controls and
procedures since the date of the evaluation.

                                       16
<PAGE>
                                     PART II

ITEM I. LEGAL PROCEEDINGS

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

ITEM II. CHANGES IN SECURITIES AND USE OF PROCEEDS

     The Company eliminated the liquidation preference of its Series B preferred
stock.

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

                                       17
<PAGE>
                                   SIGNATURES

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


                            ILX RESORTS INCORPORATED
                                  (Registrant)



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


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


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


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


Date: As of November 11, 2002

                                       18
<PAGE>
                       FORM OF CERTIFICATION FOR FORM 10-Q

                                 CERTIFICATIONS

I,  Joseph P.  Martori,  Chairman,  and Chief  Executive  Officer of ILX Resorts
Incorporated (the "Company") certify that:

     1.   I have  reviewed  this  quarterly  report on Form 10-Q of ILX  Resorts
          Incorporated;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material fact  necessary to make the statements
          made, in light of the  circumstances  under which such statements were
          made,  not  misleading  with  respect  to the  period  covered by this
          quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date: November 11, 2002

                                        /s/ Joseph P. Martori
                                        ----------------------------------------
                                        Joseph P. Matori
                                        Chairman and Chief Executive Officer

                                       19
<PAGE>
                       FORM OF CERTIFICATION FOR FORM 10-Q

                                 CERTIFICATIONS

I, Margaret M. Eardley,  Executive Vice President and Chief Financial Officer of
ILX Resorts Incorporated (the "Company") certify that:

     1.   I have  reviewed  this  quarterly  report on Form 10-Q of ILX  Resorts
          Incorporated;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material fact  necessary to make the statements
          made, in light of the  circumstances  under which such statements were
          made,  not  misleading  with  respect  to the  period  covered by this
          quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date: November 11, 2002

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

                                       20