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

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 2005

                                       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
          Incorporation or organization)                  Identification Number)

610 N.E. Jensen Beach Blvd., Jensen Beach, Florida                  34957
--------------------------------------------------                  -----
     (Address of principal executive offices)                    (Zip Code)

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

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

As of November 7, 2005 there were 3,121,912 shares of the $.01 Par Value Common
Stock outstanding.

Transitional Small Business Disclosure Form (check one): Yes |_| No |X|

<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

                  Condensed Consolidated Balance Sheets (Unaudited).......................................3

                  Condensed Consolidated Statements of Operations (Unaudited).............................4

                  Condensed Consolidated Statements of Cash Flows (Unaudited).............................5

                  Notes to Condensed Consolidated Financial Statements....................................7

         Item 2.  Management's Discussion and Analysis or Plan of Operation  .............................8-12

         Item 3.  Controls and Procedures ................................................................12

Part II - Other Information

         Item 1.  Legal Proceedings      .................................................................12-14

         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds   ..........................14

         Item 3.  Defaults Upon Senior Securities     ....................................................15

         Item 4.  Submission of Matters to a Vote of Security Holders  ...................................15

         Item 5.  Other Information   ....................................................................15

         Item 6.  Exhibits  ..............................................................................15-16

Signatures................................................................................................17
</TABLE>

<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheet
                               September 30, 2005
                                   (Unaudited)

<TABLE>
<S>                                                                           <C>
                                         Assets

Assets

   Current Assets
     Cash and cash equivalents                                                $  1,455,216
     Marketable securities                                                       8,990,880
     Accrued receivables                                                           456,025
     Other current assets                                                               96
                                                                              ------------

        Total Current Assets                                                    10,902,217

   Investment in partnerships                                                    8,711,280

   Other Assets
     Aggregate inventory                                                           832,427
     Deferred costs                                                                250,000
     Other                                                                           1,300
                                                                              ------------

        Total Other Assets                                                       1,083,727
                                                                              ------------

              Total Assets                                                    $ 20,697,224
                                                                              ============

                              Liabilities and Stockholders' Equity

Liabilities and Stockholders' Equity
   Current Liabilities
     Accounts payable                                                         $    189,690
     Accrued expenses                                                              340,923
                                                                              ------------
        Total Current Liabilities                                                  530,613

   Deferred credit                                                               1,098,615
                                                                              ------------

              Total Liabilities                                                  1,629,228
                                                                              ------------

   Stockholders' equity
     Serial preferred stock not subject to mandatory redemption
       (Maximum liquidation preference $24,975,312)                              1,052,988
     Common stock, par value $.01; authorized 8,000,000 shares;
       issued 3,168,412 shares; outstanding 3,113,412 shares                        31,134

     Additional paid-in capital                                                  8,344,871
     Readjustment resulting from quasi-reorganization at December 31, 1987      (1,670,596)
     Retained earnings                                                          14,087,314
     Note receivable - sale of stock                                            (2,440,000)
     Treasury stock, 55,000 shares at cost                                        (337,795)
                                                                              ------------

        Total Stockholders' Equity                                              19,067,996
                                                                              ------------

              Total Liabilities and Stockholders' Equity                      $ 20,697,224
                                                                              ============
</TABLE>

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


                                       3
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended September 30,    Nine Months Ended September 30
                                                          --------------------------------    ------------------------------
                                                               2005              2004              2005              2004
                                                           -----------       -----------       -----------       -----------
<S>                                                        <C>               <C>               <C>               <C>
Net Sales                                                  $        --       $        --       $        --       $        --

Costs and expenses
     Selling, general and administrative expenses              345,355           530,779         1,142,171         3,181,300
                                                           -----------       -----------       -----------       -----------
                                                               345,355           530,779         1,142,171         3,181,300
                                                           -----------       -----------       -----------       -----------

Loss from operations                                          (345,355)         (530,779)       (1,142,171)       (3,181,300)

Income from equity investment in partnerships                1,481,651           698,275         2,174,742         1,560,932
Rental income                                                       --                --                --             4,599
Interest and dividend income                                    50,802            41,351           132,073           112,069
Other income, net                                               85,227            21,892           223,849            79,676
                                                           -----------       -----------       -----------       -----------

Other income                                                 1,617,680           761,510         2,530,664         1,757,276
                                                           -----------       -----------       -----------       -----------

Net Income (Loss)                                            1,272,325           230,739         1,388,493        (1,424,024)
                                                           ===========       ===========       ===========       ===========

Net income (loss) per common share:
   Basic and diluted                                       $      0.41       $      0.08       $      0.45       $     (0.47)
                                                           ===========       ===========       ===========       ===========

Weighted average number of common shares outstanding:
   Basic and diluted                                         3,115,847         3,019,412         3,056,002         3,018,914
                                                           ===========       ===========       ===========       ===========
</TABLE>

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


                                       4
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      Nine Months Ended September 30,
                                                                     ---------------------------------
                                                                          2005                2004
                                                                     -------------       -------------
<S>                                                                  <C>                 <C>
Cash Flows from operating activities
   Net income (loss)                                                 $   1,388,493       $  (1,424,024)
   Adjustments to reconcile net income (loss) to net cash
     used in operating activities
       Depreciation and amortization                                         1,899               3,494
       Stock-based compensation                                              5,250               6,350
       Income from equity investment in partnerships                    (2,174,742)         (1,560,932)
       Impairment of notes, accrued interest receivable                         --           1,182,626
       Unrealized gain on marketable securities                                 --             (75,963)
       Changes in operating assets and liabilities
        Accounts receivable                                                     --               3,077
        Accrued receivables                                               (108,783)            (72,336)
        Other current assets                                                41,800             (21,436)
        Accounts payable and accrued expenses                             (160,213)           (229,360)
            Net cash used in operating activities                       (1,006,296)         (2,188,504)
                                                                     -------------       -------------

Cash flows from investing activities
   Cash investments in partnerships                                       (200,057)         (7,300,145)
   Payments received on notes receivable                                        --               1,563
   Proceeds from sales of marketable securities                         81,000,000         118,500,000
   Purchases of marketable securities                                  (80,998,624)       (108,925,022)
   Net proceeds from sale of property and equipment                             --             483,415
   Proceeds from partnership earnings received                           1,075,000                  --
                                                                     -------------       -------------
            Net cash provided by investing activities                      876,319           2,759,811
                                                                     -------------       -------------

Cash flows from financing activities
   Proceeds from the exercise of stock options                             158,000                  --
   Purchase of treasury stock                                              (42,160)           (295,635)
                                                                     -------------       -------------
            Net cash provided by (used in) financing activities            115,840            (295,635)
                                                                     -------------       -------------

(Decrease) Increase in cash and cash equivalents                     $     (14,137)      $     275,672
Cash and cash equivalents - beginning                                    1,469,353             451,249
                                                                     -------------       -------------
Cash and cash equivalents - ending                                   $   1,455,216       $     726,921
                                                                     =============       =============

<CAPTION>
                                                                      Nine Months Ended September 30,
                                                                     ---------------------------------
                                                                          2005                2004
                                                                     -------------       -------------
<S>                                                                  <C>                 <C>
Supplemental disclosures of cash flow information:
     Cash paid during the year for
       Interest                                                      $          --       $          --
       Income taxes                                                             --                  --
</TABLE>

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


                                       5
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows

Supplemental Schedule of Non-Cash Investing and Financing Activities:

      During the nine months ended September 30, 2004, the Company has recorded
      the retirement of 1,160,233 shares of cancelled treasury stock at a cost
      of $18,243.

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


                                       6
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements

Note 1. 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
      Item 310 of Regulation S-B. 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, 2005 are
      not necessarily indicative of the results that may be expected for the
      year ended December 31, 2005. For further information, refer to the
      consolidated financial statements and footnotes thereto included in the
      Company's annual report on Form 10-KSB, as amended, for the year ended
      December 31, 2004.

      Principles of Consolidation - The consolidated financial statements
      include the accounts of Regency Affiliates, Inc. (the "Company"), its 75%
      owned subsidiary, Iron Mountain Resources, Inc. ("IMR"), and its 80% owned
      subsidiary, National Resource Development Corporation ("NRDC"). All
      significant intercompany balances and transactions have been eliminated in
      consolidation.

Note 2. Earnings Per Share

      Basic earnings per share are computed by dividing net income attributable
      to common shareholders (net income less preferred stock dividend
      requirements and periodic accretion if applicable) by the weighted average
      number of common shares outstanding during the year.


                                       7
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Forward-Looking Statements and Associated Risk

Certain statements contained in this Quarterly Report on Form 10-QSB, 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 federal securities laws and
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. Such
factors include:

            - A default in the lease or sudden catastrophe to the property owned
      by Security Land and Development Company Limited Partnership ("Security")
      or the operating facilities owned by Mobile Energy Services Company, LLC
      ("Mobile Energy") from uninsured acts of God or war could have a
      materially adverse impact upon our investment in Security or Mobile
      Energy, respectively, and therefore our financial position and results of
      operations;

            - Our subsidiaries currently lack the necessary infrastructure at
      the site of the Groveland mine in order to permit them to make more than
      casual sales of the rock aggregate located at the Groveland Mine;

            - We have had 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 our use, retroactively and/or
      prospectively, of such carryforwards, due to ownership changes or any
      other reason. The disallowance of the utilization or our net operating
      loss would severely impact or financial position and results of operations
      due to the significant amounts of taxable income that has been, and may in
      the future be, offset by our net operating loss carryforwards;

            - Royalty Holdings, LLC ("Royalty"), an affiliate of the Company's
      management, beneficially owns approximately 60% of our common stock. As a
      result, Royalty has the ability to control the outcome of all matters
      requiring stockholder approval, including the election and removal of
      directors and any merger, consolidation or sale of all or substantially
      all of our assets;


                                       8
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)

            - The Company does not expect to pay dividends in the foreseeable
      future; and

            - There are many public and private companies that are also
      searching for operating businesses and other business opportunities as
      potential acquisition or merger candidates. The Company will be in direct
      competition with these other companies in its search for business
      opportunities. Many of these entities have significantly greater financial
      and personnel resources than the Company.

The following discussion and analysis of the financial condition and results of
operations of the Company should be read in conjunction with the accompanying
financial statements and related notes included in Item 1 of this report.

General.

The Company is committed to enhancing the value of the Company's Common Stock by
seeking opportunities to monetize certain existing assets and by seeking new
business opportunities on an opportunistic basis.

Liquidity and Capital Resources.

On September 30, 2005, the Company had current assets of $10,902,217 and
Stockholders' Equity of $19,067,996. On September 30, 2005, the Company had
$10,446,096 in cash and marketable securities, total assets of $20,697,224 and
total current liabilities of $530,613.

On April 30, 2004, the Company through a newly-formed, wholly-owned subsidiary
called Regency Power Corporation, a Delaware corporation ("Regency Power"),
acquired a 50% membership interest in MESC Capital, LLC, a Delaware limited
liability company ("MESC Capital"), from DTE Mobile, LLC ("DTE Mobile"),
pursuant to an Assignment and Assumption Agreement dated as of April 30, 2004.
The purchase price for the 50% membership interest was $3,000,000 and was funded
from the Company's working capital. DTE Mobile, which is owned by an unregulated
subsidiary of a large energy company that has significant experience in owning,
managing and operating electric generation and on-site energy facilities, owns
the other 50% membership interest in MESC Capital.

MESC Capital was formed to acquire all of the membership interests in Mobile
Energy, an Alabama limited liability company. Mobile Energy owns an on-site
energy facility that supplies steam and electricity to a Kimberly-Clark tissue
mill in Mobile, Alabama. The acquisition of Mobile Energy was also consummated
on April 30, 2004 pursuant to a Membership Interest Purchase Agreement, dated as
of January 30, 2004, between MESC Capital and Mobile Energy Services Holdings,
Inc. The purchase price under the Membership Interest Purchase Agreement, after
certain pre-closing adjustments, was $33,600,000, and is subject to certain
post-closing adjustments. The purchase price and working capital reserves were
funded by the issuance of $28,500,000 of non-recourse debt, a total equity
contribution by MESC Capital of $8,600,290, $4,300,145 of which was funded by
Regency Power and $4,300,145 of which was funded by DTE Mobile, and a credit of
$1,000,000 on account of existing and continuing tax-exempt indebtedness of
Mobile Energy. The $28,500,000 acquisition indebtedness will be fully amortized
over the fifteen year term. Neither Regency Power nor DTE Mobile is obligated to
contribute additional capital, or loan or otherwise advance funds, to MESC
Capital.


                                       9
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)

At March 31, 2004, the Company held notes receivable totaling $1,127,708, which
were deemed uncollectible due to lack of cash flows generated and continual
default on payment terms by the issuer. Management determined to record full
impairment of the notes and any accrued interest thereon, resulting in an
impairment charge of $1,182,626, which is included in the Selling, General &
Administrative caption of the accompanying Statements of Operations. Management
intends however, to continue to pursue options available to receive payment on
the obligations from the debtor.

On June 24, 2003, US SSA LLC, a single purpose entity owned by Security,
borrowed $98,500,000 through a public debt issue underwritten by CTL Capital,
LLC. Proceeds of the refinancing were used to repay the outstanding balance of
Security's 1994 indebtedness, to establish reserves to make capital improvements
to the property, to provide reserves required by the new debt, to pay costs and
expenses related to issuing the debt, to pay fees related to the lease extension
with the GSA and the financing, and to make a distribution to the partners of
Security. The debt is for a term of 15.3 years maturing October 31, 2018 at
which time the loan will have been paid down to a balance of $10,000,000.
Security also successfully obtained residual value insurance for approximately
$10,000,000. The interest cost of the financing is 4.63%. The financing is
non-recourse to the Company. The Company received approximately $41,000,000 from
the Security distribution. In addition, under the terms of the Security
partnership agreement, the Company is entitled to (i) 95% of Security's
distributions of cash flow until it has received $2,000,000 of such
distributions, and thereafter 50% of such distributions and (ii) once it has
received $2,000,000 of cash flow distributions, a $180,000 annual management fee
from Security. The foregoing percentages are inclusive of the Company's interest
as a limited partner in 1500 Woodlawn Limited Partnership, the general partner
of Security. In connection with the Security refinancing and distribution, the
Company was required to repay its KBC Bank loan. The payoff amount was
approximately $14,125,000, which included a release fee and make-whole premium.

The Company and general partner of Security are in disagreement as to the manner
in which taxable income of Security is to be allocated pursuant to the
partnership agreement and applicable law, and in September 2005, the Company
reported taxable income (loss) from Security in a manner it believes is proper,
but which was different than the manner reported by Security.

In order to satisfy the Company's working capital needs, in April 2003 the
Company obtained a loan facility from Royalty, an affiliate of Messrs. Levy and
Hasson, pursuant to which the Company could have borrowed up to an aggregate of
$300,000 from Royalty. Amounts borrowed were evidenced by a demand note bearing
interest of 8% per annum. On July 3, 2003, the Company repaid all amounts
outstanding under the $300,000 working capital loan facility from Royalty, and
terminated the facility. The payment amount consisted of $180,000 of principal
and $2,910 of accrued and unpaid interest.

On September 30, 2002, our subsidiary, Rustic Crafts International, Inc.
("Rustic Crafts") sold all of its operating assets subject to the assumption of
certain of its liabilities. Prior to the sale, Rustic Crafts had established a
$1,000,000 line of credit with PNC Bank which was guaranteed by the Company and
expired on May 18, 2002. In conjunction with the Rustic Crafts asset sale,
Rustic Crafts' indebtedness under the line of credit together with its $960,000
mortgage loan from PNC Bank and certain other indebtedness to PNC Bank was
restructured to replace such indebtedness with five notes totaling $2,432,782
and have a ten year amortization schedule. The notes bear interest at the


                                       10
<PAGE>

blended rate of 10.8% per annum. As part of the PNC Bank 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 was required
to make a $540,000 payment in December 2002. A $40,000 payment was made to PNC
Bank in December 2002, but Rustic Crafts and the Company failed to make the
balance of the December 2002 payment. Accordingly, the PNC Bank debt was
subsequently modified to provide for the payment of the remaining $500,000
payment on or before June 30, 2003. On June 30, 2003, the Company paid all
outstanding principal and interest due to PNC Bank, in satisfaction of the above
described obligations.

Management believes that the Company's cash balance and anticipated cash flows
from operations will be adequate to fund our cash requirements for at least the
next twelve months.

Results of Operations.

      2005 Compared to 2004

      For the three months ended September 30, 2005:

            No revenue was generated by the Company in this period. Selling and
            administrative expenses decreased by $185,424 or 34.9% in 2005
            compared to 2004 primarily due to a reduction in professional fees
            related to continuing litigation defense and fees relating to the
            MESC acquisition in 2004.

            Income from equity investment in partnerships increased by $783,376
            or 112.2% compared to 2004, primarily due to an increase in
            partnership income relating to our new investment in MESC.

            Net Income increased by $1,041,586 in 2005 over 2004 or 451.4%

      For the nine months ended September 30, 2005:

            No revenue was generated by the Company in this period. Selling and
            administrative expenses decreased by $2,039,129 or 64.1% in 2005
            compared to 2004 primarily due to the write off of the notes
            receivable in 2004. Also, professional fees for continuing
            litigation and for the MESC acquisition were less in 2005.

            Income from equity investment in partnerships increased by $613,810,
            39.3% more than 2004 due primarily due to an increase in partnership
            income relating to our new investment in MESC. The increase is
            partially offset by a reduction in income received from Security.

            Net Income increased by $2,797,424 in 2005 over 2004 or 196.4%.

The Company's Stockholders' Equity at September 30, 2005 was $19,067,996 as
compared to $18,392,978 on September 30, 2004, an increase of $675,018.


                                       11
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)

Impact of Inflation.

Although the Company has not attempted to calculate the effect of inflation,
management does not believe inflation has had a material effect on its results
of operations.

Off-Balance Sheet Arrangements

The Company has not entered into any off-balance sheet arrangements.

ITEM 3. CONTROLS AND PROCEDURES.

The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) as of the end of the period covered by this report. Based on such
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
have concluded that, as of the end of such period, the Company's disclosure
controls and procedures are effective.

In connection with the evaluation of the Company's internal controls during the
Company's last fiscal quarter, the Company's Chief Executive Officer and Chief
Financial Officer have determined that there are no changes to the Company's
internal controls over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal controls over
financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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. We further claim that Horbach converted all or part of the
proceeds from the loan for his benefit and breached his fiduciary duties as an
officer and director. Horbach filed a Motion for the Court to determine whether
the claims asserted against him


                                       12
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS. (continued)

were properly brought in Florida, or whether they should have been filed in
Nebraska. The matter was fully briefed, and the Florida Court took the matter
under advisement. The Florida Court has not yet rendered its decision on this
jurisdictional issue.

On February 7, 2002, a complaint naming Regency 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 a 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.

On May 2, 2002, a lawsuit (the "Federal Action") was filed in the Federal
District Court for the District of Nebraska (the "Nebraska Court") by two
dissident Company shareholders, Edward E. Gatz and Donald D. Graham, captioned
Gatz et al. v. Ponsoldt, Sr., et al, against the former officers and directors
of the Company, Statesman and, as a nominal defendant only, the Company. In
December 2002, plaintiffs filed a seven-count Amended Complaint to add claims
against Royalty and Royalty's control persons. All Defendants moved to dismiss
all claims against them on jurisdictional and substantive grounds. On July 7,
2003, the Nebraska Court ruled that venue in the District of Nebraska was
improper and granted defendants' motions to transfer the case to the District of
Delaware. In connection with the transfer of the case to Delaware, the Court
denied as moot the other motions pending before it without prejudice to their
reassertion in the United States District Court for the District of Delaware
(the "Delaware Federal Court"). In September and October 2003, all defendants
filed motions to dismiss the Federal Action with the Delaware Federal Court and
plaintiffs filed a motion for permission to file an amended and supplemental
complaint as well as a preliminary injunction or status quo order seeking, among
other things, to prevent the Company from taking any actions outside the
ordinary course of business.

On December 18, 2003, the Delaware Federal Court issued an opinion and order
which, among other things (i) granted defendants' motions to dismiss the amended
complaint with respect to certain claims, (ii) denied plaintiffs' motion for
leave to file a supplemental and second amended complaint, (iii) denied
plaintiffs' request for a preliminary injunction and a status quo order and (iv)
dismissed the remainder of the amended complaint for lack of subject matter
jurisdiction. As a result of the Delaware Federal Court's opinion and order, the
Federal Action was dismissed in its entirety.

On January 20, 2004, a purported derivative and class action lawsuit (the
"Delaware State Action") was filed by the same two individual shareholder
plaintiffs in the New Castle County Court of Chancery, Delaware (the "Court"),
captioned Gatz et al. v. Ponsoldt, Sr., et al, (C.A. No. 174-N) naming as
defendants certain current and former directors of the Company, Royalty and
certain of its affiliates, Statesman and, nominally, the Company. The complaint
alleged, among other things, breaches of fiduciary duties by the former director
defendants and Statesman in connection with (i) the exercise by Statesman in
2001 of an option to acquire shares of our common stock, (ii) the 2001 sale of
Aggregate by NRDC to IMR and (iii) the October 2002 transactions. The complaint
also alleged breaches of fiduciary duties by the current director defendants in
connection with the payment by the Company in 2003 of accrued compensation owed
to William R. Ponsoldt, Sr. for periods prior to the October


                                       13
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS. (continued)

2002 transactions. The complaint also alleged that Royalty and its affiliates
knowingly participated in the breaches of fiduciary duties by the former
director defendants relating to the October 2002 transactions. In addition to
other damages, plaintiffs sought unspecified compensatory and/or rescissory
damages against all defendants, a declaration that all Company stock issued to
Statesman, William R. Ponsoldt, Sr., Royalty and any person affiliated with the
foregoing is void, an order rescinding any payments in any form made by the
Company to William R. Ponsoldt, Sr. or any of his affiliates or family members,
an order rescinding the October 2002 transactions, and an order rescinding
Statesman's 2001 option exercise and rescinding the option itself.

In November 2004 the Court dismissed all but one claim alleged in the complaint.
The Company was not a defendant in the sole surviving claim, which related to
the December 2001 sale of assets from one Regency subsidiary to another Regency
subsidiary. In dismissing the claims, the Court determined that all of the
claims (other than the claim related to the 2001 asset sale) were derivative in
nature and that the claims could therefore not be maintained. In October 2005,
the Court dismissed the one remaining claim without prejudice.

The defendants in the Federal Action and the Delaware State Action, other than
Statesman, are entitled to be indemnified by the Company for damages, if any,
and expenses, including legal fees, they may incur as a result of the lawsuit,
subject to certain circumstances under which such indemnification is not
available. In addition, none of the claims contained in the Delaware State
Action are covered by insurance, as the Company's carrier has declined coverage
on the basis of the "insured vs. insured" exclusion since one of the named
plaintiffs, Donald D. Graham, was previously a director of the Company.

On May 10, 2004, Gary Nuttall, a former President of the Company, commenced an
arbitration against the Company with respect to certain claims allegedly arising
under his 1995 Employment Agreement with the Company. Mr. Nuttall is seeking
severance and all other compensation and benefits due him under the 1995
Employment Agreement in an amount in excess of approximately $1,650,000
($1,400,000 of which is a financing bonus), 466,667 unrestricted shares of the
Company (pre-split) or 46,667 unrestricted shares of the Company (post-split),
options to purchase additional stock of the Company, punitive damages, interest,
fees and costs associated with the arbitration. The Company believes the claims
are without merit and intends to defend them vigorously.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Small Business Issuer Purchases of Equity Securities

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Period                      (a) Total Number of      (b) Average Price Paid   (c) Total Number of      (d) Maximum Number (or
                            Shares (or Units)        per Share (or Unit)      Shares (or Units)        Approximate Dollar
                            Purchased                                         Purchased as Part of     Value) of Shares (or
                                                                              Publicly Announced       Units) that May Yet Be
                                                                              Plans or Programs        Purchased Under the
                                                                                                       Plans or Programs
-----------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                      <C>                        <C>                      <C>
July 1, 2005 - July 31,              8,000                    $5.27                      -                        -
2005(1)
-----------------------------------------------------------------------------------------------------------------------------
August 1, 2005 - August                -                        -                        -                        -
31, 2005
-----------------------------------------------------------------------------------------------------------------------------
September 1, 2005 -                    -                        -                        -                        -
September 30, 2005
-----------------------------------------------------------------------------------------------------------------------------
Total                                8,000                    $5.27                      -                        -
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       14
<PAGE>

(1) On July 28, 2005, the Company purchased 8,000 shares of the Company's common
stock for an aggregate price of $42,160 in a privately negotiated transaction.

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.

      (a) Exhibits

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

      3.1(i)(a)           Restated Certificate of Incorporation of the Company
                          (filed as Exhibit 3.1(i)(a) to the Company's Quarterly
                          Report on Form 10-Q for the period ended September 30,
                          2002, filed on November 19, 2002, and incorporated
                          herein by reference).

      3.1(i)(b)           Corrected Certificate of Amendment reflecting
                          amendment to Restated Certificate of Incorporation of
                          the Company (filed as Exhibit 3.1(i)(b) to the
                          Company's Quarterly Report on Form 10-Q for the period
                          ended September 30, 2002, filed on November 19, 2002,
                          and incorporated herein by reference).

      3.1(i)(c)           Certificate of Amendment of Restated Certificate of
                          Incorporation of Regency Affiliates, Inc. (filed as
                          Exhibit A to the Company's Information Statement on
                          Schedule 14C filed on October 27, 2003 and
                          incorporated by reference herein).


                                       15
<PAGE>

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

      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 (filed as
                          Exhibit 3.1(ii)(b) to the Company's Quarterly Report
                          on Form 10-Q for the period ended September 30, 2002,
                          filed on November 19, 2002, and incorporated herein by
                          reference).

      31.1                Chief Executive Officer's Certificate, pursuant to
                          Section 302 of the Sarbanes-Oxley Act of 2002.*

      31.2                Chief Financial Officer's Certificate, pursuant to
                          Section 302 of the Sarbanes-Oxley Act of 2002.*

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

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

      *Filed herewith


                                       16
<PAGE>

                                   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 14, 2005                  /s/ Laurence S. Levy
      -----------------                  ---------------------------------------
                                         (President and Chief Executive Officer)


Date: November 14, 2005                  /s/ Neil N. Hasson
      -----------------                  ---------------------------------------
                                         (Chief Financial Officer)


                                       17
<PAGE>

                                  EXHIBIT INDEX

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

      3.1(i)(a)          Restated Certificate of Incorporation of the Company
                         (filed as Exhibit 3.1(i)(a) to the Company's Quarterly
                         Report on Form 10-Q for the period ended September 30,
                         2002, filed on November 19, 2002, and incorporated
                         herein by reference).

      3.1(i)(b)          Corrected Certificate of Amendment reflecting amendment
                         to Restated Certificate of Incorporation of the Company
                         (filed as Exhibit 3.1(i)(b) to the Company's Quarterly
                         Report on Form 10-Q for the period ended September 30,
                         2002, filed on November 19, 2002, and incorporated
                         herein by reference).

      3.1(i)(c)          Certificate of Amendment of Restated Certificate of
                         Incorporation of Regency Affiliates, Inc. (filed as
                         Exhibit A to the Company's Information Statement on
                         Schedule 14C filed on October 27, 2003 and incorporated
                         by reference herein).

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


                                       18
<PAGE>

      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 (filed as
                         Exhibit 3.1(ii)(b) to the Company's Quarterly Report on
                         Form 10-Q for the period ended September 30, 2002,
                         filed on November 19, 2002, and incorporated herein by
                         reference).

      31.1               Chief Executive Officer's Certificate, pursuant to
                         Section 302 of the Sarbanes-Oxley Act of 2002.*

      31.2               Chief Financial Officer's Certificate, pursuant to
                         Section 302 of the Sarbanes-Oxley Act of 2002.*

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

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

      *Filed herewith


                                       19