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                                                                    EXHIBIT 99
 
                                  RISK FACTORS
 
     Prospective investors should carefully consider the following information
in conjunction with the other information contained in this Prospectus before
purchasing any of the shares of Common Stock offered hereby.
 
SENSITIVITY OF CUSTOMERS TO GENERAL ECONOMIC CONDITIONS
 
     The Company focuses exclusively on the economy segment of the timeshare
industry and markets primarily to households with annual incomes between $25,000
and $50,000. The Company's targeted customers are generally more vulnerable to
deteriorating economic conditions than consumers in the luxury or upscale
markets. Any economic downturn could depress spending for Vacation Intervals,
limit the availability or increase the cost of financing for the Company and its
customers, and adversely affect the collectibility of the Company's loans to
Vacation Interval buyers. During past economic slowdowns and recessions,
Affiliated Companies experienced increased delinquencies in the payment of
Vacation Interval promissory notes and monthly Club dues and consequent
increased foreclosures and loan losses. During any future economic slowdown or
recession, the Company projects that increased delinquencies, foreclosures, and
loan losses are likely to occur. Similar adverse consequences could result from
significant increases in transportation costs. Any or all of the foregoing could
have a material adverse effect on the Company's results of operations, liquidity
and financial position.
 
LEVERAGE
 
     The Company's future lending and development activities will likely be
financed with indebtedness obtained under the Company's existing credit
facilities or under credit facilities to be obtained by the Company in the
future. Such credit facilities are and would likely be collateralized by Company
assets and contain restrictive covenants. Among other consequences, terms of the
Company's debt instruments could impair the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, significant business opportunities that may arise, general
corporate purposes or other purposes. In addition, if the Company were to incur
additional indebtedness, this could increase its vulnerability to adverse
general economic and timeshare industry conditions and to increased competitive
pressures. Finally, creditors' claims against the Company will be paid in full
before the claims of shareholders in the event of a liquidation, bankruptcy or
winding up of the Company. Historically and at March 31, 1997, after taking into
account the amount of ineligible collateral and the 70% borrowing base, the
Company's borrowings have approached the maximum amount available under its
existing credit facilities. However, to the extent the Company continues to
generate additional customer notes receivable through its sales efforts, such
notes may be pledged to lenders under existing credit facilities for additional
borrowings, subject to the 70% advance rate. See "-- Financing Customer
Borrowings -- Borrowing Base" and "Business -- Existing Credit Facilities".
 
BORROWER DEFAULTS
 
     The Company offers financing to the buyers of Vacation Intervals at the
Company's resorts. These buyers make a down payment of at least 10% of the
purchase price and deliver a promissory note to the Company for the balance; the
promissory notes generally bear interest at a fixed rate, are payable over a
seven year period, and are secured by a first mortgage on the Vacation Interval.
The Company bears the risk of defaults on these promissory notes, and this risk
is heightened inasmuch as the Company generally does not verify the credit
history of its customers and will provide financing if the customer is presently
employed and meets certain household income criteria.
 
     The Company's credit experience is such that in 1997 it plans to allocate
22% of the purchase price of each Vacation Interval to a bad debt reserve. If a
buyer of a Vacation Interval defaults, the Company generally must foreclose on
the Vacation Interval and attempt to resell it; the associated marketing,
selling, and administrative costs from the original sale are not recovered; and
such costs must be incurred again to resell the Vacation Interval. Although the
Company, in many cases, may have recourse against a Vacation Interval buyer for
the unpaid price, the state of Texas and certain other states have laws which
limit the Company's ability to recover personal judgments against customers who
have defaulted on their loans. For example, under Texas law, if the Company were
to pursue a post-foreclosure deficiency claim against a customer, the customer
may file a court
 
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proceeding to determine the fair market value of the property foreclosed upon.
In such event, the Company may not recover a personal judgment against the
customer for the full amount of the deficiency, but may recover only to the
extent that the indebtedness owed to the Company exceeds the fair market value
of the property. Accordingly, the Company has generally not pursued this remedy.
 
     Prior to 1996, the Company sold customer promissory notes and mortgages to
third parties, generally with recourse, as a means of financing its operations.
As a result, the Company may be required to repurchase customer promissory notes
previously sold which become delinquent. The Company takes these contingent
obligations into account in establishing its allowance for uncollectible notes.
At December 31, 1996, the Company had notes receivable (including notes
unrelated to Vacation Intervals) in the approximate principal amount of $67.7
million, was contingently liable with respect to approximately $11.0 million
principal amount of customer notes sold with recourse and had an allowance for
doubtful notes of approximately $11.9 million. There can be no assurance that
such reserves are adequate. See Note 4 of Notes to Consolidated Financial
Statements.
 
FINANCING CUSTOMER BORROWINGS
 
   
     While the Company intends to use the proceeds of the Offering to pay off
approximately $49.9 million of existing indebtedness, it will be required to
continue to borrow to sustain operations.
    
 
   
     Borrowing Base. The Company has entered into agreements with lenders to
borrow up to approximately $96 million collateralized by customer promissory
notes and mortgages. The Company's lenders typically lend the Company 70% of the
principal amount of performing notes, and Silverleaf Owners make payments on
their promissory notes directly to the lender's collection center, where
receipts are applied against the Company's loan balance. At December 31, 1996,
the Company had a portfolio of approximately 17,626 customer promissory notes in
the approximate principal amount of $66.8 million, of which approximately $11.6
million in principal amount of customer receivables were 61 days or more past
due and therefore ineligible as collateral. At such date, the Company had
borrowings from lenders in the approximate principal amount of $34.7 million
secured by the customer loans. Historically and currently, after taking into
account the amount of ineligible collateral and the 70% borrowing base, the
Company's borrowings have approached the maximum amount available under its
existing credit facilities. To the extent the Company generates additional
customer notes receivable through its sales efforts, such notes may be pledged
to lenders for additional borrowings, subject to the 70% advance rate.
    
 
     Negative Cash Flow. The Company ordinarily receives only 10% of the
purchase price on the sale of a Vacation Interval but must pay in full the costs
of development, marketing, and sale of the interval. Maximum borrowings
available under the Company's current credit agreements may not be sufficient to
cover these costs, thereby straining capital resources, liquidity, and capacity
to grow.
 
     Interest Rate Mismatch. At December 31, 1996, the Company's portfolio of
customer loans had a weighted average fixed interest rate of 14.7%. At such
date, the Company's borrowings (which bear interest at variable rates) against
the portfolio had a weighted average cost of funds of 10.8%. The Company has
historically derived net interest income from its financing activities because
the interest rates it charges its customers who finance the purchase of their
Vacation Intervals exceed the interest rates the Company pays to its lenders.
Because the Company's indebtedness bears interest at variable rates and the
Company's customer receivables bear interest at fixed rates, increases in
interest rates will erode the spread in interest rates that the Company has
historically enjoyed and could cause the interest expense on the Company's
borrowings to exceed its interest income on its portfolio of customer loans. The
Company does not currently engage in interest rate hedging transactions.
Therefore, any increase in interest rates, particularly if sustained, could have
a material adverse effect on the Company's results of operations, liquidity and
financial position.
 
     To the extent interest rates decrease generally on loans available to the
Company's customers, the Company faces an increased risk that customers will
pre-pay their loans and reduce the Company's income from financing activities.
See "Business -- Customer Financing".
 
     Maturity Mismatch. The Company typically provides financing to customers
over a seven year period which customer notes have an average maturity of 5.6
years. The Company's related revolving credit borrowings, however, mature
between October 1998 and August 2003, with most of such borrowings maturing in
1999. Accordingly, there is a mismatch between the Company's anticipated cash
receipts and cash disbursements.
 
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Although the Company has historically been able to secure financing sufficient
to fund its operations, it does not presently have agreements with its lenders
to extend the term of its existing funding commitments or to replace such
commitments upon their expiration. Failure to obtain such refinancing facilities
could require the Company to sell its portfolio of customer loans, probably at a
substantial discount, or to seek other alternatives to enable it to continue in
business. While the Company has been successful in obtaining financing to date,
there is no assurance it will be able to do so in the future. See
"-- Acceleration of Deferred Taxes" and "-- Alternative Minimum Taxes".
 
     Impact on Sales. Limitations on the availability of financing would inhibit
sales of Vacation Intervals due to (i) the lack of funds to finance the initial
negative cash flow that results from sales that are financed by the Company, and
(ii) reduced demand if the Company is unable to provide financing to purchasers
of Vacation Intervals.
 
REPAYMENT OF INDEBTEDNESS OWED TO OFFICER AND AFFILIATES
 
     Mr. Mead will realize benefits from the Offering that will not be received
by other persons participating in the Offering. Such benefits include the
repayment by the Company of indebtedness owed to Mr. Mead and his affiliates.
Thus, Mr. Mead has interests that conflict with the interests of persons
acquiring Common Stock in the Offering. Mr. Mead and his affiliates will receive
approximately $9.9 million of the net proceeds of the Offering for the repayment
of debt owed by the Company to him and his affiliates. See "Certain
Relationships and Related Transactions -- Repayment of Affiliated Debt",
"Principal Shareholders", and "Management -- Employment and Noncompetition
Agreements".
 
REGULATION OF MARKETING AND SALES OF VACATION INTERVALS AND RELATED LAWS
 
     The Company's marketing and sales of Vacation Intervals and other
operations are subject to extensive regulation by the federal government and the
states and jurisdictions in which the Existing Resorts are located and in which
Vacation Intervals are marketed and sold. On a federal level, the Federal Trade
Commission has taken the most active regulatory role through the Federal Trade
Commission Act, which prohibits unfair or deceptive acts or competition in
interstate commerce. Other federal legislation to which the Company is or may be
subject includes the Truth-in-Lending Act and Regulation Z, the Equal
Opportunity Credit Act and Regulation B, the Interstate Land Sales Full
Disclosure Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Telephone Consumer Protection Act, the Telemarketing and
Consumer Fraud and Abuse Prevention Act, the Fair Housing Act and the Civil
Rights Acts of 1964 and 1968.
 
     In response to the fraudulent marketing practices which plagued the
timeshare industry in the 1980's, in the late 1980's and early 1990's, various
states enacted legislation aimed at curbing such abuses. Texas and Missouri, the
only states in which the Company currently owns resorts, have adopted specific
laws and regulations regarding the sale of Vacation Interval ownership programs.
The laws of most states, including Texas, require the Company to file with a
designated state authority for its approval a detailed offering statement
describing the Company and all material aspects of the project and the sale of
Vacation Intervals prior to selling to residents of that state. The laws of
these states require the Company to file numerous documents and supporting
information with the state agency responsible for the regulation of Vacation
Intervals. When the agency determines that a project may be sold, it will issue
a public report for the project. The Company is required to deliver an offering
statement or public report to all prospective purchasers of a Vacation Interval
who are Texas residents, together with certain additional information concerning
the terms of the purchase, regardless of whether the resort is located in Texas.
In Missouri, the Company is required to make certain disclosures in its sales
documents. Laws in each state where the Company currently sells Vacation
Intervals generally grant the purchaser of a Vacation Interval the right to
cancel a contract of purchase at any time within approximately five calendar
days following the date the contract was signed by the purchaser. Most states
have other laws which regulate the Company's activities and protect purchasers,
such as real estate licensure laws; travel sales licensure laws; anti-fraud
laws; consumer protection laws; telemarketing laws; prize, gift and sweepstakes
laws; and other related laws.
 
     The Company believes it is in material compliance with federal, Texas, and
Missouri laws and regulations to which it is currently subject relating to the
sale and marketing of timeshare resorts. However, the Company is
 
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normally and currently the subject of a number of consumer complaints generally
relating to marketing or sales practices filed with relevant authorities, and
there can be no assurance that all of these complaints can be resolved without
adverse regulatory actions or other consequences. The Company expects some level
of consumer complaints in the ordinary course of its business as the Company
targets audiences which generally are less financially sophisticated and more
susceptible to intensive sales practices than more affluent customers. There can
be no assurance that the costs of resolving consumer complaints or of qualifying
under Vacation Interval ownership regulations in all jurisdictions in which the
Company desires to conduct sales will not be significant, that the Company is in
material compliance with applicable federal, Texas, Missouri, or other laws and
regulations, or that violations of law will not have adverse implications for
the Company, including negative public relations, potential litigation, and
regulatory sanctions. The expense, negative publicity, and potential sanctions
associated with the failure to comply with applicable laws or regulations could
have a material adverse effect on the Company's results of operations,
liquidity, or financial position. See "Business -- Governmental Regulation".
 
     During the 1980's and continuing through the present, the timeshare
industry has been and continues to be afflicted with negative publicity and
prosecutorial attention due, among other things, to marketing practices which
were widely viewed as deceptive or fraudulent. Among the many timeshare
companies which have been the subject of federal, state and local enforcement
actions and investigations in the past were certain of the Affiliated Companies
and their affiliates. Some of the settlements, injunctions and decrees resulting
from litigation and enforcement actions (the "Orders") to which certain of the
Affiliated Companies consented purport to bind all successors and assigns, and
accordingly bind the Company. In addition, at that time the Company was directly
a party to one such Order issued in Missouri. No past or present officers,
directors or employees of the Company or any Affiliated Company were named as
subjects or respondents in any of these Orders; however, each Order purports to
bind generically unnamed "officers, directors and employees" of certain
Affiliated Companies. Therefore, certain of these Orders may be interpreted to
be enforceable against the present officers, directors and employees of the
Company even though they were not individually named as subjects of the
enforcement actions which resulted in these Orders. These Orders require, among
other things, that all parties bound by the Orders, including the Company,
refrain from engaging in deceptive sales practices in connection with the offer
and sale of Vacation Intervals. In one case in 1988, an Affiliated Company pled
guilty to deceptive uses of the mails in connection with promotional sales
literature mailed to prospective timeshare purchasers and agreed to pay a
judicially imposed fine of $1.5 million and restitution of $100,000. The
requirements of the Orders are substantially what applicable state and federal
laws and regulation mandate, but the consequence of violating the Order may be
that sanctions (including possible financial penalties and suspension or loss of
licensure) may be imposed more summarily and may be harsher than would be the
case if the Orders did not bind the Company. In addition, the existence of the
Orders may be viewed negatively by prospective regulators in jurisdictions where
the Company does not now do business, with attendant risks of increased costs
and reduced opportunities.
 
     Recently, the Company has been the subject of some consumer complaints
which have triggered governmental investigations into the Company's affairs. In
March 1997, the Company entered into an Assurance of Voluntary Compliance with
the Texas Attorney General, in which the Company agreed to make additional
disclosure to purchasers of Vacation Intervals regarding the limited
availability of its Endless Escape program during certain periods. The Company
paid $15,200 for investigatory costs and attorneys' fees of the Attorney General
in connection with this matter. Also, in March 1997, the Company entered into an
agreed order (the "Agreed Order") with the Texas Real Estate Commission
requiring the Company to comply with certain aspects of the Texas Timeshare Act,
Texas Real Estate License Act and Rules of the Texas Real Estate Commission,
with which it had allegedly been in non-compliance until mid-1995. The
allegations included (i) the Company's admitted failure to register the Missouri
Destination Resorts in Texas (due to its misunderstanding of the reach of the
Texas Timeshare Act); (ii) payment of referral fees for Vacation Interval sales,
the receipt of which was improper on the part of the recipients; and (iii)
miscellaneous other actions alleged to violate the Texas Timeshare Act, which
the Company denied. While the Agreed Order acknowledges that Silverleaf
independently resolved ten consumer complaints referenced in the Agreed Order,
discontinued the practices complained of, and had registered the Destination
Resorts during 1995 and 1996, the Texas Real Estate Commission ordered
Silverleaf to cease its discontinued practices and enhance its disclosure to
purchasers of Vacation Intervals. In the Agreed Order, Silverleaf agreed to make
a voluntary donation of $30,000 to the State of Texas. The Agreed Order also
 
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directs Silverleaf to revise its training manual for timeshare salespersons and
verification officers. While the Agreed Order resolved all of the alleged
violations contained in complaints received by the Texas Real Estate Commission
through December 31, 1996, the Company expects to encounter some level of
consumer complaints in the ordinary course of its business. See
"Business -- Governmental Regulation".
 
CONCENTRATION IN TIMESHARE INDUSTRY
 
     Because the Company's operations are conducted solely within the timeshare
industry, any adverse changes affecting the timeshare industry such as an
oversupply of timeshare units, a reduction in demand for timeshare units,
changes in travel and vacation patterns, changes in governmental regulations or
taxation of the timeshare industry, as well as negative publicity about the
timeshare industry, could have a material adverse effect on the Company's
results of operations, liquidity or financial position. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
 
COMPETITION
 
     The timeshare industry is highly fragmented and includes a large number of
local and regional resort developers and operators. However, some of the world's
most recognized lodging, hospitality and entertainment companies, such as,
Marriott Ownership Resorts ("Marriott"), The Walt Disney Company ("Disney"),
Hilton Hotels Corporation ("Hilton") and Hyatt Corporation ("Hyatt"), have
recently entered the industry. Other companies in the timeshare industry,
including Signature Resorts, Inc. ("Signature"), Fairfield Communities, Inc.
("Fairfield"), Vacation Break USA, Inc. ("Vacation Break"), Vistana, Inc.
("Vistana") and Ramada Vacation Suites ("Ramada"), a subsidiary of Mego
Financial Corporation, are public companies with enhanced access to capital and
other resources.
 
     Fairfield and Signature own timeshare resorts in or near Branson, Missouri,
which compete with the Company's Holiday Hills and Ozark Mountain Resorts, and
Signature owns a resort which is located near and competes with the Company's
Piney Shores Resort. Based on published industry data and reports, except for
Fairfield and Signature, the Company does not believe that any of the
competitors named above own timeshare resorts in Texas or Missouri and believes
that such competitors generally target consumers with higher annual incomes than
the Company. Nonetheless, competitors may possess significantly greater
financial, marketing, personnel and other resources than the Company, and there
can be no assurance that such competitors will not significantly reduce the
price of their Vacation Intervals or offer greater convenience, services or
amenities than the Company.
 
     While the Company's principal competitors are developers of timeshare
resorts, the Company is also subject to competition from other entities engaged
in the commercial lodging business, including condominiums, hotels and motels;
others engaged in the leisure business; and, to a lesser extent, from
campgrounds, recreational vehicles, tour packages and second home sales. A
reduction in the product costs associated with any of these competitors, or an
increase in the Company's costs relative to such competitors' costs, could have
a material adverse effect on the Company's results of operations, liquidity and
financial position.
 
     Numerous businesses, individuals and other entities will compete with the
Company in seeking properties for development and acquisition of resorts. Some
of these competitors will be larger and have greater financial resources than
the Company. Such competition may result in a higher cost for properties the
Company wishes to acquire or may cause the Company to be unable to acquire
suitable properties for the development of new resorts.
 
DEVELOPMENT, CONSTRUCTION AND PROPERTY ACQUISITION ACTIVITIES
 
     The Company intends to selectively develop and acquire new resorts and
continue the expansion of the Existing Resorts. Acquiring and developing new
resorts will place substantial demands on the Company's liquidity and capital
resources, as well as on its personnel and administrative capabilities. Risks
associated with the Company's development and construction activities include
the following: construction costs or delays at a property may exceed original
estimates, possibly making the expansion or development uneconomical or
unprofitable; sales of Vacation Intervals at a newly completed property may not
be sufficient to make the property profitable; and financing may be unavailable
or may not be available on favorable terms for development of, or the continued
sales of Vacation Intervals at, a property. The Company projects that its
planned expansion at the
 
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Existing Resorts alone will cost in excess of $100 million. Additionally, the
Company currently projects that it will cost in excess of $47.6 million to
acquire and fully develop its planned new drive-to resorts in Missouri and
Illinois. The Company also has plans to develop a tract of land it currently
owns in Mississippi as a new destination resort at an estimated cost of $4.5
million. There can be no assurance the Company will develop and acquire new
resorts or expand the Existing Resorts. The Company does not and upon the
consummation of the Offering will not have the financing available to complete
all of its planned expansion as set forth in "Business -- The Existing Resorts"
and "Business -- Growth Strategy".
 
     In addition, the Company's development and construction activities, as well
as its ownership and management of real estate, are subject to comprehensive
federal, state and local laws regulating such matters as environmental and
health concerns, protection of endangered species, water supplies, zoning, land
development, land use, building design and construction, marketing and sales,
and other matters. Such laws and difficulties in obtaining, or failing to
obtain, the requisite licenses, permits, allocations, authorizations and other
entitlements pursuant to such laws could impact the development, completion, and
sale of the Company's projects. See "-- Regulation of Marketing and Sales or
Vacation Intervals and Related Laws". The enactment of "slow growth" or
"no-growth" initiatives or changes in labor or other laws in any area where the
Company's projects are located could also delay, affect the cost or feasibility
of, or preclude entirely the expansion planned at each of the Existing Resorts
or the development of other resorts.
 
     The Company's resorts are located in rural areas, often requiring the
Company to provide public utility water and sanitation services in order to
proceed with development. Such activities are subject to permission and
regulation by governmental agencies, the denial or conditioning of which could
limit or preclude development. Operation of the utilities also subjects the
Company to risk of liability in connection with both the quality of fresh water
provided and the treatment and discharge of waste-water. See
"Business -- Governmental Regulation".
 
     While the Company's construction activities typically are performed by
third-party contractors whose performance cannot be assured by the Company,
construction claims may be asserted against the Company for construction defects
and such claims may give rise to liabilities. Certain state and local laws may
impose liability on property developers with respect to construction defects
discovered or repairs made by future owners of such property.
 
     See "Business -- Growth Strategy", "Business -- Development and Acquisition
Process" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company's success depends to a large extent upon the experience and
abilities of Mr. Mead, Sharon K. Brayfield, and David T. O'Connor, the Company's
Chief Executive Officer, President, and Executive Vice President -- Sales,
respectively. The loss of the services of any one of these key individuals could
have a material adverse effect on the Company's results of operations, liquidity
or financial position. See "Management -- Employment and Noncompetition
Agreements". The Company's success is also dependent upon its ability to attract
and maintain qualified acquisition, development, marketing, management,
administrative and sales personnel. The ability to attract such personnel will
become particularly important as the Company grows and develops additional
resorts, and there can be no assurance that the Company will be successful in
attracting and/or retaining such personnel.
 
COSTS OF COMPLIANCE WITH LAWS GOVERNING ACCESSIBILITY OF FACILITIES TO DISABLED
PERSONS
 
     A number of state and federal laws, including the Fair Housing Act and the
Americans with Disabilities Act (the "ADA"), impose requirements related to
access and use by disabled persons of a variety of public accommodations and
facilities. The ADA requirements did not become effective until after January 1,
1991. Although the Company believes the Existing Resorts are substantially in
compliance with laws governing the accessibility of its facilities to disabled
persons, the Company will incur additional costs of complying with such laws.
Additional federal, state and local legislation may impose further burdens or
restrictions on the Company, the Clubs, or the Master Club at the Existing
Resorts with respect to access by disabled persons. The ultimate cost of
compliance with such legislation is not currently ascertainable, and, while such
costs are not expected to
 
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have a material effect on the Company's results of operations, liquidity or
capital resources, such costs could be substantial.
 
GEOGRAPHIC CONCENTRATION WITHIN TEXAS AND MISSOURI
 
     At March 31, 1997, all of the Company's resorts and substantially all of
the Company's customers and borrowers were located in Texas and Missouri. The
Company's performance and the value of its properties is affected by regional
factors, including local economic conditions (which may be adversely impacted by
business layoffs or downsizing, industry slowdowns, changing demographics and
other factors) and the local regulatory climate. The Company's current
concentration in the Texas and Missouri markets could make the Company more
susceptible to adverse events or conditions which affect these areas in
particular.
 
POSSIBLE ENVIRONMENTAL LIABILITIES
 
     Under various federal, state and local laws, ordinances and regulations, as
well as common law, the owner or operator of real property generally is liable
for the costs of removal or remediation of certain hazardous or toxic substances
located on, in, or emanating from, such property, as well as related costs of
investigation and property damage. Such laws often impose liability without
regard to whether the owner knew of, or was responsible for, the presence of the
hazardous or toxic substances. The presence of such substances, or the failure
to properly remediate such substances, may adversely affect the owner's ability
to sell or lease a property or to borrow money using such real property as
collateral. Other federal and state laws require the removal or encapsulation of
asbestos-containing material when such material is in poor condition or in the
event of construction, demolition, remodeling or renovation. Other statutes may
require the removal of underground storage tanks. Noncompliance with these and
other environmental, health or safety requirements may result in the need to
cease or alter operations at a property. Further, the owner or operator of a
site may be subject to common law claims by third parties based on damages and
costs resulting from violations of environmental regulations or from
contamination associated with the site. Phase I environmental reports (which
typically involve inspection without soil sampling or ground water analysis)
were prepared in 1994 by independent environmental consultants for each Existing
Resort and did not reveal, nor is the Company aware of, any environmental
liability that would have, a material adverse effect on the Company's results of
operations, liquidity or financial position. No assurance, however, can be given
that these reports reveal all environmental liabilities or that no prior owner
created any material environmental condition not known to the Company.
 
     Certain environmental laws impose liability on a previous owner of property
to the extent hazardous or toxic substances were present during the prior
ownership period. A transfer of the property may not relieve an owner of such
liability. Thus, the Company may have liability with respect to properties
previously sold by it or by its predecessors.
 
     The Company owns its own water supply facilities and waste-water treatment
plant at several of its resorts. The Texas Natural Resources Conservation
Commission ("TNRCC") is the primary state umbrella agency regulating the
utilities at the Drive-to Resorts in Texas, and the Department of Natural
Resources and the Public Service Commission of Missouri are the primary state
umbrella agencies regulating such utilities at the Destination Resorts in
Missouri. As a result of an enforcement proceeding brought against the Company
by TNRCC in connection with a waste-water facility at the Holly Lake Resort, the
Company is in the process of expanding the existing waste-water facility. See
"Business -- Governmental Regulation".
 
     The Company believes that it is in compliance in all material respects with
all federal, state and local ordinances and regulations regarding hazardous or
toxic substances. Other than in connection with the waste-water proceedings
mentioned above, the Company has not been notified by any governmental authority
or third party of any non-compliance, liability or other claim in connection
with any of its present or former properties. See "Business -- Governmental
Regulation -- Environmental Matters".
 
DEPENDENCE ON VACATION INTERVAL EXCHANGE NETWORKS; POSSIBLE INABILITY TO QUALIFY
RESORTS
 
     The attractiveness of Vacation Interval ownership is enhanced by the
availability of exchange networks that allow Silverleaf Owners to exchange in a
particular year the occupancy right in their Vacation Interval for an
 
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occupancy right in another participating network resort. According to ARDA, the
ability to exchange Vacation Intervals was cited by many buyers as an important
reason for purchasing a Vacation Interval. Several companies, including RCI,
provide broad-based Vacation Interval exchange services, and all of the
Company's Existing Resorts are currently qualified for participation in the RCI
exchange network. However, no assurance can be given that the Company will
continue to be able to qualify the Existing Resorts or future resorts for
participation in the RCI network or any other exchange network. If such exchange
networks cease to function effectively, or if the Company's resorts are not
accepted as exchanges for other desirable resorts, the Company's sales of
Vacation Intervals could be materially adversely affected. See
"Business -- Participation in Vacation Interval Exchange Networks".
 
RESALE MARKET FOR VACATION INTERVALS
 
     Based on its experience at the Existing Resorts, the Company believes the
market for resale of Vacation Intervals by the owners of such intervals is very
limited and that resale prices are substantially below their original purchase
price. This may make ownership of Vacation Intervals less attractive to
prospective buyers. Also, attempts by buyers to resell their Vacation Intervals
compete with sales of Vacation Intervals by the Company. While Vacation Interval
resale clearing houses or brokers do not currently have a material impact, if
the secondary market for Vacation Intervals were to become more organized and
liquid, the availability of resale intervals at lower prices could materially
adversely affect the prices and number of sales of new Vacation Intervals by the
Company.
 
SEASONALITY AND VARIABILITY OF QUARTERLY RESULTS
 
     Sales of Vacation Intervals have generally been lower in the months of
November and December. Cash flow and earnings may be impacted by the timing of
development, the completion of future resorts, and the potential impact of
weather or other conditions in the regions where the Company operates. The above
may cause significant variations in quarterly operating results. See "-- Natural
Disasters; Uninsured Loss" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
 
NATURAL DISASTERS; UNINSURED LOSS
 
     There are certain types of losses (such as losses arising from floods and
acts of war) that are not generally insured because they are either uninsurable
or not economically insurable and for which neither the Company nor the Clubs,
nor the Master Club have insurance coverage. Should an uninsured loss or a loss
in excess of insured limits occur, the Company could lose its capital invested
in a resort, as well as the anticipated future revenues from such resort and
would continue to be obligated on any mortgage indebtedness or other obligations
related to the property. Any such loss could have a material adverse effect on
the Company's results of operations, liquidity or financial position. See
"Business -- Insurance; Legal Proceedings".
 
ACCELERATION OF DEFERRED TAXES
 
     While the Company reports sales of Vacation Intervals as income currently
for financial reporting purposes (see Note 2 of Notes to Consolidated Financial
Statements), for regular federal income tax purposes the Company reports
substantially all Vacation Interval sales on the installment method. Under the
installment method, the Company recognizes income for tax on the sale of the
Vacation Interval when cash is received in the form of a down payment and as
payments on customer loans are received. The Company's December 31, 1996 balance
sheet reflected a liability for deferred taxes (i.e., taxes owed to taxing
authorities in the future in consequence of income previously reported in the
financial statements) of $4.8 million, primarily attributable to this method of
reporting Vacation Interval sales. This amount does not include accrued interest
on such deferred taxes which also will be payable when the taxes are due, the
amount of which is not now reasonably ascertainable. If the Company should sell
the installment notes or be required to factor them or if the notes were
foreclosed on by a lender of the Company or otherwise disposed of, the deferred
gain would be reportable for tax and the deferred taxes, including interest on
the taxes for the period the taxes were deferred, as computed under Section 453
of the Internal Revenue Code of 1986, as amended (the "Code"), would become due.
There can be no assurance that the Company would have sufficient cash resources
to pay those taxes and interest. Furthermore, if the Company's sales of Vacation
Intervals should decrease in the future, the Company's diminished operations may
not generate
 
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<PAGE>   9
 
either sufficient tax losses to offset taxable income or funds to pay the
deferred tax liability from prior periods. See "-- Limitations on Use of Net
Operating Loss From Ownership Change".
 
ALTERNATIVE MINIMUM TAXES
 
     The Company has also used the installment method for the calculation of
adjusted current earnings for federal alternative minimum tax purposes, although
the accrual method is required under the Code. This has resulted in current
income taxes payable of approximately $3.3 million which is included in the
Company's December 31, 1996 balance sheet within Income Taxes Payable. The
Company has submitted a request to the Internal Revenue Service for permission
to change to the accrual method for this computation. If granted, these current
estimated taxes of approximately $3.3 million will become payable during 1997
through 2000. Although the Company believes the Internal Revenue Service will
give its permission, there is no assurance that it will, and if not granted, the
Company will currently owe those taxes plus interest and potential penalties.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".
 
LIMITATIONS ON USE OF NET OPERATING LOSS FROM OWNERSHIP CHANGE
 
     The Company estimates that it had net operating loss carryforwards of
approximately $14 million at December 31, 1996, for regular federal income tax
purposes related primarily to losses associated with the deferral of installment
sale gains. In addition to the general limitations on the carryback and
carryforward of net operating losses under Section 172 of the Code, Section 382
of the Code imposes additional limitations on the utilization of a net operating
loss by a corporation following various types of ownership changes which result
in more than a 50 percentage point change in ownership of a corporation within a
three year period. Mr. Mead owned 100% of the stock of the Company until
December 29, 1995, at which time his ownership decreased to approximately 99%.
As a result of the Offering, Mr. Mead's ownership of the Company will decrease
such that he will own approximately 65% to 68% of the Company after the
Offering. Thereafter, Mr. Mead could transfer his shares and/or the Company
could issue additional shares or grant stock options, which could result in more
than a 50 percentage point change in his ownership of the Company. If such a
subsequent change occurs within a three year period, the limitations of Section
382 would apply and may limit or deny the future utilization of the net
operating loss by the Company, resulting in the Company paying substantial
additional federal and state taxes and interest for any periods following such
change in ownership. See "-- Acceleration of Deferred Taxes" and "Shares
Eligible for Future Sale".
 
TAX RE-CLASSIFICATION OF INDEPENDENT CONTRACTORS AND RESULTING TAX LIABILITY
 
     Although all on-site sales personnel are treated as employees of the
Company for payroll tax purposes, the Company does have independent contractor
agreements with certain sales, marketing, and architectural persons or entities.
The Company has not treated these independent contractors as employees;
accordingly, the Company does not withhold payroll taxes from the amounts paid
to such persons or entities. In the event the Internal Revenue Service or any
state or local taxing authority were to successfully classify such persons or
entities as employees of the Company, rather than as independent contractors,
and hold the Company liable for back payroll taxes, such action may have a
material adverse effect on the Company's results of operations, liquidity or
financial position.
 
VOTING CONTROL BY EXISTING SHAREHOLDER
 
     Upon consummation of the Offering, Mr. Mead will hold a majority of the
Common Stock (approximately 65% to 68%), which will allow him to elect all of
the Company's directors and control the management and affairs of the Company.
To the extent Mr. Mead holds more than two-thirds of the Common Stock, he will
have sufficient voting power to determine the outcome of various matters
submitted to the shareholders for approval, including mergers, consolidations,
and the sale of substantially all of the Company's assets. See "Principal
Shareholders" and "Description of Capital Stock". Such control may result in
decisions which are not in the best interest of the Company.
 
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<PAGE>   10
 
REPAYMENT OF INDEBTEDNESS OWED TO AFFILIATE OF UNDERWRITER
 
   
     Credit Suisse First Boston Mortgage Capital, L.L.C., an affiliate of Credit
Suisse First Boston Corporation, the lead managing underwriter for the Offering,
will receive approximately $4.9 million of the net proceeds of the Offering (or
up to $5.7 million if the Underwriters' over-allotment option is exercised in
full) as repayment of indebtedness and related interest expected to be
outstanding upon consummation of the Offering. See "Underwriting".
    
 
ANTI-TAKEOVER EFFECT OF THE COMPANY'S CHARTER AND BYLAWS
 
     Certain provisions of the Company's articles of incorporation (the
"Charter") and bylaws (the "Bylaws"), may be deemed to have anti-takeover
effects and may delay, defer or prevent a takeover attempt that a shareholder
might consider to be in the shareholder's best interest. For example, such
provisions may (i) deter tender offers for Common Stock, which offers may be
beneficial to shareholders, or (ii) deter purchases of large blocks of Common
Stock, thereby limiting the opportunity for shareholders to receive a premium
for their Common Stock over then-prevailing market prices. These provisions
include the following:
 
          Preferred Shares. The Charter authorizes the Board of Directors to
     issue Preferred Stock in one or more series and to establish the
     preferences and rights (including the right to vote and the right to
     convert into Common Stock) of any series of Preferred Stock issued. No
     Preferred Stock will be issued or outstanding as of the consummation of the
     Offering. See "Description of Capital Stock -- Preferred Stock".
 
          Classified Board. The Board of Directors of the Company will have
     three classes of directors, and directors will be elected for three year
     terms, with approximately one-third of the directors elected each year. The
     terms of the first, second and third classes will expire in 1998, 1999 and
     2000, respectively. The affirmative vote of two-thirds of the outstanding
     Common Stock is required to remove a director.
 
IMMEDIATE AND SUBSTANTIAL BOOK VALUE DILUTION; NO ANTICIPATED DIVIDENDS
 
   
     Purchasers of Common Stock in the Offering will experience immediate
dilution in net tangible book value per share of Common Stock of $9.47 from the
initial public offering price per share. See "Dilution". The Company does not
anticipate that it will pay any dividends on its Common Stock in the foreseeable
future. See "Dividend Policy".
    
 
SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon consummation of the Offering, all the 3,500,000 shares of Common Stock
offered hereby will be eligible for public sale under the Securities Act of
1933, as amended (the "Securities Act"), without restriction, except for shares
acquired in the Offering by "affiliates" of the Company, as that term is defined
in Rule 144 promulgated under the Securities Act. In addition, all shares held
by affiliates will be eligible for public sale under Rule 144, subject to the
Rule's volume, manner of sale and other restrictions. In addition, the Company
has the authority to issue additional shares of Common Stock and shares of one
or more series of Preferred Stock. Pursuant to a Registration Rights Agreement
between the Company and Mr. Mead, upon Mr. Mead's request, the Company shall
register one-half of his Common Stock 180 days following the consummation of the
Offering and any of his remaining unregistered Common Stock one year after the
Offering. See "Shares Eligible for Future Sale". The Company intends to register
1,100,000 shares of Common Stock reserved for issuance pursuant to the Company's
1997 Stock Option Plan as soon as practicable following the consummation of the
Offering. The issuance of such shares could result in the dilution of voting
power of the shares of Common Stock purchased in the Offering and could have a
dilutive effect on earnings per shares. The Company currently has no plans to
designate and/or issue any shares of Preferred Stock. Future sales of
substantial amounts of Common Stock, or the potential for such sales, could
adversely affect prevailing market prices. See "-- Limitations on Use of Net
Operating Loss From Ownership Change".
 
     The Company and its officers, directors and current shareholders each have
agreed that they will not, without the prior written consent of Credit Suisse
First Boston Corporation, offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of any shares of Common Stock or any securities
convertible into or exercisable or
 
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<PAGE>   11
 
exchangeable for such Common Stock or in any other manner transfer all or a
portion of the economic consequences associated with the ownership of such
Common Stock for a period of 180 days from the date of this Prospectus.
 
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
 
     There has been no prior public market for the Company's Common Stock.
Although the Common Stock has been approved for listing on The New York Stock
Exchange, subject to official notice thereof, there can be no assurance that a
viable public market for the Common Stock will develop or be sustained after the
Offering or that purchasers of the Common Stock will be able to resell their
Common Stock at prices equal to or greater than the initial public offering
price. The initial public offering price will be determined by negotiations
between the Company and the representative of the Underwriters and may not be
indicative of the prices that may prevail in the public market after the
Offering is completed. See "Underwriting". Numerous factors, including
announcements of fluctuations in the Company's or its competitors' operating
results and market conditions for hospitality and timeshare industry stocks in
general, could have a significant impact on the future price of the Common
Stock. In addition, the stock market in recent years has experienced significant
price and volume fluctuations that often have been unrelated or disproportionate
to the operating performance of companies. These broad fluctuations may
adversely affect the market price of the Common Stock.
 
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