UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-Q**





(Mark
      One)


x
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**








For
      the
      quarterly period ended September 30, 2007





**OR**








o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





For
      the
      transition period from _____________ to _____________





Commission
      file number:  001-13003








**SILVERLEAF
      RESORTS, INC**.


(Exact
      name of Registrant as specified in its charter)





**TEXAS**
            **75-2259890**(State
                of incorporation)
            (I.R.S.
                Employer Identification No.)




**1221
      RIVER BEND DRIVE, SUITE 120**


**DALLAS,
      TEXAS  75247**


(Address
      of principal executive offices, including zip code)





**214-631-1166**


(Registrant’s
      telephone number, including area code)







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


Yes
x    No
      o





Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


Large
                accelerated filer   o
            Accelerated
                filer   o
            Non-accelerated
                filer   x





Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
o    No
      x




Number
      of
      shares of common stock outstanding of the issuer’s Common Stock, par value $0.01
      per share, as of November 6, 2007:  37,818,154.













**Forward-Looking
      Statements**





This
      quarterly report on Form 10-Q contains forward-looking statements within the
      meaning of the Private Securities Litigation Reform Act of 1995,
      Section 27A of the Securities Act of 1933, and Section 21E of the
      Securities Exchange Act of 1934, including in particular, statements about
      our
      plans, objectives, expectations and prospects under the headings “Business” and
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.” You can identify these statements by forward-looking words such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “seek” and
      similar expressions. Although we believe that the plans, objectives,
      expectations and prospects reflected in or suggested by our forward-looking
      statements are reasonable, those statements involve uncertainties and risks,
      and
      we can give no assurance that our plans, objectives, expectations and prospects
      will be achieved. Important factors that could cause our actual results to
      differ materially from the results anticipated by the forward-looking statements
      are contained in our Annual Report on Form 10-K for the year ended December
      31,
      2006 under Part I, Item 1A. “Risk Factors” beginning on page 21; Part I, Item 2.
“Properties” beginning on page 30; Part II, Item 7. “Management’s Discussion and
      Analysis of Financial Condition and Results of Operations” beginning on page 45
      and elsewhere in the report. Any or all of these factors could cause our actual
      results and financial or legal status for future periods to differ materially
      from those expressed or referred to in any forward-looking statement. All
      written or oral forward-looking statements attributable to us are expressly
      qualified in their entirety by these cautionary statements. Forward-looking
      statements speak only as of the date on which they are made.





1




**SILVERLEAF
      RESORTS, INC.**





**INDEX**





PagePART
                I.
            FINANCIAL
                INFORMATIONItem
              1.
            Condensed
                  Consolidated Statements of Operations for the
                  three months and nine months ended September 30, 2007 and
                  2006
            3Condensed
                  Consolidated Balance Sheets as of September 30,
                  2007 and December 31, 2006
            4Condensed
                  Consolidated Statement of Shareholders' Equity
                  for the nine months ended September 30, 2007
            5Condensed
                  Consolidated Statements of Cash Flows for the
                  nine months ended September 30, 2007 and 2006
            6Notes
                to the Condensed Consolidated Financial
                Statements
            7Item
              2.
            Management's
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures about Market
                Risk
            22Item
                4.
            Controls
                and Procedures
            23PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            23Item
                1A.
            Risk
                Factors
            24Item
                6.
            Exhibits
                and Reports on Form 8-K
            24Signatures
            26




2
 ***Index***





**PART
      I: FINANCIAL INFORMATION**


**Item
      1. Financial Statements**


**SILVERLEAF
      RESORTS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


(in
      thousands, except share and per share amounts)


(Unaudited)





Three
                Months Ended
              September
                30,
            
            
            Nine
                Months Ended
              September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006**Revenues:**Vacation
                Interval sales
            
            $
            63,293
            
            
            $
            51,414
            
            
            $
            175,235
            
            
            $
            141,516Estimated
                uncollectible revenue
            
            
            (11,076
            )
            
            
            (8,910
            )
            
            
            (28,989
            )
            
            
            (24,525
            )Net
                sales
            
            
            52,217
            
            
            
            42,504
            
            
            
            146,246
            
            
            
            116,991Interest
                income
            
            
            13,465
            
            
            
            12,021
            
            
            
            38,952
            
            
            
            33,439Management
                fee income
            
            
            615
            
            
            
            465
            
            
            
            1,845
            
            
            
            1,396Other
                income
            
            
            1,238
            
            
            
            1,110
            
            
            
            3,171
            
            
            
            2,980Total
                revenues
            
            
            67,535
            
            
            
            56,100
            
            
            
            190,214
            
            
            
            154,806**Costs
                and Operating Expenses:**Cost
                of Vacation Interval sales
            
            
            5,215
            
            
            
            6,069
            
            
            
            16,668
            
            
            
            14,986Sales
                and marketing
            
            
            31,203
            
            
            
            25,880
            
            
            
            87,794
            
            
            
            68,535Operating,
                general and administrative
            
            
            10,099
            
            
            
            7,958
            
            
            
            28,002
            
            
            
            23,329Depreciation
            
            
            873
            
            
            
            627
            
            
            
            2,589
            
            
            
            1,750Interest
                expense and lender fees
            
            
            6,329
            
            
            
            5,730
            
            
            
            18,106
            
            
            
            15,273Total
                costs and operating expenses
            
            
            53,719
            
            
            
            46,264
            
            
            
            153,159
            
            
            
            123,873Income
                before provision for income taxes
            
            
            13,816
            
            
            
            9,836
            
            
            
            37,055
            
            
            
            30,933Provision
                for income taxes
            
            
            (5,319
            )
            
            
            (3,787
            )
            
            
            (14,266
            )
            
            
            (11,909
            )**Net
                income**
            
            $
            8,497
            
            
            $
            6,049
            
            
            $
            22,789
            
            
            $
            19,024**Basic
                net income per share**
            
            $
            0.22
            
            
            $
            0.16
            
            
            $
            0.60
            
            
            $
            0.51**Diluted
                net income per share**
            
            $
            0.22
            
            
            $
            0.15
            
            
            $
            0.58
            
            
            $
            0.48**Weighted
                average basic common shares outstanding**
            
            
            37,810,980
            
            
            
            37,590,168
            
            
            
            37,809,106
            
            
            
            37,528,924**Weighted
                average diluted common shares outstanding**
            
            
            39,432,691
            
            
            
            39,233,579
            
            
            
            39,407,049
            
            
            
            39,232,479




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.





3
 ***Index***





**SILVERLEAF
      RESORTS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


(in
      thousands, except share and per share amounts)





ASSETS
            
            September
                30,
              2007
            
            
            December
                31,
              2006(Unaudited)Cash
                and cash equivalents
            
            $
            11,196
            
            
            $
            11,450Restricted
                cash
            
            
            14,605
            
            
            
            15,771Notes
                receivable, net of allowance for uncollectible notes of $71,328 and
                $68,118, respectively
            
            
            274,433
            
            
            
            229,717Accrued
                interest receivable
            
            
            3,524
            
            
            
            2,936Investment
                in special purpose entity
            
            
            8,527
            
            
            
            13,008Amounts
                due from affiliates
            
            
            4,975
            
            
            
            1,251Inventories
            
            
            168,230
            
            
            
            147,759Land,
                equipment, buildings, and leasehold improvements, net
            
            
            35,943
            
            
            
            28,040Land
                held for sale
            
            
            411
            
            
            
            205Prepaid
                and other assets
            
            
            27,463
            
            
            
            24,393TOTAL
                ASSETS
            
            $
            549,307
            
            
            $
            474,530LIABILITIES
                AND SHAREHOLDERS' EQUITYLIABILITIESAccounts
                payable and accrued expenses
            
            $
            20,121
            
            
            $
            14,192Accrued
                interest payable
            
            
            2,948
            
            
            
            1,792Amounts
                due to affiliates
            
            
            -
            
            
            
            246Unearned
                Vacation Interval sales
            
            
            352
            
            
            
            -Unearned
                samplers
            
            
            7,393
            
            
            
            6,245Income
                taxes payable
            
            
            486
            
            
            
            163Deferred
                income taxes
            
            
            25,749
            
            
            
            17,683Notes
                payable and capital lease obligations
            
            
            294,351
            
            
            
            254,550Senior
                subordinated notes
            
            
            26,817
            
            
            
            31,467Total
                Liabilities
            
            
            378,217
            
            
            
            326,338COMMITMENTS
                AND CONTINGENCIES (Note 7)SHAREHOLDERS'
                EQUITYPreferred
                stock, 10,000,000 shares authorized, none issued and
                outstanding
            
            
            -
            
            
            
            -Common
                stock, par value $0.01 per share, 100,000,000 shares authorized,
                37,818,154 and 37,808,154 shares issued and outstanding at September
                30,
                2007 and December 31, 2006, respectively
            
            
            378
            
            
            
            378Additional
                paid-in capital
            
            
            112,664
            
            
            
            112,555Retained
                earnings
            
            
            58,048
            
            
            
            35,259Total
                Shareholders' Equity
            
            
            171,090
            
            
            
            148,192TOTAL
                LIABILITIES AND SHAREHOLDERS' EQUITY
            
            $
            549,307
            
            
            $
            474,530




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.





4
 ***Index***





**SILVERLEAF
      RESORTS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY**


(in
      thousands, except share amounts)


(Unaudited)





Common
                StockNumber
                of
              Shares
              Issued
            
            
            $0.01
              Par
              Value
            
            
            Additional
              Paid-in
              Capital
            
            
            Retained
              Earnings
            
            
            TotalJanuary
                1, 2007
            
            
            37,808,154
            
            
            $
            378
            
            
            $
            112,555
            
            
            $
            35,259
            
            
            $
            148,192Stock-based
                compensation
            
            
            -
            
            
            
            -
            
            
            
            106
            
            
            
            -
            
            
            
            106Exercise
                of stock options
            
            
            10,000
            
            
            
            -
            
            
            
            3
            
            
            
            -
            
            
            
            3Net
                income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            22,789
            
            
            
            22,789September
                30, 2007
            
            
            37,818,154
            
            
            $
            378
            
            
            $
            112,664
            
            
            $
            58,048
            
            
            $
            171,090




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.





5
 ***Index***





**SILVERLEAF
      RESORTS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


(in
      thousands)


(Unaudited)





Nine
                Months Ended
              September
                30,2007
            
            
            2006OPERATING
                ACTIVITIES:Net
                income
            
            $
            22,789
            
            
            $
            19,024Adjustments
                to reconcile net income to net cash used in operating
                activities:Estimated
                uncollectible revenue
            
            
            28,989
            
            
            
            24,525Deferred
                income taxes
            
            
            8,066
            
            
            
            12,832Depreciation
            
            
            2,589
            
            
            
            1,750Gain
                on sale of land held for sale
            
            
            -
            
            
            
            (499
            )Stock-based
                compensation
            
            
            106
            
            
            
            217Cash
                effect from changes in operating assets and liabilities:Restricted
                cash
            
            
            (15
            )
            
            
            (661
            )Notes
                receivable
            
            
            (73,705
            )
            
            
            (77,037
            )Accrued
                interest receivable
            
            
            (588
            )
            
            
            (615
            )Investment
                in special purpose entity
            
            
            4,481
            
            
            
            7,782Amounts
                due from/to affiliates
            
            
            (3,970
            )
            
            
            (3,882
            )Inventories
            
            
            (20,471
            )
            
            
            (15,820
            )Prepaid
                and other assets
            
            
            (3,276
            )
            
            
            (6,214
            )Accounts
                payable and accrued expenses
            
            
            5,929
            
            
            
            1,165Accrued
                interest payable
            
            
            1,156
            
            
            
            657Unearned
                Vacation Interval sales
            
            
            352
            
            
            
            -Unearned
                samplers
            
            
            1,148
            
            
            
            857Income
                taxes payable
            
            
            323
            
            
            
            (2,890
            )Net
                cash used in operating activities
            
            
            (26,097
            )
            
            
            (38,809
            )INVESTING
                ACTIVITIES:Purchases
                of land, equipment, buildings, and leasehold improvements
            
            
            (10,492
            )
            
            
            (13,573
            )Proceeds
                from sale of land held for sale
            
            
            -
            
            
            
            791Net
                cash used in investing activities
            
            
            (10,492
            )
            
            
            (12,782
            )FINANCING
                ACTIVITIES:Proceeds
                from borrowings from unaffiliated entities
            
            
            128,422
            
            
            
            291,426Payments
                on borrowings to unaffiliated entities
            
            
            (93,271
            )
            
            
            (209,523
            )Restricted
                cash for repayment of debt
            
            
            1,181
            
            
            
            (32,528
            )Proceeds
                from exercise of stock options
            
            
            3
            
            
            
            60Net
                cash provided by financing activities
            
            
            36,335
            
            
            
            49,435Net
                change in cash and cash equivalents
            
            
            (254
            )
            
            
            (2,156
            )CASH
                AND CASH EQUIVALENTS:Beginning
                of period
            
            
            11,450
            
            
            
            10,990End
                of period
            
            $
            11,196
            
            
            $
            8,834SUPPLEMENTAL
                CASH FLOW INFORMATION:Interest
                paid, net of amounts capitalized
            
            $
            15,517
            
            
            $
            13,026Income
                taxes paid
            
            $
            6,116
            
            
            $
            3,800




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.





6
 ***Index***





**SILVERLEAF
      RESORTS, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**








**Note
      1 – Background**





These
      condensed consolidated financial statements of Silverleaf Resorts, Inc.
      (“Silverleaf,” “the Company,” “we,” or “our”) presented herein do not include
      certain information and disclosures required by accounting principles generally
      accepted in the United States of America for complete financial statements.
      However, in our opinion, all normal and recurring adjustments considered
      necessary for a fair presentation have been included. Operating results for
      the
      nine months ended September 30, 2007 are not necessarily indicative of the
      results that may be expected for the year ending December 31, 2007.





These
      condensed consolidated financial statements should be read in conjunction with
      our audited consolidated financial statements and footnotes included in our
      Form
      10-K for the year ended December 31, 2006 as filed with the Securities and
      Exchange Commission (“SEC”), as well as all the financial information contained
      in interim and other reports filed with the SEC since then. The accounting
      policies used in preparing these condensed consolidated financial statements
      are
      the same as those described in such Form 10-K.





**Note
      2 – Significant Accounting Policies Summary**





*Basis
      of Presentation —*The accompanying condensed consolidated financial
      statements have been prepared in conformity with accounting policies generally
      accepted in the United States of America. In our opinion, the accompanying
      condensed consolidated financial statements contain all material adjustments,
      consisting only of normal recurring adjustments necessary to present fairly
      our
      financial position, our results of operations and changes in our cash
      flows.





*Principles
      of Consolidation —*The condensed consolidated financial statements include
      the accounts of the Company and its wholly-owned subsidiaries, excluding
      Silverleaf Finance III, LLC, our wholly-owned off-balance sheet qualified
      special purpose finance subsidiary, formed during the third quarter of 2005
      (“SF-III”). All significant intercompany accounts and transactions have been
      eliminated in the condensed consolidated financial statements.





*Adoption
      of SFAS No. 152 —*We adopted Statement of Financial Accounting Standards
      No. 152 “Accounting for Real Estate Time Sharing Transactions” (“SFAS No. 152”)
      effective January 1, 2006. However, we did not record a cumulative effect of
      a
      change in accounting principle as our adoption of SFAS No. 152 had an immaterial
      impact on our results for periods prior to January 1, 2006. SFAS No. 152 amends
      Financial Accounting Standards Board Statement No. 66, “Accounting for Sales of
      Real Estate”, to reference the financial accounting and reporting guidance for
      real estate time-sharing transactions that is provided in American Institute
      of
      Certified Public Accountants Statement of Position 04-2, “Accounting for Real
      Estate Time-Sharing Transactions” (“SOP 04-2”). This Statement also amends
      Financial Accounting Standards Board Statement No. 67, “Accounting for Costs and
      Initial Rental Operations of Real Estate Projects”, to state that the guidance
      for (a) incidental operations and (b) costs incurred to sell real estate
      projects does not apply to real estate time-sharing transactions. The accounting
      for those operations and costs is subject to the guidance in SOP 04-2. SFAS
      No.
      152 provides guidance on determining revenue recognition for timeshare
      transactions, evaluation of uncollectibility of Vacation Interval receivables,
      accounting for costs of Vacation Interval sales, operations during holding
      periods (or incidental operations), and other accounting transactions specific
      to time share operations. Restatement or reclassification of previously reported
      financial statements is not permitted. Accordingly, as a result of the adoption
      of SFAS No. 152, our financial statements for periods beginning on or after
      January 1, 2006 are not comparable, in all respects, with those prepared for
      periods ending on or prior to December 31, 2005.





*Revenue
      and Expense Recognition —*A substantial portion of Vacation Interval sales
      are made in exchange for mortgage notes receivable, which are secured by a
      deed
      of trust on the Vacation Interval sold. We recognize the sale of a Vacation
      Interval under the full accrual method after a binding sales contract has been
      executed, the buyer has made a down payment of at least 10%, and the statutory
      rescission period has expired. If all accrual method criteria are met except
      that significant development costs remain to complete the project or phase,
      revenues are recognized on the percentage-of-completion basis. Under this
      method, the amount of revenue recognized (based on the sales value) at the
      time
      a sale is recognized is measured by the relationship of costs already incurred
      to the total of costs already incurred and estimated future costs to complete
      the development of the phase. The remaining amount is deferred and recognized
      as
      the remaining costs are incurred. We had $352,000 in unearned Vacation Interval
      sales at September 30, 2007 related to the percentage-of-completion
      method.





Both
      of
      the above methods employ the relative sales value method in accounting for
      costs
      of sales and inventory, which are applied to each phase separately. Generally,
      we consider each type of building a separate phase. Pursuant to the provisions
      of SFAS No. 152, in determining relative sales value, an estimate of
      uncollectibility is used to reduce the estimate of total Vacation Interval
      revenue under the project, both actual to date plus expected future revenue.
      The
      relative sales value method is used to allocate inventory cost and determine
      cost of sales in conjunction with a sale. Under the relative sales value method,
      cost of sales is estimated as a percentage of net sales using a cost of sales
      percentage which represents the ratio of total estimated cost, including both
      costs already incurred plus estimated costs to complete the phase, if any,
      to
      total estimated Vacation Interval revenue under the project. Common costs,
      including amenities, are allocated to inventory cost among the phases that
      those
      costs are expected to benefit, and are included in total estimated
      costs.





7
 ***Index***





The
      estimate of total revenue for a phase, which includes both actual to date
      revenues and expected future revenues, incorporates factors such as actual
      or
      estimated uncollectibles, changes in sales mix and unit sales prices,
      repossessions of intervals, effects of upgrade programs, and past and expected
      sales programs to sell slow moving inventory units. On at least a quarterly
      basis, we evaluate the estimated cost of sales percentage using updated
      information for total estimated phase revenue and total estimated phase costs,
      both actual to date and expected in the future. The effects of changes in
      estimates are accounted for in the period in which they first become known
      on a
      retrospective basis using a current period adjustment.





Certain
      Vacation Interval sales transactions are deferred until the minimum down payment
      has been received. We account for these transactions utilizing the deposit
      method. Under this method, the sale is not recognized, a receivable is not
      recorded, and inventory is not relieved. Any cash received is carried as a
      deposit until the sale can be recognized. When these types of sales are
      cancelled without a refund, deposits forfeited are recognized as income and
      the
      interest portion is recognized as interest income. This income is not
      significant.





In
      addition to sales of Vacation Intervals to new prospective owners, we sell
      additional and upgraded Vacation Intervals to existing owners. Revenues are
      recognized on an additional Vacation Interval sale, which is a new interval
      sale
      that is treated as a separate transaction from the original Vacation Interval
      for accounting purposes, when the buyer makes a down payment of at least 10%,
      excluding any equity from the original Vacation Interval purchased. Revenues
      are
      recognized on an upgrade Vacation Interval sale, which is a modification and
      continuation of the original sale, by including the buyer’s equity from the
      original Vacation Interval towards the down payment of at least 10%. The
      additional accrual method criteria described above must also be satisfied for
      revenue recognition of additional and upgraded Vacation Intervals. The revenue
      recognized on upgrade Vacation Interval sales is the difference between the
      upgrade sales price and traded-in sales price, and cost of sales is the
      incremental increase in the cost of the Vacation Interval
      purchased.





We
      recognize interest income as earned. Interest income is accrued on notes
      receivable, net of an estimated amount that will not be collected, until the
      individual notes become 90 days delinquent.  Once a note becomes 90
      days delinquent, the accrual of interest income ceases until collection is
      deemed probable.





We
      receive fees for management services provided to Silverleaf Club and Orlando
      Breeze Resort Club. These revenues are recognized on an accrual basis in the
      period the services are provided if collection is deemed probable.





Services
      and other income are recognized on an accrual basis in the period service is
      provided.





Sales
      and
      marketing costs are charged to expense in the period incurred. Commissions,
      however, are recognized in the same period as the related revenue is
      recognized.





*Cash
      and Cash Equivalents —*Cash and cash equivalents consist of all highly
      liquid investments with an original maturity at the date of purchase of three
      months or less. Cash and cash equivalents include cash, certificates of deposit,
      and money market funds.





*Restricted
      Cash*— Restricted cash consists of certificates of deposit that serve as
      collateral for construction bonds and cash restricted for repayment of
      debt.





*Allowance
      for Uncollectible Notes —*Estimated uncollectible revenue is recorded at an
      amount sufficient to maintain the allowance for uncollectible notes at a level
      management considers adequate to provide for anticipated losses resulting from
      customers' failure to fulfill their obligations under the terms of their notes.
      The allowance for uncollectible notes is adjusted based upon a periodic
      static-pool analysis of the notes receivable portfolio, which tracks
      uncollectible notes for each year’s sales over the life of these notes. Other
      factors considered in the assessment of uncollectibility are the aging of notes
      receivable, historical collection experience, and current economic
      factors.





8
 ***Index***





Credit
      losses take three forms. The first is the full cancellation of the note, whereby
      the customer is relieved of the obligation and we recover the underlying
      inventory. The second form is a deemed cancellation, whereby we record the
      cancellation of all notes that become 90 days delinquent, net of notes that
      are
      no longer 90 days delinquent. The third form is the note receivable reduction
      that occurs when a customer trades a higher value product for a lower value
      product. In estimating the allowance, we project future cancellations and credit
      losses for each sales year by using historical cancellations
      experience.





The
      allowance for uncollectible notes is reduced by actual cancellations and losses
      experienced, including losses related to previously sold notes receivable which
      became delinquent and were reacquired pursuant to the recourse obligations
      discussed herein. Recourse on sales of customer notes receivable is governed by
      the agreements between the purchasers and the Company.





*Investment
      in Special Purpose Entity*— We closed a securitization transaction with
      SF-III, which is a qualified special purpose entity formed for the purpose
      of
      issuing $108.7 million of Timeshare Loan-Backed Notes Series 2005-A (“Series
      2005-A Notes”) in a private placement during the third quarter of 2005. This
      transaction qualified as a sale for accounting purposes. The Series 2005-A
      Notes
      are secured by timeshare receivables we sold to SF-III pursuant to a transfer
      agreement between us and SF-III. Under that agreement, we sold SF-III
      approximately $132.8 million in timeshare receivables that were previously
      pledged as collateral under revolving credit facilities with our senior lenders
      and Silverleaf Finance I, Inc., (“SF-I”), our former qualified special purpose
      entity which was dissolved during the third quarter of 2005. The proceeds from
      the sale of the timeshare receivables to SF-III were used to pay off in full
      the
      credit facility of SF-I and to pay down amounts we owed under our senior credit
      facilities. The timeshare receivables we sold to SF-III are without recourse,
      except for breaches of certain representations and warranties at the time of
      sale. We are responsible for servicing the timeshare receivables purchased
      by
      SF-III pursuant to the terms of the agreement and receive a fee for our
      services. Such fees received approximate our internal cost of servicing such
      timeshare receivables, and approximates the fee a third party would receive
      to
      service such receivables.  As a result, the related servicing asset or
      liability was estimated to be insignificant.





We
      account for and evaluate the investment in our special purpose entity in
      accordance with Statement of Financial Accounting Standards No. 140, “Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities” (“SFAS No. 140”), EITF 99-20, “Recognition of Interest Income and
      Impairment on Purchased Beneficial Interests and Beneficial Interests That
      Continue to Be Held by a Transferor in Securitized Financial Assets”, and
      Statement of Financial Accounting Standards No. 115, “Accounting for Certain
      Investments in Debt and Equity Securities,” as applicable. SFAS No. 140 was
      amended in March 2006 by Statement of Financial Accounting Standards No. 156,
      “Accounting for Servicing of Financial Assets” (“SFAS No. 156”) and is to be
      applied prospectively to new transactions occurring after the effective
      date.  The adoption of SFAS No. 156 as of January 1, 2007, did not
      affect the manner in which we account for our investment in our special purpose
      entity. The gain or loss on the sale of notes receivable is determined based
      on
      the proceeds received, the fair value assigned to the investment in our special
      purpose entity, and the recorded value of notes receivable sold. The fair value
      of the investment in our special purpose entity is estimated based on the
      present value of future cash flows we expect to receive from the notes
      receivable sold.  We utilized the following key assumptions to
      estimate the fair value of such cash flows related to SF-III: customer
      prepayment rate (including expected accounts paid in full as a result of
      upgrades) – 15.9%; expected credit losses – 8.81% to 11.38%; discount rate –
12.9% to 21.5%; base interest rate – 5.37%; and loan servicing fees – 1.75%. Our
      assumptions are based on experience with our notes receivable portfolio,
      available market data, estimated prepayments, the cost of servicing, and net
      transaction costs. Such assumptions are assessed quarterly and, if necessary,
      adjustments are made to the carrying value of the investment in our special
      purpose entity on a prospective basis as a change in accounting estimate, with
      the amount of periodic interest accretion adjusted over the remaining life
      of
      the beneficial interest. The carrying value of the investment in our special
      purpose entity represents our maximum exposure to loss regarding our involvement
      with our special purpose entity.





*Inventories
      —*Inventories are stated at the lower of cost or market value. Cost
      includes amounts for land, construction materials, amenities and common costs,
      direct labor and overhead, taxes, and capitalized interest incurred in the
      construction or through the acquisition of resort dwellings held for timeshare
      sale. Timeshare unit costs are capitalized as inventory and are allocated to
      cost of Vacation Interval sales based upon their relative sales
      values.





We
      estimate the total cost to complete all amenities at each resort. This cost
      includes both costs incurred to date and expected costs to be incurred. At
      September 30, 2007, the estimated costs not yet incurred, which are expected
      to
      complete promised amenities was $2.4 million. We allocate the estimated cost
      of
      promised and completed amenities to cost of Vacation Interval sales based on
      Vacation Intervals sold in a given period as a percentage of total Vacation
      Intervals expected to sell over the life of a particular resort
      project.





9
 ***Index***





The
      relative sales value method of recording Vacation Interval cost of sales has
      been amended by SFAS No. 152 beginning January 1, 2006. The relative sales
      value
      method is used to allocate inventory costs and determine cost of sales in
      conjunction with a sale. Under the relative sales value method, cost of sales
      is
      estimated as a percentage of net sales using a cost of sales percentage which
      represents the ratio of total estimated cost, including both costs already
      incurred plus costs to complete the phase, if any, to total estimated Vacation
      Interval revenues under the project, including amounts already recognized and
      future revenues. Common costs, including amenities, are allocated to inventory
      cost among the phases that those costs are expected to benefit. The estimate
      of
      total revenue for a phase, which includes both actual to date revenues and
      expected future revenues, incorporates factors such as actual or estimated
      uncollectibles, changes in sales mix and unit sales prices, repossessions of
      intervals, effects of upgrade programs, and past and expected future sales
      programs to sell slow moving inventory units.  Each time estimated
      revenue or cost is adjusted, the effects of changes in estimate are accounted
      for in each period on a retrospective basis using a current-period adjustment,
      such that the balance sheet at the end of the period of change and the
      accounting in subsequent periods are as they would have been if the revised
      estimates had been the original estimates.





We
      also
      periodically review the carrying value of our inventory on an individual project
      basis for impairment, to ensure that the carrying value does not exceed market
      value.





*Land,
      Equipment, Buildings, and Leasehold Improvements*— Land, equipment
      (including equipment under capital lease), buildings, and leasehold improvements
      are stated at cost. When assets are disposed of, the cost and related
      accumulated depreciation are removed, and any resulting gain or loss is
      reflected in income for the period. Maintenance and repairs are charged to
      expense as incurred; significant betterments and renewals, which extend the
      useful life of a particular asset, are capitalized. Depreciation is calculated
      for all fixed assets, other than land, using the straight-line method over
      the
      estimated useful life of the assets, ranging from 3 to 20 years. We periodically
      review our long-lived assets for impairment whenever events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable.





*Prepaid
      and Other Assets*— Prepaid and other assets consist primarily of prepaid
      insurance, prepaid postage, commitment fees, debt issuance costs, deferred
      commissions, novelty inventories, deposits, collected cash in lender lock boxes
      which has not yet been applied to the loan balances by our lenders, and
      miscellaneous receivables. Commitment fees and debt issuance costs are amortized
      over the life of the related debt.





*Income
      Taxes*— Deferred income taxes are recorded for temporary differences between
      the basis of assets and liabilities as recognized by tax laws and their carrying
      value as reported in the condensed consolidated financial statements. A
      provision is made or benefit recognized for deferred income taxes relating
      to
      temporary differences for financial reporting purposes. To the extent a deferred
      tax asset does not meet the criteria of "more likely than not" for realization,
      a valuation allowance would be recorded. Although we do not currently have
      any
      material charges for interest and penalties, if these costs were incurred,
      they
      would be reported within the provision for income taxes. Our federal tax return
      includes all items of income, gain, loss, expense, and credit of SF-III, which
      is a non-consolidated subsidiary for reporting purposes and a disregarded entity
      for federal income tax purposes. We have a tax sharing agreement with
      SF-III.





We
      file
      U.S. federal income tax returns as well as income tax returns in various states.
      We are no longer subject to income tax examinations by the Internal Revenue
      Service for years prior to 2004, although carryforward attributes that were
      generated prior to 2004 may still be subject to examination. For the majority
      of
      state tax jurisdictions, we are no longer subject to income tax examinations
      for
      years prior to 2004. In the state of Texas, we are no longer subject to
      franchise tax examinations for years prior to 2003.





*Derivative
      Financial Instruments*— We follow Statement of Financial Accounting
      Standard No. 133, “Accounting for Derivative Instruments and Hedging Activities”
(“SFAS No. 133”) as amended, which establishes accounting and reporting
      standards for derivative financial instruments, including certain derivative
      instruments embedded in other contracts and hedging activities.
**All derivatives, whether designed as hedging relationships or
      not, are required to be recorded on the balance sheet at fair value. If the
      derivative is designated as a fair value hedge, the changes in the fair value
      of
      the derivative and of the hedged item attributable to the hedged risk are
      recognized in earnings. If the derivative is designated as a cash flow hedge,
      the effective portions of changes in the fair value of the derivative are
      recorded in other comprehensive income and ineffective portions of changes
      in
      the fair value of cash flow hedges are recognized in earnings.





To
      partially offset an increase in interest rates, we have engaged in two interest
      rate hedging transactions, or derivatives, related to our conduit loan through
      Silverleaf Finance II, Inc., (“SF-II”), a Delaware corporation, for a notional
      amount of $25.0 million at September 30, 2007, that expire between September
      2011 and March 2014. Our variable funding note with Silverleaf Finance IV,
      LLC,
      (“SF-IV”) also acts as an interest rate hedge since it contains a provision for
      an interest rate cap. The balance outstanding under this line of credit at
      September 30, 2007 is $46.1 million.





10
 ***Index***





*Earnings
      Per Share*— Basic earnings per share is computed by dividing net income by
      the weighted average common shares outstanding. Earnings per share assuming
      dilution is computed by dividing net income by the weighted average number
      of
      common shares and potentially dilutive shares outstanding. The number of
      potentially dilutive shares is computed using the treasury stock method, which
      assumes that the increase in the number of common shares resulting from the
      exercise of the stock options is reduced by the number of common shares that
      we
      could have repurchased with the proceeds from the exercise of the stock
      options.





*Stock-Based
      Compensation*—We adopted Statement of Financial Accounting Standards No.
      123R, “Share Based Payment” (“SFAS No. 123R”), as of January 1, 2006, using the
      modified prospective method. Under this transition method, for all stock options
      granted on or prior to December 31, 2005 that were outstanding as of that date,
      compensation cost is recognized for the unvested portion over the remaining
      requisite service period, using the fair value for these options as estimated
      at
      the date of grant using the Black-Scholes option-pricing model under the
      original provisions of SFAS No. 123 for pro-forma disclosure purposes.
      Accordingly, we recognized $106,000 and $217,000 of stock-based compensation
      expense for the nine months ended September 30, 2007 and 2006, respectively.
      At
      September 30, 2007, there is $124,000 of unamortized compensation expense
      related to stock options granted prior to 2006, which will be fully recognized
      by August 31, 2008.





At
      September 30, 2007, we have options outstanding under two stock-based
      compensation plans. Readers should refer to “Stock-Based Compensation” under
      Note 2 – “Significant Accounting Policies Summary” and Note 10 – “Equity” of our
      financial statements, which are included in our Annual Report on Form 10-K
      for
      the year ended December 31, 2006, for additional information related to these
      stock-based compensation plans.





The
      following table summarizes our outstanding stock options for the nine months
      ended September 30, 2007 and 2006:





**2007**
            
            
            **2006**Options
                outstanding, January 1
            
            
            2,823,807
            
            
            
            3,137,657Granted
            
            
            —
            
            
            
            —Exercised
            
            
            (10,000
            )
            
            
            (191,093
            )Expired
            
            
            (297,000
            )
            
            
            —Forfeited
            
            
            (1,000
            )
            
            
            —Options
                outstanding, September 30
            
            
            2,515,807
            
            
            
            2,946,564Exercisable,
                September 30
            
            
            2,426,807
            
            
            
            2,768,564





The
      weighted average exercise price of the 10,000 shares exercised during the first
      nine months of 2007 and the 191,093 shares exercised during the first nine
      months of 2006 was $0.315 per share, and the intrinsic value was $54,000 and
      $632,000, respectively.





*Use
      of Estimates*— The preparation of the condensed consolidated financial
      statements requires the use of management’s estimates and assumptions in
      determining the carrying values of certain assets and liabilities, the
      disclosure of contingent assets and liabilities at the date of the condensed
      consolidated financial statements, and the reported amounts for certain revenues
      and expenses during the reporting period. Actual results could differ from
      those
      estimated. Significant management estimates include the allowance for
      uncollectible notes, estimates for income taxes, valuation of SF-III, and the
      future sales plan and estimated recoveries used to allocate certain costs to
      inventory phases and cost of sales.





*Other
      Recent Accounting Pronouncements*—





*SFAS
      No. 156*– In March 2006, the Financial Accounting Standards Board (“FASB”)
      issued Statement of Financial Accounting Standards No. 156, “Accounting for
      Servicing of Financial Assets.” The statement allows for the adoption of the
      fair value method of accounting for servicing assets, as opposed to the lower
      of
      amortized cost or market value, including mortgage servicing rights, which
      represent an entity’s right to a future stream of cash flows based upon the
      contractual servicing fee associated with servicing mortgage loans. The
      statement is effective as of the beginning of any fiscal year beginning after
      September 15, 2006, with early adoption permitted as of January 1, 2006. The
      adoption of SFAS No. 156 did not impact our consolidated financial position,
      results of operations, or cash flows.





*FIN
      No. 48***–**In July 2006, the FASB issued FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes” (“FIN No. 48”), which clarifies the
      accounting for uncertainty in income taxes recognized in an enterprise’s
      financial statements in accordance with Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes.” FIN No. 48 prescribes a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. It also provides guidance on derecognition, classification, interest
      and penalties, accounting in interim periods, disclosure, and transition. FIN
      No. 48 is effective for fiscal years beginning after December 15, 2006. We
      adopted the provisions of FIN No. 48 on January 1, 2007. The adoption of FIN
      No.
      48 did not impact our consolidated financial position, results of operations,
      or
      cash flows.





11
 ***Index***





*SFAS
      No. 157***–**
      In September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 157, “Fair Value Measurements”**(“SFAS No. 157”), which
      clarifies that the term fair value is intended to mean a market-based measure,
      not an entity-specific measure, and gives the highest priority to quoted prices
      in active markets in determining fair value.  SFAS No. 157 requires
      disclosures about (1) the extent to which companies measure assets and
      liabilities at fair value, (2) the methods and assumptions used to measure
      fair
      value, and (3) the effect of fair value measures on earnings.  SFAS No. 157
      is effective for fiscal years beginning after November 15, 2007.  We are
      currently assessing the financial impact the adoption of SFAS No. 157 will
      have
      on our consolidated financial position, results of operations, and cash
      flows.





*SFAS
      No. 159* **–** In February 2007, the FASB issued Statement
      of Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities” (“SFAS No. 159”), which allows an irrevocable
      election to measure certain financial assets and financial liabilities at fair
      value on an instrument-by-instrument basis, with unrealized gains and losses
      recognized currently in earnings. Under SFAS No. 159, the fair value option
      may
      only be elected at the time of initial recognition of a financial asset or
      financial liability or upon the occurrence of certain specified events.
      Additionally, SFAS No. 159 provides that application of the fair value option
      must be based on the fair value of an entire financial asset or financial
      liability and not selected risks inherent in those assets or liabilities. SFAS
      No. 159 requires that assets and liabilities which are measured at fair value
      pursuant to the fair value option be reported in the financial statements in
      a
      manner that separates those fair values from the carrying amounts of similar
      assets and liabilities which are measured using another measurement attribute.
      SFAS No. 159 also provides expanded disclosure requirements regarding the
      effects of electing the fair value option on the financial statements. SFAS
      No.
      159 is effective prospectively for fiscal years beginning after November 15,
      2007, with early adoption permitted for fiscal years in which interim financial
      statements have not been issued, provided that all of the provisions of SFAS
      No.
      157 are early adopted as well. We are currently assessing the financial impact
      the adoption of SFAS No. 159 will have on our consolidated financial position,
      results of operations, and cash flows.





**Note
      3 – Earnings Per Share**





The
      following table illustrates the reconciliation between basic and diluted
      weighted average common shares outstanding for the three and nine months ended
      September 30, 2007 and 2006:





**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Weighted
                average shares outstanding - basic
            
            
            37,810,980
            
            
            
            37,590,168
            
            
            
            37,809,106
            
            
            
            37,528,924Issuance
                of shares from stock options exercisable
            
            
            2,028,981
            
            
            
            2,174,793
            
            
            
            2,030,855
            
            
            
            2,236,037Repurchase
                of shares from stock options proceeds
            
            
            (407,270
            )
            
            
            (531,382
            )
            
            
            (432,912
            )
            
            
            (532,482
            )Weighted
                average shares outstanding - diluted
            
            
            39,432,691
            
            
            
            39,233,579
            
            
            
            39,407,049
            
            
            
            39,232,479





Outstanding
      stock options totaling approximately 494,000 and 867,000 were not dilutive
      at
      September 30, 2007 and 2006, respectively, because the exercise price for such
      options exceeded the market price for our shares.





**Note
      4**–**Notes Receivable**





We
      provide financing to the purchasers of Vacation Intervals, which are
      collateralized by their interest in such Vacation Intervals. The notes
      receivable generally have initial terms of seven to ten years. The average
      yield
      on outstanding notes receivable at September 30, 2007 and 2006 was approximately
      16.2% and 15.7%, respectively, with individual rates ranging from 0% to 17.9%.
      The Vacation Interval notes receivable with interest rates of 0% originated
      primarily between 1997 and 2003, and have an outstanding balance at September
      30, 2007 of approximately $113,000. In connection with the sampler program,
      we
      routinely enter into notes receivable with terms of 10 months. Notes receivable
      from sampler sales were $3.8 million and $3.1 million at September 30, 2007
      and
      2006, respectively, and are non-interest bearing.





We
      consider accounts over 60 days past due to be delinquent.  As of
      September 30, 2007, $4.8 million of notes receivable, net of accounts charged
      off, were considered delinquent. An additional $26.2 million of notes, of which
      $23.6 million is pledged to senior lenders, would have been considered to be
      delinquent, had we not granted payment concessions to the customers, which
      brings a delinquent note current and extends the maturity date if two
      consecutive payments are made.





12
 ***Index***





Notes
      receivable are scheduled to mature as follows at September 30, 2007 (in
      thousands):





For
                the 12-Month Period Ending September 30,2008
            
            $
            40,1092009
            
            
            39,4742010
            
            
            42,7772011
            
            
            45,7232012
            
            
            48,829Thereafter
            
            
            128,849345,761Less
                allowance for uncollectible notes
            
            
            (71,328
            )Notes
                receivable, net
            
            $
            274,433





The
      activity in gross notes receivable is as follows for the three and nine-month
      periods ended September 30, 2007 and 2006 (in thousands):





**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Balance,
                beginning of period
            
            $
            328,823
            
            
            $
            270,601
            
            
            $
            297,835
            
            
            $
            230,051Sales
            
            
            48,357
            
            
            
            42,376
            
            
            
            134,126
            
            
            
            127,599Collections
            
            
            (21,088
            )
            
            
            (17,598
            )
            
            
            (60,421
            )
            
            
            (50,562
            )Receivables
                charged off
            
            
            (10,331
            )
            
            
            (7,245
            )
            
            
            (25,779
            )
            
            
            (18,954
            )Balance,
                end of period
            
            $
            345,761
            
            
            $
            288,134
            
            
            $
            345,761
            
            
            $
            288,134





The
      activity in the allowance for uncollectible notes is as follows for the three
      and nine months ended September 30, 2007 and 2006 (in thousands):





**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Balance,
                beginning of period
            
            $
            70,583
            
            
            $
            68,171
            
            
            $
            68,118
            
            
            $
            52,479Reclassification
                of estimated inventory recoveries on future charge offs
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            11,786Estimated
                uncollectible revenue
            
            
            11,076
            
            
            
            8,910
            
            
            
            28,989
            
            
            
            24,525Receivables
                charged off
            
            
            (10,331
            )
            
            
            (7,245
            )
            
            
            (25,779
            )
            
            
            (18,954
            )Balance,
                end of period
            
            $
            71,328
            
            
            $
            69,836
            
            
            $
            71,328
            
            
            $
            69,836





**Note
      5 – Debt**





The
      following table summarizes our notes payable, capital lease obligations, and
      senior subordinated notes at September 30, 2007 and December 31, 2006 (in
      thousands):





**September 30,**
              **2007**
            
            
            **December 31,**
              **2006**
            
            
            **Revolving**
              **Term**
            
            **Maturity**
            
            **Interest**
              **Rate**$100
                million Textron receivable-based revolver ($100 million maximum combined
                receivable, inventory and acquisition commitments, see inventory
                /
                acquisition component below)
            
            $
            63,414
            
            
            $
            28,903
            
            
            1/31/10
            
            1/31/13
            
            Prime$50
                million CapitalSource receivable-based revolver
            
            
            16,026
            
            
            
            22,831
            
            
            4/29/08
            
            4/29/08
            
            Prime
                + 0.75%$35
                million Wells Fargo Foothill receivable-based revolver
            
            
            5,451
            
            
            
            93
            
            
            12/31/08
            
            12/31/11
            
            Prime$150
                million SF-IV receivable-based revolver
            
            
            46,058
            
            
            
            —
            
            
            9/3/09
            
            9/3/11
            
            LIBOR+1.25%$37.5
                million Liberty Bank receivable-based revolver
            
            
            —
            
            
            
            —
            
            
            9/28/09
            
            9/28/12
            
            LIBOR+2.40%$66.4
                million Textron receivable-based non-revolving conduit
                loan
            
            
            15,931
            
            
            
            25,090
            
            
            
            —
            
            3/22/14
            
            
            7.035%$26.3
                million Textron receivable-based non-revolving conduit
                loan
            
            
            9,107
            
            
            
            14,210
            
            
            
            —
            
            9/22/11
            
            
            7.90%$128.1
                million Silverleaf Finance V, L.P.  receivable-based
                non-revolver
            
            
            77,637
            
            
            
            113,138
            
            
            
            —
            
            7/16/18
            
            
            6.70%$10
                million Textron inventory loan agreement
            
            
            —
            
            
            
            10,000
            
            
            8/31/08
            
            8/31/10
            
            LIBOR+3.25%$6
                million Textron inventory loan agreement
            
            
            —
            
            
            
            5,000
            
            
            8/31/08
            
            8/31/10
            
            Prime
                + 3.00%$5
                million Textron inventory loan agreement
            
            
            —
            
            
            
            1,115
            
            
            
            —
            
            3/31/07
            
            Prime
                + 3.00%Textron
                inventory / acquisition loan agreement (see receivable-based revolver
                above)
            
            
            22,500
            
            
            
            —
            
            
            1/31/10
            
            1/31/12
            
            Prime
                + 1.00%$30
                million CapitalSource inventory loan agreement
            
            
            19,376
            
            
            
            18,876
            
            
            4/29/09
            
            4/29/11
            
            Prime
                + 1.50%$15
                million Wells Fargo Foothill inventory loan agreement
            
            
            10,000
            
            
            
            5,985
            
            
            12/31/08
            
            12/31/10
            
            Prime
                + 2.00%Various
                notes, due from January 2009 through August 2016, collateralized
                by
                various assets with interest rates ranging from 6.0% to
                8.5%
            
            
            7,539
            
            
            
            7,590
            
            
            
            —
            
            various
            
            variousTotal
                notes payable
            
            
            293,039
            
            
            
            252,831Capital
                lease obligations
            
            
            1,312
            
            
            
            1,719
            
            
            
            —
            
            various
            
            variousTotal
                notes payable and capital lease obligations
            
            
            294,351
            
            
            
            254,5506.0%
                senior subordinated notes, due 2007
            
            
            —
            
            
            
            3,796
            
            
            
            —
            
            4/1/07
            
            
            6.00%101⁄2%
                senior subordinated notes, due 2008
            
            
            2,146
            
            
            
            2,146
            
            
            
            —
            
            4/1/08
            
            
            10.50%8.0%
                senior subordinated notes, due 2010
            
            
            24,671
            
            
            
            24,671
            
            
            
            —
            
            4/1/10
            
            
            8.00%Interest
                on the 6.0% senior subordinated notes, due 2007
            
            
            —
            
            
            
            854
            
            
            
            —
            
            4/1/07
            
            
            6.00%Total
                senior subordinated notes
            
            
            26,817
            
            
            
            31,467Total
            
            $
            321,168
            
            
            $
            286,017




13
 ***Index***





At
      September 30, 2007, our senior credit facilities provided for loans of up to
      $520.2 million, of which $234.7 million is available for future advances. The
      LIBOR rate on our senior credit facilities was 5.12% (1 month) and the Prime
      rate on these facilities was 7.75% at September 30, 2007.





On
      September 12, 2007, we amended our revolving credit facility through our
      wholly-owned and fully consolidated special purpose finance subsidiary SF-IV.
      The amendments increase the availability under the facility from $125 million
      to
      $150 million. The scheduled funding period under the variable funding note
      (“VFN”) issued by SF-IV to UBS Real Estate Securities Inc. ("UBS") was extended
      from December 2008 to September 2009, and the revised facility will mature
      in
      September 2011. The interest rate on advances to SF-IV under the VFN will remain
      the same at LIBOR plus 1.25%. The VFN is secured by customer notes receivable
      sold to SF-IV. Proceeds from the sale of customer notes receivable to SF-IV
      are
      used to fund normal business operations and for general working capital
      purposes. We will continue to service the customer notes sold to
      SF-IV.





Effective
      September 28, 2007, we entered into a $37.5 million revolving loan agreement
      with Liberty Bank as agent for itself and other lenders. The loan is secured
      by
      notes receivable from timeshare sales at an advance rate of up to 75% of the
      aggregate outstanding principal balance of all eligible notes receivable pledged
      as security.  The revolving loan period will expire on September 28,
      2009, and the principal balance of the loan facility will be due on September
      28, 2012,or if the
      revolving period is extended, 36 months from the expiration of the revolving
      period.  The outstanding principal balance on the facility will bear
      interest at LIBOR plus 2.40%.  Proceeds from the loan will be used to
      fund normal business operations and for general working capital
      purposes.





**Note
      6 – Subsidiary Guarantees**





All
      subsidiaries of the Company, except SF-II, SF-III, SF-IV, and Silverleaf Finance
      V, L.P., (“SF-V”) have guaranteed the $26.8 million of senior subordinated
      notes. Separate financial statements and other disclosures concerning each
      guaranteeing subsidiary (each, a “Guarantor Subsidiary”) are not presented
      herein because the guarantee of each Guarantor Subsidiary is full and
      unconditional and joint and several, and each Guarantor Subsidiary is a
      wholly-owned subsidiary of the Company, and together comprise all of our direct
      and indirect subsidiaries.





The
      Guarantor Subsidiaries had no operations for the nine months ended September
      30,
      2007 and 2006. Combined summarized balance sheet information as of September
      30,
      2007 and December 31, 2006 for the Guarantor Subsidiaries is as follows (in
      thousands):





**September 30,**
              **2007**
            
            
            **December 31,**
              **2006**Other
                assets
            
            $
            2
            
            
            $
            2Total
                assets
            
            $
            2
            
            
            $
            2Investment
                by parent (includes equity and amounts due to parent)
            
            $
            2
            
            
            $
            2Total
                liabilities and equity
            
            $
            2
            
            
            $
            2





**Note
      7**–**Commitments and Contingencies**





We
      are
      currently subject to litigation arising in the normal course of our business.
      From time to time, such litigation includes claims regarding employment, tort,
      contract, truth-in-lending, the marketing and sale of Vacation Intervals, and
      other consumer protection matters. Litigation has been initiated from time
      to
      time by persons seeking individual recoveries for themselves, as well as, in
      some instances, persons seeking recoveries on behalf of an alleged class. In
      our
      judgment, none of the lawsuits currently pending against us, either individually
      or in the aggregate, is likely to have a material adverse effect on our
      business, results of operations, or financial position.





Various
      legal actions and claims may be instituted or asserted in the future against
      us
      and our subsidiaries, including those arising out of our sales and marketing
      activities and contractual arrangements.  Some of the matters may
      involve claims, which, if granted, could be materially adverse to our financial
      position.





14
 ***Index***





Litigation
      is subject to many uncertainties, and the outcome of individual litigated
      matters is not predictable with assurance. We will establish reserves from
      time
      to time when deemed appropriate under generally acceptable accounting
      principles. However, the outcome of a claim for which we have not deemed a
      reserve to be necessary may be decided unfavorably against us and could require
      us to pay damages or make other expenditures in amounts or a range of amounts
      that could be materially adverse to our business, results of operations, or
      financial position.





**Item
      2.  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations**





Certain
      matters discussed throughout this Form 10-Q filing are forward-looking
      statements that are subject to risks and uncertainties that could cause actual
      results to differ materially from those projected. Such risks and uncertainties
      include, but are not limited to, those discussed in the Company’s Form 10-K for
      the year ended December 31, 2006.





As
      of
      September 30, 2007, we own and operate 13 timeshare resorts in various stages
      of
      development in Texas, Missouri, Illinois, Georgia, Massachusetts, and Florida,
      and a hotel near the Winter Park recreational area in Colorado.  Our
      resorts offer a wide array of country club-like amenities, such as golf,
      swimming, horseback riding, boating, and many organized activities for children
      and adults. The Company has a Vacation Interval ownership base of over 105,000
      members. Our condensed consolidated financial statements include the accounts
      of
      Silverleaf Resorts, Inc. and its subsidiaries, with the exception of SF-III,
      all
      of which are wholly-owned.





As
      required, we adopted SFAS No. 152, “Accounting for Real Estate Time-Sharing
      Transactions” as of January 1, 2006. The adoption of SFAS No. 152 prospectively
      revises the classification of certain revenue and cost activity. However, the
      adoption of SFAS No. 152 did not have a material effect on our reported net
      income, nor did it result in a cumulative effect adjustment.





**Results
      of Operations**





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





Three
                Months Ended
              September
                30,
            
            
            Nine
                Months Ended
              September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006As
                a percentage of total revenues:Vacation
                Interval sales
            
            
            93.7
            %
            
            
            91.7
            %
            
            
            92.1
            %
            
            
            91.4
            %Estimated
                uncollectible revenue
            
            
            -16.4
            %
            
            
            -15.9
            %
            
            
            -15.2
            %
            
            
            -15.8
            %Net
                sales
            
            
            77.3
            %
            
            
            75.8
            %
            
            
            76.9
            %
            
            
            75.6
            %Interest
                income
            
            
            19.9
            %
            
            
            21.4
            %
            
            
            20.5
            %
            
            
            21.6
            %Management
                fee income
            
            
            1.0
            %
            
            
            0.8
            %
            
            
            1.0
            %
            
            
            0.9
            %Other
                income
            
            
            1.8
            %
            
            
            2.0
            %
            
            
            1.6
            %
            
            
            1.9
            %Total
                revenues
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %As
                a percentage of Vacation Interval sales:Cost
                of Vacation Interval sales
            
            
            8.2
            %
            
            
            11.8
            %
            
            
            9.5
            %
            
            
            10.6
            %Sales
                and marketing
            
            
            49.3
            %
            
            
            50.3
            %
            
            
            50.1
            %
            
            
            48.4
            %As
                a percentage of total revenues:Operating,
                general and administrative
            
            
            15.0
            %
            
            
            14.2
            %
            
            
            14.7
            %
            
            
            15.1
            %Depreciation
            
            
            1.3
            %
            
            
            1.1
            %
            
            
            1.4
            %
            
            
            1.1
            %As
                a percentage of interest income:Interest
                expense and lender fees
            
            
            47.0
            %
            
            
            47.7
            %
            
            
            46.5
            %
            
            
            45.7
            %




15
 ***Index***





**Results
      of Operations for the Three Months Ended September 30, 2007 and
      2006**





Revenues





Revenues
      for the quarter ended September 30, 2007 were $67.5 million, representing an
      $11.4 million increase over revenues from the quarter ended September 30, 2006.
      As discussed below, the increase is primarily attributable to an $11.9 million
      increase in Vacation Interval sales during the third quarter of
      2007.





The
      following table summarizes our Vacation Interval sales (dollars in thousands,
      except average price).





**Three
                Months Ended Sept 30, 2007**
            
            
            **Three
                Months Ended Sept 30, 2006****Sales**
            
            
            **Intervals**
            
            
            **Average**
              **Price**
            
            
            **Sales**
            
            
            **Intervals**
            
            
            **Average**
              **Price**Interval
                Sales to New Customers
            
            $
            25,090
            
            
            
            2,697
            
            
            $
            9,303
            
            
            $
            22,400
            
            
            
            1,667
            
            
            $
            13,437Upgrade
                Interval Sales to Existing Customers
            
            
            22,222
            
            
            
            2,553
            
            
            
            8,704
            
            
            
            20,566
            
            
            
            2,457
            
            
            
            8,370Additional
                Interval Sales to Existing Customers
            
            
            15,981
            
            
            
            2,187
            
            
            
            7,307
            
            
            
            8,448
            
            
            
            854
            
            
            
            9,893Total
            
            $
            63,293
            
            
            
            
            
            
            
            
            
            
            $
            51,414





Vacation
      Interval sales increased 23.1% during the third quarter of 2007 versus the
      same
      period of 2006, as a result of continued growth in customer tours and higher
      closing percentages on our sales to existing customers. The number of interval
      sales to new customers increased 61.8% offset by a decrease in average prices
      of
      30.8% (due to promotional pricing we offered during the third quarter of 2007
      on
      select products) resulting in a 12.0% increase in sales to new customers in
      the
      third quarter of 2007 versus the same period of 2006. The number of upgrade
      interval sales to existing customers increased 3.9% and average prices increased
      4.0%, resulting in an 8.1% net increase in upgrade interval sales to existing
      customers during the third quarter of 2007 compared to the same period of 2006.
      The number of additional interval sales to existing customers increased 156.1%
      and average prices decreased 26.1%, (also due to promotional pricing on
      additional interval sales) resulting in an 89.2% net increase in additional
      interval sales to existing customers during the third quarter of 2007 versus
      the
      same period of 2006.





Estimated
      uncollectible revenue, which represents estimated future gross cancellations
      of
      notes receivable, was $11.1 million for the third quarter of 2007 versus $8.9
      million for the same period of 2006. Our estimated uncollectible revenue as
      a
      percentage of Vacation Interval sales was 17.5% during the quarter ended
      September 30, 2007 and 17.3% during the same period of 2006. Our receivables
      charged off as a percentage of beginning of period notes receivable were 3.1%
      for the third quarter of 2007 compared to 2.7% for the third quarter of
      2006.  We believe our notes receivable are adequately reserved,
      however, there can be no assurance that the percentage of estimated
      uncollectible revenue will remain at its current level.





Interest
      income increased $1.4 million, or 12.0%, to $13.5 million during the third
      quarter of 2007 from $12.0 million during the same period of 2006. The increase
      primarily resulted from a higher average notes receivable balance during the
      third quarter of 2007 versus the same period of 2006, and an increase in the
      average yield on our outstanding notes receivable to 16.2% at September 30,
      2007
      from 15.7% at September 30, 2006.





Management
      fee income, which consists of management fees collected from the resorts’
management clubs, cannot exceed the management clubs’ net income. Management fee
      income increased $150,000 to $615,000 during the third quarter of 2007 versus
      $465,000 during the same period of 2006.





Other
      income consists of marina income, golf course and pro shop income, hotel income,
      and other miscellaneous items. Other income remained fairly constant at $1.2
      million for the third quarter of 2007 compared to $1.1 million for the third
      quarter of 2006.





Cost
      of Vacation Interval Sales





With
      the
      implementation of SFAS No. 152 effective January 1, 2006, the relative sales
      value method of recording Vacation Interval cost of sales was amended. The
      relative sales value method is used to allocate inventory costs and determine
      cost of sales in conjunction with a sale. Under the relative sales value method,
      cost of sales is estimated as a percentage of net sales using a cost of sales
      percentage which represents the ratio of total estimated cost, including both
      costs already incurred plus costs to complete the phase, if any, to total
      estimated Vacation Interval revenues under the project, including amounts
      already recognized and future revenues. Common costs, including amenities,
      are
      allocated to inventory cost among the phases that those costs are expected
      to
      benefit. The estimate of total revenue for a phase, which includes both actual
      to date revenues and expected future revenues, incorporates factors such as
      actual or estimated uncollectibles, changes in sales mix and unit sales prices,
      repossessions of intervals, effects of upgrade programs, and past and expected
      future sales programs to sell slow moving inventory units.





16
 ***Index***





Cost
      of
      Vacation Interval sales decreased to 8.2% for the third quarter of 2007 as
      compared to 11.8% for the third quarter of 2006. During the third quarter of
      2007, cost of sales decreased due to increases in our future relative sales
      value related to an increase in repossession and resale of timeshare intervals,
      an increase in expected future sales price on some of our higher-end products,
      and an increase in our master plan for new units added across our properties
      as
      we continue to execute on our long-term growth strategy of adding lodging units,
      amenities, and other assets to our existing properties. In addition, we
      experienced an increase in sales of lower cost-basis timeshare intervals versus
      the year-ago period.  These increases were partially offset by costs
      recognized during the third quarter of 2007 related to past construction
      projects that were terminated as we revamped our master plan during the
      quarter.





Sales
      and Marketing





Sales
      and
      marketing expense as a percentage of Vacation Interval sales decreased to 49.3%
      for the third quarter of 2007 versus 50.3% in the prior-year
      period.  The $5.3 million increase in sales and marketing expense is
      primarily attributable to our increased volume of Vacation Interval sales,
      as
      well as increased costs related to new and existing promotional programs used
      to
      generate tours.  These promotional programs were a primary factor in
      providing us with a 9.2% growth in tours and a 23.1% increase in Vacation
      Interval sales during the third quarter of 2007 versus the third quarter of
      2006.





In
      accordance with SFAS No. 152, sampler sales and related costs are accounted
      for
      as incidental operations, whereby incremental costs in excess of incremental
      revenue are charged to expense as incurred and the operations are presented
      as a
      net expense in the condensed consolidated statement of operations. Since our
      sampler sales primarily function as a marketing program for us, allowing us
      additional opportunities to sell a Vacation Interval to a prospective customer,
      the incremental costs of our sampler sales typically exceed incremental sampler
      revenue. Accordingly, $821,000 and $686,000 of sampler revenues were recorded
      as
      a reduction to sales and marketing expense for the quarters ended September
      30,
      2007 and 2006, respectively.





Operating,
      General and Administrative





Operating,
      general and administrative expense as a percentage of total revenues increased
      to 15.0% for the third quarter of 2007 versus 14.2% for the same period of
      2006.
      Overall, operating, general and administrative expense increased by $2.1 million
      for the third quarter of 2007, as compared to the same period of 2006, primarily
      due to an
      increase in salaries of $1.0 million, an increase in bank fees of $189,000,
      resulting from higher credit card processing fees from increased sales volume,
      and a $172,000 increase in legal fees.





Depreciation





Depreciation
      expense as a percentage of total revenues was 1.3% for the quarter ended
      September 30, 2007 versus 1.1% for the same quarter of 2006. Overall,
      depreciation expense for the third quarter of 2007 was $873,000 versus $627,000
      for the same period of 2006, an increase of $246,000, due to capital
      expenditures of approximately $11.8 million since September 30,
      2006.





Interest
      Expense and Lender Fees





Interest
      expense and lender fees as a percentage of interest income decreased to 47.0%
      for the third quarter of 2007 compared to 47.7% for the same period of 2006.
      Overall, interest expense and lender fees increased $599,000 for the third
      quarter of 2007 versus the same period of 2006.  This increase is
      primarily the result of a larger average debt balance outstanding during the
      third quarter of 2007, partially offset by a decrease in our weighted average
      cost of borrowings to 7.7% for the quarter ended September 30, 2007 as compared
      to 7.9% for the quarter ended September 30, 2006.





Income
      before Provision for Income Taxes





Income
      before provision for income taxes increased to $13.8 million for the quarter
      ended September 30, 2007, as compared to $9.8 million for the quarter ended
      September 30, 2006, as a result of the above-mentioned operating
      results.





Provision
      for Income Taxes





Provision
      for income taxes as a percentage of income before provision for income taxes
      was
      38.5% for the quarters ended September 30, 2007 and 2006. As of January 1,
      2007,
      we had no unrecognized tax benefits, and as a result, no benefits that would
      affect the effective income tax rate. We do not anticipate any significant
      changes related to unrecognized tax benefits in the next 12 months. As of
      January 1, 2007, and September 30, 2007, we did not have an accrual for interest
      and penalties related to unrecognized tax benefits.





17
 ***Index***





Net
      Income





Net
      income for the quarter ended September 30, 2007 increased to $8.5 million,
      as
      compared to $6.0 million for the quarter ended September 30, 2006, as a result
      of the above-mentioned operating results.





**Results
      of Operations for the Nine Months Ended September 30, 2007 and
      2006**





Revenues





Revenues
      for the nine months ended September 30, 2007 were $190.2 million, representing
      a
      $35.4 million increase from revenues of $154.8 million for the nine months
      ended
      September 30, 2006. As discussed below, the increase is primarily attributable
      to a $33.7 million increase in Vacation Interval sales during the first nine
      months of 2007.





The
      following table summarizes our Vacation Interval sales (dollars in thousands,
      except average price).





**Nine
                Months Ended Sept 30, 2007**
            
            
            **Nine
                Months Ended Sept 30, 2006****Sales**
            
            
            **Intervals**
            
            
            **Average**
              **Price**
            
            
            **Sales**
            
            
            **Intervals**
            
            
            **Average**
              **Price**Interval
                Sales to New Customers
            
            $
            71,275
            
            
            
            6,455
            
            
            $
            11,042
            
            
            $
            64,350
            
            
            
            5,136
            
            
            $
            12,529Upgrade
                Interval Sales to Existing Customers
            
            
            64,798
            
            
            
            7,454
            
            
            
            8,693
            
            
            
            53,286
            
            
            
            6,454
            
            
            
            8,256Additional
                Interval Sales to Existing Customers
            
            
            39,162
            
            
            
            4,552
            
            
            
            8,603
            
            
            
            23,880
            
            
            
            2,452
            
            
            
            9,739Total
            
            $
            175,235
            
            
            
            
            
            
            
            
            
            
            $
            141,516





Vacation
      Interval sales increased 23.8% during the first nine months of 2007 versus
      the
      same period of 2006, as a result of continued growth in customer tours and
      higher closing percentages on our sales to existing customers. The number of
      interval sales to new customers increased 25.7% offset by a decrease in average
      prices of 11.9%, (due to promotional pricing we offered during the third quarter
      of 2007 on select products) resulting in a 10.8% increase in sales to new
      customers in the first nine months of 2007 versus the same period of 2006.
      The
      number of upgrade interval sales to existing customers increased 15.5% and
      average prices increased 5.3%, resulting in a 21.6% increase in upgrade interval
      sales to existing customers during the first nine months of 2007 compared to
      the
      same period of 2006. The number of additional interval sales to existing
      customers increased 85.6% and average prices decreased 11.7%, (also due to
      promotional pricing on additional interval sales) resulting in a 64.0% net
      increase in additional interval  sales to existing customers during
      the first nine months of 2007 versus the same period of 2006.





Estimated
      uncollectible revenue, which represents estimated future gross cancellations
      of
      notes receivable, was $29.0****million for the first nine
      months of 2007 versus $24.5 million for the same period of 2006. Our estimated
      uncollectible revenue as a percentage of Vacation Interval sales was 16.5%
      during the nine months ended September 30, 2007 and 17.3% during the same period
      of 2006. Our receivables charged off as a percentage of beginning of period
      notes receivable were 8.7% for the first nine months of 2007 compared to 8.2%
      for the first nine months of 2006. We believe our notes receivable are
      adequately reserved, however, there can be no assurance that the percentage
      of
      estimated uncollectible revenue will remain at its current level.





Interest
      income increased $5.5 million, or 16.5%, to $39.0 million during the first
      nine
      months of 2007 from $33.4 million during the same period of 2006. The increase
      primarily resulted from a higher average notes receivable balance during the
      first nine months of 2007 versus the same period of 2006. The increase in
      average yield on our outstanding notes receivable to 16.2% at September 30,
      2007
      from 15.7% at September 30, 2006 also contributed to the increase in interest
      income.





Management
      fee income, which consists of management fees collected from the resorts’
management clubs, cannot exceed the management clubs’ net income. Management fee
      income increased $449,000 to $1.8 million during the first nine months of 2007
      versus $1.4 million during the same period of 2006.





Other
      income consists of marina income, golf course and pro shop income, hotel income,
      land sales, and other miscellaneous items. Other income was $3.2 million for
      the
      first nine months of 2007 and $3.0 million for the first nine months of
      2006.  We generated hotel income of $877,000 during the first nine
      months of 2007 versus $335,000 for the same period of 2006.  During
      the first nine months of 2006, we also recorded a pretax gain of approximately
      $499,000 from the sale of two parcels of land in Mississippi.





18
 ***Index***





Cost
      of Vacation Interval Sales





With
      the
      implementation of SFAS No. 152 effective January 1, 2006, the relative sales
      value method of recording Vacation Interval cost of sales was amended. The
      relative sales value method is used to allocate inventory costs and determine
      cost of sales in conjunction with a sale. Under the relative sales value method,
      cost of sales is estimated as a percentage of net sales using a cost of sales
      percentage which represents the ratio of total estimated cost, including both
      costs already incurred plus costs to complete the phase, if any, to total
      estimated Vacation Interval revenues under the project, including amounts
      already recognized and future revenues. Common costs, including amenities,
      are
      allocated to inventory cost among the phases that those costs are expected
      to
      benefit. The estimate of total revenue for a phase, which includes both actual
      to date revenues and expected future revenues, incorporates factors such as
      actual or estimated uncollectibles, changes in sales mix and unit sales prices,
      repossessions of intervals, effects of upgrade programs, and past and expected
      future sales programs to sell slow moving inventory units.





Cost
      of
      Vacation Interval sales decreased to 9.5% for the first nine months of 2007
      compared to 10.6% for the first nine months of 2006. For the nine months ended
      September 30, 2007 cost of sales decreased due to increases in our future
      relative sales value related to an increase in repossession and resale of
      timeshare intervals, an increase in expected future sales price on some of
      our
      higher-end products, and an increase in our master plan for new units added
      across our properties as we continue to execute on our long-term growth strategy
      of adding lodging units, amenities, and other assets to our existing properties.
      In addition, we experienced an increase in sales of lower cost-basis timeshare
      intervals versus the nine months ended September 30, 2006.  These
      increases were partially offset by costs recognized during the third quarter
      of
      2007 related to past construction projects that were terminated as we revamped
      our master plan during the quarter.





Sales
      and Marketing





Sales
      and
      marketing expense as a percentage of Vacation Interval sales increased to 50.1%
      for the nine-month period ended September 30, 2007, from 48.4% for the same
      period of 2006. The $19.3 million increase in sales and marketing expense is
      primarily attributable to our increased volume of Vacation Interval sales,
      as
      well as increased costs related to new and existing promotional programs used
      to
      generate tours. These promotional programs were a primary factor in providing
      us
      with a 19% growth in tours and a 23.8% increase in Vacation Interval sales
      during the first nine months of 2007 versus the first nine months of
      2006.





In
      accordance with SFAS No. 152, sampler sales and related costs are accounted
      for
      as incidental operations, whereby incremental costs in excess of incremental
      revenue are charged to expense as incurred and the operations are presented
      as a
      net expense in the consolidated statement of operations. Since our sampler
      sales
      primarily function as a marketing program for us, allowing us additional
      opportunities to sell a Vacation Interval to a prospective customer, the
      incremental costs of our sampler sales typically exceed incremental sampler
      revenue. Accordingly, $2.4 million and $2.1 million of sampler revenues were
      recorded as a reduction to sales and marketing expense for the nine months
      ended
      September 30, 2007 and 2006, respectively.





Operating,
      General and Administrative





Operating,
      general and administrative expense as a percentage of total revenues decreased
      to 14.7% for the first nine months of 2007 versus 15.1% for the same period
      of
      2006. Overall, operating, general and administrative expense increased by $4.7
      million for the first nine months of 2007, as compared to the same period of
      2006, primarily due
      toan increase in salaries of $2.1 million, and an increase in bank fees
      of $845,000, due largely to higher credit card processing fees resulting from
      higher sales volume.





Depreciation





Depreciation
      expense as a percentage of total revenues increased to 1.4% for the nine months
      ended September 30, 2007 versus 1.1% for the same period of 2006. Overall,
      depreciation expense for the first nine months of 2007 was $2.6 million versus
      $1.8 million for the same period of 2006, an increase of $839,000, due to
      capital expenditures of approximately $11.8 million since September 30,
      2006.





19
 ***Index***





Interest
      Expense and Lender Fees





Interest
      expense and lender fees as a percentage of interest income increased to 46.5%
      for the first nine months of 2007 compared to 45.7% for the same period of
      2006.
      This increase is primarily the result of a larger average debt balance
      outstanding during the first nine months of 2007, partially offset by a decrease
      in our weighted average cost of borrowings to 7.7% at September 30, 2007 as
      compared to 8.0% at September 30, 2006.





Income
      before Provision for Income Taxes





Income
      before provision for income taxes increased to $37.1 million for the nine months
      ended September 30, 2007, as compared to $30.9 million for the nine months
      ended
      September 30, 2006, as a result of the above-mentioned operating
      results.





Provision
      for Income Taxes





Provision
      for income taxes as a percentage of income before provision for income taxes
      was
      38.5% for the first nine months of 2007 and 2006. As of January 1, 2007, we
      had
      no unrecognized tax benefits, and as a result, no benefits that would affect
      the
      effective income tax rate. We do not anticipate any significant changes related
      to unrecognized tax benefits in the next 12 months. As of January 1, 2007,
      and
      September 30, 2007, we did not have an accrual for interest and penalties
      related to unrecognized tax benefits.





Net
      Income





Net
      income increased to $22.8 million for the nine months ended September 30, 2007,
      as compared to $19.0 million for the nine months ended September 30, 2006,
      as a
      result of the above-mentioned operating results.





**Liquidity
      and Capital Resources**





***Sources
      of Cash.***We generate cash primarily from the cash received on the
      sale of Vacation Intervals, the financing and collection of customer notes
      receivable from Vacation Interval owners, the sale of notes receivable to our
      special purpose entities, management fees, sampler sales, marina income, golf
      course and pro shop income, and hotel income. We typically receive a 10% to
      15%
      down payment on sales of Vacation Intervals and finance the remainder with
      the
      issuance of a seven-year to ten-year customer promissory note. We generate
      cash
      from customer notes receivable by (i) borrowing at an advance rate of 75% to
      80%
      of eligible customer notes receivable, (ii) selling notes receivable, and (iii)
      from the spread between interest received on customer notes receivable and
      interest paid on related borrowings. Because we use significant amounts of
      cash
      in the development and marketing of Vacation Intervals, but collect cash on
      customer notes receivable over a seven-year to ten-year period, borrowing
      against receivables has historically been a necessary part of normal operations.
      During the nine months ended September 30, 2007, our operating activities used
      $26.1 million of cash compared to $38.8 million during the same period of 2006.
      This $12.7 million difference in cash used in operating activities during the
      first nine months of 2007 versus the comparable 2006 period primarily resulted
      from the timing of payments on accounts payable, accrued expenses and prepaid
      and other assets, partially offset by an increase in inventories due to higher
      cash outflows for construction projects in the current year.





Although
      it appears we have adequate liquidity to meet our needs through September 2009,
      we are continuing to identify additional financing arrangements into 2010 and
      beyond. To finance our growth, development, and any future expansion plans,
      we
      may at some time be required to consider the issuance of other debt, equity,
      or
      collateralized mortgage-backed securities. Any debt we incur or issue may be
      secured or unsecured, have fixed or variable rate interest, and may be subject
      to such terms as we deem prudent.





***Uses
      of Cash.***During the first nine months of 2007, investing
      activities used $10.5 million of cash for capital expenditures, compared to
      $12.8 million cash used for investing activities during the first nine months
      of
      2006. The $12.8 million net cash used during the first nine months of 2006
      consisted of purchases of land, equipment, and leasehold improvements totaling
      $13.6 million, partially offset by net proceeds of $791,000 received from the
      sale of two parcels of land in Mississippi.




During
        the quarter ended September 30, 2007, we purchased unimproved real property
        in
        Massachusetts and Missouri. The land in Missouri consists of 36.72 acres
        and is
        adjacent to our Holiday Hills resort in Taney County, Missouri. The
        Massachusetts land is a 394.33 acre tract which adjoins 500 acres that we
        own in
        Berkshire County, Massachusetts.  The purchase agreements for each of
        the new tracts are attached hereto as exhibits to this Form 10-Q.


20
 ***Index***




During
      the first nine months of 2007, net cash provided by financing activities was
      $36.3 million compared to $49.4 million for the comparable 2006
      period.  The net cash of $36.3 million provided by financing
      activities during the first nine months of 2007 was primarily the result of
      $128.4 million of proceeds received from borrowings against pledged notes
      receivable and our inventory loans, offset by $93.3 million of payments on
      borrowings against pledged notes receivable and other debt. The net cash of
      $49.4
      million provided by financing activities during the first nine months of 2006
      was primarily the result of $291.4 million of proceeds received from borrowings
      against pledged notes receivable, partially offset by $209.5 million of payments
      on borrowings against pledged notes receivable and $32.5 million of increases
      in
      restricted cash for repayment of debt, all of which were primarily due to our
      transactions with SF-IV and SF-V.





At
      September 30, 2007, our senior credit facilities provided for loans of up to
      $520.2 million, of which approximately $285.5 million of principal related
      to
      advances under the credit facilities was outstanding. As of September 30, 2007,
      the weighted average cost of funds for all borrowings was 7.7%. Customer
      defaults have a significant impact on our cash available from financing customer
      notes receivable in that notes more than 60 days past due are not eligible
      as
      collateral. As a result, we must repay borrowings against such delinquent notes.
      As of September 30, 2007, $4.8 million of notes were more than 60 days past
      due.





Certain
      debt agreements include restrictions on our ability to pay dividends based
      on
      minimum levels of net income and cash flow. Our ability to pay dividends might
      also be restricted by the Texas Business Corporation Act.





*Off-Balance
      Sheet Arrangements.*During the third quarter of 2005, we closed a term
      securitization transaction with our wholly-owned off-balance sheet qualified
      special purpose finance subsidiary, SF-III, a Delaware limited liability
      company, which was formed for the purpose of issuing $108.7 million of its
      Series 2005-A Notes in a private placement through UBS Securities LLC. The
      Series 2005-A Notes are secured by timeshare receivables we sold to SF-III
      pursuant to a transfer agreement between us and SF-III. Under that agreement,
      we
      sold to SF-III approximately $132.8 million in timeshare receivables that were
      previously pledged as collateral under revolving credit facilities with our
      senior lenders and SF-I, and recognized a pre-tax gain of $5.8 million. In
      connection with this sale, we received cash consideration of $108.7 million,
      which was primarily used to pay off in full the credit facility of SF-I and
      to
      pay down amounts we owed under credit facilities with our senior lenders. We
      dissolved SF-I simultaneously with the sale of the timeshare receivables to
      SF-III.  The timeshare receivables we sold to SF-III are without
      recourse to us, except for breaches of certain representations and warranties
      at
      the time of sale. We are responsible for servicing the timeshare receivables
      purchased by SF-III pursuant to the terms of the Indenture and receive a fee
      for
      our services equal to 1.75% of eligible timeshare receivables held by the
      facility. Such fees were $682,000 and $1.2 million for the nine months ended
      September 30, 2007 and 2006, respectively.  Such fees received
      approximate our internal cost of servicing such timeshare receivables, and
      approximate the fee a third party would receive to service such receivables.
      As
      a result, the related servicing asset or liability was estimated to be
      insignificant.





At
      September 30, 2007, SF-III held notes receivable totaling $42.1 million, with
      related borrowings of $34.2 million. Except for the repurchase of notes that
      fail to meet initial eligibility requirements, we are not obligated to
      repurchase defaulted or any other contracts sold to SF-III. As the Servicer
      of
      the notes receivable sold to SF-III, we are obligated by the terms of the
      conduit facility to foreclose upon the Vacation Interval securing a defaulted
      note receivable. We may, but are not obligated to, purchase the foreclosed
      Vacation Interval for an amount equal to the net fair market value of the
      Vacation Interval if the net fair market value is no less than fifteen percent
      of the original acquisition price that the customer paid for the Vacation
      Interval. For the nine months ended September 30, 2007, we paid approximately
      $954,000 to repurchase the Vacation Intervals securing defaulted contracts
      to
      facilitate the re-marketing of those Vacation Intervals. The carrying value
      of
      our investment in SF-III was $8.5 million at September 30, 2007, which
      represents our maximum exposure to loss regarding our involvement with
      SF-III.





Our
      special purpose entities allow us to realize the benefit of additional credit
      availability we have with our current senior lenders. We require credit
      facilities to have the liquidity necessary to fund our costs and expenses;
      therefore it is vitally important to our liquidity plan to have financing
      available to us in order to finance future sales, since we finance the majority
      of our timeshare sales over seven to ten years.





*Income
      Taxes.*For regular federal income tax purposes, we report substantially all
      of the Vacation Interval sales we finance under the installment method. Under
      this method, income on sales of Vacation Intervals is not recognized until
      cash
      is received, either in the form of a down payment or as installment payments
      on
      customer notes receivable. The deferral of income tax liability conserves cash
      resources on a current basis. Interest is 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 payment is received.  If we are not
      subject to tax in a particular year, no interest is imposed since the interest
      is based on the amount of tax paid in that year. The condensed consolidated
      financial statements do not contain an accrual for any interest expense that
      would be paid on the deferred taxes related to the installment method as the
      interest expense is not reasonably estimable.





21
 ***Index***





In
      addition, we are subject to current alternative minimum tax ("AMT") as a result
      of the deferred income that results from the installment sales
      treatment.  Payment of AMT creates a deferred tax asset in the form of
      a minimum tax credit, which, unless otherwise limited, reduces the future
      regular tax liability attributable to Vacation Interval sales. Due to AMT losses
      in certain years prior to 2003, which offset all AMT income for years prior
      to
      2003, no minimum tax credit exists for years prior to 2003. Nevertheless, we
      had
      significant AMT in 2006 and for the nine months ended September 30, 2007, and
      anticipate that we will pay significant AMT in future periods.





The
      federal net operating losses (“NOLs”) of $162.4 million at December 31, 2006,
      expire between 2019 through 2021. Realization of the deferred tax assets arising
      from NOLs is dependent on generating sufficient taxable income prior to the
      expiration of the loss carryforwards.





Due
      to a
      restructuring in 2002, an ownership change within the meaning of Section 382(g)
      of the Internal Revenue Code (“the Code”) occurred. As a result, our NOL is
      subject to an annual limitation for the current and future taxable
      years.  This annual limitation may be increased for any recognized
      built-in gain to the extent allowed in Section 382(h) of the
      Code.  There is an annual limitation of approximately $768,000, which
      was the value of our stock immediately before the ownership change, multiplied
      by the applicable long term tax exempt rate.  We believe that
      approximately $36.2 million of our net operating loss carryforwards as of
      December 31, 2006 were subject to the Section 382
      limitations**.**





**Item
      3.  Quantitative and Qualitative Disclosures About
      Market Risk**





Interest
      on our notes receivable portfolio, senior subordinated debt, capital leases,
      and
      miscellaneous notes is fixed, whereas interest on our primary loan agreements,
      which had a total facility amount of $520.2 million at September 30, 2007,
      have
      a fixed-to-floating debt ratio of 36% fixed rate debt to 64% floating rate
      debt.
      The impact of a one-point effective interest rate change on the $182.8 million
      balance of variable-rate financial instruments at September 30, 2007, would
      be
      approximately $843,000 on our results of operations for the nine months ended
      September 30, 2007, or approximately $0.02 per diluted share.





At
      September 30, 2007, the carrying value of our notes receivable portfolio
      approximates fair value because the weighted average interest rate on the
      portfolio approximates current interest rates received on similar
      notes.  Our fixed-rate notes receivable are subject to interest rate
      risk and will decrease in fair value if market rates increase, which may
      negatively impact our ability to sell our fixed rate notes in the
      marketplace.  A hypothetical one-point interest rate increase in the
      marketplace at September 30, 2007 would result in a fair value decrease of
      approximately $11.5 million on our notes receivable portfolio.





*Credit
      Risk*— We are exposed to on-balance sheet credit risk related to our notes
      receivable. We are exposed to off-balance sheet credit risk related to notes
      sold.





We
      offer
      financing to the buyers of Vacation Intervals at our resorts. These buyers
      generally make a down payment of 10% to 15% of the purchase price and deliver
      a
      promissory note to us for the balance. The promissory notes generally bear
      interest at a fixed rate, are payable over a seven to ten year period, and
      are
      secured by a first mortgage on the Vacation Interval. We bear the risk of
      defaults on these promissory notes. Although we prescreen prospects by credit
      scoring them in the early stages of the marketing and sales process, we
      generally do not perform a detailed credit history review of our
      customers.





If
      a
      buyer of a Vacation Interval defaults, we 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 in many
      cases we may have recourse against a Vacation Interval buyer for the unpaid
      price, certain states have laws that limit our ability to recover personal
      judgments against customers who have defaulted on their loans. Accordingly,
      we
      have generally not pursued this remedy.





*Interest
      Rate Risk —*We have historically derived net interest income from our
      financing activities because the interest rates we charge our customers who
      finance the purchase of their Vacation Intervals exceed the interest rates
      we
      pay to our senior lenders. Because 64% of our indebtedness bears interest at
      variable rates and our customer notes receivable bear interest at fixed rates,
      increases in interest rates will erode the spread in interest rates that we
      have
      historically experienced and could cause our interest expense on borrowings
      to
      exceed our interest income on our portfolio of customer loans. Therefore, any
      increase in interest rates, particularly if sustained, could have a material
      adverse effect on our results of operations, cash flows, and financial
      position.





22
 ***Index***





To
      partially offset an increase in interest rates, we have engaged in two interest
      rate hedging transactions, or derivatives, related to our conduit loan through
      SF-II, for a notional amount of $25.0 million at September 30, 2007, that
      expires between September 2011 and March 2014. Our variable funding note with
      SF-IV also acts as an interest rate hedge since it contains a provision for
      an
      interest rate cap. The balance outstanding under this line of credit at
      September 30, 2007 is $46.1 million.





In
      addition, the Series 2005-A Notes related to our off-balance sheet special
      purpose finance subsidiary, SF-III, with a balance of $34.2 million at September
      30, 2007, bear interest at a blended fixed rate of 5.4%, and the Series 2006-A
      Notes related to SF-V, with a balance of $77.6 million at September 30, 2007
      bear interest at a blended fixed rate of 6.7%.





*Availability
      of Funding Sources —*We fund substantially all of the notes receivable,
      timeshare inventories, and land inventories which we originate or purchase
      with
      borrowings through our financing facilities, sales of notes receivable,
      internally generated funds, and proceeds from public debt and equity offerings.
      Borrowings are in turn repaid with the proceeds we receive from repayments
      of
      such notes receivable. To the extent that we are not successful in maintaining
      or replacing existing financings, we would have to curtail our operations or
      sell assets, thereby having a material adverse effect on our results of
      operations, cash flows, and financial position**.**





*Geographic
      Concentration —*Our notes receivable are primarily originated in Texas,
      Missouri, Illinois, Massachusetts, and Georgia. The risk inherent in such
      concentrations is dependent upon regional and general economic stability, which
      affects property values and the financial stability of the borrowers. Our
      Vacation Interval inventories are concentrated in Texas, Missouri, Illinois,
      Massachusetts, Georgia, and Florida. The risk inherent in such concentrations
      is
      in the continued popularity of the resort destinations, which affects the
      marketability of our products and the collection of notes
      receivable.





**Item
      4.  Controls and Procedures**





An
      evaluation as of the end of the period covered by this report was carried out
      under the supervision and with the participation of our management, including
      our Chief Executive Officer and Chief Financial Officer, of the effectiveness
      and design and operation of our disclosure controls and procedures (as defined
      in Rules 13a–15(e) and 15d-15(e) under the Securities Exchange Act of 1934).
      Based upon that evaluation, the Chief Executive Officer and the Chief Financial
      Officer concluded that, as of the end of the period covered by this report,
      those disclosure controls and procedures are effective.  There were no
      changes made in our internal control over financial reporting (as defined in
      Rules 13a-15(f) and 15d–15(f) under the Securities Exchange Act of 1934) during
      the third quarter of 2007 that materially affected or are reasonably likely
      to
      materially affect our internal control over financial reporting.





**PART
      II: OTHER INFORMATION**





**Item
      1.  Legal Proceedings**





We
      are
      currently subject to litigation arising in the normal course of our business.
      From time to time, such litigation includes claims regarding employment, tort,
      contract, truth-in-lending, the marketing and sale of Vacation Intervals, and
      other consumer protection matters. Litigation has been initiated from time
      to
      time by persons seeking individual recoveries for themselves, as well as, in
      some instances, persons seeking recoveries on behalf of an alleged class. In
      our
      judgment, none of the lawsuits currently pending against us, either individually
      or in the aggregate, is likely to have a material adverse effect on our
      business, results of operations, or financial position.





We
      are
      the plaintiff in a suit pending in U.S. District Court for the District of
      Massachusetts.  The case is styled *Silverleaf Resorts, Inc. v.
      Berkshire Wind Power, LLC*, Civil Action No. 06-30152.  We
      initiated this lawsuit because the defendant is seeking to construct a wind
      farm
      directly adjacent to the property line of a 500 acre tract of land we own in
      Berkshire County, Massachusetts.  We are seeking to permanently enjoin
      the construction of this wind farm facility unless certain of its proposed
      turbines are set back further from our property line on the grounds that, among
      other things, as currently proposed it will constitute a nuisance and will
      unreasonably interfere with the reasonable use and enjoyment of our property.
      Alternatively, we requested damages for the prospective nuisance.  In
      addition, the defendant has asserted that we are responsible for certain costs,
      including the costs to take the depositions of the defendant's experts.  We
      have asserted that the defendant should pay the costs of the depositions of
      our
      experts.  Prior to commencement of this litigation, we were in the
      initial stages of developing our 500 acre tract. If the defendant is ultimately
      successful in developing this neighboring site in accordance with its current
      plans, the proximity of such a wind farm facility to our property line could
      adversely affect our future development plans for our 500 acre tract. The court
      originally scheduled a trial for May 21, 2007 on the issue of our request for
      an
      injunction, but postponed the trial until November 13, 2007 to allow the parties
      time to resolve their differences.  Continuing settlement discussions
      between the parties were unsuccessful and in October 2007, we moved to dismiss
      this action without prejudice.  The defendant has opposed our motion
      to dismiss unless the dismissal is with prejudice or, alternatively, that the
      defendant is allowed to recover certain statutory costs. This matter has not
      been resolved but the case has been taken off the active trial list. We
      anticipate a ruling from the court in the near future on our motion to dismiss
      without prejudice to refiling.





23
 ***Index***





We
      are
      also a plaintiff in a related matter brought in the Land Court Department
      of the Trial Court of the Commonwealth of Massachusetts, styled as
*Silverleaf Resorts, Inc., et al. v. Zoning Board of Appeals of the Town
      of
      Lanesborough, et al.,*Civil Action No. 07 MISC 351155.  In this
      action, we have challenged the validity of a special permit issued by the
      Lanesborough Zoning Board of Appeals to Berkshire Wind Power, LLC, for a portion
      of a road needed to access the wind farm facility that is the subject of the
      U.S. District Court Action.  We seek a court decree that the special permit
      granted Berkshire Wind expired from non-use and is therefore no longer valid.
      The case is now in fast track discovery, but no final trial date has been
      set.





**Item
      1A.  Risk Factors**





There
      have been no material changes to the risk factors previously disclosed under
      the
      heading “Risk Factors” beginning on page 21 of our annual report on Form 10-K
      for the year ended December 31, 2006.





**Item
      6.  Exhibits and Reports on Form
      8-K**





(a)
            Exhibits
                filed herewith:





10.1
            Second
                Supplement to Indenture dated as of September 12, 2007, by and among
                Silverleaf Finance IV, LLC, UBS Real Estate Securities Inc. and Wells
                Fargo Bank, National Association, as
                Trustee





10.2
            First
                Amendment to Amended and Restated Sale and Servicing Agreement dated
                as of
                September12, 2007, by and among Silverleaf Finance IV, LLC, Silverleaf
                Resorts, Inc., and Wells Fargo Bank, National Association, as Trustee,
                Backup Servicer and Account
                Intermediary





10.3
            Contract
                of Sale dated October 30, 2006 by and between Virgil M. Casey, Ronald
                D.
                Casey, Charles Randolph Casey, and Roger Kevin Casey, Trustees Of
                The
                Casey Family Trust Dated June 3, 1992, Ronald D. Casey and Wife,
                P.
                Beverly Casey, Charles Randolph Casey, and Roger Kevin Casey and
                Silverleaf Resorts, Inc.





10.4
            Contract
                of Sale dated July 24, 2007 by and between J. W. Kelly’s Enterprises,
                Inc., James W. Kelly and Dorothy H. Kelly and James J. Oestreich,
                as
                assigned pursuant to the Assignment Of Contract Rights dated August
                1,
                2007 between James J. Oestreich and Silverleaf Resorts,
                Inc.




31.1
              Certification
                  of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of
                  2002
 
 31.2
              Certification
                  of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of
                  2002
 
 32.1
              Certification
                  of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of
                  2002
 
 32.2
              Certification
                  of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of
                  2002


(b)
            Reports
                on Form 8-K:





We
      filed
      the following Current Reports on Form 8-K with the SEC during the quarter ended
      September 30, 2007:





Current
      report on Form 8-K filed with the SEC on August 2, 2007 relating to press
      release announcing the scheduled release of financial results for the three-
      and
      six-month periods ended June 30, 2007.





Current
      report on Form 8-K filed with the SEC on August 14, 2007 relating to the
      Company’s earnings release for the three- and six-months ended June 30,
      2007.





24
 ***Index***





Current
      report on Form 8-K filed with the SEC on August, 22, 2007 relating to the
      announcement that the Company will soon begin construction of member services
      sales centers at four of its resort locations and expand an existing center
      at
      one resort location.





Current
      report on Form 8-K filed with the SEC on August 30, 2007 relating to the
      announcement that the Company will be presenting at the Roth 2007 New York
      Conference.





Current
      report on Form 8-K filed with the SEC on September 14, 2007 relating to the
      amendment of a revolving credit facility through its wholly-owned and fully
      consolidated special purpose finance subsidiary Silverleaf Finance IV,
      LLC.





25
 ***Index***





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





Dated:  November
                6, 2007
            By:
            /s/  ROBERT
                E. MEADRobert
                E. MeadChairman
                of the Board andChief
                Executive OfficerDated:  November
                6, 2007
            By:
            /s/  HARRY
                J. WHITE, JR.Harry
                J. White, Jr.Chief
                Financial Officer





26
 ***Index***




**INDEX
      TO EXHIBITS**




**Exhibit No.**
            
            **Description**10.1
            
            Second
                Supplement to Indenture dated as of September 12, 2007, by and among
                Silverleaf Finance IV, LLC, UBS Real Estate Securities Inc. and Wells
                Fargo Bank, National Association, as Trustee10.2
            
            First
                Amendment to Amended and Restated Sale and Servicing Agreement dated
                as of
                September 12, 2007, by and among Silverleaf Finance IV, LLC, Silverleaf
                Resorts, Inc., and Wells Fargo Bank, National Association, as Trustee,
                Backup Servicer and Account Intermediary10.3
            
            Contract
                of Sale dated October 30, 2006 by and between Virgil M. Casey, Ronald
                D.
                Casey, Charles Randolph Casey, and Roger Kevin Casey, Trustees Of
                The
                Casey Family Trust Dated June 3, 1992, Ronald D. Casey and Wife,
                P.
                Beverly Casey, Charles Randolph Casey, and Roger Kevin Casey and
                Silverleaf Resorts, Inc.10.4
            
            Contract
                of Sale dated July 24, 2007 by and between J. W. Kelly’s Enterprises,
                Inc., James W. Kelly and Dorothy H. Kelly and James J. Oestreich,
                as
                assigned pursuant to the Assignment Of Contract Rights dated August
                1,
                2007 between James J. Oestreich and Silverleaf Resorts,
                Inc.31.1
            
            Certification
                of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.2
            
            Certification
                of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232.1
            
            Certification
                of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            
            Certification
                of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002






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