<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

     (Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended December 31, 1998

                                       or

[ ]  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 0-10695

                             REGENCY EQUITIES CORP.
             (Exact name of registrant as specified in its charter)

        DELAWARE                                            23-2298894
(State or other jurisdiction of                          (I.R.S. employer
 incorporation or organization)                         identification no.)

                     11845 WEST OLYMPIC BOULEVARD, SUITE 900
                          LOS ANGELES, CALIFORNIA 90064
              (Address of principal executive offices and zip code)

                                 (310) 827-9604
              (Registrant's telephone number, including area code)

                 SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
                                  OF THE ACT:
                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                          Common stock ($.01 par value)
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

     The aggregate market value of the voting securities held by nonaffiliates
of the registrant as of February 5, 1999, based upon the average of the bid and
asked prices on that date, was approximately $424,821. For purposes of this
calculation, all officers and directors of the registrant were considered
affiliates, as were all beneficial owners (whether individuals, entities or
groups) of more then ten percent of the registrant's Common Stock.

     Number of shares of Common Stock, par value $.01, outstanding as of March
     23, 1999: 87,283,661. Documents Incorporated by Reference: None.


<PAGE>

                                     PART I

ITEM 1.   BUSINESS.

The corporate headquarters of Regency Equities Corp. (the "Company") are 
located at 11845 West Olympic Boulevard, Suite 900, Los Angeles, California 
90064. The Company shares this suite on a rent-free basis with the 
accounting firm of Engel, Kalvin, McMillan & Kipper, LLP. The Company's Chief 
Financial Officer, Morris Engel, is a partner in Engel, Kalvin, McMillan & 
Kipper, LLP. The Company has two employees: Mr. Engel and Allan L. Chapman, 
the Company's Chairman of the Board, Chief Executive Officer and President.

The Company owns a shopping center in Grand Rapids, Michigan. Approximately 
12% of the shopping center's space is leased to a tenant. The balance of the 
shopping center's space has been vacant since July 1997. The Company 
sustained a net operating loss of $79,885 from this property in 1998. For 
further information regarding the Grand Rapids property, see the Company's 
financial statements and notes thereto that are included in this Annual 
Report on Form 10-K.

During 1998 and the preceding several years, substantially all of the 
Company's remaining assets have consisted of cash which has been deposited 
with several major United States banks. For further information regarding the 
amount of revenue, operating profit or loss and identifiable assets 
attributable to the Company's various operations, reference is made to the 
Company's financial statements and notes thereto that are included in this 
Annual Report on Form 10-K.

On January 16, 1995, the Company's Board of Directors approved a cash 
dividend of $.15 per share to stockholders of record as of January 30, 1995 
and payable on February 7, 1995. The aggregate amount of the dividend was 
$13,092,549, which represented approximately 77.5% and 77.8% of the Company's 
total assets and stockholders' equity, respectively, as of December 31, 1994.

First Lincoln Holdings, Inc., a Delaware corporation, beneficially owns 
72,867,965 shares of the Company's common stock, which represents 83.48% of 
the Company's outstanding common stock. Of that aggregate number of shares, 
First Lincoln Holdings, Inc. is the record owner of 1,010,000 shares and 
Evergreen Acceptance Corporation, a Delaware corporation and a wholly owned 
subsidiary of First Lincoln Holdings, Inc., is the record owner of 71,857,965 
shares. Martin Oliner, who is a director of the Company, is the Chairman of 
the Board of Directors, President, Chief Executive Officer and sole 
stockholder of First Lincoln Holdings, Inc.

The nature and direction of the future business and operations of the Company 
are uncertain. The Company has commenced preliminary negotiations with First 
Lincoln Holdings, Inc. regarding a cash merger transaction which, if 
consummated, would result in all stockholders other than First Lincoln 
Holdings, Inc. and Evergreen Acceptance Corporation receiving cash in 
exchange for their shares of the Company's common stock. Following 
consummation of the transaction, First Lincoln Holdings, Inc. and Evergreen 
Acceptance Corporation would be the Company's only stockholders.

No specific transaction of the type described in the preceding paragraph has
been proposed or agreed upon by the parties, and it is uncertain whether or when
such a transaction will be proposed, agreed upon or consummated. Furthermore,
there is not yet any agreement or understanding regarding the price that
stockholders would receive if the parties decide to proceed with the
transaction.

                                        2
<PAGE>

ITEM 2.   PROPERTIES.

See "Item 1. Business." The Company does not own any real property other than
the Grand Rapids shopping center described above.

ITEM 3.   LEGAL PROCEEDINGS.

REGENCY EQUITIES CORP. V. WITMARK, INC., 
  NO. 97-06049-CK (COUNTY OF KENT, MICH.).

During 1997, the Company was advised that Witmark, Inc., which occupied 
approximately 88% of the Grand Rapids shopping center, had commenced 
liquidation proceedings. The Company filed an action against Witmark, Inc. 
for amounts due under its lease. On September 8, 1997, the Company settled 
this lawsuit for a cash payment from Witmark, Inc. of $120,000 and the return 
of the premises to the Company.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to the Company's stockholders during the quarter 
ended December 31, 1998.

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER 
         MATTERS.

(A)      MARKET INFORMATION.

Until February 8, 1995, the principal market for the Company's common stock 
was the Nasdaq National Market System. On that date, primarily as a result of 
the Company's February 7, 1995 cash dividend which represented approximately 
77.5% of its total assets, the Company's stock was delisted from the Nasdaq 
National Market System. The common stock is now traded over-the-counter, and 
there is not an active market for such stock.

The following table reflects the highest and lowest per share prices for the 
Company's common stock as quoted for the periods indicated. Because there is 
no longer an established, active public trading market for the Company's 
common stock, the following prices may not be an accurate indication of the 
value of such stock.

<TABLE>
<CAPTION>
             1998                            HIGH                  LOW 
             ----                            ----                  ---
         <S>                                <C>                   <C>
         1st quarter                        $0.020                $0.015
         2nd quarter                         0.015                 0.015
         3rd quarter                         0.015                 0.015
         4th quarter                         0.015                 0.015
</TABLE>

                                        3
<PAGE>

<TABLE>
<CAPTION>
             1997                             HIGH              LOW 
             ----                             ----              ---
         <S>                                 <C>               <C>
         1st quarter                         $0.015            $0.010
         2nd quarter                          0.015             0.015
         3rd quarter                          0.015             0.010
         4th quarter                          0.015             0.013
</TABLE>

(B)      HOLDERS.

The number of record holders of the Company's common stock on February 5, 
1999 was 1,587.

(C)      DIVIDENDS.

The Company has not historically paid regular dividends on its common stock 
and does not presently intend to do so in the future. On February 7, 1995, 
the Company paid an extraordinary cash dividend of $.15 per share to 
stockholders of record as of January 30, 1995. The Company has not paid any 
other dividends since February 7, 1995.

ITEM 6.   SELECTED FINANCIAL DATA.(a)

<TABLE>
<CAPTION>
                                              (In thousands except per share data)

                                                    Year ended December 31,
                                   --------------------------------------------------------
                                   1998          1997         1996         1995        1994
                                   ----          ----         ----         ----        ----
<S>                            <C>             <C>          <C>          <C>         <C>
Total revenues                 $    198        $  334       $  398       $  926      $  773
Income (loss) before
   income taxes                     (82)           28          133          171         267
Net income (loss)                   (84)         (395)         399          292        (298)
Income (loss) per share           (.001)        (.005)        .005         .003       (.003)
Dividends per share                   0             0            0          .15           0
Total assets                      3,980         4,055        4,455        4,240      16,893
Liabilities                          33            24           29          213          66
Shareholders' equity              3,947         4,031        4,426        4,027      16,827
Book value per share                .05           .05          .05          .05         .19
Weighted average shares
   outstanding                   87,284        87,284       87,284       87,284      87,284
</TABLE>

------------------------------

(a)  The selected financial data should be read in conjunction with
     "Management's Discussion and Analysis of Financial Condition and Results of
     Operations" and the Company's financial statements and notes thereto that
     are included elsewhere in this Annual Report on Form 10-K. On February 7,
     1995, the Company paid a cash dividend of $.15 per share to stockholders of
     record as of January 30, 1995. The aggregate amount of the dividend was
     $13,092,549, which represented approximately 77.5% and 77.8% of the
     Company's total assets and stockholders' equity, respectively, as of
     December 31, 1994. The nature and direction of the future business plans
     and operations of the Company are uncertain. See "Item 1. Business." As a
     result of these

                                       4
<PAGE>

     factors, the selected financial data are not necessarily indicative of the
     Company's future financial condition or results of operations.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

The following discussion should be read in conjunction with the Company's
financial statements and notes thereto that are included elsewhere in this
Annual Report on Form 10-K. See "Item 1. Business" for a description of recent
developments affecting the Company and the future direction of the Company.

(a)      RESULTS OF OPERATIONS.

         (i)  YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31,
              1997.

The Company recorded a loss before income taxes of $81,864 in 1998 compared to
income before income taxes of $27,907 in 1997. The decrease resulted principally
from (i) a decrease in rental income of $138,574 attributable to the termination
of the lease of the Michigan shopping center with Witmark, Inc. and (ii) an
increase in rental operating expenses of $11,229. The decline in operating
results was partially offset by a decrease in legal fees of $35,791 primarily
attributable to the settlement of litigation with Witmark, Inc. See "Item 3.
Legal Proceedings."

The Company recorded a net loss of $84,084 in 1998 compared to a net loss of
$395,177 in 1997. The decrease in net loss resulted principally from a decrease
of $447,844 in the valuation allowance against deferred tax assets. A valuation
allowance is provided to reduce the deferred tax assets to a value which, more
likely than not, will be realized. The valuation allowance against deferred tax
assets is determined by management based on its estimate of the amount which
will be realized from future profitability with reasonable certainty. In view of
the fact that the Company has not yet completed a definitive business plan, the
amount of deferred tax benefits expected to be realized for the determination of
the valuation allowance was based upon an assumption of two years of future
operations and the sale of the rental property at the end of the two-year
period.

         (ii) YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31,
1996.

The Company recorded income before income taxes (benefit) of $27,907 in 1997
compared to $132,988 in 1996. The decrease resulted principally from (i) a
decrease in rental income of $86,023 attributable to the termination of the
lease with Witmark, Inc. and (ii) an increase of legal fees of $39,616
attributable to the litigation with Witmark, Inc. See "Item 3. Legal
Proceedings." The decline in operating results was partially offset by an
increase in interest income of $22,246.

The Company recorded a net loss of $395,177 in 1997 compared to net income of
$399,410 in 1996. The decrease in net income resulted principally from (i) the
decreases that are described in the immediately preceding paragraph and (ii) an
increase of $447,844 in the valuation allowance against deferred tax assets. In
view of the fact that the Company has not yet completed a definitive business
plan, the amount of deferred tax benefits expected to be realized for the
determination of the valuation allowance was based upon an assumption of two
years of future operations and the sale of the rental property at the end of the
two-year period. The net change in the total valuation allowance for the years
ended December 31, 1997 and 1996 was ($446,233) and ($1,223,793), respectively.
The decease in

                                        5
<PAGE>

1997 resulted primarily from a decrease in the expected income from operations
and the sale of the rental property over the next two years. The decrease in
1996 resulted primarily from the expiration of loss carry-forwards offset by the
increase in the amount of deferred tax assets to be realized in the future as
determined by management.

(b)      LIQUIDITY, CAPITAL RESOURCES AND FUTURE OPERATIONS.

As of December 31, 1998, the Company had cash in the amount of $3,113,031
invested in interest-bearing demand deposit accounts with two major United
States banks. The Company has sufficient cash for its current operating needs;
the Company does not currently have any material commitments for capital
expenditures; and it has no present plans to incur any indebtedness.

The business direction of the Company is uncertain. As a result, the reported
financial information contained in this Annual Report on Form 10-K is not
necessarily indicative of future operating results or of future financial
condition.

(c)      NEW ACCOUNTING STANDARDS.

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share
("EPS"). SFAS No. 128 requires dual presentation of basic EPS and diluted EPS on
the face of all income statements issued after December 15, 1997 for all
entities with complex capital structures. Basic EPS is computed as net income
divided by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock options, warrants and other convertible
securities. As the Company does not have any stock options, warrants or other
convertible securities outstanding, basic and diluted EPS are the same for all
periods presented.

In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. SFAS
No. 130 requires that an enterprise report, by major components, and as a single
total, the change in its net assets during the period from nonowner sources.
Adoption of this statement will not impact the Company's financial statements.

(d)      IMPACT OF YEAR 2000.

The year 2000 issue affects computer applications that may not properly
recognize and process data for the year 2000 and beyond because of the use of
two digits rather than four to define an applicable year. The Company presently
is not aware of any material operational year 2000-related concerns and believes
that, with minor modifications to existing accounting software or conversion to
new software, any year 2000 concerns can be mitigated. Based on management's
best estimate, the costs associated with the year 2000 mitigation are not
expected to be material to the Company.

However, the Company maintains significant cash and cash equivalent balances at
two United States banks. The Company cannot, at this time, make any assurances
that the computer systems of the banks will be year 2000 compliant. If such
systems are not year 2000 compliant, the Company's results of operations and
financial position could be adversely affected in a material manner. Management
intends to request information from the banks regarding their year 2000
readiness and to evaluate the possible impact on the Company.

                                        6
<PAGE>

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable. The Company has exposure to interest rate changes as a result of
interest rate changes relating to the cash and cash equivalent balances that it
maintains with two banks. However, the Company believes that any such reasonably
anticipated changes in interest rates are unlikely to have a material effect on
the Company's financial position and results of operations.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information with respect to this item is set forth in the Company's
financial statements and notes thereto included in this Annual Report on Form
10-K and listed in the Index to Financial Statements and Financial Statement
Schedules set forth in Item 14 herein.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
           FINANCIAL DISCLOSURE.

Not applicable.

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
               NAME                    AGE             POSITION WITH THE COMPANY
               ----                    ---             -------------------------
         <S>                           <C>             <C>
         William J. Adams              69              Director and Secretary

         Allan L. Chapman              61              Chairman of the Board of Directors, Chief
                                                       Executive Officer and President

         Morris Engel                  72              Chief Financial Officer and Treasurer

         Ira L. Gottshall              41              Director

         Peter M. Graham               44              Director

         Ronald LaBow                  64              Director

         Martin Oliner                 51              Director
</TABLE>

William J. Adams has served as Secretary and a director of the Company since
June 1992 and is presently engaged in the private practice of law. Mr. Adams
served as Vice President, Secretary and General Counsel of First Lincoln
Holdings, Inc., an insurance holding company which was formerly called First
Executive Corporation, from 1982 through May 1993, and as a director and as
Secretary and General Counsel of Evergreen Acceptance Corporation, a subsidiary
of First Lincoln Holdings, Inc., from 1982 through May 1993.

                                        7
<PAGE>

Allan L. Chapman has served as Chairman of the Board of Directors, Chief
Executive Officer and President of the Company since June 30, 1992. He has also
served as President of the Sterling Group, an actuarial consulting firm, since
March 1991. He served as a Senior Vice President and a director of Executive
Life Insurance Company from 1980 until February 1991 and as a Vice President of
First Executive Corporation (now called First Lincoln Holdings, Inc.), an
insurance holding company, from 1980 until February 1991.

Morris Engel has served as Chief Financial Officer of the Company since May 1991
and as Treasurer since March 1993. He has also been a partner in the accounting
firm of Engel, Kalvin, McMillan & Kipper, LLP since November 1990. Mr. Engel was
a partner in the accounting firm of Laventhol & Horwath from 1969 to 1990.

Ira L. Gottshall has served as a director of the Company since August 1992. Mr.
Gottshall is a consultant in the life insurance industry. Mr. Gottshall served
as President of National Affiliated Corp., an insurance holding company, from
January 1997 until January 1998. Prior to 1997, Mr. Gottshall served as an
executive officer of several other insurance companies, including as President
and Chief Executive Officer of First Delaware Life Insurance Company from July
1991 until January 1994 and as a Vice President of Evergreen Acceptance
Corporation from September 1992 until January 1994.

Peter M. Graham has served as a director of the Company since March 1991. Mr.
Graham has served as Vice Chairman of Ladenburg, Thalmann & Co. Inc., an
investment banking firm, since 1998. Mr. Graham served as Director of Corporate
Finance of Ladenburg, Thalmann & Co. Inc. from 1989 until 1995, as its President
from 1995 until 1998 and as a director of the firm since 1982. He also serves as
a director of Seventh Generation, Inc.

Ronald LaBow has served as a director of the Company since May 1985. Mr. LaBow
has served as Chairman of the Board of Directors of WHX Corp., a steel
manufacturing company, since January 1991.

Martin Oliner has served as a director of the Company since November 1993 and
has been engaged in the private practice of law since 1972. Mr. Oliner serves as
Chairman of the Board of Directors, President and Chief Executive Officer of
First Lincoln Holdings, Inc., which has been principally engaged in the
ownership of two insurance subsidiaries, First Delaware Life Insurance Company
and Lincoln Liberty Life Insurance Company.

Directors are elected at the annual meeting of stockholders to serve during the
ensuing year and until a successor is duly elected and qualified. Officers serve
at the pleasure of the Board of Directors. There are no family relationships
between or among any of the directors and executive officers of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 and regulations adopted
thereunder require the Company's directors and officers and persons who own more
than ten percent of the outstanding shares of the Company's common stock
(collectively, the "Reporting Persons") to file with the Securities and Exchange
Commission and the Company initial reports of ownership and reports of changes
in ownership of the Company's common stock and other equity securities. Based
solely upon (i) the Company's review of the Forms 3, 4 and 5 that were furnished
by the Reporting Persons to the Company pursuant to Section 16(a) and applicable
regulations during and with respect to the Company's most recent fiscal year

                                        8
<PAGE>

and (ii) written representations received by the Company from its directors and
officers, the Company believes that all applicable Section 16(a) filing
requirements were complied with on a timely basis by the Reporting Persons
during and with respect to the Company's most recent fiscal year.

ITEM 11.  EXECUTIVE COMPENSATION.

(a)      SUMMARY COMPENSATION TABLE.

The following table sets forth all compensation paid or awarded by the Company
for services rendered during the fiscal years ended December 31, 1998, December
31, 1997 and December 31, 1996 to its Chief Executive Officer. No executive
officer or other employee of the Company had aggregate compensation for salary
and bonus in excess of $100,000 during the most recently completed fiscal year.

<TABLE>
<CAPTION>
                                                     SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------------------
                                                                                  LONG-TERM COMPENSATION
                                                                        -------------------------------------
                                        ANNUAL COMPENSATION                     AWARDS              PAYOUTS 
                             ---------------------------------------    -----------------------   -----------
                                                                                     SECURITIES
                                                          OTHER         RESTRICTED   UNDERLYING
      NAME AND                                            ANNUAL           STOCK      OPTIONS/      LTIP           ALL OTHER
PRINCIPAL POSITION   YEAR    SALARY($)    BONUS($)   COMPENSATION($)    AWARDS($)     SARS(#)     PAYOUTS($)   COMPENSATION($)(1)
------------------   ----    ---------    --------   ---------------    ---------   ----------    ----------   ------------------
<S>                  <C>      <C>            <C>           <C>              <C>        <C>            <C>            <C>
Allan L. Chapman     1998     $36,000         0             0                0           0             0              $4,000
Chairman, Chief      1997     $36,000         0             0                0           0             0              $4,000 
Executive Officer    1996     $36,000         0             0                0           0             0              $4,000 
and President
</TABLE>

---------------
(1)      Represents Mr. Chapman's receipt of directors' fees.

(b)      COMPENSATION OF DIRECTORS.

During 1998, the Company's directors received $1,000 per Board meeting and $500
per committee meeting, and their expenses incurred in attending such meetings
were reimbursed by the Company.

(c)      INDEMNIFICATION AGREEMENTS.

The Company has entered into an indemnification agreement with each of its
current directors and executive officers. The indemnification agreements provide
for the mandatory indemnification of each director and executive officer by the
Company with respect to proceedings arising out of or related to actions taken
or omitted to be taken by the individuals as directors, officers, employees or
agents of the Company. Under the agreements, the Company is obligated to
indemnify each of these individuals to the fullest extent permitted by Delaware
law and, if requested, is obligated to advance the reasonable expenses of any
such individual with respect to a proceeding, unless independent legal counsel
determines that such payments are not permitted. The Company's obligations under
these agreements continue notwithstanding the cessation of the individuals'
tenure as directors and officers of the Company.

(d)      COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.

The members of the Company's Stock Option/Compensation Committee are William J.
Adams and Ronald LaBow. Mr. Adams is the Company's Secretary, which is not a
salaried position.

                                        9
<PAGE>

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

With respect to each person known by the Company to be the beneficial owner of
more than five percent of its common stock, each director of the Company, each
of the Company's executive officers named in the Summary Compensation Table
presented above and all directors and executive officers of the Company as a
group, the following table sets forth the number of shares of common stock
beneficially owned as of March 22, 1999 by each such person or group and the
percentage of the outstanding shares of the Company's common stock beneficially
owned as of March 22, 1999 by each such person or group. Unless otherwise
indicated, each of the following stockholders has, to the Company's knowledge,
sole voting and investment power with respect to the shares beneficially owned,
except to the extent that such authority is shared by spouses under applicable
law or otherwise noted herein. Information presented below with respect to
persons or groups owning more than five percent of the Company's common stock is
based upon Schedule 13D or 13G filings made by such persons or groups with the
Securities and Exchange Commission.

<TABLE>
<CAPTION>
                                                                          APPROXIMATE
                                                 SHARES OF STOCK           PERCENT
   NAME OF BENEFICIAL OWNER                    BENEFICIALLY OWNED          OF CLASS  
   ------------------------                    ------------------          --------
FIVE PERCENT SHAREHOLDERS
<S>                                                 <C>                    <C>
First Lincoln Holdings, Inc.(1)                     72,867,965              83.48%
Evergreen Acceptance Corporation
  1001 Jefferson Plaza, Suite 200
  1001 Jefferson Street
  Wilmington, DE 19801

DIRECTORS AND
NAMED EXECUTIVE OFFICERS

William J. Adams                                      20,000                   *

Allan L. Chapman                                     235,000                   *

Ira L. Gottshall                                           0                   0

Peter M. Graham                                            0                   0

Ronald LaBow                                               0                   0

Martin Oliner(2)                                  72,867,965               83.48%
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
ALL DIRECTORS AND EXECUTIVE
  OFFICERS AS A GROUP
  <S>                                             <C>                      <C>
  (7 persons)(2)                                  73,122,965               83.78%
</TABLE>
------------------------------

 * Owns less than 1% of the Company's outstanding shares of common stock.

(1)    Evergreen Acceptance Corporation is a wholly owned subsidiary of First
       Lincoln Holdings, Inc. Evergreen Acceptance Corporation is the record
       owner of 71,857,965 shares of the Company's common stock; Evergreen
       Acceptance Corporation and First Lincoln Holdings, Inc. share voting and
       investment power with respect to such shares. First Lincoln Holdings,
       Inc. is the record owner of 1,010,000 shares of the Company's common
       stock, as to which it has sole voting and investment power.

(2)    Information presented for Mr. Oliner includes shares of the Company's
       common stock that are owned by First Lincoln Holdings, Inc. and its
       wholly owned subsidiary, Evergreen Acceptance Corporation. Mr. Oliner
       serves as Chairman of the Board, Chief Executive Officer and President of
       First Lincoln Holdings, Inc. Mr. Oliner is also the owner of all of the
       outstanding capital stock of First Lincoln Holdings, Inc. Mr. Oliner does
       not have direct ownership of any shares of the Company's common stock.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Morris Engel, the Company's Chief Financial Officer and Treasurer, is a partner
in the accounting firm of Engel, Kalvin, McMillan & Kipper, LLP. The Company
paid fees of $13,535 to Engel, Kalvin, McMillan & Kipper, LLP in 1998 in
consideration for accounting and tax services rendered by that firm.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
                                                                              PAGE NO.
<S>                                                                             <C>
Report of BDO Seidman, LLP................................................       F-1

Balance Sheets - December 31, 1998 and 1997...............................       F-2

Statements of Operations - Years
              Ended December 31, 1998, 1997 and 1996......................       F-3
</TABLE>

                                       11
<PAGE>

<TABLE>
<S>                                                                             <C>
Statements of Changes in Shareholders'
              Equity - Years Ended December 31, 1998,
              1997 and 1996 ..............................................       F-4

Statements of Cash Flows - Years Ended
              December 31, 1998, 1997 and 1996............................       F-5

Notes to Financial Statements.............................................       F-6

Report of BDO Seidman, LLP on Schedules...................................       F-11

Schedule II - Valuation and Qualifying Accounts...........................       F-12

Schedule III - Real Estate and Accumulated
              Depreciation................................................       F-13
</TABLE>
              Schedules not listed above are omitted because they are
              inapplicable or the information required is presented in the
              financial statements or the footnotes thereto.

EXHIBITS.

         3.1      Certificate of Incorporation of the Company as amended and
                  restated to date, incorporated herein by this reference to
                  Exhibit 3.1 to the Company's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1991.

         3.2      By-laws of the Company, incorporated herein by this reference
                  to Exhibit 3.2 to the Company's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1990.

         10.1     1986 Stock Option Plan, incorporated herein by this reference
                  to Exhibit 10.1 to the Company's Annual Report on Form 10-K
                  for the fiscal year ended December 31, 1991.

         10.2     Incentive Stock Option Plan, incorporated herein by this
                  reference to Exhibit 10.2 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1991.

         10.3     Indemnification Agreement dated February 7, 1995, between the
                  Company and William J. Adams, incorporated herein by this
                  reference to Exhibit 10.4 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

         10.4     Indemnification Agreement dated February 7, 1995, between the
                  Company and Allan L. Chapman, incorporated herein by this
                  reference to Exhibit 10.5 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

         10.5     Indemnification Agreement dated February 7, 1995, between the
                  Company and Morris Engel, incorporated herein by this
                  reference to Exhibit 10.6 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

                                       12
<PAGE>

         10.6     Indemnification Agreement dated February 7, 1995, between the
                  Company and Ira L. Gottshall, incorporated herein by this
                  reference to Exhibit 10.7 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

         10.7     Indemnification Agreement dated February 7, 1995, between the
                  Company and Peter M. Graham, incorporated herein by this
                  reference to Exhibit 10.8 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

         10.8     Indemnification Agreement dated February 14, 1995, between the
                  Company and Ronald LaBow, incorporated herein by this
                  reference to Exhibit 10.9 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

         10.9     Indemnification Agreement dated February 7, 1995, between the
                  Company and Martin Oliner, incorporated herein by this
                  reference to Exhibit 10.10 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994.

         27.1     Financial Data Schedule (included only in the electronic 
                  filing)

REPORTS ON FORM 8-K.

No Current Reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1998.

                                       13
<PAGE>

                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date:  March 23, 1999             REGENCY EQUITIES CORP.

                                  By  /s/ ALLAN L. CHAPMAN
                                      ----------------------------------------
                                      Allan L. Chapman, Chairman of the Board,
                                      Chief Executive Officer and President






                                       14
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated:

Date:  March 23, 1999             By  /s/ ALLAN L. CHAPMAN               
                                    -------------------------------------
                                    Allan L. Chapman
                                    Chairman of the Board, Chief Executive
                                    Officer and President (Principal 
                                    Executive Officer)

Date:  March 23, 1999             By  /s/ MORRIS ENGEL                   
                                    -------------------------------------
                                    Morris Engel
                                    Chief Financial Officer and Treasurer 
                                    (Principal Financial and Accounting 
                                    Officer)

Date:  March 23, 1999             By  /s/ WILLIAM J. ADAMS               
                                    -------------------------------------
                                    William J. Adams
                                    Secretary and Director

Date:  March 23, 1999             By  /s/ RONALD LaBOW                   
                                    -------------------------------------
                                    Ronald LaBow
                                    Director

Date:  March 23, 1999             By  /s/ PETER M. GRAHAM                
                                    -------------------------------------
                                    Peter M. Graham
                                    Director

Date:  March 23, 1999             By  /s/ IRA L. GOTTSHALL               
                                    -------------------------------------
                                    Ira L. Gottshall
                                    Director

Date:  March 23, 1999             By  /s/ MARTIN OLINER                  
                                    -------------------------------------
                                    Martin Oliner
                                    Director

                                       15
<PAGE>

                             REGENCY EQUITIES CORP.

                           ANNUAL REPORT ON FORM 10-K

                      ITEM 8 AND ITEM 14(a)(1) and 14(a)(2)

             FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                          YEAR ENDED DECEMBER 31, 1998



<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
Regency Equities Corp.

We have audited the accompanying balance sheets of Regency Equities Corp. as of
December 31, 1998 and 1997 and the related statements of operations, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Regency Equities Corp. at
December 31, 1998 and 1997 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.

                                              BDO SEIDMAN, LLP

Los Angeles, California
February 9, 1999

                                       F-1
<PAGE>

                             REGENCY EQUITIES CORP.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                     -------------------------------------
                                                         1998                      1997   
                                                     -----------               -----------
<S>                                                  <C>                       <C>
ASSETS
    Cash (Note A)                                    $ 3,113,031               $ 3,137,924
    Rent receivable                                        3,412                     3,752
    Rental property owned, net of write
     down for possible loss of $215,000
     and accumulated depreciation of
     $392,544 in 1998 and $343,476 in
     1997 (Note B)                                       863,897                   912,965
                                                     -----------               -----------

                                                     $ 3,980,340               $ 4,054,641
                                                     -----------               -----------
                                                     -----------               -----------
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
    Accounts payable and accrued
     expenses                                        $    30,549               $    22,366
    Income taxes payable (Note C)                          3,020                     1,420
                                                     -----------               -----------

                                                          33,569                    23,786
                                                     -----------               -----------
CONTINGENCIES (Note A)

SHAREHOLDERS' EQUITY:
    Preferred stock, par value $.01
     per share, authorized 5,000,000
     shares; none issued
    Common stock, par value $.01
     per share, authorized
     125,000,000 shares; issued and
     outstanding 87,283,661 shares                       872,836                   872,836
    Additional paid-in capital                        47,660,331                47,660,331
    Accumulated deficit                             ( 44,586,396)             ( 44,502,312)
                                                     -----------               -----------

                                                       3,946,771                 4,030,855
                                                     -----------               -----------

                                                     $ 3,980,340               $ 4,054,641
                                                     -----------               -----------
                                                     -----------               -----------
</TABLE>

                 See accompanying notes to financial statements.

                                       F-2
<PAGE>

                             REGENCY EQUITIES CORP.

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                               --------------------------------------------------------
                                                   1998                   1997                  1996   
                                               -----------            -----------           -----------
<S>                                            <C>                    <C>                   <C>
REVENUES:
    Interest income                            $   150,090            $   147,741           $   125,495
    Rental income                                   48,068                186,642               272,665
                                               -----------            -----------           -----------

         TOTAL REVENUES                            198,158                334,383               398,160
                                               -----------            -----------           -----------
EXPENSES:
    Administrative expense                         100,693                108,004               101,027
    Professional fees (Note E)                      51,376                 81,748                52,964
    Rental expense                                 127,953                116,724               111,181
                                               -----------            -----------           -----------
          TOTAL EXPENSES                           280,022                306,476               265,172
                                               -----------            -----------           -----------

          INCOME (LOSS) BEFORE INCOME
           TAXES                                 (  81,864)                27,907               132,988

PROVISION (BENEFIT) FOR INCOME TAXES
 (NOTE C)                                            2,220                423,084             (  266,422)
                                                 -----------           -----------           -----------
          NET INCOME (LOSS)                      ($   84,084)          ($  395,177)          $   399,410
                                                 -----------           -----------           -----------
                                                 -----------           -----------           -----------
WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                               87,283,661            87,283,661            87,283,661
                                                 -----------           -----------           -----------
                                                 -----------           -----------           -----------
NET INCOME (LOSS) PER SHARE--
 Basic and Diluted                               ($     .001)          ($     .005)          $      .005

                                                 -----------           -----------           -----------
                                                 -----------           -----------           -----------
</TABLE>

                 See accompanying notes to financial statements.

                                       F-3
<PAGE>

                             REGENCY EQUITIES CORP.

                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                       THREE YEARS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                    COMMON STOCK
                              -------------------------     ADDITIONAL
                               NUMBER OF                     PAID-IN        ACCUMULATED
                                SHARES         AMOUNT        CAPITAL          DEFICIT
                              -----------   ----------     -----------      -----------
<S>                           <C>            <C>           <C>              <C>
BALANCE AT
  January 1, 1996             87,283,661      $872,836     $47,660,331      ($44,506,545)

      Net income                                                                 399,410
                              ----------      --------     -----------       -----------

BALANCE AT
  December 31, 1996           87,283,661       872,836      47,660,331      ( 44,107,135)

      Net loss                                                              (    395,177)
                              ----------      --------     -----------       -----------

BALANCE AT
  December 31, 1997           87,283,661       872,836      47,660,331      ( 44,502,312)

      Net loss                                                              (     84,084)
                              ----------      --------     -----------       -----------

BALANCE AT
    December 31, 1998         87,283,661      $872,836     $47,660,331      ($44,586,396)
                              ----------      --------     -----------       -----------
                              ----------      --------     -----------       -----------
</TABLE>

                 See accompanying notes to financial statements.

                                       F-4
<PAGE>

                             REGENCY EQUITIES CORP.

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                          ----------------------------------------
                                                              1998              1997         1996   
                                                          -----------     -----------  -----------
<S>                                                     <C>              <C>            <C>
          INCREASE (DECREASE) IN CASH

OPERATING ACTIVITIES:

    Net income (Loss)                                   ($   84,084)     ($ 395,177)    $  399,410

    Adjustments to reconcile net 
     income (loss) to net cash 
     provided by (used in)
    operating activities:
      Depreciation                                           49,068          49,068         49,068

    Changes in operating assets and liabilities:
      Rent receivable                                           340          94,396          2,841
      Accounts payable and accrued
       expenses                                               8,183     (     5,373)   (   184,039)
      Deferred income taxes                                                 421,164    (   269,342)
      Income taxes payable                                    1,600     (       300)           400
                                                         ----------      ----------     ----------

          NET CASH PROVIDED BY (USED IN)
           OPERATING ACTIVITIES                         (    24,893)        163,778    (     1,662)
                                                         ----------      ----------     ----------

INCREASE (DECREASE) IN CASH                             (    24,893)        163,778    (     1,662)

CASH BEGINNING OF YEAR                                    3,137,924       2,974,146      2,975,808
                                                         ----------      ----------     ----------

CASH END OF YEAR                                         $3,113,031      $3,137,924     $2,974,146
                                                         ----------      ----------     ----------
                                                         ----------      ----------     ----------
</TABLE>

                 See accompanying notes to financial statements.

                                       F-5
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                             REGENCY EQUITIES CORP.

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

BUSINESS: Regency Equities Corp. (the "Company") is incorporated in the state 
of Delaware. The Company owns and leases to third parties a shopping center 
in Grand Rapids, Michigan.

CASH: Cash at December 31, 1998 is deposited with two major U.S. banks. At 
December 31, 1998 and throughout the year the Company has maintained balances 
in its bank accounts in excess of the federally insured limit.

DEPRECIATION: Rental property is depreciated over its estimated useful life of
25 years using the straight-line method.

LONG-LIVED ASSETS: The Company periodically reviews long-lived assets for 
impairment to determine whether any events or circumstances indicate that the 
carrying amount of the assets may not be recoverable. Such review includes 
estimating expected future cash flows from operations and net realizable 
value upon liquidation based on recent appraisals.

RENTAL INCOME: The Company recognizes minimum rents from leases on a
straight-line basis over the lease term. Overage rentals are recognized in the
period earned.

INCOME TAXES: Deferred tax assets and liabilities are determined based on the
differences between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.

                                   (continued)

                                       F-6
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                             REGENCY EQUITIES CORP.

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

ACCOUNTING ESTIMATES: The preparation of financial statements in conformity 
with generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosures of contingent assets and liabilities at the date 
of the financial statements and the reported amounts of revenues and expenses 
during the reporting period. Actual results could differ from those estimates.

EARNINGS PER SHARE: In February 1997, the Financial Accounting Standards 
Board ("FASB") issued Statement of Financial Accounting Standards (SFAS) No 
128 Earnings Per Share ("EPS"). SFAS No. 128 requires dual presentation of 
basic EPS and diluted EPS on the face of all income statements issued after 
December 15, 1997 for all entities with complex capital structures. Basic EPS 
is computed as net income divided by the weighted average number of common 
shares outstanding for the period. Diluted EPS reflects the potential 
dilution that could occur from common shares issuable through stock options, 
warrants and other convertible securities. As the Company does not have any 
stock options, warrants or other convertible securities outstanding, basic 
and diluted EPS are the same, and only basic EPS is presented.

NOTE B - RENTAL PROPERTY AND DEPRECIATION

The Company, as lessor, leases space in a shopping center (the "Center") 
located in Grand Rapids, Michigan.

During 1997, the Company was advised that one tenant which occupied 
approximately 87.5% of the Center had commenced liquidation proceedings. The 
Company then filed an action against the tenant for all amounts due in 
connection with the lease. In September 1997, the Company settled its lawsuit 
with the tenant for a cash payment of $120,000 and the return of the leased 
premises.

In July 1997, the lease for the remaining approximately 12.5% of the Center 
expired. The tenant continues to occupy the space on a month-to-month basis. 
Minimum rent in connection with this tenant is $3,500 per month.

                                   (continued)

                                       F-7
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                             REGENCY EQUITIES CORP.

NOTE C - INCOME TAXES (BENEFIT)

The provision (benefit) for income taxes consists of:

<TABLE>
<CAPTION>
                                      1998               1997                1996   
                                   ----------         ----------          ----------
<S>                                <C>                <C>                 <C>
Federal:

     Current                       $     -              $   -               $   -
     Deferred                       2,178,384          (  24,930)             47,814
State:

     Current                            2,220              1,920               2,920
     Deferred                         150,565          (   1,750)          (   1,286)
Increase (decrease)
 in valuation allowance
 of deferred tax assets           ( 2,328,949)           447,844           ( 315,870)
                                   ----------           --------            --------

   Total                           $    2,220           $423,084           ($266,422)
                                   ----------           --------            --------
                                   ----------           --------            --------
</TABLE>

The reconciliation of the provision (benefit) for income taxes and the amount 
computed by applying the statutory federal income tax rate to earnings before 
income taxes is as follows:

<TABLE>
<CAPTION>
                                                 1998           1997            1996  
                                               --------       --------        --------
 <S>                                            <C>           <C>             <C>

  Federal tax at statutory rate                 ( 34.0%)         34.0%           34.0%
  State income tax, net of
   federal income tax benefit                      2.7            6.9             3.2
  Increase (decrease) in valuation
   allowance of deferred tax assets               34.0        1,475.1          (237.5 )
                                                 ------       --------          ------

  Provision (benefit) for income taxes             2.7%       1,516.0%         (200.3%)
                                                 ------       --------          ------
                                                 ------       --------          ------
</TABLE>

                                   (continued)

                                       F-8
<PAGE>
                          NOTES TO FINANCIAL STATEMENTS

                             REGENCY EQUITIES CORP.

NOTE C - INCOME TAXES (BENEFIT) (continued)

Deferred tax assets (liabilities) consist of:

<TABLE>
<CAPTION>
                                                            1998                  1997   
                                                         ----------            ----------
 <S>                                                    <C>                   <C>
  Depreciation                                          ($   60,842)          ($   62,452)
                                                         ----------            ----------

         Gross deferred tax liabilities                 (    60,842)          (    62,452)
                                                         ----------            ----------

  Rental property loss allowance                             76,435                76,435
  Loss carryforwards                                      3,462,268             5,792,827
                                                         ----------            ----------

         Gross deferred tax assets                        3,538,703             5,869,262

  Valuation allowance                                   ( 3,477,861)          ( 5,806,810)
                                                         ----------            ----------

         Net deferred tax assets                             60,842                62,452
                                                         ----------            ----------

         Deferred taxes                                  $        0            $        0
                                                         ----------            ----------
                                                         ----------            ----------
</TABLE>

A valuation allowance is provided to reduce the deferred tax assets to a 
level which, more likely than not, will be realized. The net deferred assets 
reflects management's estimate of the amount which will be realized from 
future profitability with reasonable certainty. The net change in the total 
valuation allowance for the years ended December 31, 1998, 1997, and 1996 
were ($2,328,949), $447,844 and ($1,223,793), respectively. The decreases in 
1998 and 1996 resulted primarily from the expiration of loss carryforwards 
and the increase in 1997 was due to the decrease in rental income.

                                   (continued)

                                       F-9
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                             REGENCY EQUITIES CORP.

NOTE C - INCOME TAXES (BENEFIT) (concluded)

The Company had operating loss carryforwards at December 31, 1998 for federal
tax purposes as follows:

<TABLE>
       <S>                              <C>
       EXPIRES IN:
       1999                             $8,700,000
       2006                                630,000
       2009                                460,000
       2018                                 80,000
                                        ----------
                                        ----------
                                        $9,870,000
</TABLE>

The Company also had significant Michigan state operating loss carryforwards 
at December 31, 1998.

The Company made income tax payments of $1,420, $2,220 and $2,520 during 1998,
1997 and 1996, respectively.

NOTE D - INCENTIVE STOCK OPTION PLANS

The Company has incentive stock option plans for certain officers that provide
for options to be granted at a price equal to fair market value at the date of
the grant. Options cannot be exercised after ten years from the date of the
grant or more than three months after the termination of an optionee's
employment with the Company. No stock options were granted or exercised in 1996,
1997 or 1998. No options were outstanding at December 31, 1998; however, options
were available to be granted for 5,450,000 shares.

NOTE E - RELATED PARTY TRANSACTIONS

The current Chief Financial Officer is a partner in a certified public
accounting firm which provides accounting and tax services to the Company. Fees
paid by the Company to that firm were $13,535 in 1998, $17,167 in 1997 and
$21,471 in 1996.

                                   (continued)

                                      F-10
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS ON
                          FINANCIAL STATEMENT SCHEDULES

Board of Directors
Regency Equities Corp.

The audits referred to in our report dated February 9, 1999 relating to the
financial statements of Regency Equities Corp., which is contained in Item 8 of
this Form 10K included the audit of the financial statement schedules listed in
the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement schedules based on our audits.

In our opinion such financial statement schedules present fairly, in all
material respects, the information set forth therein.


BDO SEIDMAN, LLP


Los Angeles, California
February 9, 1999

                                      F-11
<PAGE>

                             REGENCY EQUITIES CORP.

                 VALUATION AND QUALIFYING ACCOUNTS - SCHEDULE II
<TABLE>
<CAPTION>
                                                        Additions     Additions            
                                        Balance at    (deductions)  (deductions)    Balance
                                         beginning     charged to       from        at end
                                         of year       operations      reserve      of year 
                                        ----------    ------------  ------------   ---------
<S>                                     <C>           <C>            <C>            <C>
Deferred tax valuation
 allowance deducted from deferred
  tax assets:
   Year ended December 31, 1997         $5,358,966    $  447,844     $     -        $5,806,810
                                        ----------    ----------     ----------     ----------

   Year ended December 31, 1998         $5,806,810    $    -        ($2,328,949)    $3,477,861
                                        ----------    ----------     ----------     ----------
</TABLE>

                                      F-12
<PAGE>

                             REGENCY EQUITIES CORP.

             REAL ESTATE AND ACCUMULATED DEPRECIATION - SCHEDULE III
<TABLE>
<CAPTION>
                                          Costs                               
                                       capitalized            Gross amount    
                                     subsequent to         at which carried   
                     Initial Cost     acquisition         at close of period             (4)               Life (years)
                 ------------------  -------------        -------------------       Accumu-                  on which
          (1)             Bldg. &                            Bldg. &                 lated                   deprecia-
  Descrip-               Improve-    Improve-                Improve-        (5)    Deprecia-     Date        tion is
    tion      Land        ments       ments       Land        ments       Total       tion       acquired    computed
  ---------  ------     ----------   --------    ------     ---------    --------   ----------   --------   -----------
<S>          <C>        <C>          <C>        <C>        <C>         <C>           <C>         <C>           <C>
December 31,
 1998        $266,076    $794,337    $411,028   $266,076   $1,205,365  $1,471,441    $392,544    Oct 1976       25
</TABLE>

     (1)  The property is a shopping arcade in Grand Rapids, Michigan.

     (2)  The property was not subject to encumbrance at December 31, 1998,
          1997, or 1996.

     (3)  An allowance for possible losses of $215,000 has been provided at
          December 31, 1998 1997, and 1996 to adjust the carrying value of the
          property to estimated net realizable value.

     (4)  Reconciliation of accumulated depreciation:

<TABLE>
<CAPTION>
                                                1998         1997         1996  
                                              --------     --------     --------
          <S>                                 <C>          <C>          <C>
          Balance at beginning of period      $343,476     $294,408     $245,340
          Additions during period               49,068       49,068       49,068
                                              --------     --------     --------

           Balance at close of period         $392,544     $343,476     $294,408
                                              --------     --------     --------
                                              --------     --------     --------
</TABLE>

     (5)  The aggregate cost for federal income tax purposes of the property for
          each of the three years December 31, 1996, 1997 and 1998 was
          $1,471,441.

                                      F-13
<PAGE>

                             REGENCY EQUITIES CORP.

                           ANNUAL REPORT ON FORM 10-K

                              INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number                                 Description                                       Page
------                                 -----------                                       ----
<S>       <C>                                                                           <C>
3.1       Certificate of Incorporation of the Company as amended and restated to
          date, incorporated herein by this reference to Exhibit 3.1 to the Company's
          Annual Report on Form 10-K for the fiscal year ended December 31, 1991.

3.2       By-laws of the Company, incorporated herein by this reference to Exhibit
          3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1990.

10.1      1986 Stock Option Plan, incorporated herein by this reference to Exhibit
          10.1 to the Company's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1991.

10.2      Incentive Stock Option Plan, incorporated herein by this reference to Exhibit
          10.2 to the Company's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1991.

10.3      Indemnification Agreement dated February 7, 1995, between the Company
          and William J. Adams, incorporated herein by this reference to Exhibit 10.4
          to the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1994.

10.4      Indemnification Agreement dated February 7, 1995, between the Company
          and Allan L. Chapman, incorporated herein by this reference to Exhibit 10.5
          to the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1994.

10.5      Indemnification Agreement dated February 7, 1995, between the Company
          and Morris Engel, incorporated herein by this reference to Exhibit 10.6 to
          the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1994.

10.6      Indemnification Agreement dated February 7, 1995, between the Company
          and Ira L. Gottshall, incorporated herein by this reference to Exhibit 10.7 to
          the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1994.

10.7      Indemnification Agreement dated February 7, 1995, between the Company
          and Peter M. Graham, incorporated herein by this reference to Exhibit 10.8
</TABLE>

<PAGE>

<TABLE>
<S>       <C>                                                                            <C>
          to the Company's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1994.

10.8      Indemnification Agreement dated February 14, 1995, between the Company
          and Ronald LaBow, incorporated herein by this reference to Exhibit 10.9 to
          the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1994.

10.9      Indemnification Agreement dated February 7, 1995, between the Company
          and Martin Oliner, incorporated herein by this reference to Exhibit 10.10 to
          the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1994.

27.1      Financial Data Schedule (included only in the electronic filing)
</TABLE>