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 September 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  November  13,  2002  there  were 1,950,549 shares of the $ .01 Par Value
Common  Stock  outstanding.


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



                                                                                    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. . . . . . . . . . . . . . . . .    8-14

   Item 2.  Management's Discussion and Analysis of Financial Condition
            And Results of Operations . . . . . . . . . . . . . . . . . . . . . .   15-17

   Item 3. Quantitative and Qualitative Disclosure About Market Risk. . . . . . .      18

   Item 4.  Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . .      18

Part II - Other Information (Unaudited)

   Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .   18-20

   Item 2.  Changes in Securities and Use of Proceeds . . . . . . . . . . . . . .      20

   Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . .      20

   Item 4.  Submission of Matters to a Vote of Security Holders . . . . . . . . .      21

   Item 5.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . . .      21

   Item 6.  Exhibits and Reports on  Form 8-K . . . . . . . . . . . . . . . . . .   21-22

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      22
</TABLE>


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



                                                      September 30,    December 31,
                                                          2002             2001
                                                       (Unaudited)      (Audited)
                                                     ---------------  --------------
<S>                                                  <C>              <C>
Assets
   Current Assets
      Cash and Cash Equivalents                      $        18,821  $      310,093
      Accounts Receivable, net of allowance                        -         495,160
      Notes Receivable - current                             127,653               -
      Inventory                                              354,439         953,909
      Other Current Assets                                    35,116         318,651
                                                     ---------------  --------------
           Total Current Assets                              536,029       2,077,813

   Notes Receivable - net of current portion                 979,347               -

   Property, Plant and Equipment, net                      2,057,478       2,192,695

   Investment in Partnership                              34,550,839      30,183,346

   Other Assets
      Aggregate Inventory                                    833,763         834,194
      Goodwill, net of amortization                          487,757         484,312
      Debt Issuance Costs, net of amortization               220,537         362,311
      Accrued Interest Receivable - related party            113,193               -
      Other                                                   14,873           5,205
                                                     ---------------  --------------
           Total Other Assets                              1,670,123       1,686,022
                                                     ---------------  --------------

           Total Assets                              $    39,793,816  $   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



                                                                  September 30,    December 31,
                                                                      2002             2001
                                                                   (unaudited)      (audited)
                                                                 ---------------  --------------
<S>                                                              <C>              <C>
Liabilities and Shareholders' Equity
  Current Liabilities
    Current Portion of Long-Term Debt                            $    1,038,300   $     238,145
    Notes Payable - banks                                             1,261,536         906,977
    Note Payable                                                        110,018               -
    Accounts Payable                                                    349,746         366,440
    Accrued Expenses                                                    223,141         256,805
    Accrued Compensation                                              1,417,173         786,416
    Loan Payable                                                         10,068               -
    Taxes Payable                                                       180,000         180,000
                                                                 ---------------  --------------
      Total Current Liabilities                                       4,589,982       2,734,783

  Long Term Debt, net of current portion                             13,405,756      13,495,178

  Minority Interest in Consolidated Subsidiaries                          3,881          31,741
  Shareholders' Equity
    Serial preferred stock not subject to mandatory redemption
      (maximum liquidation preference $24,975,312)                    1,052,988       1,052,988
    Common Stock, par value $.01 authorized 25,000,000
     shares; issued and outstanding 1,955,599 shares                     19,556          19,556
    Additional Paid-in Capital                                        8,337,247       8,337,247
    Readjustment resulting from quasi-reorganization at
      December 31, 1987                                              (1,670,596)     (1,670,596)
    Retained Earnings                                                16,505,695      14,589,672
    Note Receivable                                                  (2,440,000)     (2,440,000)
    Treasury Stock, 40,528 shares in 2002 and 2001                      (10,693)        (10,693)
                                                                 ---------------  --------------
      Total Shareholders' Equity                                     21,794,197      19,878,174
                                                                 ---------------  --------------

      Total Liabilities and Shareholders' Equity                 $   39,793,816   $  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 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                  (UNAUDITED)


                                                            Three Months Ended              Nine Months Ended
                                                      ------------------------------  ------------------------------
                                                       September 30    September 30    September 30    September 30
                                                           2002            2001            2002            2001
                                                      --------------  --------------  --------------  --------------
<S>                                                   <C>             <C>             <C>             <C>
Net Sales                                             $     425,647   $       5,295   $     425,647   $      17,388
                                                      --------------  --------------  --------------  --------------

Costs and Expenses
   Costs of Goods Sold                                      425,455             185         425,455             312
   Selling and Administrative                               536,307         383,685       1,408,973       1,187,023
                                                      --------------  --------------  --------------  --------------
                                                            961,762         383,870       1,834,428       1,187,335

Loss from Operations                                       (536,115)       (378,575)     (1,408,781)     (1,169,947)
Income from Equity Investment in Partnership              1,484,996       1,450,983       4,471,796       4,199,089
Other Income                                                 30,998           7,480         115,817           7,500
Interest Expense                                           (283,548)       (291,546)       (811,896)       (878,424)
                                                      --------------  --------------  --------------  --------------
Income before income tax expense, minority interest,
and discontinued operations                                 696,331         788,342       2,366,936       2,158,218
Income Tax Expense                                                -         (10,000)              -         (30,000)
Minority Interest                                             5,395               -          16,609               -
                                                      --------------  --------------  --------------  --------------
Income from Continuing Operations                     $     701,726   $     778,342   $   2,383,545   $   2,128,218
Discontinued Operations
   Loss from operations of discontinued
   components, after gain on disposal of  $262,550
   in September 2002, net of 0 income tax in 2002
   and 2001                                                 (85,213)       (108,140)       (467,522)       (212,183)
                                                      --------------  --------------  --------------  --------------
Net Income                                            $     616,513   $     670,202   $   1,916,023   $   1,916,035
                                                      ==============  ==============  ==============  ==============
            Net Income per Common Share:
            Basic
              Continuing Operations                   $        0.36   $        0.45   $        1.22   $        1.22
              Discontinued Operations                         (0.04)          (0.06)          (0.24)          (0.12)
                                                      --------------  --------------  --------------  --------------
                                                      $        0.32   $        0.39   $        0.98   $        1.10
                                                      ==============  ==============  ==============  ==============
            Diluted
              Continuing Operations                   $        0.36   $        0.45   $        1.22   $        1.22
              Discontinued Operations                         (0.04)          (0.06)          (0.24)          (0.12)
                                                      --------------  --------------  --------------  --------------
                                                      $        0.32   $        0.39   $        0.98   $        1.10
                                                      ==============  ==============  ==============  ==============

Weighted Average Number of Common Shares
Outstanding                                               1,955,599       1,747,159       1,955,599       1,747,159
                                                      ==============  ==============  ==============  ==============
</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
                  NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                  (UNAUDITED)


                                                                    September 30,    September 30,
                                                                        2002             2001
                                                                   ---------------  ---------------
<S>                                                                <C>              <C>
Cash Flows from Operating Activities
  Net Income                                                       $    1,916,023   $    1,916,035
  Adjustments to reconcile Net Income to Net Cash
    used by Operating Activities
      Depreciation and Amortization                                       458,129          532,365
      Change in Deferred Income Taxes                                           -          (18,069)
      Minority Interest                                                   (27,860)         140,566
      Undistributed Income from Equity Investment in Partnership       (4,367,493)      (4,199,089)
      Gain on Sale of Net Assets of Subsidiary                           (262,550)               -
      Interest Accretion on Long-Term Debt                                722,603          650,764
      Changes in Operating Assets and Liabilities
        Accounts Receivable                                               163,506          340,243
        Accrued interest Receivable                                      (113,193)               -
        Inventory                                                        (238,223)          67,095
        Other Current Assets                                               54,255         (297,993)
        Accounts Payable                                                  522,716         (296,307)
        Accrued Expenses                                                  638,780        1,111,507
                                                                   ---------------  ---------------
          Net Cash Used by Operating Activities                          (533,307)         (52,883)
                                                                   ---------------  ---------------

Cash Flows from Investing Activities
  Capital Expenditures                                                   (201,004)         (69,915)
  Other                                                                    (9,668)           8,571
                                                                   ---------------  ---------------
          Net Cash Used by Investing Activities                          (210,672)         (61,344)
                                                                   ---------------  ---------------

Cash Flows from Financing Activities
  Net Short-Term Borrowings                                               464,577        1,656,479
  Net Long-Term Borrowings                                                (11,870)         771,658
                                                                   ---------------  ---------------
          Net Cash Provided by Financing Activities                       452,707        2,428,137
                                                                   ---------------  ---------------
Foreign Currency Translation Adjustment                                         -         (167,811)
                                                                   ---------------  ---------------
Increase (Decrease) in Cash and Cash Equivalents                         (291,272)       2,146,099
Cash and Cash Equivalents - Beginning                                     310,093          928,636
                                                                   ---------------  ---------------
Cash and Cash Equivalents - Ending                                 $       18,821   $    3,074,735
                                                                   ===============  ===============
</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)
                  NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                  (UNAUDITED)


                                                           2002      2001
                                                         --------  --------
<S>                                                      <C>       <C>
     Supplemental Disclosures of Cash Flow Information:
         Cash paid during the year for:
            Income Taxes                                 $      -  $211,960
            Interest                                      144,129   155,940
</TABLE>

Supplemental disclosures of non-cash investing and financing activities:

     On  September  30, 2002 the Corporation's subsidiary, Rustic Crafts, sold a
     majority of its net assets with a book value of $844,450 and obtained notes
     receivable totaling $1,107,000. The resultant gain of $262,550 is reflected
     in  the  financial  statements  as  a  reduction  of loss from discontinued
     operations.

     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.

     In  2001  accrued  compensation  in the amount of $113,503 was converted to
     debt.




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.   Basis  of  Presentation  and  Summary  of  Significant  Accounting
          Policies

          A.   Bases  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 nine month periods ended September 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 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 subsidiaries,
               Rustic  Crafts  International,  Inc.  ("Rustic  Crafts"),
               substantially  all  of  the  net  operating  assets of which were
               disposed  of  on September 30, 2002 and Neptune Trading Co., Inc.
               ("Neptune"),  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") and 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  has been retroactively adjusted for the
               period  ending  September  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 September 30, 2002 and December 31,
               2001:

<TABLE>
<CAPTION>
                                    September 30,  December 31,
                                        2002           2001
                                    -------------  -------------
<S>                                 <C>            <C>
        Raw materials and supplies  $           -  $     646,958
        Work-in-process                         -          8,793
        Finished products                       -        298,158
        Construction in Process           354,439              -
                                    -------------  -------------
                                    $     354,439  $     953,909
                                    =============  =============
</TABLE>


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

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

          E.   Aggregate  Inventory  -  Inventory, which consists of 70+ million
               short tons of aggregate 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.  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% per annum in
               ninety  six  equal  payments of principal and interest commencing
               December  31, 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.

          G.   Reclassifications  - Certain reclassifications were made to prior
               period  financial statement presentations to conform with current
               period  presentations.

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  management  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  leases  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


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

Note 2.   Investment  in  Partnership  (Continued)

          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 September
          30,  2002  is  $34,550,839.  The  income  from  the  Company's  equity
          investment  in the Partnership for the nine months ended September 30,
          2002  and  2001  was  $4,321,796  and  $4,057,138,  respectively.

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

<TABLE>
<CAPTION>
                                   Three Months Ended       Nine Months Ended
                                 ----------------------  ------------------------
                                 September   September    September    September
                                    30,         30,          30,          30,
                                    2002        2001        2002         2001
                                 ----------  ----------  -----------  -----------
<S>                              <C>         <C>         <C>          <C>
          Revenues               $3,362,843  $3,433,245  $10,127,135  $10,246,680
                                 ----------  ----------  -----------  -----------
          Operating Expenses        960,634     860,172    2,882,957    2,585,613
          Depreciation and          622,142     664,160    1,886,284    2,096,294
          Amortization
          Interest Expense, Net     269,545     431,367      808,635    1,294,101
                                 ----------  ----------  -----------  -----------
             Net Income          $1,510,522  $1,477,546  $ 4,549,259  $ 4,270,672
                                 ----------  ----------  -----------  -----------
</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  $150,000  and  $141,951  for the
          nine-month  periods  ended  September 30, 2002 and 2001, respectively,
          from  this  investment.

Note 3.   Note  and  Accrued  Interest  Receivable  -  Other

          On  October  15,  2001 the Statesman Group, Inc. (Statesman), a former
          shareholder,  exercised  in full its option, which had been granted in
          1997  to  acquire  6,100,000 (610,000 after one for ten reverse split)
          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  610,000  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 $113,193 at
          September  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 former
          director  of  the  Company)  and  two  other  children  of  William R.
          Ponsoldt,  Sr.,  the  Company's  former  President and Chief Executive
          Officer.

          On October 16, 2002 the Company redeemed the common shares acquired by
          Statesman  as a result of the above described exercise. See Subsequent
          Events.


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


Note 4.   Discontinued  Operations

          On  October  1,  2001  the  Company disposed of its greater than fifty
          percent  ownership  interest  in  Glas-Aire. On September 30, 2002 the
          Company's  subsidiary, Rustic Crafts, sold all of its operating assets
          subject to the assumption of certain of its liabilities, recognizing a
          gain  on  disposal  of  $262,550.

          The  results  of  these businesses have been reflected as discontinued
          operations  in  the  accompanying  financial  statements. For the nine
          months ended September 30, 2002 and 2001 revenues attributable to such
          discontinued  operations  through  the  date  of disposition amount to
          $1,299,985  and  $9,935,758,  respectively.  For the nine months ended
          September 30, 2002 and 2001 net loss attributable to such discontinued
          operations  through  the  date  of  disposition  were  ($730,772)  and
          ($212,183),  respectively.

          Rustic  Crafts  received the following consideration from the buyer of
          its  operating  assets:

          1.   A  note  for  $707,000;
          2.   A  note  for  $400,000  without interest payable on September 30,
               2003  absent  the  occurrence  of  certain  events  requiring
               prepayment;  and
          3.   $200,000  (the  proceeds  of which were from a $250,000 loan from
               the  Company  to  the  buyer).

          Additionally,  Rustic  Crafts entered into a three year lease with the
          Buyer  for its land and building which it retained, requiring payments
          of  $6,500  per  month  for  a  thirty  six  (36)  month  term.


Note 5.   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  September  30,  2002).  The  line  of  credit  is
          guaranteed  by  the  Company.  At  September  30,  2002  the  amount
          outstanding under the line of credit was $900,000. In conjunction with
          the  Rustic  Crafts' asset sale, Rustic Crafts' indebtedness under the
          line  of credit together with its mortgage loan from PNC (see Note 6 -
          Long Term Debt) and certain other PNC indebtedness was restructured to
          replace  such indebtedness with five notes totaling $2,432,782, all of
          which  are due in June 2004 and have a ten year amortization schedule.
          As  part of PNC debt restructuring, Rustic Crafts' was required to pay
          down  the outstanding loan balance with $200,000 of the purchase price
          in  the  Rustic  Crafts asset sale, and is required to make a $540,000
          payment  in  December 2002. The Company was also required to pledge up
          to  five  million  tons of rock aggregate as additional collateral for
          the  loans  from  PNC.

          The  Company's  subsidiary,  Neptune  Trading  Co.,  Inc.  obtained
          non-recourse  financing in connection with its purchase of residential
          real  property  and  vacant  lots.  At  September 30, 2002 Neptune had
          demand  notes  at  7%  interest  outstanding  totaling  $361,536
          collateralized  by  construction  in  process  with  a  book  value of
          $354,439.


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


Note 6.   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 September 30, 2002 the amount outstanding under the
          Loan  is  $12,880,069,  including  $722,603  of  interest for the nine
          months  ended  September  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 from PNC, which is guaranteed by the Company.
          The  first  mortgage  term  loan  was  payable  in consecutive monthly
          installments  over  10  years  with  a  20  year  amortization but was
          restructured  in  connection with the September 30, 2002 Rustic Crafts
          asset  sale  (see  Note  5).


Note 7.   Income  Taxes

          As  referred  to in Note 1, the Company utilizes SFAS 109, "Accounting
          for  Income  Taxes."

          For  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 months ended September 30, 2002 and 2001 the tax effect
          of  net operating loss carryforwards reduced the current provision for
          regular  Federal  income taxes by approximately $210,000 and $230,000,
          respectively.  For  the  nine months ended September 30, 2002 and 2001
          the tax effect of net operating loss carryforwards reduced the current
          provision  for  regular Federal income taxes by approximately $650,000
          in  each  of the years. The Company provided for $0 state income taxes
          in  the  three months ended September 30, 2002 and 2001, respectively.
          The Company provided $10,000 and $30,000 for state income taxes in the
          nine  months  ended  September  30,  2002  and  2001,  respectively.


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


Note 8.   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 in Florida 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 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.

Note 10.  Subsequent  Events

          On  October 16, 2002 the Company redeemed the 754,950 shares of common
          stock  of  the  Company owned by Statesman for an aggregate redemption
          price of $1,020,000 ($1.35 per share - or the approximate market value
          of  the  common stock at the time of redemption) pursuant to the terms
          of  a Redemption Agreement, dated October 16, 2002 between the Company
          and  Statesman  (the  "Redemption  Agreement"). In connection with the
          redemption,  each  of the Company's directors as of such time resigned
          effective  October  28,  2002  at which time persons designated by the
          Lender  (as  defined  below)  were appointed to serve as the successor
          members  of  the  Board of Directors. In addition, simultaneously with
          the  redemption,  all  of  the officers of the Company as of such time
          resigned.  Laurence S. Levy, an affiliate of the Lender, was appointed
          President  and Chief Executive Officer of the Company. Neil N. Hasson,
          also an affiliate of the Lender, was appointed Chief Financial Officer
          and Secretary of the Company. Both new executive officers entered into
          employment  agreements  with  the  Company.  On  November 18, 2002 Mr.
          Hasson  resigned  as  Secretary  of the Company and Carol Zelinski was
          appointed  as  his  successor.

          The  Company  funded the redemption price and the related transactions
          with Statesman discussed below with the proceeds of loans from Royalty
          Holding LLC (the "Lender"), an unaffiliated third party, pursuant to a
          Note Purchase Agreement (the "Note Purchase Agreement"), dated October
          16,  2002.  Pursuant  to  the  Note  Purchase  Agreement,  the  Lender
          purchased  (i)  a  $3,500,000  5%  Convertible  Promissory Note of the
          Company  due October 16, 2012 and (ii) a $1,250,000 9% Promissory Note
          of  the  Company  due  October  16,  2007.  Under both notes, interest
          payments  not  paid  currently  accrue without penalty or default. All
          unpaid  interest  and  principal  under the 5% Convertible Note may be
          converted  at  any  time  at  the  option of the holder into shares of
          Company  common  stock  at  a  conversion


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


Note 10.  Subsequent  Events  (Continued)

          rate  of  $2.00 per share. On November 7, 2002 the Lender converted an
          aggregate of $1,500,000 in principal and accrued interest under the 5%
          Convertible  Note  into  750,000  shares  of Company Common Stock. The
          notes are prepayable at any time without premium or penalty and the 9%
          Promissory  Note  must  be  prepaid upon the receipt by the Company of
          sufficient proceeds from its investment in Security after discharge of
          certain  pre-existing  indebtedness  of  the  Company.  In addition to
          customary  default  provisions  under the notes, the notes would be in
          default  if  within  thirty  days  following the expiration or earlier
          termination  of  the  current  lease  relating to the property held by
          Security,  the  current  tenant  under such lease has not renewed such
          lease  or  entered  into a new lease for the property. A default under
          one  note  would  also  trigger  a  default  under  the  other  note.

          In connection with the Redemption Agreement, the Company acquired from
          Statesman  a  three  year option to purchase the 20% stock interest in
          NRDC  held  by  Statesman.  To  exercise  the option, the Company must
          deliver to Statesman for cancellation the $2.44 million note issued to
          the  Company  by  Statesman  in October 2001. As consideration for the
          option,  the  Company  (i)  paid  Statesman $250,000, (ii) amended the
          $2.44 million note and related pledge agreement to limit the Company's
          recourse  under  the  note  and (iii) transferred to Statesman certain
          office  furniture  and  equipment  owned  by  the  Company.

          In  connection with the Redemption Agreement, the Company also entered
          into  a  Payment  Agreement  with William R. Ponsoldt, Sr., the former
          President  and Chief Executive Officer of the Company, whereby payment
          of  $1,508,000  of  accrued  compensation  owed to Mr. Ponsoldt by the
          Company  became  subject  to  the  satisfaction  of certain conditions
          precedent.

          In  connection with the Redemption Agreement, the Company also entered
          into an agreement with Statesman providing for (i) an amendment to the
          Certificate  of  Designations  of the Series C Preferred Stock for the
          Company  and  (ii)  certain limitations on the ability of Statesman to
          issue or transfer shares or other beneficial interests in Statesman or
          to  sell,  transfer,  purchase  or  acquire  any  capital stock of the
          Company,  in  each  case  without first receiving written confirmation
          from  the  Company  that such issuance or transfer would not adversely
          affect  the  Company's  ability  to  utilize  its  net  operating loss
          carryforwards.  The  Company  paid  Statesman  an  aggregate amount of
          $2,730,000  in  consideration  of  the  foregoing  agreements.  The
          Certificate  of  Designations  of  the  Series  C  Preferred Stock was
          amended to make certain ministerial changes as well as to provide that
          (i)  no  dividends will accrue or be payable on the Series C Preferred
          Stock  as a result of the December 2001 sale of assets of NRDC to Iron
          Mountain  Minerals,  Inc. or as a result of the receipt by NRDC of any
          proceeds  of  the  note  issued  to  NRDC  in  connection  with  such
          transaction  and (ii) the Company may satisfy the redemption price for
          the  shares of Series C Preferred Stock by delivery of the NRDC common
          stock.

          More  information  regarding  the  transactions described above can be
          found in the Company's Current Report on Form 8-K filed on October 18,
          2002.


                                       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.

General.

     The Company's Shareholders' Equity at September 30, 2002 was $21,794,197 as
     compared  to  $17,824,276  at September 2001, an increase of $3,969,921 for
     the  twelve  months  ended  September  30,  2002.

Liquidity and Capital Resources.

     The  investment  in  Security  provides the Company with management fees of
     approximately $100,000 per annum until 2003. In the period ending September
     30, 2002 the Company's income from its equity investment in the Partnership
     (as well as its interest in Security's General Partner, 1500 Woodlawn L.P.)
     was  $4,471,796.  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  $34,550,839,  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,
     subject  to  certain  conditions,  including  that  the  building  remains
     occupied,  the  maturity  date  of  the  KBC  loan  will be extend to 2006;
     provided  that  all  income  to the Company from the partnership is used to
     amortize  the  loan.  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. 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.

     As  of  September  30,  2002  the Company's wholly-owned subsidiary, Rustic
     Crafts,  sold  its  operating  assets to RCI Wood Products, Inc. ("RCI"), a
     newly-formed  Pennsylvania  corporation  that  is  controlled by the former
     President  of  Rustic  Crafts,  Kevin  Sheard.  In addition to assuming the
     operating  liabilities of Rustic Crafts, as consideration for the sale, RCI
     paid  Rustic  Crafts  $240,000  in  cash (which was advanced by the Company
     under  a  short term note due December 2002) and delivered two notes in the
     aggregate  amount  of  $1,107,000.  The  retained  assets  of Rustic Crafts
     consist  of  the real estate and notes from RCI, with an estimated value of
     $2,850,000  and  related  liabilities  in  the  amount  of  approximately
     $2,400,000.  In  connection  with  the  Rustic  Crafts  asset sale, the PNC
     indebtedness  was  restructured  (see  Note  5  to  Consolidated  Financial
     Statements).


                                       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 historically has relied primarily on debt financing to sustain
     liquidity  for  ongoing  operations.  The  Company's ability to continue in
     existence  is  largely  dependent  upon  its  ability to continue to source
     financing.  The  Company  is  currently  evaluating  the  availability  of
     additional  financing to the Company from a number of sources. There can be
     no  assurance,  however,  that  any  such  financing will become available.

Results of Operations

     2002 Compared to 2001

     For the nine months ended September 30, 2002:

     Net  sales  increased  $408,259  over  the similar period in 2001, which is
     attributable to Neptune, the company's newly formed residential development
     corporation. Selling and administrative expenses increased $221,950 in 2002
     as  compared  to  2001, which increase is largely attributable to increased
     legal  fees  and  contractual  compensation  agreements.

     Income from equity in partnerships increased $272,707. Interest expense was
     lower  by $485,466 but partially offset by a rise in operating expenses for
     the period. Corporate interest expense decreased by $66,528. While interest
     on  the KBC loan was higher than last year, the company was not required to
     pay  interest  on  short  term  borrowing  as  it did in the previous year.

     Net  income  of  $1,916,023 is substantially the same as net income for the
     previous  nine  month  period. Net income from continuing operations, which
     increased  $255,327 was decreased by losses from discontinued operations of
     $255,339.

     For the three months ended September 30, 2002:

     Net sales increased $420,352 in 2002 over the similar period in 2001, again
     as  a  result  of  the  inclusion  of  Neptune.

     Selling  and  administrative  expenses  increased $152,622 due to increased
     legal  fees  and  contractual  compensation  agreements.

     Income  from equity in partnerships increased $34,013. This increase is due
     to a decrease in interest expense offset by increases in operating expenses
     for  the  quarter.

     Corporate  interest  expense decreased by $7,998. While interest expense on
     the KBC loan was higher than last year, the company was not required to pay
     interest  on  short  term  borrowing  as  it  did  in  the  previous  year.

     Net  income  decreased  $53,689.  Net  income  from  continuing  operations
     decreased  $76,616  while  losses  from  discontinued  operations decreased
     $22,927.


                                       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 generate sufficient cash
               flow  to  cover corporate operating expenses and thus the Company
               must  rely on external sources of capital 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


ITEM 3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     The  Company  does  not expect its operating results, cash flows, or credit
     available  to  be  affected to any significant degree by a sudden change in
     market  interest  rates.  Furthermore,  the  Company does not engage in any
     transactions  involving  financial  instruments  or in hedging transactions
     with  respect  to  its  operations.



ITEM 4.  CONTROLS AND PROCEDURES

     (a)  Within  the  90-day  period  prior  to  the  date  of this report, the
          Company's  management, including its Chief Executive Officer and Chief
          Financial  Officer,  evaluated  the  Company's disclosure controls and
          procedures  pursuant  to  Exchange  Act  Rule  13a-14. Based upon that
          evaluation,  the Company's Chief Executive Officer and Chief Financial
          Officer  concluded  that  the  Company's  disclosure  controls  and
          procedures are functioning effectively to provide reasonable assurance
          that  the  Company  can  meet  its obligations to disclose in a timely
          manner  material  information required to be included in the Company's
          reports  under  the  Exchange  Act.

     (b)  There  have  been  no  significant  changes  in the Company's internal
          controls  or  in  other factors which could significantly affect those
          internal  controls  subsequent  to  the  date the Company's management
          carried  out  its  evaluation.

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.


                                       18
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION (CONTINUED)

     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.

     During  the  third  quarter ended September 30, 2002 there were no material
     developments  in  previously  reported  legal  proceedings  other  than  as
     follows:

     On  August  30, 2002 the Defendants moved to dismiss the Complaint filed on
     May 2, 2002 by two dissident shareholders against the Company and its Board
     of  Directors,  Gatz et al. v. Ponsoldt, Sr., et al., Case No. 4:02 CV 3113
     (D. Neb.) ("Shareholder Litigation") on the grounds that the Court does not
     possess  personal  jurisdiction  over  the  individual  defendants  and for
     failure  to  state  a  claim for which relief could be granted. On the same
     date,  Defendants  also  filed  their Opposition to plaintiffs' preliminary
     injunction  motion.

     On  August  27,  2002  Defendants  moved  for a protective order to prevent
     plaintiffs  from  interfering  with  Regency's  existing  and  prospective
     commercial  relations and from distributing confidential Regency documents.
     The  Magistrate  Judge  granted  Defendants  motion and, with the Company's
     agreement,  on  September  12,  2002, the Magistrate Judge entered an Order
     requiring  Defendants  to give plaintiffs 10 days pre-closing notice of any
     transaction  that  concerned  a  monetization  of Regency's interest in the
     Security  Land  partnership.

     Since  September  30,  2002  and  the  filing of this report, the following
     material  developments  have  occurred:

     Following  the  Company's  announcement of its recapitalization, Plaintiffs
     filed  an  additional  motions for sanctions against the Defendants arguing
     that under the Magistrate Judge's September 12, 2002 Order, Defendants were
     required to give notice of the recapitalization but did not, and Plaintiffs
     filed  an  additional  motion  for preliminary injunction with the District
     Court  Judge. After hearing, the Magistrate Judge denied Plaintiffs' motion
     for  sanctions.  After hearing on October 24, 2002 the District Court Judge
     denied  both of Plaintiffs' preliminary injunction motions and, pursuant to
     the  parties'  agreement,  entered  an  order  requiring  the  same  10-day
     pre-closing  notice  that  was ordered by the Magistrate Judge on September
     12,  2002.

     On  November  8,  2002  Donald  D.  Graham,  one  of  the plaintiffs in the
     Shareholder  Litigation,  served a demand letter upon the Company's CEO. In
     that  letter,  Mr.  Graham  alleges  various wrongs by the Company's former
     Board  of Directors, including but not limited to the Board's approving the
     recapitalization,  and  Mr.  Graham  makes various demands of the Board. On
     November 12, 2002 the Company responded, informing Mr. Graham it intends to
     form  an  independent committee of the Board to investigate his allegations
     and  demands  and  determine  whether  the  actions  he proposed are in the
     Company's  best  interests.  On November 15, 2002 Plaintiffs filed a motion
     seeking  leave  to  file  an


                                       19
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION (CONTINUED)


     amended  complaint and add additional parties. Defendants' response to this
     motion  is  due  to  be  filed  on  November  29,  2002.


     Other  Litigation:

     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. 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.


                                       20
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION (CONTINUED)


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.

     (a)  Exhibits

          Exhibit Number      Description  of  Exhibit
          --------------      ------------------------

          3.1(i)(a)           Restated Certificate of Incorporation of the
                              Company

          3.1(i)(b)           Corrected Certificate of Amendment reflecting
                              amendment to Restated Certificate of Incorporation
                              of the Company

          3.1(i)(c)           Certificate of Designation - Series B Preferred
                              Stock, $10 Stated Value, $.10 par value (filed as
                              Exhibit to Form 10-K dated June 7, 1993 and
                              incorporated herein by reference).

          3.1(i)(d)           Amended and Restated Certificate of Designation,
                              Series C Preferred Stock, $100 Stated Value, $.10
                              par value (filed as Exhibit 99.4 to the Company's
                              Current Report on Form 8-K filed on October 18,
                              2002, and incorporated herein by reference).

          3.1(i)(e)           Certificate of Designation - Series D Junior
                              Preferred Stock, $10 Stated Value, $.10 par value
                              (filed as Exhibit to Form 10-K dated June 7, 1993
                              and incorporated herein by reference).

          3.1(i)(f)           Certificate of Designation - Series E Preferred
                              Stock, $100 Stated Value, $.10 par value (filed as
                              Exhibit 4.1 to Registrant's Annual Report on Form
                              10-K for the year ended December 31, 1995 at page
                              E-1, and incorporated herein by reference).


                                       21
<PAGE>
                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

PART II -  OTHER INFORMATION (CONTINUED)


          3.1(ii)(a)          By-laws of the Company (filed as Exhibit 3.4 to
                              the Company's Registration Statement on Form S-1,
                              Registration Number 2-86906, and incorporated
                              herein by reference)

          3.1(ii)(b)          Amendment No. 1 to By-Laws of the Company

          99.1                Certification of Chief Executive Officer and Chief
                              Financial Officer pursuant to 18 U.S.C. Section
                              1350, as adopted pursuant to Section 906 of the
                              Sarbanes-Oxley Act of 2002


(b)  Reports on Form 8-K

         None.




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:  November 19, 2002              /s/ Neil N. Hasson
------------------------              ------------------
                                      (Chief Financial Officer)


                                       22
<PAGE>
                                  CERTIFICATION
                                  -------------

I,  Neil  N.  Hasson,  certify  that:

1.  I  have  reviewed this quarterly report on Form 10-Q of Regency, Affiliates,
Inc.;

2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

a)  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  quarterly  report  is  being  prepared;

b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and

b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

Date:  November  19,  2002


                                            /s/ Neil N. Hasson
                                            -------------------------------
                                                Neil N. Hasson
                                                Chief Financial Officer


                                       23
<PAGE>
                                  CERTIFICATION
                                  -------------

I,  Laurence.  S.  Levy,  certify  that:

1.  I  have  reviewed this quarterly report on Form 10-Q of Regency, Affiliates,
Inc.;

2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

a)  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  quarterly  report  is  being  prepared;

b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and

b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

Date:  November 19, 2002

                                            /s/ Laurence S. Levy
                                            -------------------------------
                                                Laurence S. Levy
                                                Chief Executive Officer


                                       24
<PAGE>