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UNITED STATES
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, 2003
|                                           
|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
(State or other jurisdiction of incorporation or organization) |  | 23-2298894
(I.R.S. employer identification no.)

9454 Wilshire Boulevard, Penthouse 27
Beverly Hills, California 90212
(Address of principal executive offices, including zip code)

(310) 876-0569
(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]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act). Yes [   ] No [X]

The aggregate market value of the voting securities held by nonaffiliates of the registrant as of June
30, 2003, based upon the average of the bid and asked prices on that date, was approximately $143,757.
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 30, 2004: 87,283,661.
Documents Incorporated by Reference: None.





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TABLE OF CONTENTS



|             |                                                                                                |  |  |  |  |  |  | 
|------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I      
|             | Item 1. Business.                                                                             
|             | Item 2. Properties.                                                                           
|             | Item 3. Legal Proceedings.                                                                    
|             | Item 4. Submission of Matters to a Vote of Security Holders.                                  
|PART II     
|             | Item 5. Market for the Registrants Common Stock and Related Stockholder Matters.             
|             | Item 6. Selected Financial Data.(a)                                                           
|             | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|             | Item 7A. Quantitative and Qualitative Disclosures About Market Risk.                          
|             | Item 8. Financial Statements and Supplementary Data.                                          
|             | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 
|             | Item 9A. Controls and Procedures.                                                             
|PART III    
|             | Item 10. Directors and Executive Officers of the Registrant.                                  
|             | Item 11. Executive Compensation.                                                              
|             | Item 12. Security Ownership of Certain Beneficial Owners and Management.                      
|             | Item 13. Certain Relationships and Related Transactions.                                      
|             | Item 14. Principal Accounting Fees and Services.                                              
|PART IV     
|             | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.                     
|SIGNATURES  
|Exhibit 31.1
|Exhibit 31.2
|Exhibit 32.1
|Exhibit 32.2



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PART I




Item 1. Business.

The corporate headquarters of Regency Equities Corp. (the Company) are
located at 9454 Wilshire Boulevard, Penthouse 27, Beverly Hills, California
90212. The Company shares this office on a rent-free basis with the Companys
Chief Financial Officer, Morris Engel, who is a self-employed certified public
accountant. 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 that is located
at 4183-4198 Jupiter Avenue, N.E., Grand Rapids, Michigan. Approximately
12.5% of the shopping centers space is leased to one tenant on
a month-to-month basis. The balance of the
shopping centers space has been vacant since July 1997. The
tenant operates a retail pet supplies store. Rental income from the
shopping center in 2003 was $52,644. The Company sustained
a net operating loss of $101,611 from this shopping center in 2003. For further
information regarding the property, see the Companys financial
statements and notes thereto that are included in this Annual Report on Form
10-K.

During 2003 and the preceding several years, substantially all of the Companys
remaining assets have consisted of cash which has been deposited with two major
United States banks. For further information regarding the amount of revenue,
operating profit or loss and identifiable assets attributable to the Companys
operations, reference is made to the Companys financial statements and notes
thereto that are included in this Annual Report on Form 10-K.

Except for leasing 12.5% of its Michigan shopping
center to one tenant, the Company has not conducted any business
operations for more than five years. The Companys attempts to
locate attractive business opportunities in which it could invest its
cash reserves have been unsuccessful.

Any decision by the Company to invest all or a
portion of its available cash would be subject to the approval of the
Board of Directors. A vote of the stockholders would not be
necessary. Other than a requirement of Board approval, the Company
has not adopted any policies regarding investments in real estate,
investments in real estate-related assets, investments in other
business or securities, issuances or repurchases of securities,
incurring indebtedness or making loans.

According to an April 12, 2004 letter from the
Companys managing agent of the Michigan shopping center, the
market value of the shopping center is approximately $700,000. The
Companys title to the property is not encumbered by any
mortgages or other material liens, and the Company believes that the
property is adequately covered by insurance. The letter from the
Companys agent states that significant improvements and changes
to the shopping center are required in order to bring it to a
marketable condition. Among other required improvements, the letter
states that a new roof is needed and that the shopping centers
parking lot must be resurfaced. The agents letter states that a
cash investment of at least $500,000 might be required in order to
improve the shopping center to the level that it could attract new
tenants and increase its rental income. The letter also states that
most large retail tenants have moved to a commercial corridor that is
approximately five miles from the Companys shopping center.

The Company has not determined whether or not to
make the significant improvements to the Michigan property that
appear to be required in order to increase its market value and
rental income.

Evergreen Acceptance LLC, a Delaware limited liability company, is the record
owner of 71,897,965 shares of the Companys common stock, and First Lincoln
Holdings, Inc., a Delaware corporation, is the record owner of 1,010,000 shares
of the Companys common stock. The 72,907,965 shares of common stock that are
owned by Evergreen Acceptance LLC and First Lincoln Holdings, Inc. represent
approximately 83.5% of the Companys 87,283,661 total outstanding shares of
common stock.

Evergreen Acceptance LLC is owned by RMO, Inc., a Delaware corporation. RMO,
Inc. and First Lincoln Holdings, Inc. are owned by MAREV, Inc., a Delaware
corporation. Martin Oliner and the Oliner Family Trust own MAREV, Inc. and, as
a result, are the ultimate beneficial owners of the 72,907,965 shares of common
stock that are owned of record by Evergreen Acceptance LLC and First Lincoln
Holdings, Inc. Mr. Oliner is the trustee of the Oliner Family Trust and also
serves as one of the Companys four directors. Mr. Oliner is (i) the sole
director of MAREV, Inc., RMO, Inc. and First Lincoln Holdings, Inc., (ii) the
Chief Executive Officer and President of MAREV, Inc., RMO, Inc. and First
Lincoln Holdings, Inc., and (iii) one of the two managers of Evergreen
Acceptance LLC.

The Company has entered into an Agreement and Plan of Merger dated December 16,
2003 (the Merger Agreement) with Regency Acquisition Corp., a Delaware
corporation that is a wholly owned subsidiary of Evergreen Acceptance LLC.

Regencys Board of Directors approved the Merger Agreement on December 11,
2003. First Lincoln Holdings, Inc. and Evergreen Acceptance LLC have approved
and adopted the Merger Agreement by written consent in their capacity as the
holders of a majority of the Companys outstanding common stock.

Under the terms of the Merger Agreement, Regency Acquisition Corp. will merge
into the Company (the Merger). Each share of the Companys common stock,
other than shares of common stock held by First Lincoln Holdings, Inc. and
Evergreen Acceptance LLC and other than shares of common stock held by
stockholders who perfect their appraisal rights under Delaware law, will be
converted into the right to receive $0.017 in cash, without interest. The
common stock that is owned by First Lincoln Holdings,

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Inc. and Evergreen Acceptance LLC will be cancelled in the Merger, and the
stock of Regency Acquisition Corp. that is owned by Evergreen Acceptance LLC
will be converted into shares of the Companys common stock on a one-for-one
basis.

Upon the completion of the Merger, Evergreen Acceptance LLC will be the
Companys only stockholder. The Companys common stock will cease to be traded
on the OTC Bulletin Board after the Merger, and the Company will cease to file
periodic reports with the Securities and Exchange Commission.

On January 26, 2004, the Company filed with the Securities and Exchange
Commission a Schedule 14C and a Schedule 13E-3 regarding the Merger and the
Merger Agreement. The Schedule 14C contains an Information Statement that
describes in detail the Merger and the Merger Agreement and the reasons for
converting the Company into a wholly owned subsidiary of Evergreen Acceptance
LLC.

The Information Statement will be mailed to the Companys stockholders after
the Securities and Exchange Commission has completed its review of the
document. As permitted by the Delaware General Corporation Law, no meeting of
the Companys stockholders will be held since the Merger Agreement has been
approved by the holders of a majority of the Companys common stock. The
merger of Regency Acquisition Corp. into the Company, and the conversion of the
Company into a wholly owned subsidiary of Evergreen Acceptance LLC, will occur
approximately twenty days after the Information Statement is mailed to
stockholders.

The Company currently anticipates that the Information Statement will be mailed
to stockholders in May 2004, and that the Merger will occur prior to
June 30, 2004.

Stockholders should review the Information Statement for additional information
about the Merger, the Merger Agreement and their appraisal rights under
Delaware law.




Item 2. Properties.

See Item 1. Business. The Company does not own any real property other than
the Michigan shopping center described above.




Item 3. Legal Proceedings.

Not applicable.




Item 4. Submission of Matters to a Vote of Security Holders.

On December 16, 2003, Evergreen Acceptance LLC and First Lincoln Holdings, Inc.
executed a written consent pursuant to which they adopted the Merger Agreement
and approved the Merger in their capacity as the holders of a majority of the
Companys common stock. For a summary of the Merger Agreement and the Merger,
see Item 1. Business. Evergreen Acceptance LLC and First Lincoln Holdings,
Inc. are the holders of record of 72,907,965 of the Companys 87,283,661 total
outstanding shares of common stock.

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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 on the OTC Bulletin Board, 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.

|            |  |      |      |     |  |   |      | 
|----------- |  | ---- | ---- | --- |  | - | ---- | 
|2003        |  | High |      | Low
|            |  |      |      |    
|1st quarter |  | $    | 0.03 |     |  | $ | 0.01 | 
|2nd quarter |  |      | 0.02 |     |  |   | 0.01 | 
|3rd quarter |  |      | 0.02 |     |  |   | 0.01 | 
|4th quarter |  |      | 0.03 |     |  |   | 0.01 | 

|            |  |      |      |     |  |   |      | 
|----------- |  | ---- | ---- | --- |  | - | ---- | 
|2002        |  | High |      | Low
|            |  |      |      |    
|1st quarter |  | $    | 0.02 |     |  | $ | 0.01 | 
|2nd quarter |  |      | 0.02 |     |  |   | 0.02 | 
|3rd quarter |  |      | 0.02 |     |  |   | 0.01 | 
|4th quarter |  |      | 0.02 |     |  |   | 0.01 | 

(b)  Holders.

The number of record holders of the Companys common stock on March 22, 2003
was 1,505.

(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.

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Item 6. Selected Financial Data.(a)

|                                    |  |                                       |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|----------------------------------- |  | ------------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                    |  | (In thousands, except per share data)
|                                    |  | Year ended December 31,              
|                                    |  |                                      
|                                    |  | 2003                                  |        | 2002 |  | 2001 |        | 2000 |  | 1999
|                                    |  |                                       |        |      |  |      |        |      |  |     
|Total revenues                      |  | $                                     | 83     |      |  | $    | 93     |      |  | $    | 164    |   |  | $ | 197    |   |  | $ | 189    |  
|Income (loss) before
income taxes   |  |                                       | (215   | )    |  |      | (181   | )    |  |      | (150   | ) |  |   | (76    | ) |  |   | (85    | )
|Net income (loss)                   |  |                                       | (216   | )    |  |      | (182   | )    |  |      | (152   | ) |  |   | (78    | ) |  |   | (87    | )
|Income (loss) per share             |  |                                       | (.002  | )    |  |      | (.002  | )    |  |      | (.002  | ) |  |   | (.001  | ) |  |   | (.001  | )
|Dividends per share                 |  |                                       | 0      |      |  |      | 0      |      |  |      | 0      |   |  |   | 0      |   |  |   | 0      |  
|Total assets                        |  |                                       | 3,277  |      |  |      | 3,479  |      |  |      | 3,713  |   |  |   | 3,814  |   |  |   | 3,892  |  
|Liabilities                         |  |                                       | 46     |      |  |      | 32     |      |  |      | 84     |   |  |   | 32     |   |  |   | 32     |  
|Shareholders equity                |  |                                       | 3,231  |      |  |      | 3,447  |      |  |      | 3,629  |   |  |   | 3,782  |   |  |   | 3,860  |  
|Book value per share                |  |                                       | .04    |      |  |      | .04    |      |  |      | .04    |   |  |   | .04    |   |  |   | .04    |  
|Weighted average
shares outstanding |  |                                       | 87,284 |      |  |      | 87,284 |      |  |      | 87,284 |   |  |   | 87,284 |   |  |   | 87,284 |  



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|(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. Upon
completion of the Merger, the Company will become a wholly owned
subsidiary of Evergreen Acceptance LLC. See Item 1. Business. As a
result, 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 Company conducts limited business operations, and it will become a wholly
owned subsidiary of Evergreen Acceptance LLC upon completion of the Merger.
See Item 1. Business for a discussion of the Merger and the Merger Agreement.
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.

(a)  Results of Operations.

(i) Year Ended December 31, 2003 Compared with Year Ended December 31, 2002.

The Company recorded a loss before income taxes of $215,040 in 2003 compared to
a loss of $181,041 in 2002. The increase in loss resulted principally from (i)
a decrease in interest income of $13,826, (ii) an increase in legal fees of
$17,325 related to the Merger and the Merger Agreement, and (iii) an increase
in rental property insurance expense of $27,195. The decrease in operating
results was partially offset by (i) a decrease in directors fees of $3,500,
(ii) a decrease in officers salaries of $16,500, and (iii) a decrease in
accounting fees of $4,811.

(ii) Year Ended December 31, 2002 Compared with Year Ended December 31,
2001.

The Company recorded a loss before income taxes of $181,041 in 2002 compared to
a loss of $150,157 in 2001. The increase in loss resulted principally from (i)
a decrease in interest income of $71,080, (ii) an increase in stock transfer
agent fees of $6,183, (iii) an increase in rental property utilities of $7,190,
(iv)

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an increase in rental property management fees of $2,250, and (v) an increase
in rental property insurance of $2,303. The decrease in operating results was
partially offset by a decrease in professional fees of $58,317.

(b)  Liquidity and Capital Resources.

As of December 31, 2003, the Company had cash in the amount of $2,579,770
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 aggregate cash consideration that is payable to the Companys minority
stockholders in connection with the pending merger of Regency Acquisition Corp.
into the Company is estimated to be approximately $245,000, all of which will
be provided by Evergreen Acceptance LLC and First Lincoln Holdings, Inc. out of
working capital. The Company estimates that its expenses to be incurred in
connection with the Merger will not exceed $100,000. See Item 1. Business.

(c) Critical Accounting Policies

The Companys discussion and analysis of its financial condition and results of
operations are based upon its financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of financial statements requires the Company to make estimates
and disclosures as of the date of the financial statements. On an on-going
basis, the Company evaluates its estimates, including, but not limited to,
those related to the valuation of long-lived assets. The Company uses
authoritative pronouncements, historical experience and other assumptions as
the basis for making judgments. Actual results could differ from those
estimates. The Company believes that the following critical accounting policy
affects its more significant judgments and estimates in the preparation of its
financial statements.

Valuation of long-lived assets

Long-lived assets, consisting primarily of a building, comprise a significant
portion of the Companys total assets. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that their
carrying values may not be recoverable. Recoverability of assets is measured
by a comparison of the carrying value of an asset to the future net cash flows
expected to be generated by those assets. The cash flow projections are based
on historical experience, managements view of growth rates within the
industry, and the anticipated future economic environment.

Factors the Company considers important that could trigger a review for
impairment include the following:

| |                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------
| | (a) Significant underperformance relative to expected historical or
projected future operating results;                       
|
| | (b) Significant changes in the manner of the Companys use of the
acquired assets or the strategy of its overall business; and
|
| | (c) Significant negative industry or economic trends.                                                                         

When the Company determines that the carrying value of long-lived assets may
not be recoverable based upon the existence of one or more of the above
indicators of impairment, it measures any impairment

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based on a projected discounted cash flow method using a discount rate
determined by its management to be commensurate with the risk inherent in its
current business model.




Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

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 15 herein.




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.




Item 9A. Controls and Procedures.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the
Exchange Act), the Companys management, with the participation of the Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of
the Companys disclosure controls and procedures as of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Companys disclosure controls
and procedures are effective in ensuring that information required to be
disclosed in reports that the Company files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms. No
change in the Companys internal control over financial reporting occurred
during the Companys most recent fiscal quarter that materially affected, or is
reasonably likely to materially affect, the Companys internal control over
financial reporting.




PART III




Item 10. Directors and Executive Officers of the Registrant.

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

|                 |  |     |    |                           |  |                                                                          
|---------------- |  | --- | -- | ------------------------- |  | -------------------------------------------------------------------------
|Name             |  | Age |    | Position with the Company
|                 |  |     |    |                          
|William J. Adams |  |     | 74 |                           |  | Director and Secretary                                                   
|Allan L. Chapman |  |     | 66 |                           |  | Chairman of the Board of Directors, Chief Executive
Officer and President
|Morris Engel     |  |     | 76 |                           |  | Chief Financial Officer and Treasurer                                    
|Ira L. Gottshall |  |     | 46 |                           |  | Director                                                                 
|Martin Oliner    |  |     | 56 |                           |  | Director                                                                 

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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.

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. Mr. Engel is a self-employed certified
public accountant. He was a partner in the accounting firm of Engel, Kalvin,
McMillan & Company, LLP from November 1990 to November 2003. 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 Regional Vice President of IOF Foresters, which is an
insurance company. 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.

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 is (i)
the sole director of MAREV, Inc., RMO, Inc. and First Lincoln Holdings, Inc.,
(ii) the Chief Executive Officer and President of MAREV, Inc., RMO, Inc. and
First Lincoln Holdings, Inc., and (iii) one of the two managers of Evergreen
Acceptance LLC.

Each director serves until a successor is duly elected at an annual meeting of
stockholders. 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.

The Company does not have an audit committee. The Companys full Board of
Directors performs the responsibilities of an audit committee. The Board of
Directors has not determined that any director qualifies as an audit committee
financial expert within the meaning of the Securities and Exchange
Commissions rules. The Company has not adopted a written code of ethics that
applies to its principal executive officer and principal financial officer.

The Securities and Exchange Commissions requirements to disclose in a
registrants Annual Report on Form 10-K whether or not a registrant has a code
of ethics and whether or not a registrant has an audit committee financial
expert are newly adopted rules that apply to annual reports for fiscal years
ending on or after July 15, 2003. As described in the preceding sections of
this Annual Report on Form 10-K, the Company will become a wholly owned
subsidiary of one stockholder upon the effective date of the Merger that is
described in the Merger Agreement and the Company will cease to file reports
under the Securities Exchange Act of 1934 after the Merger. Because the
Company will soon terminate its operations as a publicly traded corporation and
because the Company has conducted very limited business operations during the
preceding several years, the Board of Directors does not believe that it is
necessary

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to have an audit committee financial expert or to adopt a written code of
ethics that would cover the Companys two employees. However, the Board of
Directors consists of experienced directors who carefully review the Companys
financial statements, and the Board of Directors monitors the conduct of the
Companys two employees on an ongoing basis and requires them to comply with
all applicable laws, rules and regulations. Furthermore, the Companys Chief
Financial Officer, Morris Engel, qualifies as an audit committee financial
expert although he does not serve on the Board of Directors.

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 any 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 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, 2003, December
31, 2002 and December 31, 2001 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.

SUMMARY COMPENSATION TABLE

|                                |  |      |      |            |  |                     |        |                  |  |           |   |         |  |                 |   |                     |  |                        |   |  |  |            |   |           |  |  |   |  |  |   |       | 
|------------------------------- |  | ---- | ---- | ---------- |  | ------------------- | ------ | ---------------- |  | --------- | - | ------- |  | --------------- | - | ------------------- |  | ---------------------- | - |  |  | ---------- | - | --------- |  |  | - |  |  | - | ----- | 
|                                |  |      |      |            |  |                     |        |                  |  |           |   |         |  |                 |   |                     |  | Long-Term Compensation |   |  |  |           
|                                |  |      |      |            |  |                     |        |                  |  |           |   |         |  |                 |   |                     |  |                        |   |  |  |           
|                                |  |      |      |            |  | Annual Compensation |        | Awards           |  | Payouts   |   |         |  |                
|                                |  |      |      |            |  |                     |        |                  |  |           |   |         |  |                
|                                |  |      |      |            |  |                     |        |                  |  |           |   |         |  |                 |   |                     |  |                        |   |  |  | Securities |   |           |  |  |   |  |  |  
|Name and                        |  |      |      |            |  |                     |        |                  |  |           |   |         |  | Other Annual    |   | Restricted Stock    |  | Underlying Options/    |   |  |  |            |   | All Other
|Principal Position              |  | Year |      | Salary ($) |  | Bonus ($)           |        | Compensation ($) |  | Awards($) |   | SARs(#) |  | LTIP Payouts($) |   | Compensation ($)(1)
|                                |  |      |      |            |  |                     |        |                  |  |           |   |         |  |                 |   |                    
|Allan L. Chapman                |  |      | 2003 |            |  | $                   | 27,500 |                  |  |           | 0 |         |  |                 | 0 |                     |  |                        | 0 |  |  |            | 0 |           |  |  | 0 |  |  | $ | 5,000 | 
|Chairman, Chief                 |  |      | 2002 |            |  | $                   | 36,000 |                  |  |           | 0 |         |  |                 | 0 |                     |  |                        | 0 |  |  |            | 0 |           |  |  | 0 |  |  | $ | 4,000 | 
|Executive Officer
and President |  |      | 2001 |            |  | $                   | 36,000 |                  |  |           | 0 |         |  |                 | 0 |                     |  |                        | 0 |  |  |            | 0 |           |  |  | 0 |  |  | $ | 4,000 | 



---

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

(b)  Compensation of Directors.

During 2003, the Companys directors received $1,000 per Board meeting and $500
per committee meeting attended.

8



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##### Table of Contents



(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 sole member of the Companys Stock Option/Compensation Committee is William
J. Adams. Mr. Adams is the Companys Secretary, which is not a salaried
position.




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 15, 2004 by each such person or group and the
percentage of the outstanding shares of the Companys common stock beneficially
owned as of March 15, 2004 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.

9



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##### Table of Contents



|                                                |                |                    |                 |            |                     |  |      |      | 
|----------------------------------------------- | -------------- | ------------------ | --------------- | ---------- | ------------------- |  | ---- | ---- | 
|                                                |                |                    | Shares of Stock |            | Approximate Percent
|Name of Beneficial Owner                        |                | Beneficially Owned |                 | of Class  
|                                                |                |                    |                 |           
|Principal Stockholders(1)                       |                |                    |                 |            |                     |  |      |     
|Evergreen Acceptance LLC                        |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|First Lincoln Holdings, Inc.                    |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|Regency Acquisition Corp.                       |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|MAREV, Inc.                                     |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|RMO, Inc.                                       |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|Martin Oliner and the Oliner Family Trust       |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|Directors and Named Executive Officers          |                |                    |                 |            |                     |  |      |     
|William J. Adams                                |                |                    | 20,000          |            |                     |  | *    |     
|Allan L. Chapman                                |                |                    | 248,008         |            |                     |  | *    |     
|Ira L. Gottshall                                |                |                    | 0               |            |                     |  | 0    |     
|Martin Oliner(2)                                |                |                    | 72,907,965      |            |                     |  | 83.5 |     
|All Directors and Executive Officers as
a Group |                |                    |                 |            |                     |  |      |     
|                                                | (5 Persons)(2) |                    |                 | 73,175,973 |                     |  |      | 83.8 | 



---

|*   |  | Owns less than 1% of the Companys outstanding shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(1) |  | The following information with respect to each person listed in this
table as beneficially owning more than five percent of the Companys
common stock is based upon Amendment No. 17 to a Schedule 13D that was
filed with the Securities and Exchange Commission on January 29, 2004 by
all such beneficial owners: The business address of each such beneficial
owner is 1219 West Street, Wilmington, Delaware 19801. Evergreen
Acceptance LLC has sole voting and dispositive power with respect to
71,897,965 shares and shared voting and dispositive power with respect to
1,010,000 shares. First Lincoln Holdings, Inc. has sole voting and
dispositive power with respect to 1,010,000 shares and shared voting and
dispositive power with respect to 71,897,965 shares. Regency Acquisition
Corp., MAREV, Inc., RMO, Inc., Martin Oliner and the Oliner Family Trust
each have shared voting and dispositive power with respect to 72,907,965
shares.

10



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##### Table of Contents



|(2) |  | Information presented for Mr. Oliner includes shares of the Companys
common stock that he beneficially owns through his direct or indirect
ownership of the entities that are listed in this table under the heading
Principal Stockholders. Mr. Oliner does not have record ownership of
any shares of the Companys common stock.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Equity Compensation Plan Information

The following table sets forth certain information as of December 31, 2003
regarding securities authorized for issuance under the Companys equity
compensation plans.

|                                                           |  |                   |     |                   |  |                     |     |           |  |  |           | 
|---------------------------------------------------------- |  | ----------------- | --- | ----------------- |  | ------------------- | --- | --------- |  |  | --------- | 
|                                                           |  | Number of         |     |                   |  |                     |     |           |  | 
|                                                           |  | securities to be  |     |                   |  |                     |     | Number of
|                                                           |  | issued upon       |     | Weighted-average  |  | securities         
|                                                           |  | exercise of       |     | exercise price of |  | remaining available
|                                                           |  | outstanding       |     | outstanding       |  | for future issuance
|                                                           |  | options, warrants |     | options, warrants |  | under equity       
|                                                           |  | and rights        |     | and rights        |  | compensation plans 
|                                                           |  |                   |     |                   |  |                    
|Equity compensation
plans approved by
security holders     |  |                   | -0- |                   |  |                     | N/A |           |  |  | 5,450,000 | 
|Equity compensation
plans not approved
by security holders |  |                   | -0- |                   |  |                     | N/A |           |  |  | N/A       | 
|Total                                                      |  |                   | -0- |                   |  |                     | N/A |           |  |  | 5,450,000 | 

The compensation plans approved by security holders represent the Companys
1986 Stock Option Plan and Incentive Stock Option Plan.




Item 13. Certain Relationships and Related Transactions.

Morris Engel, the Companys Chief Financial Officer and Treasurer, was a
partner in the accounting firm of Engel, Kalvin, McMillan & Company, LLP. The
Company paid fees of $10,626 to Engel, Kalvin, McMillan & Company, LLP in 2003
in consideration for accounting and tax services rendered by that firm.

Pursuant to the Merger Agreement between the Company and Regency Acquisition
Corp., Evergreen Acceptance LLC will become the Companys sole stockholder and
all stockholders other than Evergreen Acceptance LLC and First Lincoln
Holdings, Inc. will receive cash in exchange for their shares of the Companys
common stock. Martin Oliner, who is one of the Companys four directors, is
the beneficial owner of Evergreen Acceptance LLC, First Lincoln Holdings, Inc.
and Regency Acquisition Corp. For additional information about the Merger and
the Merger Agreement, see Item 1. Business.

11



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##### Table of Contents






Item 14. Principal Accounting Fees and Services.

The following table shows the fees billed to the Company by Singer Lewak
Greenbaum & Goldstein LLP (Singer Lewak) for the audit and other services
rendered by Singer Lewak during fiscal 2003 and 2002.

|                   |  |      |        |      |  |   |        | 
|------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|                   |  | 2003 |        | 2002
|                   |  |      |        |     
|Audit Fees (1)     |  | $    | 11,699 |      |  | $ | 11,204 | 
|Audit-Related Fees |  |      | 0      |      |  |   | 0      | 
|Tax Fees           |  |      | 0      |      |  |   | 0      | 
|All Other Fees     |  |      | 0      |      |  |   | 0      | 



---

|(1) |  | Audit fees represent fees for professional services provided to the
Company in connection with the audit of the Companys financial statements and
review of the Companys quarterly financial statements and audit services
provided in connection with other statutory or regulatory filings.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All audit-related services and other services rendered by Singer Lewak were
pre-approved by the Board of Directors. The Company does not have an audit
committee. The Board of Directors has a pre-approval policy that requires the
pre-approval by the Board of all services performed for the Company by Singer
Lewak.




PART IV




Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  Index to Financial Statements and Financial Statement Schedules.

|                                                              |                                              |  |          |     | 
|------------------------------------------------------------- | -------------------------------------------- |  | -------- | --- | 
|                                                              |                                              |  | Page No.
|Report of Singer Lewak Greenbaum & Goldstein LLP              |                                              |  | F-1      |    
|Balance Sheets  December 31, 2003 and 2002                   |                                              |  | F-2      |    
|Statements of Operations -                                    |                                              |  |          |    
|                                                              | Years Ended December 31, 2003, 2002 and 2001 |  |          | F-3 | 
|Statements
of Changes in Shareholders Equity                |                                              |  |          |    
|                                                              | Years Ended December 31, 2003, 2002 and 2001 |  |          | F-4 | 
|Statements
of Cash Flows                                     |                                              |  |          |    
|                                                              | Years Ended December 31, 2003, 2002, 2001    |  |          | F-5 | 
|Notes to Financial Statements                                 |                                              |  | F-6      |    
|Report of Singer Lewak Greenbaum & Goldstein LLP on Schedules |                                              |  | F-13     |    
|Supplemental Information  Selected Quarterly Financial
Data  |                                              |  | F-14     |    
|Schedule II  Valuation and Qualifying Accounts               |                                              |  | F-15     |    
|Schedule III  Real Estate and Accumulated Depreciation       |                                              |  | F-16     |    

12



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##### Table of Contents



| |                                                                                                                                                                     |  |          |  | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | 
| |                                                                                                                                                                     |  | Page No.
| | Schedules not listed above are omitted because they are
inapplicable or the information required is presented in
the financial statements or the footnotes thereto. |  |          |  | 

(b)  Exhibits.

|     |  |                                                                                                                                                                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1  |  | Agreement and Plan of Merger dated December 16, 2003 between the Company
and Regency Acquisition Corp., incorporated herein by this reference to
Exhibit 2.1 to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 17, 2003.
|    
|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 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.                                        
|    
|31.1 |  | Certification of Chief Executive Officer Pursuant to 15 U.S.C. § 7241,
as Adopted Pursuant                                                                                                                                                                                      

13



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##### Table of Contents



|     |  |                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|     |  | to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                           
|    
|31.2 |  | Certification of Chief Financial Officer Pursuant to 15 U.S.C. § 7241,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|    
|32.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. § 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|    
|32.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. § 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(c)  Reports on Form 8-K.

On December 17, 2003, the Company filed a Current Report on Form 8-K (Items 5
and 7) regarding its execution of the Merger Agreement. For a description of
the Merger and the Merger Agreement, see Item 1. Business.

14



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##### Table of Contents






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: April 26, 2004 |  | REGENCY EQUITIES CORP.
|                    
|                     |  | By:                    |  | /s/ Allan L. Chapman                                                          
|                     |  |                        |  |                                                                               
|                     |  |                        |  | Allan L. Chapman, Chairman of the Board, Chief
Executive Officer and President

15



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##### Table of Contents



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: April 26, 2004 |  | By: |  | /s/ Allan L. Chapman                                                                                       
|                     |  |     |  |                                                                                                            
|                     |  |     |  | Allan L. Chapman
Chairman of the Board, Chief Executive Officer and
President
(Principal Executive Officer)
|                    
|Date: April 26, 2004 |  | By: |  | /s/ Morris Engel                                                                                           
|                     |  |     |  |                                                                                                            
|                     |  |     |  | Morris Engel
Chief Financial Officer and Treasurer (Principal
Financial and Accounting Officer)            
|                    
|Date: April 26, 2004 |  | By: |  | /s/ William J. Adams                                                                                       
|                     |  |     |  |                                                                                                            
|                     |  |     |  | William J. Adams
Secretary and Director                                                                    
|                    
|Date: April 26, 2004 |  | By: |  | /s/ Ira. L. Gottshall                                                                                      
|                     |  |     |  |                                                                                                            
|                     |  |     |  | Ira L. Gottshall
Director                                                                                  
|                    
|Date: April 26, 2004 |  | By: |  | /s/ Martin Oliner                                                                                          
|                     |  |     |  |                                                                                                            
|                     |  |     |  | Martin Oliner
Director                                                                                     

16



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##### Table of Contents



REGENCY EQUITIES CORP.

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 15(a)(1) and 15(a)(2)

FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

THREE YEARS ENDED DECEMBER 31, 2003





---



##### Table of Contents



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, 2003 and 2002, and the related statements of operations,
shareholders equity, and cash flows for the years then ended. 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 auditing standards generally
accepted in the United States of America. 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. as of
December 31, 2003 and 2002 and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

| |  |                                       
| |  | --------------------------------------
| |  | Singer Lewak Greenbaum & Goldstein LLP

Los Angeles, California
March 16, 2004

F-1



---



##### Table of Contents



REGENCY EQUITIES CORP.

BALANCE SHEETS

|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |             |  
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | ----------- | ---- | - | --------- | ----------- | -
|                                     |                                                                                                                                                                                                     |   | DECEMBER 31
|                                     |                                                                                                                                                                                                     |   |            
|                                     |                                                                                                                                                                                                     |   | 2003        |             | 2002
|                                     |                                                                                                                                                                                                     |   |             |             |     
|ASSETS                               |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                     | Cash (Note A)                                                                                                                                                                                       |   | $           | 2,579,770   |      |   | $         | 2,736,423   |  
|                                     | Rent receivable                                                                                                                                                                                     |   |             | 6,023       |      |   |           | 5,945       |  
|                                     | Prepaid insurance                                                                                                                                                                                   |   |             | 21,660      |      |   |           | 29,372      |  
|                                     | Rental property owned, net of write down
for possible loss of $215,000 and
accumulated depreciation of $586,612 in
2003 and $549,380 in 2002 (Note B)                                               |   |             | 669,829     |      |   |           | 707,061     |  
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                     |                                                                                                                                                                                                     | $ | 3,277,282   |             |      | $ | 3,478,801 |            
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                    
|LIABILITIES                          |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                     | Accounts payable and accrued expenses                                                                                                                                                               |   | $           | 44,934      |      |   | $         | 30,383      |  
|                                     | Income taxes payable (Note C)                                                                                                                                                                       |   |             | 1,275       |      |   |           | 1,220       |  
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                     |                                                                                                                                                                                                     |   | 46,209      |             |      |   | 31,603    |            
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|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                                                                                                                                                                                 |   |             | (45,302,094 | )    |   |           | (45,085,969 | )
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                     |                                                                                                                                                                                                     |   | 3,231,073   |             |      |   | 3,447,198 |            
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            
|                                     |                                                                                                                                                                                                     | $ | 3,277,282   |             |      | $ | 3,478,801 |            
|                                     |                                                                                                                                                                                                     |   |             |             |      |   |           |            

See accompanying notes to financial statements

F-2



---



##### Table of Contents



REGENCY EQUITIES CORP.

STATEMENTS OF OPERATIONS

|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |         |          |  
|--------------------------------------------- | -------------------------- | ------------------------ | ---------- | ----------------------- | -------- | ---- | ---------- | ------- | -------- | - | ---------- | ------- | -------- | -
|                                              |                            |                          |            | YEAR ENDED DECEMBER 31,
|                                              |                            |                          |            |                        
|                                              |                            |                          |            | 2003                    |          | 2002 |            | 2001   
|                                              |                            |                          |            |                         |          |      |            |        
|REVENUES:                                     |                            |                          |            |                         |          |      |            |         |          |   |            |        
|                                              | Interest income            |                          | $          | 29,855                  |          |      | $          | 43,681  |          |   | $          | 114,761 |         
|                                              | Rental income              |                          |            | 52,644                  |          |      |            | 49,409  |          |   |            | 49,182  |         
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|                                              |                            | TOTAL REVENUES           |            |                         | 82,499   |      |            |         | 93,090   |   |            |         | 163,943  |  
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|EXPENSES:                                     |                            |                          |            |                         |          |      |            |         |          |   |            |        
|                                              | Administrative expense     |                          |            | 85,104                  |          |      |            | 106,077 |          |   |            | 99,894  |         
|                                              | Professional fees (Note E) |                          |            | 58,180                  |          |      |            | 47,432  |          |   |            | 105,748 |         
|                                              | Rental expense             |                          |            | 154,255                 |          |      |            | 120,622 |          |   |            | 108,458 |         
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|                                              |                            | TOTAL EXPENSES           |            |                         | 297,539  |      |            |         | 274,131  |   |            |         | 314,100  |  
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|                                              |                            | LOSS BEFORE INCOME TAXES |            |                         | (215,040 | )    |            |         | (181,041 | ) |            |         | (150,157 | )
|PROVISION FOR INCOME TAXES (NOTE C)           |                            |                          | 1,085      |                         |          |      | 1,220      |         |          |   | 2,020      |        
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|                                              |                            | NET LOSS                 |            | $                       | (216,125 | )    |            | $       | (182,261 | ) |            | $       | (152,177 | )
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING |                            |                          | 87,283,661 |                         |          |      | 87,283,661 |         |          |   | 87,283,661 |        
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        
|NET LOSS PER SHARE                            |                            | $                        | (.002      | )                       |          | $    | (.002      | )       |          | $ | (.002      | )      
|                                              |                            |                          |            |                         |          |      |            |         |          |   |            |        

See accompanying notes to financial statements

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##### Table of Contents



REGENCY EQUITIES CORP.

STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

THREE YEARS ENDED DECEMBER 31, 2003

|           |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             |          |  
|---------- | ----------------- | -------- |  | ---------------- |  | ---------- | - | ------- |  | ------------------- | - | ---------- |  |  | - | ----------- | -------- | -
|           |                   |          |  | COMMON STOCK     |  | ADDITIONAL |   |         |  |                    
|           |                   |          |  |                  |  | PAID-IN    |   |         |  |                    
|           |                   |          |  | NUMBER OF SHARES |  | AMOUNT     |   | CAPITAL |  | ACCUMULATED DEFICIT
|           |                   |          |  |                  |  |            |   |         |  |                    
|BALANCE AT |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |            
|           | January 1, 2001   |          |  | 87,283,661       |  |            | $ | 872,836 |  |                     | $ | 47,660,331 |  |  | $ | (44,751,531 | )       
|           |                   | Net loss |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             | (152,177 | )
|           |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             |         
|BALANCE AT |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |            
|           | December 31, 2001 |          |  | 87,283,661       |  |            |   | 872,836 |  |                     |   | 47,660,331 |  |  |   | (44,903,708 | )       
|           |                   | Net loss |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             | (182,261 | )
|           |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             |         
|BALANCE AT |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |            
|           | December 31, 2002 |          |  | 87,283,661       |  |            |   | 872,836 |  |                     |   | 47,660,331 |  |  |   | (45,085,969 | )       
|           |                   | Net loss |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             | (216,125 | )
|           |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |             |         
|BALANCE AT |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |            
|           | December 31, 2003 |          |  | 87,283,661       |  |            | $ | 872,836 |  |                     | $ | 47,660,331 |  |  | $ | (45,302,094 | )       
|           |                   |          |  |                  |  |            |   |         |  |                     |   |            |  |  |   |            

See accompanying notes to financial statements

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##### Table of Contents



REGENCY EQUITIES CORP.

STATEMENTS OF CASH FLOWS

|                        |                                                                             |                             |                                       |          |                         |          |           |          |      |          |           |          |   |         |  
|----------------------- | --------------------------------------------------------------------------- | --------------------------- | ------------------------------------- | -------- | ----------------------- | -------- | --------- | -------- | ---- | -------- | --------- | -------- | - | ------- | -
|                        |                                                                             |                             |                                       |          | YEAR ENDED DECEMBER 31,
|                        |                                                                             |                             |                                       |          |                        
|                        |                                                                             |                             |                                       |          | 2003                    |          | 2002      |          | 2001
|                        |                                                                             |                             |                                       |          |                         |          |           |          |     
|                        |                                                                             | INCREASE (DECREASE) IN CASH |                                       |          |                         |          |           |          |      |          |           |          |   |        
|OPERATING ACTIVITIES:   |                                                                             |                             |                                       |          |                         |          |           |          |      |          |           |         
|                        | Net loss                                                                    |                             | $                                     | (216,125 | )                       |          | $         | (182,261 | )    |          | $         | (152,177 | )
|                        | Adjustments to reconcile net loss to
net cash used in operating
activities: |                             |                                       |          |                         |          |           |          |      |          |           |          |  
|                        | Depreciation                                                                |                             |                                       | 37,232   |                         |          |           | 37,232   |      |          |           | 37,232   |  
|                        | Changes in operating assets and
liabilities:                                |                             |                                       |          |                         |          |           |          |      |          |           |          |  
|                        | Rent receivable                                                             |                             |                                       | (78      | )                       |          |           | (2,608   | )    |          |           | 1,135    |  
|                        | Prepaid insurance                                                           |                             |                                       | (7,712   | )                       |          |           | (29,372  | )    |          |           |         |  
|                        | Accounts payable and accrued expenses                                       |                             |                                       | (14,551  | )                       |          |           | 51,826   |      |          |           | 51,219   |  
|                        | Income Taxes Payable                                                        |                             |                                       | 55       |                         |          |           |         |      |          |           |         |  
|                        |                                                                             |                             |                                       |          |                         |          |           |          |      |          |           |         
|                        |                                                                             |                             | NET CASH USED IN OPERATING
ACTIVITIES |          |                         | (156,653 | )         |          |      | (228,835 | )         |          |   | (62,591 | )
|                        |                                                                             |                             |                                       |          |                         |          |           |          |      |          |           |         
|DECREASE IN CASH        |                                                                             |                             | (156,653                              | )        |                         |          | (228,835  | )        |      |          | (62,591   | )       
|CASH, BEGINNING OF YEAR |                                                                             |                             | 2,736,423                             |          |                         |          | 2,965,258 |          |      |          | 3,027,849 |         
|                        |                                                                             |                             |                                       |          |                         |          |           |          |      |          |           |         
|CASH, END OF YEAR       |                                                                             | $                           | 2,579,770                             |          |                         | $        | 2,736,423 |          |      | $        | 2,965,258 |         
|                        |                                                                             |                             |                                       |          |                         |          |           |          |      |          |           |         

See accompanying notes to financial statements

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##### Table of Contents



REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

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, 2003 is deposited with two major U.S. banks. At
December 31, 2003 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. In determining if an
impairment exists, management estimates the future undiscounted cash flows
expected to be received, including the eventual disposition of the asset, less
the related estimated cash out-flows expected to be incurred. If an impairment
is indicated based upon the above, a determination is made of the assets
estimated fair value based upon recent appraisals. If the estimated fair value
is less than the assets net book value, an impairment is recognized.

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.

ACCOUNTING ESTIMATES: The
preparation of financial statements 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 (loss) 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.

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 141, Business
Combinations. This statement addresses financial accounting and reporting for
business combinations and supersedes Accounting Principles Bulletin (APB)
Opinion No. 16, Business Combinations, and SFAS No. 38, Accounting for
Pre-Acquisition Contingencies of Purchased Enterprises. All business
combinations in the scope of this statement are to be accounted for using one
method, the purchase method. The provisions of this statement apply to all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method for those business combinations is prohibited.
This statement also applies to all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001 or later.
This statement is not applicable to the Company.

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon
their acquisition. This statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements. It is effective for fiscal years
beginning after December 15, 2001. Early application is permitted for entities
with fiscal years beginning after March 15, 2001, provided that the first
interim financial statements have not been issued previously. This statement
is not applicable to the Company.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development, and/or the normal operation of long-lived assets, except for
certain obligations of lessees. This statement is not applicable to the
Company.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
statement replaces SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, the accounting and
reporting provisions of APB No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual, and Infrequently Occurring Events and Transactions,
for the disposal of a segment of a business, and amends Accounting Research
Bulletin No. 51, Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is likely to be
temporary. The Company does not expect adoption of SFAS No. 143 to have a
material impact, if any, on its financial position or results of operations.

In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. SFAS No. 145 updates, clarifies,
and simplifies existing accounting pronouncements. This statement rescinds
SFAS No. 4, which required all gains and losses from extinguishment of debt to
be aggregated and, if material, classified as an extraordinary item, net of
related income tax effect. As a result, the criteria in Accounting Principles
Board No. 30 will now be used to classify those gains and losses. SFAS No. 64
amended SFAS No. 4 and is no longer necessary as SFAS No. 4 has been rescinded.
SFAS No. 44 has been rescinded as it is no longer necessary. SFAS No. 145
amends SFAS No. 13 to

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS (continued)

require that certain lease modifications that have
economic effects similar to sale-leaseback transactions be accounted for in the
same manner as sale-lease transactions. This statement also makes technical
corrections to existing pronouncements. While those corrections are not
substantive in nature, in some instances, they may change accounting practices.
This statement is not applicable to the Company.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). This
statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under EITF
Issue 94-3, a liability for an exit cost, as defined, was recognized at the
date of an entitys commitment to an exit plan. The provisions of this
statement are effective for exit or disposal activities that are initiated
after December 31, 2002 with earlier application encouraged. This statement is
not applicable to the Company.

In October 2002, the FASB issued SFAS No. 147 Acquisition of Certain Financial
Institutions, SFAS No. 147 removes the requirement in SFAS No. 72 and
Interpretation 9 thereto, to recognize and amortize any excess of the fair
value of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset. This
statement requires that those transactions be accounted for in accordance with
SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. In addition, this statement amends SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, to include
certain financial institution-related intangible assets. This statement is not
applicable to the Company.

In November 2002, the Financial Accounting Standards Board (FASB) issued FASB
interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Other. In the
course of business the Company has contractual guarantees in the form of
warranties. However, these warranties are limited and do not represent
significant commitments or contingent liabilities of the indebtedness of
others. This pronouncement is effective for financial statements issued after
December 15, 2002 and is not expected to have a material impact on the
Companys financial statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment of SFAS No. 123. SFAS
No. 148 provides alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require more prominent and more frequent disclosures in
financial statements about the effects of stock-based compensation. This
statement is effective for financial statements for fiscal years ending after
December 15, 2002. The Company has not yet determined the impact SFAS No. 148
will have on its financial statements.

In April 2003, the Financial Accounting Standards Board FASB issued SFAS NO.
149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. SFAS No. 149 amends and clarifies accounting and reporting for
derivative instruments and hedging activities under SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS No. 149 is effective
for

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS (continued)

derivative instruments and hedging activities entered into or modified
after June 30, 2003, except for certain forward purchase and sale securities.
For these forward purchase and sale securities, SFAS No. 149 is effective for
 both new and existing securities after June 30, 2003. Management does not
expect adoption of SFAS No. 149 to have a material impact on the Companys
statements of earnings, financial position, or cash flows.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures in its
statement of financial position certain financial instruments with
characteristics of both liabilities and equity. In accordance with the
standard, financial instruments that embody obligations for the issuer are
required to be classified as liabilities. SFAS No. 150 will be effective for
financial instruments entered into or modified after May 31, 2003 and otherwise
will be effective at the beginning of the first interim period beginning after
June 15, 2003.

In December 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of Accounting Research Bulletin
No. 51, Consolidated Financial Statements. This pronouncement required the
consolidation of variable interest entities, as defined, and is effective
immediately for variable interest entities created after January 31, 2003, and
for variable interest entities in which an enterprise obtains an interest after
that date. The Company does not have any variable interest entities, and
therefore, this interpretation is not expected to have a material impact on the
Companys financial statements.

NOTE B  RENTAL ACTIVITY

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

In July 1997, the lease for the tenant occupying 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.

The remaining approximately 87.5% of the Center is vacant.

NOTE C  INCOME TAXES

The provision for income taxes consists of:

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS (continued)

|                                                                  |          |  |        |         |      |  |        |         |   |  |        |         |  
|----------------------------------------------------------------- | -------- |  | ------ | ------- | ---- |  | ------ | ------- | - |  | ------ | ------- | -
|                                                                  |          |  | 2003   |         | 2002 |  | 2001  
|                                                                  |          |  |        |         |      |  |       
|Federal:                                                          |          |  |        |         |      |  |        |         |   |  |        |        
|                                                                  | Current  |  | $      |        |      |  | $      |        |   |  | $      |        |  
|                                                                  | Deferred |  |        | (71,155 | )    |  |        | (57,039 | ) |  |        | (47,650 | )
|State:                                                            |          |  |        |         |      |  |        |         |   |  |        |        
|                                                                  | Current  |  |        | 1,085   |      |  |        | 1,220   |   |  |        | (2,020  | )
|                                                                  | Deferred |  |        | (26,680 | )    |  |        | (14,497 | ) |  |        | (12,028 | )
|Increase (decrease) in valuation allowance of
deferred tax assets |          |  | 96,750 |         |      |  | 71,536 |         |   |  | 59,678 |        
|                                                                  |          |  |        |         |      |  |        |         |   |  |        |        
|                                                                  | Total    |  | $      | 1,085   |      |  | $      | 1,220   |   |  | $      | 2,020   |  
|                                                                  |          |  |        |         |      |  |        |         |   |  |        |        

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

|                                                     |  |      |       |      |  |      |       |    |  |  |       |   
|---------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | -- |  |  | ----- | --
|                                                     |  | 2003 |       | 2002 |  | 2001
|                                                     |  |      |       |      |  |     
|Federal tax (benefit) at statutory rate              |  |      | (34.0 | %)   |  |      | (34.0 | %) |  |  | (34.0 | %)
|State income tax, net of federal income tax
benefit  |  |      | 0.5   |      |  |      | .7    |    |  |  | 1.3   |   
|Change in valuation allowance of deferred tax
assets |  |      | 34.0  |      |  |      | 34.0  |    |  |  | 34.0  |   
|                                                     |  |      |       |      |  |      |       |    |  |  |       |   
|Provision for income taxes                           |  |      | 0.5   | %    |  |      | .7    | %  |  |  | 1.3   | % 
|                                                     |  |      |       |      |  |      |       |    |  |  |       |   
|Deferred tax assets (liabilities) consist of:        |  |      |       |      |  |      |       |    |  |  |       |   

|                               |                                |   |          |         |      |   |          |         |  
|------------------------------ | ------------------------------ | - | -------- | ------- | ---- | - | -------- | ------- | -
|                               |                                |   | 2003     |         | 2002
|                               |                                |   |          |         |     
|Depreciation                   |                                | $ | (63,155  | )       |      | $ | (63,822  | )      
|                               |                                |   |          |         |      |   |          |        
|                               | Gross deferred tax liabilities |   |          | (63,155 | )    |   |          | (63,822 | )
|                               |                                |   |          |         |      |   |          |        
|Rental property loss allowance |                                |   | 78,153   |         |      |   | 78,153   |        
|Loss carryforwards             |                                |   | 792,501  |         |      |   | 694,675  |        
|                               |                                |   |          |         |      |   |          |        
|                               | Gross deferred tax assets      |   |          | 870,654 |      |   |          | 772,828 |  
|Valuation allowance            |                                |   | (807,499 | )       |      |   | (709,006 | )      
|                               |                                |   |          |         |      |   |          |        
|                               | Net deferred tax assets        |   |          | 63,155  |      |   |          | 63,822  |  
|                               |                                |   |          |         |      |   |          |        
|                               | Deferred taxes                 |   | $        | 0       |      |   | $        | 0       |  
|                               |                                |   |          |         |      |   |          |        

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##### Table of Contents



REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS (continued)

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 changes in the total
valuation allowance for the years ended December 31, 2003, 2002, and 2001 were
$98,493, $76,466 and $63,795, respectively. The increases in 2003 and 2002
result primarily from managements assessment of the value of the Companys
loss carryforward incurred in those years.

The Company had operating loss carryforwards at December 31, 2003 for federal
income tax purposes as follows:

|            |  |   |           | 
|----------- |  | - | --------- | 
|EXPIRES IN: |  |   |           | 
|            |  |   |           | 
|2006        |  | $ | 630,000   | 
|2009        |  |   | 460,000   | 
|2018        |  |   | 80,000    | 
|2019        |  |   | 85,000    | 
|2020        |  |   | 85,000    | 
|2021        |  |   | 150,000   | 
|2022        |  |   | 181,000   | 
|2023        |  |   | 215,000   | 
|            |  |   |           | 
|            |  | $ | 1,886,000 | 
|            |  |   |           | 

The Company also had significant California and Michigan state operating loss
carryforwards at December 31, 2003.

The Company made income tax payments of $1,220, $1,220 and $2,020 during 2003,
2002 and 2001, 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
2001, 2002, 2003. No options were outstanding at December 31, 2003; however,
options were available to be granted for 5,450,000 shares.

NOTE E  RELATED PARTY TRANSACTIONS

The current Chief Financial Officer was a partner in a certified public
accounting firm through October 31, 2003 which provides accounting and tax
services to the Company. Fees paid by the Company to that firm were $10,626
in 2003, $16,227 in 2002 and $20,227 in 2001.

NOTE F  SUBSEQUENT EVENT

The Company has entered into an Agreement and Plan of Merger dated December 16,
2003 with Regency Acquisition Corp. (Acquisition).

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS (continued)

Under the terms of the merger agreement, Acquisition will merge into the
Company. Each share of the common stock of the Company, other than the 83.5%
of shares held by the two majority shareholders (First Lincoln Holdings, Inc.
(First Lincoln) and Evergreen Acceptance LLC (Evergreen)) will be converted
into the right to receive $0.017 in cash without interest. The Companys
common stock owned by First Lincoln and Evergreen will be cancelled, and the
shares of Acquisition common stock owned by Evergreen will be converted into
shares of Company common stock on a one-for-one basis.

Upon completion of the merger, Evergreen will be the Companys only
shareholder.

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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

FINANCIAL STATEMENT SCHEDULES

Board of Directors
Regency Equities Corp.

Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules II and III are
presented for purposes of complying with the Securities and Exchange
Commissions rules and are not a part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

The Supplemental Information  Selected Quarterly Financial Data was not
audited by us and, accordingly, we do not express an opinion on it.

| |  |                                       
| |  | --------------------------------------
| |  | Singer Lewak Greenbaum & Goldstein LLP

Los Angeles, California
March 16, 2004

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##### Table of Contents



REGENCY EQUITIES CORP.

SUPPLEMENTAL INFORMATION

SELECTED QUARTERLY FINANCIAL DATA

(UNAUDITED)

|                       |  |                    |         |         |  |         |         |         |  |   |         |   |  |   |         |  
|---------------------- |  | ------------------ | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                       |  | Three months ended
|                       |  |                   
|                       |  | 12/31/03           |         | 9/30/03 |  | 6/30/03 |         | 3/31/03
|                       |  |                    |         |         |  |         |         |        
|Total revenues         |  | $                  | 20,327  |         |  | $       | 19,677  |         |  | $ | 20,967  |   |  | $ | 21,528  |  
|Loss before
income tax |  |                    | (42,325 | )       |  |         | (50,520 | )       |  |   | (56,764 | ) |  |   | (65,431 | )
|Net loss               |  |                    | (42,380 | )       |  |         | (51,130 | )       |  |   | (56,764 | ) |  |   | (65,851 | )
|Loss per share         |  | $                  | (0.001  | )       |  | $       | (0.001  | )       |  | $ | (0.001  | ) |  | $ | (0.001  | )

|                       |  |                    |         |         |  |         |         |         |  |   |         |   |  |   |         |  
|---------------------- |  | ------------------ | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                       |  | Three months ended
|                       |  |                   
|                       |  | 12/31/02           |         | 9/30/02 |  | 6/30/02 |         | 3/31/02
|                       |  |                    |         |         |  |         |         |        
|Total revenues         |  | $                  | 22,174  |         |  | $       | 23,342  |         |  | $ | 23,078  |   |  | $ | 24,496  |  
|Loss before
income tax |  |                    | (56,487 | )       |  |         | (39,944 | )       |  |   | (36,949 | ) |  |   | (47,661 | )
|Net loss               |  |                    | (56,487 | )       |  |         | (40,554 | )       |  |   | (36,949 | ) |  |   | (48,271 | )
|Loss per share         |  | $                  | (0.001  | )       |  | $       | (0.001  | )       |  | $ | (0.001  | ) |  | $ | (0.001  | )

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##### Table of Contents



REGENCY EQUITIES CORP.

VALUATION AND QUALIFYING ACCOUNTS  SCHEDULE II

|                                                                    |  |           |         |            |  |           |   |         |  |   |        |  |  |   |         | 
|------------------------------------------------------------------- |  | --------- | ------- | ---------- |  | --------- | - | ------- |  | - | ------ |  |  | - | ------- | 
|                                                                    |  | Balance,  |         | Additions  |  | Additions |   | Balance
|                                                                    |  | beginning |         | charged to |  | to        |   | end    
|                                                                    |  | of year   |         | operations |  | reserve   |   | of year
|                                                                    |  |           |         |            |  |           |   |        
|Deferred tax valuation
allowance deducted from
deferred tax assets: |  |           |         |            |  |           |   |         |  |   |        |  |  |   |         | 
|December 31, 2002                                                   |  | $         | 632,540 |            |  | $         |  |         |  | $ | 76,466 |  |  | $ | 709,006 | 
|December 31, 2003                                                   |  | $         | 709,006 |            |  | $         |  |         |  | $ | 98,493 |  |  | $ | 807,499 | 

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##### Table of Contents



REGENCY EQUITIES CORP.

REAL ESTATE AND ACCUMULATED DEPRECIATION  SCHEDULE III



|               |  |              |         |              |  |                            |         |      |  |                   |         |                       |  |   |         |         |  |   |           |  |  |   |           | 
|-------------- |  | ------------ | ------- | ------------ |  | -------------------------- | ------- | ---- |  | ----------------- | ------- | --------------------- |  | - | ------- | ------- |  | - | --------- |  |  | - | --------- | 
|               |  |              |         |              |  |                            |         |      |  | Costs capitalized |         |                       |  |   |         |         |  |   |           |  |  |  
|               |  |              |         |              |  |                            |         |      |  | subsequent to     |         | Gross amount at which
|               |  | Initial Cost |         | acquisition  |  | carried at close of period
|               |  |              |         |              |  |                           
|               |  |              |         |              |  | Bldg. &                    |         |      |  |                   |         |                       |  |   |         | Bldg. & |  |   |           | 
|Description(1) |  | Land         |         | Improvements |  | Improvements               |         | Land |  | Improvements      |         | Total(3)             
|               |  |              |         |              |  |                            |         |      |  |                   |         |                      
|(1)            |  | $            | 266,076 |              |  | $                          | 794,337 |      |  | $                 | 411,028 |                       |  | $ | 266,076 |         |  | $ | 1,205,365 |  |  | $ | 1,471,441 | 

|               |  |                 |         |               |  |           |  |                 |  |               |  | 
|-------------- |  | --------------- | ------- | ------------- |  | --------- |  | --------------- |  | ------------- |  | 
|               |  |                 |         |               |  |           |  |                 |  | Life on which
|               |  | Accumulated     |         |               |  |           |  | depreciation is
|Description(1) |  | Depreciation(2) |         | Date Acquired |  | computed 
|               |  |                 |         |               |  |          
|(1)            |  | $               | 586,612 |               |  | Oct. 1976 |  | 25 years       



---

|(1) |  | The property is a shopping arcade in Grand Rapids, Michigan.                                                                                                                      
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|    |  | The property was not subject to encumbrance at December 31, 2003, 2002, or
2001                                                                                                   
|   
|   
|   
|   
|    |  | An allowance for possible losses of $215,000 has been provided at December
31, 2003 2002, and 2001 to adjust the carrying value of the property to estimated
net realizable value.
|   
|   
|   
|   
|(2) |  | Reconciliation of accumulated depreciation:                                                                                                                                       

|                               |                            |   |         |         |      |   |         |         |  |   |         |         | 
|------------------------------ | -------------------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                               |                            |   | 2003    |         | 2002 |   | 2001   
|                               |                            |   |         |         |      |   |        
|Balance at beginning of period |                            | $ | 549,380 |         |      | $ | 512,148 |         |  | $ | 474,916 |        
|Additions during period        |                            |   | 37,232  |         |      |   | 37,232  |         |  |   | 37,232  |        
|                               |                            |   |         |         |      |   |         |         |  |   |         |        
|                               | Balance at close of period |   | $       | 586,612 |      |   | $       | 549,380 |  |   | $       | 512,148 | 
|                               |                            |   |         |         |      |   |         |         |  |   |         |        



---

|(3) |  | The aggregate cost for federal income tax purposes of the property for
each of the three years December 31, 2001, 2002 and 2003 was $1,471,441.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents



REGENCY EQUITIES CORP.

ANNUAL REPORT ON FORM 10-K

INDEX TO EXHIBITS

|               |  |                                                                                                                                                                                                                                                                                 
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                     
|               |  |                                                                                                                                                                                                                                                                                 
|2.1            |  | Agreement and Plan of Merger dated December 16, 2003 between
the Company and Regency Acquisition Corp., incorporated herein
by this reference to Exhibit 2.1 to the Companys Current
Report on Form 8-K filed with the Securities and Exchange
Commission on December 17, 2003.
|              
|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.                                      





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##### Table of Contents



|               |  |                                                                                                                                                                                                                                         
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                             
|               |  |                                                                                                                                                                                                                                         
|10.7           |  | 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.
|              
|31.1           |  | Certification of Chief Executive Officer Pursuant to 15 U.S.C.
§ 7241, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                            
|              
|31.2           |  | Certification of Chief Financial Officer Pursuant to 15 U.S.C.
§ 7241, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                            
|              
|32.1           |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
§ 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                            
|              
|32.2           |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C.
§ 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.