819551--3/31/2006--ILX_RESORTS_INC

related topics
{cost, regulation, environmental}
{acquisition, growth, future}
{stock, price, share}
{stock, price, operating}
{loss, insurance, financial}
{loan, real, estate}
{condition, economic, financial}
{competitive, industry, competition}
{tax, income, asset}
{operation, natural, condition}
{capital, credit, financial}
{provision, law, control}
{personnel, key, retain}
{regulation, change, law}
{debt, indebtedness, cash}
WE FACE A VARIETY OF RISKS RELATED TO THE RAPID GROWTH OF OUR BUSINESS. OUR PRACTICE OF FINANCING CUSTOMER BORROWINGS EXPOSES US TO LIQUIDITY RISKS. WE FACE SUBSTANTIAL COMPETITION IN THE VACATION OWNERSHIP INDUSTRY. OUR SUCCESS WILL DEPEND UPON OUR KEY MANAGEMENT EMPLOYEES. OUR BUSINESS COULD BE ADVERSELY AFFECTED BY OUR GEOGRAPHIC CONCENTRATION WITHIN THE WESTERN UNITED STATES, PARTICULARLY ARIZONA. OUR ABILITY TO SUCCESSFULLY MARKET OUR PROPERTIES WILL DEPEND UPON CONTINUED AVAILABILITY OF VIABLE EXCHANGE NETWORKS OUR COMPANY FACES SIGNIFICANT RISKS ASSOCIATED WITH LEVERAGE. EXTENSIVE FEDERAL, STATE, AND LOCAL LAWS AND REGULATIONS AFFECT THE WAY WE CONDUCT OUR BUSINESS. EXCESSIVE CLAIMS FOR CONSTRUCTION-RELATED DEFECTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND OPERATING RESULTS. ENVIRONMENTAL LIABILITIES COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS. ACCELERATION OF DEFERRED TAXES AND NET OPERATING LOSS CARRYFORWARD LIMITATIONS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND LIQUIDITY. THE LIMITED RESALE MARKET FOR VACATION OWNERSHIP INTERESTS COULD ADVERSELY AFFECT OUR BUSINESS. DOWNTURNS IN GENERAL ECONOMIC CONDITIONS CAN SIGNIFICANTLY IMPACT OUR FINANCIAL CONDITION AND OPERATING RESULTS. WE COULD INCUR COSTS TO COMPLY WITH LAWS GOVERNING ACCESSIBILITY OF FACILITIES BY DISABLED PERSONS. WE MAY HAVE LOSSES THAT ARE NOT COVERED BY INSURANCE. INCREASED GASOLINE PRICES, AN OUTBREAK OF WAR, ACTS OF TERRORISM, UNFORESEEN NATURAL DISASTERS OR SIMILAR EVENTS COULD NEGATIVELY IMPACT OUR BUSINESS. OUR BUSINESS IS SUBJECT TO SEASONALITY AND VARIABILITY OF QUARTERLY RESULTS CERTAIN OF OUR EXISTING SHAREHOLDERS HAVE THE ABILITY TO EXERT A SIGNIFICANT AMOUNT OF CONTROL OVER OUR COMPANY. IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE US. OUR STOCK PRICE HAS BEEN, AND WILL LIKELY CONTINUE TO BE, HIGHLY VOLATILE, WHICH MAY NEGATIVELY AFFECT OUR ABILITY TO OBTAIN FINANCING IN THE FUTURE.

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