SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-Q/A
                                 AMENDMENT NO. 1

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

For The Quarter Ended September 30, 1998        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.

The undersigned  registrant  hereby amends its Quarterly Report on Form 10-Q for
the three- and nine-month periods ended September 30, 1998, as follows:

         Part I,  Items I and 2 and  the  Financial  Data  Schedule
         are hereby amended to read in their entirety, as follows:
<PAGE>
PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                     December 31,  September 30,
                                                         1997          1998
                                                     ------------  -------------
                                                                   (Unaudited)
                                     ASSETS

Cash and cash equivalents                            $ 3,226,038   $ 1,650,200
Notes receivable, net                                 15,861,621    18,910,291
Resort property held for Vacation
 Ownership Interest sales                             14,666,658    20,881,974
Resort property under development                      2,943,936       147,631
Land held for sale                                     1,557,498     1,593,009
Deferred assets                                          289,009       264,048
Property and equipment, net                            3,472,899     4,251,823
Deferred income taxes                                    304,430          --
Other assets                                           1,400,224     1,496,604
                                                     -----------   -----------

    TOTAL ASSETS                                     $43,722,313   $49,195,580
                                                     ===========   ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
Accounts payable                                     $ 2,830,375   $ 1,740,263
Accrued and other liabilities                          2,220,566     1,690,413
Notes payable                                         19,884,479    17,508,694
Notes payable to affiliates                            2,166,100     1,620,557
Income taxes payable                                        --          94,320
                                                     -----------   -----------

    Total liabilities                                 27,101,520    22,654,247
                                                     -----------   -----------

COMMITMENTS AND CONTINGENCIES

Shareholders' Equity

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

Common stock, no par value; 30,000,000 shares
 authorized; 2,692,433 and 4,332,533 shares issued    10,267,667    19,819,477

Treasury stock, at cost, 103,060 and 234,940 shares     (652,587)   (1,040,456)

Additional paid in capital                                79,450       279,450

Retained earnings                                      5,541,372     6,097,971
                                                     -----------   -----------

    Total shareholders' equity                        16,620,793    26,541,333
                                                     -----------   -----------

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $43,722,313   $49,195,580
                                                     ===========   ===========

                 See notes to consolidated financial statements

                                       2
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                          Three months ended         Nine months ended
                                             September 30,              September 30,
                                         ----------------------    ------------------------
                                             1997       1998           1997         1998
                                         ----------  ----------    -----------  -----------
<S>                                    <C>          <C>           <C>          <C>
TIMESHARE REVENUES:
 Sales of Vacation Ownership Interests   $6,812,548  $5,633,797    $17,750,423  $16,881,611
 Resort operating revenue                 2,770,829   3,342,697      8,000,593    8,929,975
 Interest income                            414,482     610,098        973,236    1,543,771
                                         ----------  ----------    -----------  -----------
     Total timeshare revenues             9,997,859   9,586,592     26,724,252   27,355,357
                                         ----------  ----------    -----------  -----------
COST OF SALES AND OPERATING
EXPENSES:
 Cost of vacation ownership
   Interests sold                           852,314     739,509      2,369,296    2,347,826
 Cost of resort operations                2,672,365   3,157,149      7,938,745    8,705,876
 Sales and marketing                      4,095,069   4,169,458     10,237,066   10,989,279
 General and administrative                 703,731     842,848      2,003,106    2,120,528
 Provision for doubtful accounts            208,759     168,586        526,352      498,768
 Depreciation and amortization              137,494      99,706        345,145      284,216
                                         ----------  ----------    -----------  -----------
Total cost of sales and operating
     expenses                             8,669,732   9,177,256     23,419,710   24,946,493
                                         ----------  ----------    -----------  -----------

Timeshare operating income                1,328,127     409,336      3,304,542    2,408,864
                                         ----------  ----------    -----------  -----------

Income from land and other, net               7,001       4,435         16,585       21,975
                                         ----------  ----------    -----------  -----------
Total operating income                    1,335,128     413,771      3,321,127    2,430,839

Interest expense                            564,710     515,111      1,500,472    1,422,244
                                         ----------  ----------    -----------  -----------
Income before income taxes and
 minority interests                         770,418    (101,340)     1,820,655    1,008,595

Income tax expense                         (303,845)     41,000       (656,302)    (404,000)
                                         ----------  ----------    -----------  -----------

Income before minority interests            466,573     (60,340)     1,164,353      604,595
                                         ----------  ----------    -----------  -----------

Minority interests                           (9,554)         --       (178,307)          --
                                         ----------  ----------    -----------  -----------

NET INCOME                               $  457,019  $  (60,340)   $   986,046  $   604,595
                                         ==========  ==========    ===========  ===========
NET INCOME PER SHARE
     Basic                               $     0.16  $    (0.02)   $      0.35  $      0.15
                                         ==========  ==========    ===========  ===========

     Diluted                             $     0.16  $    (0.02)   $      0.35  $      0.15
                                         ==========  ==========    ===========  ===========
</TABLE>
                 See notes to consolidated financial statements
                                       3
<PAGE>
                    ILX RESORTS INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                                           Nine months ended
                                                             September 30,
                                                     --------------------------
                                                         1997          1998
                                                     -----------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                          $   986,046   $    604,595
 Adjustments to reconcile net income to net
  cash provided by (used in) operating activities:
  Undistributed minority interest                        178,032             --
  Deferred income taxes                                  414,204        398,750
  Provision for doubtful accounts                        526,352        498,768
  Depreciation and amortization                          345,145        284,216
  Amortization of guarantee fees                          67,150         39,075
  Change in assets and liabilities:
   Decrease (increase) in resort property
    held for Vacation Ownership Interest sales         1,016,760     (3,419,011)
   (Decrease) in resort property under development      (518,127)            --
   Increase in land held for sale                         (3,572)       (35,511)
   Increase in other assets                              (11,637)      (114,830)
   Decrease in accounts payable                         (390,843)    (1,090,112)
   Increase (decrease) in accrued and
    other liabilities                                    357,065       (331,032)
                                                     -----------   ------------
Net cash provided by (used in) operating activities    2,966,575     (3,165,092)
                                                     -----------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Notes receivable, net                             (4,429,967)    (3,547,438)
    Increase in deferred assets                          (67,617)       (14,114)
    Purchases of property and equipment, net            (492,988)    (1,044,690)
    Net cash paid for minority interest                 (820,000)            --
                                                     -----------   ------------
Net cash used in investing activities                 (5,810,572)    (4,606,242)
                                                     -----------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from notes payable                        6,208,386      9,716,404
    Principal payments on notes payable               (4,374,662)   (12,092,189)
    Principal payments on notes payable to affiliates   (202,181)      (387,143)
    Distributions to minority partners                  (140,000)            --
    Net proceeds from issuance of common stock            96,125      9,394,289
    Acquisition of treasury stock                           (563)      (387,869)
    Preferred stock dividend payments                    (47,894)       (47,996)
                                                     -----------   ------------
Net cash (used in) provided by financing activities   (1,539,211)     6,195,496
                                                     -----------   ------------
DECREASE IN CASH AND CASH EQUIVALENTS                 (1,304,786)    (1,575,838)

CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD                                              3,523,047      3,226,038
                                                     -----------   ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD           $ 2,218,261   $  1,650,200
                                                     ===========   ============

                 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   (collectively  referred  to  as  "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
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
notes  required  by  generally  accepted  accounting   principles  for  complete
financial  statements.  In  the  opinion  of  management,  all  adjustments  and
reclassifications  considered  necessary for a fair and comparable  presentation
have been included and are of a normal recurring  nature.  Operating results for
the  three  and  nine  months  ended  September  30,  1998  are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
1998. The accompanying  financial  statements should be read in conjunction with
the Company's most recent audited financial statements.

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

REVERSE STOCK SPLIT

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

REVENUE RECOGNITION

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                        Three Months Ended     Nine Months Ended
                          September 30,           September 30,
                       -------------------   -----------------------
                         1997       1998        1997         1998
Interest paid          $627,000   $356,000   $1,547,000   $1,498,000
Income taxes paid      $     --   $  2,000   $       --   $    5,000
Capitalized interest   $ 54,000   $ 34,000   $  140,000   $  357,000

                                       5
<PAGE>
RESORT PROPERTY UNDER DEVELOPMENT

     Resort property under development  totaling $2,943,936 at December 31, 1997
was reclassified to resort property held for Vacation  Ownership  Interest sales
as of  September  30, 1998 to reflect  completion  of  construction.  The resort
opened to revenue paying guests in July 1998.

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.  The Company adopted SFAS 130 in 1998. There were no items
of other comprehensive income, as that term is defined in SFAS 130, in the three
and nine months ended September 30, 1997 or September 30, 1998.

     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 is currently  evaluating what impact this statement will
have on its financial statements.

     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.

RECLASSIFICATIONS

     The financial  statements for 1997 have been  reclassified to be consistent
with the 1998 presentation.

NOTE 2. NOTES PAYABLE

     In June 1998, the Company entered into a borrowing agreement under which it
may borrow up to $40 million against eligible receivables through June 2002. The
terms of the  agreement  provide for  borrowing at prime plus 1.5% to prime plus
1.75%,  with a maturity date of June 11, 2007. A commitment fee of 1% is payable
as amounts are advanced under the line.

     In June 1998,  the  Company  acquired  residential  real  estate in Sedona,
Arizona for $308,000  for which it paid  $58,000 in cash and  borrowed  $250,000
secured by a deed of trust.  The note bears  interest  at 8.5%,  and  matures in
2003.

     In September  1998, the Company  amended a borrowing  agreement to increase
the amount that it may borrow against  eligible  receivables  from $2,000,000 to
$3,500,000  through  September  2001.  The terms of the  agreement  provide  for
borrowing at prime plus 3%, with a maturity date of September 2006.

     In September 1998, the Company borrowed $300,000 for additional development
at Varsity  Clubs of America  South Bend  Chapter,  including  enclosure  of the
outdoor  swimming pool.  The note is secured by furniture and  equipment,  bears
interest at 9.5% and matures in 2001.

                                       6
<PAGE>
NOTE 3. NOTE PAYABLE TO AFFILIATES

     In September  1998, the Company  entered into an agreement to purchase at a
$200,000  discount a promissory note from an affiliate with a current  principal
balance  before the  discount of $998,349 and accrued  interest of $13,130.  The
Company  made a  $100,000  principal  payment  in  September  1998  and paid the
remaining  balance in October 1998.  The $200,000 in debt  forgiveness  has been
treated as additional paid-in capital.

NOTE 4. 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,
                                     -------------------       --------------------
                                      1997         1998         1997         1998
                                      ----         ----         ----         ----
<S>                              <C>          <C>          <C>          <C>
Net income                        $  457,019   $  (60,340)  $  986,046   $  604,595
Less: Series A preferred stock
 dividends                           (12,000)     (12,000)     (35,947)     (36,000)
Series C convertible preferred
 stock cumulation share dividends $   (8,859)      (4,938)     (26,577)     (21,775)
                                  ----------   ----------   ----------   ----------
Net income available to common
    stockholders - basic          $  436,160   $  (77,278)  $  923,522   $  546,820
                                  ==========   ==========   ==========   ==========
Weighted average shares of common
    stock outstanding - basic      2,654,633    4,165,440    2,623,502    3,612,701
                                  ==========   ==========   ==========   ==========

Basic net income per share        $     0.16   $    (0.02)  $     0.35   $     0.15
                                  ==========   ==========   ==========   ==========

                          DILUTED NET INCOME PER SHARE

                                      Three Months Ended        Nine Months Ended
                                        September 30,             September 30,
                                     -------------------       --------------------
                                      1997         1998         1997         1998
                                      ----         ----         ----         ----
Net income                        $  457,019   $  (60,340)  $  986,046   $  604,595
Less: Series A preferred stock
 dividends                           (12,000)     (12,000)     (35,947)     (36,000)
                                  ----------   ----------   ----------   ----------
Net income available to common
    stockholders - diluted        $  445,019   $  (72,340)  $  950,099   $  568,595
                                  ==========   ==========   ==========   ==========
Weighted average shares of common
    stock outstanding              2,654,633    4,165,440    2,623,502    3,612,701
Add: Convertible preferred stock
 (Series B and C) dilutive effect    110,541      110,541      112,320      110,541
                                  ----------   ----------   ----------   ----------
Weighted average shares of common
  stock outstanding - dilutive     2,765,174    4,275,981    2,735,822    3,723,242
                                  ==========   ==========   ==========   ==========

Diluted net income per share      $     0.16   $    (0.02)  $     0.35   $     0.15
                                  ==========   ==========   ==========   ==========
</TABLE>
     Stock  options and warrants to purchase  157,200  shares of common stock at
prices  ranging  from $6.75 per share to $8.125 per share  were  outstanding  at
September  30,  1998 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 the underlying common shares. These options and
warrants expire at various dates between 1998 and 2004.

                                       7
<PAGE>
NOTE 5. SHAREHOLDERS' EQUITY

     During the first  quarter of 1998,  the  Company  issued  28,100  shares of
restricted  common  stock,  valued at $82,521,  to  employees  in  exchange  for
services provided. In February 1998, the Company issued 12,000 shares, valued at
$75,000,  to EVEREN  Securities,  Inc., for investment  banking and underwriting
services.

NOTE 6. COMMON STOCK OFFERING

     In April  1998,  the Company  sold,  through a public  offering,  1,400,000
shares of its common stock at a price of $6.75;  EVEREN  Securities,  Inc.,  the
underwriter  of the  offering,  also  exercised  its  overallotment  option  and
purchased an additional  200,000 shares at a price of $6.75,  for total proceeds
of $10,800,000.  Proceeds of the offering,  net of the costs of the underwriting
(including  a  7%  underwriting   discount,   professional  fees,  printing  and
promotional costs totaling $1,405,711), were recorded as common stock.

NOTE 7. OTHER

     In June 1998,  the  Company  entered  into an  agreement  to acquire  1,500
one-week, 25-year right-to-use Vacation Ownership Interests to be constructed on
land adjacent to a full service  resort in San Carlos,  Mexico.  Such  interests
will be  contributed  to the  Company's  Premiere  Vacation Club in exchange for
participation  in the  profits of  Premiere  Vacation  Club as  provided  in the
agreement.

                                       8
<PAGE>
ITEM 2. 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 and other  services at such  resorts.  The
Company  currently  owns five  resorts in  Arizona,  one in  Indiana  and one in
Colorado.  In addition,  the Company has the right to market Vacation  Ownership
Interests in resorts located in Florida and Mexico.

     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>
RESULTS OF OPERATIONS

     The  following  table  sets forth  certain  operating  information  for the
Company:
                                         Three Months Ended    Nine Months Ended
                                            September 30,        September 30,
                                         ------------------    -----------------
                                           1997        1998      1997      1998
As a percentage of total timeshare
revenues:
 Sales of Vacation Ownership Interests      68.2%      58.8%     66.5%     61.7%
 Resort operating revenue                   27.7%      34.8%     29.9%     32.7%
 Interest income                             4.1%       6.4%      3.6%      5.6%
                                         -------    -------   -------   -------
 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                           12.5%      13.1%     13.3%     13.9%
 Sales and marketing                        60.1%      74.0%     57.7%     65.1%
 Provision for doubtful accounts             3.1%       3.0%      3.0%      3.0%
 Contribution margin percentage
  from sale of Vacation
  Ownership Interests (1)                   24.3%       9.9%     26.0%     18.0%

As a percentage of resort operating
revenue:
 Cost of resort operations                  96.4%      94.4%     99.2%     97.5%

As a percentage of total timeshare
revenues:
 General and administrative                  7.0%       8.8%      7.5%      7.8%
 Depreciation and amortization               1.4%       1.0%      1.3%      1.0%
 Timeshare operating income                 13.3%       4.3%     12.4%      8.8%

Selected operating data:
 Vacation Ownership Interests sold (2)(3)    522        352     1,231     1,114
 Average sales price per Vacation
     Ownership Interest sold (excluding
     revenues from Upgrades) (2)         $12,023    $13,387   $12,598   $13,018

 Average sales price per Vacation
     Ownership Interest sold (including
     revenues from Upgrades) (2)         $13,051    $16,005   $14,420   $15,161

----------
(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 241 annual and 562 biennial for the
     three months ended  September  30, 1997 and 143 annual and 418 biennial for
     the three  months  ended  September  30,  1998,  and 582  annual  and 1,298
     biennial  for the nine months ended  September  30, 1997 and 503 annual and
     1,221 biennial for the nine months ended September 30, 1998.

                                       10
<PAGE>
COMPARISON  OF THE THREE AND NINE MONTHS ENDED  SEPTEMBER  30, 1997 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1998

     Sales of  Vacation  Ownership  Interests  decreased  17% or  $1,178,751  to
$5,633,797 for the three months ended  September 30, 1998,  from  $6,812,548 for
the same period in 1997 and decreased 5% or $868,812 to $16,881,611 for the nine
months ended  September 30, 1998 from  $17,750,423  for the same period in 1997.
The  reductions  in sales  reflect a decline  in sales  from the South  Bend and
Sedona sales offices as a result of fewer tours generated to those offices and a
lower  closing  rate in the Sedona  office,  net of increased  upgrade  sales to
existing  owners and sales from the Tucson sales office,  which opened in August
1997. The average sales price per Vacation  Ownership  Interest sold  (excluding
revenues  from  Upgrades)  increased  11% and 3% for the  three  and nine  month
periods ended September 30, 1998,  reflecting higher prices charged for Premiere
Vacation Club interests in comparison to interests in individual properties. The
Company began selling Premiere Vacation Club late in the second quarter of 1998.

     The number of Vacation Ownership  Interests sold decreased 32.6% to 352 for
the three months ended  September  30, 1998 from 522 for the same period in 1997
and  decreased  9% to 1,114 for the nine months  ended  September  30, 1998 from
1,231 for the same period in 1997. Sales of Vacation Ownership  Interests in the
three and nine months ended September 30, 1998,  included 418 and 1,221 biennial
Vacation Ownership Interests (counted as 209 and 610.5 annual Vacation Ownership
Interests)  compared  to 562 and 1,298  biennial  Vacation  Ownership  Interests
(counted  as 281 and 649  annual  Vacation  Ownership  Interests)  for the  same
periods in 1997, respectively.

     The  decrease in tour flow to the South Bend sales office in the first nine
months of 1998 was due to the  termination  of the  marketing  company which had
provided  the  majority  of  tours to the  sales  office,  in favor of  internal
generation of tours.  Fewer tours have been generated  during the transition and
start-up periods of these new programs.  Improvement in tour flow as a result of
the  investment  in these  programs is expected to be realized  beginning in the
latter half of the fourth quarter in 1998.  Tour flow to the Sedona sales office
has decreased due to increasing  competition for tours in the Phoenix market. In
response to this trend,  the Company  sought  approval in California to generate
tours to its Sedona sales  office,  and such approval was received in July 1998.
The Company began test  marketing  into  California  late in the third  quarter.
Significant  tour flow from this market is not expected until late in the fourth
quarter of 1998 or early 1999,  following  completion of test marketing.  During
July and August 1998 the Sedona sales office  experienced  an 11% closing  rate,
substantially  lower  than the  office's  historical  performance.  The  Company
attributes  the decline to  management  of the office and,  accordingly,  made a
change in management on September 1, 1998.  Following the change,  the September
closing rate for the office increased to 18%, consistent with historical results
from this office.

     Upgrade revenue,  included in Vacation Ownership Interest sales,  increased
72% to $921,722 for the three months ended  September 30, 1998 from $536,645 for
the same period in 1997 and increased 6% to $2,385,830 for the nine months ended
September 30, 1998 from $2,242,596 for the same period in 1997. The increases in
Upgrade revenue in the third quarter and  year-to-date  reflect the introduction
of Premiere Vacation Club late in the second quarter of 1998.  Premiere Vacation
Club,  which offers buyers the  opportunity  to utilize their time at any of the
participating individual ILX Resorts, to receive day use privileges and food and
beverage  discounts  at all ILX  Resorts  and a variety  of other  benefits,  is
currently being marketed as an Upgrade to owners of Vacation Ownership Interests
in the  individual  ILX  Resorts  (as well as to new  customers).  Interests  in
Premiere  Vacation Club are sold for higher  prices than  interests of a similar
size  and  season  in the  Company's  individual  resorts  due  to  the  greater
flexibility  Premiere  provides.  The increase in Upgrade  revenue from Premiere
Vacation  Club  sales in 1998 is offset in part by the  greater  trade-in  value
recognized  in 1997 on Upgrades by owners of Golden Eagle  ownership  interests.
Golden Eagle ownership interests have a higher trade-in value than the Company's
other properties and, in 1997, a disproportionate  number of Golden Eagle owners
upgraded their ownership  interests.  Upgrades generally do not involve the sale
of  additional   Vacation  Ownership  Interests  (merely  their  exchange)  and,
therefore, such Upgrades increase the average sales price per Vacation Ownership
Interest sold.

     The  introduction of the higher priced Premiere  Vacation Club interests to
both new  customers and existing  owners is reflected in the  increased  average
sales price per Vacation  Ownership  Interest  sold.  The average sale price per
Vacation  Ownership Interest sold excluding revenue from Upgrades increased from
$12,023 to  $13,387  and from  $12,598  to $13,018  for the three and nine month
periods in 1997 to the same periods in 1998 and the average sales price

                                       11
<PAGE>
including Upgrades increased from $13,051 to $16,005 and from $14,420 to $15,161
for the same periods.

     Resort operating revenues increased 21% and 12% or $571,868 and $929,382 to
$3,342,697 and $8,929,975 for the three and nine month periods ending  September
30, 1998, respectively,  reflecting increases at the Company's Sedona properties
and at Kohl's Ranch Lodge,  and the opening of Varsity Clubs of America - Tucson
Chapter in July 1998.

     The  decreases  in cost of  resort  operations  as a  percentage  of resort
operating  revenue for both the three and nine month periods ended September 30,
1998 reflect increased revenue at the Company's Sedona property and Kohl's Ranch
Lodge, net of the effects of recognition of start-up and initial operating costs
of Varsity Clubs of America - Tucson Chapter.

     Interest  income  increased  47% to  $610,098  for the three  months  ended
September  30, 1998 from  $414,482 for the same period in 1997 and increased 59%
to $1,543,771 for the nine months ended September 30, 1998 from $973,236 for the
same period in 1997,  primarily  as a result of the  increase in customer  notes
retained by the Company and  increases in interest  rates charged by the Company
on  its  customer  notes.  The  Company  is  retaining  and  borrowing   against
(hypothecating) rather than selling a greater portion of its consumer notes.

     Cost of  Vacation  Ownership  Interests  sold as a  percentage  of Vacation
Ownership  Interest sales increased slightly  (approximately  0.6%) for both the
three and nine month periods ended September 30, 1998,  reflecting variations in
product mix. 1998 sales include a lower  proportion of sales of interests in Los
Abrigados  Resort & Spa, and greater  sales of interests in Varsity  Clubs.  The
purpose  built  Varsity  Clubs  typically  have a  greater  cost of  sales  than
interests  in Los  Abrigados.  Partially  offsetting  this change in mix are the
greater 1998 prices as described above.

     Sales  and  marketing  as a  percentage  of  sales  of  Vacation  Ownership
Interests increased to 74% and 65% for the three and nine months ended September
30,  1998 from 60% and 58% for the same  periods in 1997,  respectively,  due to
reduced tours to the South Bend sales office as a result of the transition  from
the  utilization  of a major outside  vendor of tours to internal  generation of
tours,  increased  costs of  generating  tours to the  Sedona  sales  office and
reduced closing rates in the Sedona office in July and August,  all as discussed
above.  Sales and  marketing  expenses in the third quarter of 1998 also reflect
start-up costs  associated  with developing  sales  operations at the Roundhouse
Resort in Pinetop,  Arizona,  and two offsite sales offices in Mexico, which are
not expected to produce  significant revenue until at least the first quarter of
1999.  Sales and  marketing  expenses  also include  costs of developing an exit
program for non-purchasers  which allows such customers to take advantage of the
benefits of  ownership  on a trial  basis.  Introduction  of the exit program is
planned for the fourth quarter of 1998,  with  significant  revenue not expected
until 1999.

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

     General and administrative expenses increased 20% to $842,848 for the three
months ended  September  30, 1998 from  $703,731 for the same period in 1997 and
increased 6% to  $2,120,528  for the nine months ended  September  30, 1998 from
$2,003,106  for the same  period in 1997.  General and  administrative  expenses
increased as a percentage of total timeshare  revenues increased to 8.8% for the
three and 7.8% for the nine months ended September 30, 1998 compared to 7.0% and
7.5% for the same periods in 1997,  respectively.  The increases reflect greater
staffing  (including  information  systems,  contract  and loan  processing  and
accounting and financial  personnel) to support recent and planned  expansion of
sales offices, properties and marketing programs, including the Varsity Clubs of
America - Tucson Chapter hotel and sales office, offsite sales offices in Mexico
and the Premiere Vacation Club program.

     Interest  expense  decreased  9% to  $515,111  for the three  months  ended
September 30, 1998 from $564,710 for the same period in 1997 and decreased 5% to
$1,422,244 for the nine months ended  September 30, 1998 from $1,500,472 for the
same period in 1997, reflecting reductions in borrowings in the second and third
quarters  of 1998 from the use of  proceeds  of the  follow-on  offering  of the
Company's common stock, net of an increase in borrowings against notes

                                       12
<PAGE>
receivable  as the Company  retains and borrows  against,  rather than sells,  a
greater portion of its customer notes receivable.

     Income  tax  expense as a  percentage  of  pre-tax  income net of  minority
interests is comparable between years.

     The  elimination of minority  interests in 1998 is due to the buyout by the
Company of the LAP minority interest in August 1997.

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 nine months ended September 30, 1997 and 1998,
cash  provided  by  (used  in)  operations  was  $2,966,575  and   $(3,165,092),
respectively.  The negative  cash flow for the nine months ended  September  30,
1998 was due primarily to the  construction 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.

     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, 1997, the Company, excluding Genesis, had NOL carryforwards
of $4.8  million,  which  expire in 2001  through  2012.  At December  31, 1997,
Genesis had federal NOL  carryforwards of $1.9 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 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 for the nine
months  ended  September  30,  1997  and  1998 was  $5,810,572  and  $4,606,242,
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. During the nine

                                       13
<PAGE>
months ended September 30, 1998, the Company was  constructing  Varsity Clubs of
America - Tucson Chapter,  which was completed in July 1998. During that period,
the Company  borrowed  $3,438,076 on its construction  financing  commitment and
$800,200 on its lease commitment for this property.

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

CREDIT FACILITIES AND CAPITAL

     The  Company  has  agreements   with  financial   institutions   for  total
commitments  aggregating  $25.0 million under which the Company may sell certain
of its customer notes.  These  agreements  provide for sales on a recourse basis
with a percentage of the amount sold held back by the financial  institution  as
additional  collateral.  Notes may be sold at discounts or premiums to yield the
consumer market rate as defined by the financial  institution.  At September 30,
1998, approximately $9.1 million was available under these commitments.

     The  Company  also has  financing  commitments  aggregating  $43.5  million
whereby the Company may borrow against notes  receivable  pledged as collateral.
These  borrowings  bear interest at a rate of prime plus 1.5% to prime plus 3.0%
and expire at various  dates from 2002  through  2003.  At  September  30, 1998,
approximately  $39.7 million is available under these commitments.  In addition,
the Company has a written  commitment  for an additional  $10.0 million of notes
receivable financing that is subject to final documentation.

     In April  1998,  the Company  sold,  through a public  offering,  1,400,000
shares of its common stock at a price of $6.75;  EVEREN  Securities,  Inc.,  the
underwriter  of the  offering,  also  exercised  its  overallotment  option  and
purchased an additional  200,000 shares at a price of $6.75,  for total proceeds
of $10,800,000.  Proceeds of the offering,  net of the costs of the underwriting
(including  a  7%  underwriting   discount,   professional  fees,  printing  and
promotional costs totaling $1,405,711), were recorded as common stock.

     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.

OTHER

     In June 1998,  the  Company  entered  into an  agreement  to acquire  1,500
one-week, 25-year right-to-use Vacation Ownership Interests to be constructed on
land adjacent to a full service  resort in San Carlos,  Mexico.  Such  interests
will be contributed to Premiere  Vacation Club in exchange for  participation in
the profits of Premiere Vacation Club as provided in the agreement.

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.

                                       14
<PAGE>
     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 make the required  modifications  and test
Year 2000 Compliance.  The modification and upgrade of all significant  internal
applications  is  currently  in process.  The Company  plans on  completing  the
modification and upgrade process of all significant applications by December 31,
1998.

     In  addition,  the Company has  communicated  with others with whom it does
significant  business to determine their Year 2000 Compliance  readiness and the
extent  to which  the  Company  is  vulnerable  to any  third  party  Year  2000
Compliance issues.  However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted,  or that
a failure to convert by another  company,  or a conversion  that is incompatible
with the  Company's  systems,  would not have a material  adverse  effect on the
Company.

     The total cost to the Company of these Year 2000 Compliance  activities has
not been and is not  anticipated  to be  material to its  financial  position or
results  of  operations  in any given  year.  Since the  Company  commenced  its
assessment  of its Year 2000  Compliance  during  early  1998,  it has  expended
approximately  $28,000 and estimates  additional  future costs of  approximately
$40,000,  consisting primarily of software purchases and associated training and
consulting services. In addition,  certain employees of the Company have devoted
their time to assessing and implementing the Company's Year 2000 Compliance, the
costs of which have not been  separately  allocated by the Company.  These costs
and the date on which the Company  plans to complete the Year 2000  modification
and testing  processes  are based on  management's  best  estimates,  which were
derived utilizing numerous  assumptions of future events including the continued
availability of certain  resources and other factors.  However,  there can be no
guarantee that these  estimates will be achieved and actual results could differ
from those plans.

INFLATION

     Inflation  and  changing  prices  have  not had a  material  impact  on the
Company's revenues,  operating income and net income during any of the Company's
three most recent  fiscal years or the three or nine months ended  September 30,
1998.  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>
                                   SIGNATURES

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



                            ILX RESORTS INCORPORATED
                                  (Registrant)



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



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



                              /s/ Stephen W. Morgan
                            ------------------------
                                Stephen W. Morgan
                             Chief Financial Officer
                            and Senior Vice President



Date:  As of December 30, 1998

                                       16
<PAGE>
                                  EXHIBIT INDEX

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

27-1          Financial Data Schedule (filed herewith)

                                       17