UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

                  For the quarterly period ended June 30, 2002

                                       OR

               TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


                For the transition period from ______ to _______

                          COMMISSION FILE NUMBER 1-7949

                            REGENCY AFFILIATES, INC.
             (Exact name of registrant as specified in its charter)



                DELAWARE                               72-0888772
                --------                               ----------
    (State or other jurisdiction of       (IRS Employer Identification Number)
    incorporation or organization)



            610 JENSEN BEACH BLVD., JENSEN BEACH, FLORIDA          34957
         -----------------------------------------------------     -----
             (Address of principal executive offices)            (Zip Code)



Registrant's  Telephone  Number,  including  Area  Code  (772)  334-8181
                                                         ---------------

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
                                               -----      -----

As  of August 13, 2002 there were 1,939,874 shares of the $ .01 Par Value Common
Stock  outstanding.


<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                        INDEX TO THE FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                             Page
<S>                                                                          <C>
Part I - Financial Information (Unaudited)

     Item 1.  Financial Statements

          Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . .  3-4

          Consolidated Statements of Operations. . . . . . . . . . . . . .  5

          Consolidated Statements of Cash Flows. . . . . . . . . . . . . .  6-7

          Notes to Consolidated Financial Statements . . . . . . . . . . .  8-13

     Item 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations. . . . . . . . . . . . . . . . . . . .  13-17

Part II - Other Information (Unaudited)

     Item 1.  Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .  18-19

     Item 2.  Changes in Securities and Use of Proceeds. . . . . . . . . .  19

     Item 3.  Defaults Upon Senior Securities. . . . . . . . . . . . . . .  19

     Item 4.  Submission of Matters to a Vote of Security Holders. . . . .  19

     Item 5.  Other Information. . . . . . . . . . . . . . . . . . . . . .  19

     Item 6.  Exhibits and Reports on  Form 8-K. . . . . . . . . . . . . .  19

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
</TABLE>


                                       2.
<PAGE>
<TABLE>
<CAPTION>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS



                                                   June 30      December 31,
                                                     2002           2001
                                                 (Unaudited)     (Audited)
                                                 ------------  --------------
<S>                                              <C>           <C>
Assets
  Current Assets
    Cash and Cash Equivalents                    $     71,621  $      310,093
    Accounts receivable, net of allowance             316,812         495,160
    Income taxes receivable                             8,988           8,988
    Inventory                                       1,042,390         953,909
    Other current assets                              323,832         309,663
                                                 ------------  --------------
      Total current assets                          1,763,643       2,077,813

  Property, Plant and Equipment, Net                2,284,926       2,192,695

  Investment in partnerships                       33,065,843      30,183,346

  Other Assets
    Aggregate inventory                               834,194         834,194
    Goodwill, net of amortization                     501,094         484,312
    Debt issuance costs, net of amortization          267,795         362,311
    Accrued interest receivable - related party        83,979               -
    Other                                               1,373           5,205
                                                 ------------  --------------
      Total other assets                            1,688,435       1,686,022
                                                 ------------  --------------

      Total Assets                               $ 38,802,847  $   36,139,876
                                                 ============  ==============
</TABLE>


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


                                       3.
<PAGE>
<TABLE>
<CAPTION>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS



                                                                  June 30      December 31,
                                                                    2002           2001
                                                                (unaudited)     (audited)
                                                                ------------  --------------
<S>                                                             <C>           <C>
Liabilities and Shareholders' Equity
  Current Liabilities
    Current portion of long-term debt                           $   112,060   $     238,145
    Notes Payable - Banks                                         1,000,000         906,977
    Accounts payable                                                647,636         366,440
    Accrued expenses                                              1,459,917       1,043,221
    Taxes payable                                                   180,000         180,000
                                                                ------------  --------------
      Total current liabilities                                   3,399,613       2,734,783

  Long term debt, net of current portion                         14,216,273      13,495,178

  Minority interest in consolidated subsidiaries                      9,277          31,741
  Shareholders' equity
    Serial preferred stock not subject to mandatory redemption    1,052,988       1,052,988
      (maximum liquidation preference $24,975,312 in 2002
      and 2001, respectively
    Common stock, par value $.01 authorized 25,000,000 shares;       19,399          19,399
      issued and outstanding 1,939,874 shares in 2002 and 2001
    Additional paid-in capital                                    8,337,404       8,337,404
    Readjustment resulting from quasi-reorganization at
    December 31, 1987                                            (1,670,956)     (1,670,596)
    Retained earnings                                            15,889,182      14,589,672
    Note receivable - related party                              (2,440,000)     (2,440,000)
    Treasury stock, 405,283 shares in 2002 and 2001                 (10,693)        (10,693)
                                                                ------------  --------------
      Total shareholders' equity                                 21,177,324      19,878,174
                                                                ------------  --------------

      Total Liabilities and Shareholders' Equity                $38,802,487   $  36,139,876
                                                                ============  ==============
</TABLE>


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


                                       4.
<PAGE>
<TABLE>
<CAPTION>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                  (UNAUDITED)



                                                   Three Months Ended          Six Months Ended
                                                ------------------------  -------------------------
                                                 June 30,      June 30      June 30,     June 30,
                                                   2002         2001          2002         2001
                                                -----------  -----------  ------------  -----------
<S>                                             <C>          <C>          <C>           <C>
Net Sales                                       $  405,750   $3,209,359   $   908,633   $6,594,431
                                                -----------  -----------  ------------  -----------

Costs and expenses
  Costs of goods sold                              370,274    2,142,065       768,158    4,714,453
  Selling and administrative                       748,248    1,423,015     1,383,519    2,610,938
                                                -----------  -----------  ------------  -----------
                                                 1,118,522    3,565,080     2,151,677    7,325,391
                                                -----------  -----------  ------------  -----------

(Loss) from operations                            (712,772)    (355,721)   (1,243,044)    (730,960)
Income from equity investment in partnerships    1,500,140    1,522,710     2,986,800    2,748,106
Other income (expense), net                         42,938       (7,781)      105,331       16,802
Interest expense                                  (217,733)    (307,669)     (560,791)    (622,014)
                                                -----------  -----------  ------------  -----------
Income before income tax expense, and minority     612,573      851,539     1,288,296    1,411,934
interest
Income tax expense                                       -      (36,396)            -     (105,319)
Minority interest                                    5,724      (23,322)       11,214      (60,782)
                                                -----------  -----------  ------------  -----------
Net income                                      $  618,297   $  791,821   $ 1,299,510   $1,245,833
                                                ===========  ===========  ============  ===========
    Net income per common share:
      Basic                                     $     0.32   $     0.60   $      0.67   $     0.94
                                                ===========  ===========  ============  ===========
      Diluted                                   $     0.32   $     0.60   $      0.67   $     0.94
                                                ===========  ===========  ============  ===========


Weighted average number of common shares
outstanding                                      1,939,874    1,319,879     1,939,874    1,319,879
                                                -----------  -----------  ------------  -----------
</TABLE>


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


                                       5.
<PAGE>
<TABLE>
<CAPTION>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                  (UNAUDITED)



                                                                          June 30,      June 30,
                                                                            2002          2001
                                                                        ------------  ------------
<S>                                                                     <C>           <C>
Cash flows from operating activities
  Net income                                                            $ 1,299,510   $ 1,245,833
  Adjustments to reconcile net income to net cash
    used by operating activities
      Depreciation and amortization                                         180,410       334,401
      Change in deferred income taxes                                             -         3,468
      Minority interest                                                     (22,464)       60,782
      Undistributed income from equity investment in partnerships        (2,882,497)   (2,748,106)
      Interest accretion on long-term debt                                  481,662       427,140
      Changes in operating assets and liabilities
        Accounts receivable                                                 178,348       703,126
        Accrued interest receivable - related party                         (83,979)            -
        Inventory                                                           (88,481)     (181,336)
        Other current assets                                                (14,169)     (287,472)
        Accounts payable                                                    281,196      (183,138)
        Accrued expenses                                                    416,696       885,998
                                                                        ------------  ------------
          Net cash provided by operating activities                        (253,768)      260,696
                                                                        ------------  ------------

Cash flows from investing activities
  Capital expenditures                                                     (194,907)      (67,565)
  Other                                                                       3,832         9,601
                                                                        ------------  ------------
          Net cash (used) by investing activities                          (191,075)      (57,964)
                                                                        ------------  ------------

Cash flows from financing activities
  Net short-term borrowings (payments)                                       93,023       659,414
  Net long-term borrowings (payments)                                       113,348      (154,355)
                                                                        ------------  ------------
          Net cash provided (used) by financing activities                  206,371       505,059
                                                                        ------------  ------------
Foreign currency translation adjustment                                           -        (7,395)
Increase (decrease) in cash and cash equivalents                           (238,472)      700,396
Cash and cash equivalents - beginning                                       310,093       928,636
                                                                        ------------  ------------
Cash and cash equivalents - ending                                      $    71,621   $ 1,629,032
                                                                        ============  ============
</TABLE>


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


                                       6.
<PAGE>
<TABLE>
<CAPTION>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                    SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                  (UNAUDITED)


                                                       2002     2001
                                                      -------  -------
<S>                                                   <C>      <C>
Supplemental disclosures of cash flow information:
         Cash paid during the year for:
              Income taxes                            $     -  $86,695
              Interest                                 74,399    6,478
</TABLE>

Supplemental  disclosures  of  non-cash  investing  and  financing  activities:

In  2002,  the  stockholders  approved  a one-for-ten reverse stock split of the
Corporation's common stock, par value $0.40 per share, and a decrease in the par
value  to  $0.01  per share of common stock.  This resulted in a decrease in the
value  of  common  stock  and  corresponding increase in the value of additional
paid-in  capital  of  $7,740,110.  This  transaction  has been given retroactive
treatment  for  the  year  ended December 31, 2001 in the accompanying financial
statements.


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


                                       7.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.   Bases of Presentation and Summary of Significant Accounting Policies

          A.   Basis  of  Presentation  -  The  accompanying unaudited condensed
               consolidated  financial  statements  have  been  prepared  in
               accordance  with  generally  accepted  accounting  principles for
               interim  financial  information and with the instructions to Form
               10-Q  and  Article 10 of Regulation S-X. Accordingly, they do not
               include  all  of  the  information  and  footnotes  required  by
               generally  accepted  accounting principles for complete financial
               statements.  In  the  opinion  of  management,  all  adjustments
               (consisting  of  normal  recurring accruals) considered necessary
               for a fair presentation have been included. Operating results for
               the  three  and  six  month  periods  ended June 30, 2002 are not
               necessarily  indicative  of  the results that may be expected for
               the  year ended December 31, 2002. For further information, refer
               to  the  consolidated  financial statements and footnotes thereto
               included  in  the  Registrant  Company  and  Subsidiaries' annual
               report  on  Form  10-K  for  the  year  ended  December 31, 2001.

          B.   Principals  of  Consolidation  and  Nature  of  Business  -  The
               consolidated financial statements include the accounts of Regency
               Affiliates,  Inc.  (the  "Company"), its wholly owned subsidiary,
               Rustic  Crafts  International,  Inc.  ("Rustic  Crafts"), its 80%
               owned  subsidiaries,  National  Resource  Development Corporation
               ("NRDC"),  Transcontinental  Drilling  Company  ("Drilling")  and
               RegTransco, Inc. ("RTI"), its 75% owned subsidiary, Iron Mountain
               Minerals, Inc. ("IMM"). The consolidated financial statements for
               2001  also include its 50% owned subsidiary, Glas-Aire Industries
               Group,  Ltd.  ("Glas-Aire")  from September 23, 1999, the date in
               which the company achieved an ownership interest greater than 50%
               through  October 1, 2001, the date this interest was disposed of.
               All  significant intercompany balances and transactions have been
               eliminated  in  consolidation.

          C.   Earnings  Per  Share  -  Basic earnings per share are computed by
               dividing  net  income  attributable to common shareholders by the
               weighted  average  number of common shares outstanding during the
               year.  Diluted  earnings  per  share  computations  assume  the
               conversion  of  Series  B,  and  Junior  Series D preferred stock
               during  the  period  that  the  preferred  stock  issues  were
               outstanding.  If  the  result  of  these  assumed  conversions is
               dilutive,  the  dividend  requirements and periodic accretion for
               the  preferred  stock issues are reduced. On February 5, 2002 the
               Company's stockholders approved a one-for ten reverse stock split
               of  the  Company's common stock, par value $0.40 per share, and a
               decrease  in the par value to $0.01 per share. The computation of
               basic  and  diluted  EPS have been retroactively adjusted for the
               period  ending  June  30,  2001 to reflect this change in capital
               structure.

          D.   Inventory - Inventories are stated at the lower of cost or market
               using  the  first-in,  first-out  (FIFO)  method.  Inventory  is
               comprised  of  the  following  at  June  30,  2002:

                          Raw materials and supplies             $       269,462
                          Work-in-process                                 12,746
                          Finished products                              760,182
                                                                 ---------------
                                                                 $     1,042,390
                                                                 ===============

          E.   Aggregate  Inventory  -  Inventory, which consists of 70+ million
               short  tons, is stated at lower of cost or market. The Company is
               also  subject  to a royalty agreement, which requires the payment
               of  certain  royalties  to  a  previous  owner  of  the aggregate
               inventory  upon  sale  of  the  aggregate.


                                       8.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.   Bases of Presentation and Summary of Significant Accounting Policies
          (Continued)

          In  December  2001  the  aggregate inventory was sold to Iron Mountain
          Minerals,  Inc.,  a  75% owned subsidiary of the Company. The purchase
          price  was  $18,200,000  and  is  payable,  with  interest of 2.46% in
          ninety-six  equal  payments  of  principal  and  interest  commencing
          December  2003.  The  intercompany  gain  on this transaction has been
          eliminated  in  the  consolidation  process resulting in the aggregate
          inventory being carried at its historical cost. Otherwise, the Company
          has  made  only  casual  sales  of  the  inventory during the periods.


          F.   Income  Taxes  -  The  Company  utilizes  Statement  of Financial
               Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
               Taxes,"  which  requires  an  asset  and  liability  approach  to
               financial  accounting  and  reporting  for  income  taxes.  The
               difference  between  the  financial  statement  and  tax basis of
               assets  and  liabilities  is determined annually. Deferred income
               tax  assets  and  liabilities  are  computed  for those temporary
               differences  that  have future tax consequences using the current
               enacted  tax  laws  and  rates that apply to the periods in which
               they  are  expected  to affect taxable income. In some situations
               SFAS  109  permits  the  recognition  of  expected  benefits  of
               utilizing  net  operating  loss  and  tax  credit  carryforwards.
               Valuation  allowances  are  established  based  upon management's
               estimate,  if  necessary.  Income  tax expense is the current tax
               payable  or  refundable  for  the  period  plus  or minus the net
               exchange  in  the  deferred  tax  assets  and  liabilities.

Note 2.   Investment  in  Partnership

          In November 1994, the Company purchased a limited partnership interest
          in  Security  Land  and  Development  Company  Limited  Partnership
          ("Security"),  which  owns and operates an office complex. The Company
          has  limited  voting rights and is entitled to be allocated 95% of the
          profit  and  loss of the Partnership until October 31, 2003 (the lease
          termination  date  of  the  sole tenant of the office complex) and 50%
          thereafter.  The Company is to receive certain limited cash flow after
          debt  service,  and  a  contingent  equity build-up depending upon the
          value  of  the  project  upon termination of the lease. The Company is
          also  entitled  to  receive  certain fees relating to the partnership.

          Security  was  organized  to  own and operate two buildings containing
          approximately  717,000  net  rentable  square  feet  consisting  of  a
          two-story  office building and a connected six-story office tower. The
          building  was  purchased  by  Security  in  1986  and  is  located  on
          approximately 34.3 acres of land, which is also owned by Security. The
          building  has  been  occupied  by  the  United  States Social Security
          Administration's Office of Disability and International Operations for
          approximately  24  years  under  a  lease between the United States of
          America,  acting  by  and  through the General Services Administration
          ("GSA"). Effective November 1, 1994, Security and the GSA entered into
          a nine-year lease (the "Lease") for 100% of the building. Security has
          received  an  opinion of the Assistant General Counsel to the GSA that
          lease  payments  are not subject to annual appropriation by the United
          States  Congress  and  the  obligations  to  make  such  payments  are
          unconditional  general  obligations  of  the United States Government.

          The  Company  accounts for the investment in partnership on the equity
          method,  whereby  the carrying value of the investment is increased or
          decreased  by  the  Company's  allocable  share of income or loss. The
          investment  in partnership included in the Consolidated Balance Sheets
          at  June 30, 2002 is $33,065,843. The income from the Company's equity
          investment  in the Partnership for the three and six months ended June
          30,  2002  was  $1,500,140  and  $2,986,800,  respectively.


                                       9.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2.   Investment  in  Partnership  (Continued)

          Summarized  operating  data  for Security for the three and six months
          ended  June  30,  2002  ,  and  June  30,  2001,  is  as  follows:

<TABLE>
<CAPTION>
                                 Three Months Ended          Six Months Ended
                               ----------------------  --------------------------
                                June 30,    June 30,    June 30,       June 30,
                                  2002        2001        2002          2001
                               ----------  ----------  ----------  --------------
<S>                            <C>         <C>         <C>         <C>
Revenues                       $3,376,933  $3,460,613  $6,764,292  $    6,813,436
                               ----------  ----------  ----------  --------------
Operating Expenses                958,783     648,355   1,922,323       1,630,806
Depreciation and Amortization     622,142     716,067   1,264,142       1,432,134
Interest Expense, Net             269,545     498,290     539,090         862,734
                               ----------  ----------  ----------  --------------
    Net Income                 $1,526,463  $1,597,901  $3,038,737  $    2,887,762
                               ----------  ----------  ----------  --------------
</TABLE>

          Effective  November  30,  2000  the  Company invested $10,000 for a 5%
          limited  partnership  interest  in 1500 Wood Lawn Limited Partnership,
          the  general  partner  of  Security.  The Company recognized income of
          $100,000  and  $94,634  in  2002  and  2001,  respectively,  from this
          investment.

Note 3.   Note  and  Accrued  Interest  Receivable  -  Related  Party

          On October 15, 2001 the Statesman Group, Inc. (Statesman) exercised in
          full  its option, which had been granted in 1997, to acquire 6,100,000
          shares  of  the Company's common stock. The exercise was made pursuant
          to  an  agreement which provided for (1) a purchase price at $0.40 per
          share  (par  value) rather than the formula price in the option, which
          would  have  yielded  25%  less to the Company, (2) the execution of a
          note  from  Statesman  to  the  Company  in  the  principal  amount of
          $2,440,000  payable  in  five  years  with  interest  to accrue at the
          prevailing  prime  rate and (3) the obligation to be collateralized by
          the  6,100,000 common shares of the Company purchased upon exercise of
          the  option as well as the 20% remaining interest in the Company's 80%
          owned  subsidiary,  NRDC. Accrued interest amounted to $83,979 at June
          30,  2002.

          Statesman is controlled by The Statesman Irrevocable Trust dated April
          15,  1991,  a  trust  for  the  benefit of William R. Ponsoldt, Jr. (a
          director  of  the  Company)  and  two  other  children  of  William R.
          Ponsoldt,  Sr.,  the  Company's President and Chief Executive Officer.

Note 4.   Note  Payable

          The  Company's subsidiary, Rustic Crafts, has established a $1,000,000
          line  of  credit  with PNC Bank. The line of credit expired on May 18,
          2002  and  bears  interest  at  the  Bank's  prime rate minus one-half
          percent  (5.25%  at June 30, 2002). The accounts receivable, inventory
          and  other  assets,  such  as property and equipment, of Rustic Crafts
          have been pledged as collateral to secure the line of credit. The line
          of  credit  is guaranteed by the Company. At June 30, 2002, the amount
          outstanding  under  the  line  of  credit  was  $1,000,000.

          At  May  18,  2002,  Rustic Crafts was given a July 31, 2002 extension
          date  for  this line of credit. The Company is currently negotiating a
          further  extension/renewal with PNC Bank. There are no assurances that
          such  negotiations  will  be  successful.


                                      10.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 5.   Long-Term  Debt

          KBC Bank Loan - On June 24, 1998, the Company refinanced the long-term
          -------------
          debt  previously  outstanding  with  Southern Indiana Properties, Inc.
          ("SIPI")  and entered into a Loan Agreement (the "Loan") with KBC Bank
          N.V.  ("KBC").  Under  the  terms  of the Loan Agreement, KBC advanced
          $9,383,320.  The  due  date  of  the  Loan  is  November 30, 2003 with
          interest  at  the rate of 7.5% compounded semi-annually on each June 1
          and  December 1, commencing December 1, 1998. The interest may be paid
          by  the  Company in cash on these semi-annual dates or the Company may
          elect  to  add  the  interest  to  the  principal  of  the  Loan  then
          outstanding.  The  loan  is  secured  by the Company's interest in the
          partnership.  As  of  June  30, 2002, the amount outstanding under the
          Loan is $12,639,128, including $481,662 of interest for the six months
          ended  June  30,  2002.

          The  Company purchased a residual value insurance policy which secures
          the  repayment of the outstanding principal and interest when due with
          a maximum liability of $14 million. The costs related to the insurance
          along  with  legal  fees and other costs associated with obtaining the
          Loan  have  been  capitalized  as  debt  issuance  costs and are being
          amortized  over  the  life  of  the  Loan using the effective interest
          method.

          Mortgage  Loan - On March 25, 1998, Rustic Crafts purchased a building
          --------------
          of 126,000 square feet located in Scranton, Pennsylvania. The purchase
          of  this  facility was funded in part by a first mortgage term loan in
          the  amount  of  $960,000.  The first mortgage term loan is payable in
          consecutive  monthly  installments  over  10  years  with  a  20  year
          amortization.

          Remodeling  Loans  -  In  connection  with  the purchase of the Rustic
          -----------------
          Crafts  building,  PNC  Bank loaned the Company a total of $760,000 to
          finance  remodeling of the facility purchased in March 1998. Principal
          payments  on  one  loan  of $604,000 began June 1999 for 120 months in
          amounts  sufficient  to  amortize  the outstanding balance over twenty
          years.  The  remaining  loan  in  the  original  amount of $156,000 is
          payable  in  120  equal  monthly  installments  of  $2,518.

          Miscellaneous  Loans  -  In  January  1999,  Rustic Crafts obtained an
          --------------------
          additional  loan  from  PNC Bank for the purpose of funding additional
          equipment purchases and working capital in the amount of $163,512. The
          loan is payable in equal monthly installments, including principal and
          interest,  of  $3,153.

          In  2002,  Rustic Crafts assumed loans in connection with the purchase
          of  a  small business involved in kitchen cabinet manufacturing called
          Alpine  Resources, Inc. The total long-term debt assumed was $194,907.

          The  interest  rates  on the mortgage loan, the equipment loan and the
          miscellaneous  loans  range  from 4.25% to 7.96% at June 30, 2002. The
          outstanding  balance  on  these  loans is $1,689,205 at June 30, 2002.

          Rustic  Craft's  real  and  personal  property,  equipment,  accounts
          receivable,  inventory  and  other  general intangibles are pledged as
          security  for the loans. The loans are also guaranteed by the Company.
          The  security  agreement  requires  Rustic  Crafts to maintain certain
          financial  ratios.


                                      11.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
               NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


Note 5.   Long Term Debt (continued)

          Rustic  Crafts was not in compliance with such ratios at June 30, 2002
          as  a  result  of changes in the interpretation of such ratios by PNC.
          Rustic Crafts was given a July 31, 2002 extension date. The Company is
          currently negotiating a further extension/renewal with PNC Bank. There
          are  no  assurances  that  such  negotiations  will  be  successful.

Note 6.   Income Taxes

          As  referred  to in Note 1, the Company utilizes SFAS 109, "Accounting
          for  Income  Taxes."  The  deferred  taxes are the result of long-term
          temporary  differences  between  financial reporting and tax reporting
          for  depreciation,  earnings from the Company's partnership investment
          in  Security  Land and Development Company Limited Partnership related
          to  depreciation  and  amortization  and the recognition of income tax
          carryforward  items.  For  regular  federal  income  tax purposes, the
          Company  has  remaining  net  operating  loss  carryforwards  of
          approximately  $7,507,000.  These  losses  can  be  carried forward to
          offset  future  taxable  income  and,  if not utilized, will expire in
          varying  amounts  beginning  in  the  year  2002.

          For  the  three  and six months ended June 30, 2002, and 2001, the tax
          effect  of  net  operating  loss  carryforwards  reduced  the  current
          provision  for regular Federal income taxes by approximately $300,000,
          $300,000,  $154,000  and  $259,000, respectively. The Company provided
          $0,  $0,  $36,396  and  $105,319,  for  Canadian, state income and the
          alternative  minimum  tax  in  the three and six months ended June 30,
          2002  and  2001,  respectively.

Note 7.   Related  Party  Transactions

          On  November 2, 2001, L. J. Horbach, a director of the Company through
          December  5,  2001  and  L.  J.  Horbach  and Associates, of which Mr.
          Horbach  is  the  sole  owner,  purchased from Mid City Bank a certain
          alleged promissory note of the Company for $71,109, as to which he and
          another  shareholder (Dr. Gatz) had been guarantors. In December 2001,
          the  Company  filed  suit  against  Mr.  Horbach  seeking to avoid its
          alleged  liability  and  other relief. Thereafter, Mr. Horbach filed a
          counterclaim against the Company seeking to collect both the principal
          amount  of  the  alleged note and accrued interest, which amounted to,
          collectively,  $82,978.

Note 8.   Segment  Information

          The  Company's  operating  structure  includes  operating segments for
          Automobile  Accessories  through September 30, 2001 (the operations of
          Glas-Aire,  which  was  acquired  in  September 1999), Home Furnishing
          Accessories  (the  operations  of Rustic Crafts, which was acquired in
          March  1997),  Investment  in Partnerships (the investment in Security
          Land  and  Development  Limited Partnership and 1500 Wood Lawn Limited
          Partnership  (Note  2)), and Corporate and Other. The Company operates
          and  generates  its  revenue  in  the  United  States  and  Canada.


                                      12.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9.   Litigation

          In  May  2002,  a  complaint  in  the  form  of  a  class action and a
          derivative  action,  was  instituted against the Company, its officers
          and  its  directors.  The complaint alleges the undertaking of various
          actions  taken  from  1993 to the present, which comprise a fraudulent
          scheme  violative  of  the  Board's  fiduciary duties to the Company's
          shareholders.  The  Company  intends  to  vigorously  contest  the
          allegations  made  in  the  complaint

          Information  about the Company's Operations by segment for the periods
          presented  follows:

<TABLE>
<CAPTION>
                                                  Home        Investment    Corporate
                                 Automobile    Furnishing         in           and
                                Accessories    Accessories   Partnership      Other      Consolidated
<S>                             <C>           <C>            <C>           <C>           <C>

June 30, 2002
-------------
Net sales                       $          -  $    908,633   $          -  $         -   $     908,633
Income from equity investment
  in partnerships                          -             -      2,986,800            -       2,986,800
Segment profit/(loss)                      -      (428,995)     2,986,800   (1,258,295)      1,299,510

June 30, 2001
-------------
Net sales                       $  5,690,563  $    891,775   $          -  $    12,093   $   6,594,431
Income from equity investment
  in partnerships                          -             -      2,748,106            -       2,748,106
Segment profit/(loss)                118,026      (211,849)     2,748,106   (1,408,450)      1,245,833
</TABLE>


ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
          RESULTS  OF  OPERATIONS.

     General.

     Regency  Affiliates,  Inc. (the "Company") is the parent company of several
     subsidiary  business operations. The Company is committed to develop and/or
     monetize these business operations for the benefit of its shareholders. The
     Company's Shareholders' Equity at June 30, 2002 was $21,177,324 as compared
     to  $17,314,490  at June 30, 2001, an increase of $3,862,834 for the twelve
     months  ended  June  30,  2002.

     Liquidity  and  Capital  Resources.

     The  investment  in  Security  is  estimated  to  provide  the Company with
     management  fees  of  approximately  $100,000  per annum until 2003. In the
     period  ending  June  30,  2002,  the  Company's  income  from  its  equity


                                      13.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
          RESULTS  OF  OPERATIONS.  (CONTINUED)

     investment  in  the  Partnership  (as  well  as  its interest in Security's
     General  Partner, 1500 Woodlawn L.P.) was $2,986,800. These funds, however,
     are  presently  committed for the amortization of the outstanding principal
     balance  on Security's real estate mortgage and, while the Company's equity
     investment  in  the  Partnerships  has  increased  to  $33,065,843, neither
     provides  liquidity  to  the  Company  in  excess  of  the  $100,000 annual
     management  fee.

     The  outstanding  principal  on  Security's real estate mortgage balance is
     expected  to  be amortized in November of 2003. Under the current structure
     and assuming the building remains occupied, KBC has indicated it is willing
     to  extend the maturity of the loan (under certain circumstances) under the
     condition  that all income with the exception of $100,000 will then be paid
     to  KBC  to  amortize  the  loan.  In  that  event,  the  KBC loan would be
     liquidated  in  approximately 2006. Until that time, Regency would continue
     to  receive  only  the  $100,000  of  cash  flow.  Currently the Company is
     exploring  options,  which include refinancing the building, monetizing the
     asset,  or  restructuring  the  debt to provide a more appropriate level of
     cash  flow.  There  are  no  assurances  that  any of these options will be
     implemented.

     On  March  15,  1998,  Rustic Crafts purchased a building of 126,000 square
     feet  located  near  the  current  facility  in Scranton, Pennsylvania. The
     purchase of this facility was funded by new borrowings from PNC Bank in the
     form of a first mortgage term loan in the amount of $960,000. Rustic Crafts
     also  obtained  financing  of approximately $923,000 from PNC Bank to equip
     the  facility  and purchase new equipment. The move to the new facility was
     completed  in  1999  and has significantly increased the operating capacity
     and  enabled  Rustic Crafts to more efficiently fill its current orders and
     increase its customer base. On the date of acquisition of the new facility,
     a  tenant was renting 23,000 square feet of this facility at a base rent of
     approximately  $17,400  per year plus an allocable share of the real estate
     taxes.  The  Company  intends  to  maintain  this tenant relationship on an
     ongoing  basis.  Previously,  Rustic  Crafts had a tenant for 28,000 square
     feet,  which is now vacant. Rustic Crafts is currently attempting to find a
     tenant  for  the  28,000  square  feet.

     Rustic  Crafts  has  continued the trend of losses that began in early 2001
     and  was  exacerbated  by  the  disaster  of  September  11th  as  well  as
     substantially  reduced  sales  from  its  largest  customer,  J.C.  Penney.
     Management  of Rustic Crafts has reduced overhead by eliminating personnel,
     cutting  several  employee benefits, and other cost reduction steps in 2001
     and  2002.  In  addition, the Company is currently studying other available
     options  for  Rustic  Crafts.

     The  Company  has  had  discussions  with  several  companies regarding the
     possible  sale  of  its  interest in IMM. The Company is also exploring the
     possibility of establishing a permanent infrastructure to commercialize the
     inventory  of previously quarried and stockpiled aggregate at the Groveland
     Mine  in  cooperation  with  an  experienced  aggregate  supply  company.


                                      14.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
          RESULTS  OF  OPERATIONS.  (CONTINUED)

     The  Board  of  Directors  has  approved  the  formation  of a wholly owned
     subsidiary  called  Neptune Trading, Inc. ("Neptune"). Neptune Trading will
     engage  in  real  estate  development and other related industries. Neptune
     will  initially  assume  building  contracts  of  single family residential
     properties  that  have appreciated in value from Marc Baldinger and William
     Ponsoldt,  Sr. at their cost. Neptune will thereafter enter into agreements
     on  its  own.  In addition, Neptune intends to purchase vacant lots for the
     purpose  of  resale  and  to  build  single-family  residential  homes.  If
     successful,  the  Neptune venture is expected to generate substantial sales
     for  Regency.  To date, there have been no closing but the first closing is
     scheduled  for  mid  September.  The Company will need outside financing to
     fund  the  purchase  of  the  houses  and  the lots. There is no assurances
     currently  that  Neptune  or  Regency  will  attain  such  financing.

     The  Company historically has relied primarily on debt financing to sustain
     the  liquidity for ongoing operations. The Company's ability to continue in
     existence  is  largely  dependent  upon  its  ability  to  continue to find
     financing.

Results  of  Operations

     In  September  1999, the Company acquired a 51% interest in Glas-Aire which
     manufacturers automotive accessories. The financial statements for June 30,
     2001  include  the results of Glas-Aire. The operations of the Company also
     include  the  operations  of  Rustic  Crafts,  which  is  engaged  in  the
     manufacturing  of  decorative  fireplaces,  heater  logs  and  related
     accessories.

     On  October  1,  2001,  the  Company  announced  that  it  had  completed a
     transaction  for  the  disposing  of  the  Company's interest in Glas-Aire.
     Pursuant  to an agreement entered into on September 17, 2001 and amended on
     October  1, 2001, the Company exchanged 1,215,105 shares of common stock of
     Glas-Aire,  representing  approximately  50%  of the issued and outstanding
     shares  of  Glas-Aire,  for  $2,500,000  plus 4,040,375 shares of Regency's
     common  stock, or approximately 23% of the issued and outstanding shares of
     Regency. As a result of the transaction, neither Regency nor Glas-Aire owns
     any stock of the other. Glas-Aire generated net sales of $8,378,202 for the
     nine-month  period  ending  September  30,  2001. Income before income from
     equity investment and income tax expense was $449,040 over the same period.

     Glas-Aire  had been included in Regency's consolidated financial statements
     effective  September  23,  1999 (the date that we acquired 51.3% control of
     Glas-Aire)  through  September  30,  2001.

     During  the  period  that  Regency owned its interest of Glas-Aire, Regency
     received  no  cash  from  the  operations of Glas-Aire, so there will be no
     change  in  cash  flow  as  a  result  of  the disposition of its interest.


                                      15.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
          RESULTS  OF  OPERATIONS.  (CONTINUED)

     The  Company's  current  operations  do  not  now,  or have ever, generated
     sufficient  cash  flow  to  cover corporate operating expenses and thus the
     Company  must  rely on external sources to fund these expenses. The Company
     currently  has  unused borrowing only with the Statesman Group, Inc. and is
     in  discussion  with  additional external sources to provide for additional
     borrowing  capacity to be used, if needed. There are no assurances that any
     source  can  be  found.

     2002  Compared  to  2001

     For  the  six  months  ended  June  30,  2002:

     Net  sales  decreased  $5,685,798  in 2002 over the similar period in 2001,
     which  is  almost  solely  attributable to the disposition of the Glas-Aire
     subsidiary.  There was an increase in sales at Rustic Crafts of $16,858 and
     a  decrease in sales at NRDC of $12,093. Gross margin decreased $1,739,503,
     which  is  largely  attributable  to  the  disposition  of  the  Glas-Aire
     subsidiary.  Selling  and  administrative  expenses decreased $1,227,419 in
     2002  as  compared  to  2001, which decrease is largely attributable to the
     disposition  of  Glas-Aire.

     Income from equity in partnerships increased $238,694. This increase is due
     to  a  decrease  in  interest  expense  of $323,644 reduced by increases in
     operating  expenses  for  the period. Interest expense decreased by $61,223
     and  is  largely attributable to increased interest expense on the KBC loan
     less  interest  expense  previously  attributable  to  Glas-Aire.

     Net  income  increased  $53,677  in 2002 compared to 2001. Increased equity
     earnings  from  partnerships  and reduced corporate expenses were offset by
     the  disposition  of  Glas-Aire  and  increased  losses  of  Rustic Crafts.

     For  the  three  months  ended  June  30,  2002:

     Net  sales  decreased  $2,803,609  in 2002 over the similar period in 2001,
     which  is  largely  attributable  to  the  disposition  of  the  Glas-Aire
     subsidiary.  Sales  of  Rustic Crafts decreased $63,000 during this period.

     Gross  margin  decreased  $1,031,818,  which is largely attributable to the
     disposition  of  the  Glas-Aire  subsidiary.

     Selling  and  administrative  expenses  decreased $674,767 which is largely
     attributable to the disposition of the Glas-Aire subsidiary and an increase
     of  $89,513  of  corporate  expense.

     Income  from equity in partnerships decreased $22,570. This decrease is due
     to  a  decrease  in  interest  expense  resulting from payment of principal
     offset  by  increases  in  operating  expenses  for  the  quarter.

     Interest  expense  increased  by  $89,936  and  is  largely attributable to
     increased interest expense on the KBC loan less interest expense previously
     attributable  to  Glas-Aire.

     Net  income  decreased  $173,523,  which  is  largely  attributable  to the
     disposition  of  the  Glas-Aire  subsidiary  and increased losses of Rustic
     Crafts.


                                      16.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
          RESULTS  OF  OPERATIONS.  (CONTINUED)

Forward-Looking  Statements

     Certain  statements  contained  in  this  Quarterly  Report  on  Form 10-Q,
     including,  but  not  limited  to  those  regarding the Company's financial
     position,  business  strategy,  acquisition  strategy  and  other plans and
     objectives  for  future  operations  and  any other statements that are not
     historical facts constitute "forward-looking statements" within the meaning
     of  the  Private  Securities  Litigation  Reform  Act  of  1995.  Such
     forward-looking  statements  involve known and unknown risks, uncertainties
     and  other  important  factors  that  could  cause  the  actual  results,
     performance  or  achievements  expressed or implied by such forward-looking
     statements  to  differ  materially  from any future results, performance or
     achievements  expressed  or  implied  by  such  forward-looking statements.
     Although  the  Company  believes  that  the expectations reflected in these
     forward-looking  statements  are reasonable, there can be no assurance that
     the  actual  results  or  developments  anticipated  by the Company will be
     realized  or,  even  if  substantially  realized,  that  they will have the
     expected  effect  on  its  business  or  operations.  These forward-looking
     statements  are  made  based  on  management's  expectations  and  beliefs
     concerning  future  events  impacting  the  Company  and  are  subject  to
     uncertainties  and  factors (including, but not limited to, those specified
     below)  which  are  difficult to predict and, in many instances, are beyond
     the  control of the Company. As a result, actual results of the Company may
     differ  materially  from those results contemplated by such forward-looking
     statements,  which  include,  but  are  not  limited  to:

          (i)  The  Company's  current  operations  do  not  now,  or have ever,
               generated  sufficient  cash  flow  to  cover  corporate operating
               expenses  and  thus  the Company must rely on external sources to
               fund  these  expenses.  The  Company's  ability  to  continue  in
               existence  is  partly  dependent  upon  its  ability  to generate
               satisfactory  levels  of  operating  cash  flow.

          (ii) The  Company  currently lacks the necessary infrastructure at the
               site  of  the  Groveland  Mine to permit the Company to make more
               than  casual  sales  of  the  aggregate.

         (iii) An  unsecured  default  in the Lease or sudden catastrophe to the
               Security  West  Building  from uninsured acts of God or war could
               have a materially adverse impact upon the Company's investment in
               Security  Land  and  Development  Company Limited Partnership and
               therefore  its  financial  position  and  results  of operations.

          (iv) The  failure  of  the Social Security Administration to renew its
               lease  of  the  Security  West  Buildings  upon its expiration on
               October  31, 2003 could have a materially adverse impact upon the
               Company's  investment  in  Security  Land and Development Company
               Limited  Partnership.

          (v)  The Company has significant tax loss and credit carryforwards and
               no  assurance  can  be provided that the Internal Revenue Service
               would  not  attempt to limit or disallow altogether the Company's
               use,  retroactively  and/or prospectively, of such carryforwards,
               due to ownership changes or any other reason. The disallowance of
               the  utilization  of  the  company's  net  operating  loss  would
               severely  impact  the Company's financial position and results of
               operations  due  to  the  significant  amounts  of taxable income
               (generated  by the Company's investment in Security) that have in
               the past been, and is expected in the future to be, offset by the
               Company's  net  operating  loss  carryforwards.


                                      17.
<PAGE>
                    Regency Affiliates, Inc. and Subsidiaries


PART  II  -  OTHER  INFORMATION


     ITEM  1.  LEGAL  PROCEEDINGS.

          On  May 2, 2002, a lawsuit was filed in the Federal District Court for
          the District of Nebraska by two dissident Company shareholders, Edward
          E  Gatz  and  Donald  D.  Graham,  against  the  Company, its Board of
          Directors  and Statesman Group, Inc. The five-count Complaint purports
          to  be  brought  on  behalf  of the named plaintiffs, individually, as
          members  of  a  class of the Company's shareholders, and derivatively,
          and  it  purports  to allege RICO violations against Mr. Ponsoldt, Sr.
          and  Statesman  Group,  Inc.,  and  direct  and derivative breaches of
          fiduciary  duties  by members of the Company's Board of Directors. The
          Complaint  asserts  that  plaintiffs  claims  arise  from a variety of
          actions  taken  from 1993 to the present, including the Company's 1996
          employment  agreement  with  Mr. Ponsoldt, Sr., the options granted to
          Statesman  pursuant  to  a  1997  agreement,  as  amended  in  1998,
          Statesman's  exercise  of  its  options, the exchange of the Company's
          interest  in  Glas-Aire Industries Group, Ltd. for Regency Affiliates,
          Inc.  stock  and cash, and the Company's reverse stock split which was
          approved  at  the  Company's  last shareholder meeting. In addition to
          damages,  the  Complaint seeks to void the shares owned and controlled
          by  Mr.  Ponsoldt,  Sr.  and  Statesman  Group,  Inc.

          On  or  about  July  24,  2002, the plaintiffs moved for a preliminary
          injunction  which  seeks, among other things, to enjoin any funding to
          Mr.  Ponsoldt  Sr., under his employment agreement, any acquisition by
          or  transfer of Company stock to Mr. Ponsoldt, Sr. or Statesman Group,
          Inc.,  prohibiting the redemption of Series C preferred stock, barring
          the  monetization  of  the  Security Land partnership interest without
          notice  to  the  Court  or  plaintiffs,  and,  in  the  event  of such
          monetization,  prohibiting  the  distribution  of any proceeds of such
          monetization.

          The  Defendants  responses to the Complaint and Motion for Preliminary
          Injunction  are  due  to  be  filed  on  August  30, 2002. The Company
          believes  the  plaintiffs'  claims are without merit and is defending,
          and  will continue to defend, against them vigorously. However, due to
          the  inherent  uncertainties of litigation, the Company cannot predict
          the  ultimate outcome of this litigation. An unfavorable outcome could
          have  a  material  adverse impact on the Company's business, financial
          condition  and  results  of  operations.

          On  February  7,  2002  a complaint naming Regency Affiliates, Inc. as
          Defendant was filed in the District Court of Douglas County, Nebraska,
          case  number  1012.  The Plaintiffs are Larry J. Horbach, individually
          and  L.J.  Horbach  &  Associates and they are demanding payment on an
          alleged  Regency  Affiliates,  Inc.  loan they purchased from Mid City
          Bank. The plaintiffs are requesting payment of $82,512.57 plus accrued
          interest,  costs  and  attorney fees. We are vigorously defending this
          litigation  and had previously commenced litigation regarding the same
          subject  in  December  2001.

          On December 14, 2001 we initiated a proceeding in The Circuit Court of
          the  Nineteenth  Judicial  Circuit  in and for Martin County, Florida,
          case number 01-1087-CA against Larry J. Horbach, individually and L.J.


                                      18.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES


PART  II  -  OTHER  INFORMATION  (CONTINUED)

          Horbach & Associates. Larry Horbach was a former interim CFO and Board
          member.  We  claim  that Larry Horbach, without appropriate authority,
          borrowed  $100,050  from  Mid  City  Bank  in  the  name  of  Regency
          Affiliates, Inc. Horbach and another shareholder, Dr. Gatz, personally
          guaranteed  the  loan.  We further claim that Horbach converted all or
          part  of  the  proceeds  from  the  loan  for  his  benefit.

          On  September  13, 2001, Glas-Aire Industries LTD., Multicorp Holdings
          Inc.,  Glas-Aire  Industries  Group Ltd, Craig Grossman, Todd Garrett,
          Speed.Com,  Inc., Regency Affiliates, Inc., William Ponsoldt, Sr., and
          Marc  Baldinger  were  listed  as  defendants  in  a proceeding in the
          Supreme  Court  of British Columbia with Alex Y. W. Ding as plaintiff.
          The  case  number  is  S015104.  Mr.  Ding,  the  former  president of
          Glas-Aire,  has  asserted  that  the  October  2001  Regency-Glas-Aire
          transaction  is  in  breach  of  bank  agreements,  securities law and
          fiduciary  duties  owed  to  Glas-Aire and its stockholders. While the
          company  has  been  served, plaintiff has not proceeded on this action
          and  has  not  filed  a  statement  of claim on a timely basis. Should
          plaintiff  continue with the action, the defendants, including Regency
          Affiliates,  Inc.,  would  vigorously  defend  this  litigation.


ITEM 2.   CHANGES IN SECURITIES.

          None.


ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES

          None.


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

          None.

ITEM  5.  OTHER  INFORMATION.

          None.


ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K.

          None.


                                      19.
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES



SIGNATURES


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act  of  1934, the Company has duly caused this report to be signed on
its  behalf  by  the  undersigned  thereunto  duly  authorized.




                                          REGENCY  AFFILIATES,  INC.
                                          --------------------------
                                          (Registrant)



Date:  August  19,  2002                  /s/  Marc  H.  Baldinger
------------------------                  ------------------------
                                          (Chief Financial Officer and Director)


                                      20.
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