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


                                   FORM 10-Q/A


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

                  For the quarterly period ended June 30, 2002

                                       OR

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


                For the transition period from ______ to _______

                         COMMISSION FILE NUMBER 1-7949

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

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



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



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

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

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


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


                                                                           Page

Part I - Financial Information (Unaudited)

         Item 1.  Financial Statements

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

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

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

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

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations . . . . . . . . . .  13-18

Part II - Other Information (Unaudited)

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

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

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

          Item 4.  Submission of Matters to a Vote of Security Holders. .  20

          Item 5.  Other Information  . . . . . . . . . . . . . . . . . .  20

          Item 6.  Exhibits and Reports on  Form 8-K  . . . . . . . . . .  20

Signatures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20


                                       2.
<PAGE>
<TABLE>
<CAPTION>

                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

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

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

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

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

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


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


                                       3.
<PAGE>

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

                                                                  June 30     December 31,
                                                                   2002          2001
                                                                (unaudited)    (audited)
                                                                ------------  ------------
<S>                                                             <C>           <C>
Liabilities and Shareholders' Equity
  Current Liabilities
    Current portion of long-term debt                           $   112,060   $   238,145
    Notes Payable - Banks                                         1,000,000       906,977
    Accounts payable                                                647,636       366,440
    Accrued expenses                                                236,124       256,805
    Accrued salary - officer                                      1,223,793       786,416
    Taxes payable                                                   180,000       180,000
                                                                ------------  ------------
      Total current liabilities                                   3,399,613     2,734,783

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

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

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


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


                                       4.
<PAGE>
<TABLE>
<CAPTION>

                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                  (UNAUDITED)

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

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

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

      Net income per common share:
            Basic                               $     0.32   $     0.60   $      0.67   $     0.94
                                                ===========  ===========  ============  ===========
            Diluted                             $     0.32   $     0.60   $      0.67   $     0.94
                                                ===========  ===========  ============  ===========


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


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


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


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

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

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


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


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


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



Supplemental disclosures of non-cash investing and financing activities:

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


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


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

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

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

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

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

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

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

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


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

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

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

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

Note 2. Investment in Partnership

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

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

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


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

Note 2. Investment in Partnership (Continued)

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

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

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

Note 3. Note and Accrued Interest Receivable - Related Party

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

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


Note 4. Note Payable

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

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


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


Note 5. Long-Term Debt

          KBC Bank Loan - On June 24, 1998, the Company refinanced the long-term
          -------------
          debt  previously  outstanding  with  Southern Indiana Properties, Inc.
          ("SIPI")  ")  which was accruing at an interest rate exceeding 20% and
          entered into a Loan Agreement (the "Loan") with KBC Bank N.V. ("KBC").
          Under  the  terms  of the Loan Agreement, KBC advanced $9,383,320. The
          due date of the Loan is November 30, 2003 with interest at the rate of
          7.5%  compounded  semi-annually  on  each  June  1  and  December  1,
          commencing  December  1, 1998. The interest may be paid by the Company
          in cash on these semi-annual dates or the Company may elect to add the
          interest  to  the  principal of the Loan then outstanding. The loan is
          secured  by  the Company's interest in the partnership. As of June 30,
          2002,  the amount outstanding under the Loan is $12,639,128, including
          $481,662  of  interest  for  the  six  months  ended  June  30,  2002.

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

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

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

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

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

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

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


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

Note 5. Long Term Debt (continued)

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

Note 6. Income Taxes

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

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

Note 7. Related Party Transactions

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

Note 8. Segment Information

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


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


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

<TABLE>
<CAPTION>

                                Automobile        Home        Investment    Corporate and   Consolidated
                                Accessories    Furnishing         in            Other
                                               Accessories   Partnership
<S>                             <C>           <C>            <C>           <C>              <C>
June 30, 2002
-------------
Net sales                       $          -  $    908,633   $          -  $            -   $     908,633
Income from equity investment              -             -                              -
  in partnerships                                               2,986,800                       2,986,800
Segment profit/(loss)                      -      (428,995)     2,986,800      (1,258,295)      1,299,510

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

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,  comprise  an  alleged  fraudulent  scheme  that violates the
     Board's fiduciary duties to the Company's shareholders. The Defendants deny
     these  allegations andintends to vigorously contest the allegations made in
     the  complaint.



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

General.

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

Liquidity and Capital Resources.

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


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

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

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

     The  outstanding  principal  on  Security's real estate mortgage balance is
     expected  to  be amortized in November of 2003. Under the current structure
     and assuming the building remains occupied, KBC has indicated it is willing
     to  extend the maturity of the loan (under certain circumstances) under the
     condition  that all income with the exception of $100,000 will then be paid
     to  KBC  to  amortize  the  loan.  In  that  event,  the  KBC loan would be
     liquidated  in  approximately 2006. Until that time, Regency would continue
     to  receive  only  the  $100,000  of  cash  flow.  Currently the Company is
     exploring  options,  which include refinancing the building, monetizing the
     asset,  or  restructuring  the  debt to provide a more appropriate level of
     cash  flow.  Any such option would be dependant on the Government signing a
     new  lease.  Only  then  would  the  partnership be able to find acceptable
     financing  and  concurrently  make  a  partnership distribution or sell the
     partnership  assets  and liquidate the partnership or would Regency be able
     to sell its interest in the partnership. The ability to do nothing or elect
     to  attempt one of the foregoing options lies with the General partner, not
     with  Regency.  None  of  the  options  is imminent and will not take place
     unless  and  until  the government signs a new long term lease. The current
     lease  does not expire until October 31, 2003. There are no assurances that
     any  of  these  options  will  be  implemented.

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

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

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


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

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

     The  Board  of  Directors  has  approved  the  formation  of a wholly owned
     subsidiary  called  Neptune  Trading  Corp., Inc. ("Neptune"). Neptune will
     initially  engage  in real estate development and other related industries.
     Neptune  will  initially  assume  building  contracts  of  single  family
     residential  properties  that have appreciated in value from Marc Baldinger
     and  William Ponsoldt, Sr. (at their cost). Neptune will, thereafter, enter
     into  building  agreements  entered in own. In addition, Neptune intends to
     purchase  vacant  lots for the purpose of resale and to build single-family
     residential  homes.

     Both  William  Ponsoldt,  Sr.  and Marc Baldinger have significant previous
     real estate experience. William Ponsoldt, Sr. was involved in single family
     housing  in New Jersey for over 15 years as both a developer and as broker.
     Additionally,  he  has continued to have involvement in varying real estate
     ventures  throughout  his  career. Mr. Baldinger was previously involved in
     real estate development in central New Jersey. He was one of five owners of
     a  shopping  center and also involved in the development of residential and
     commercial  properties.

     If  successful,  the  Neptune  venture  is expected to generate substantial
     sales  for  Regency.  To  date,  there  have  been no closing but the first
     closing  is  scheduled  for  late  August.  The  Company  will need outside
     financing  to  fund  the  purchase  of the houses and the lots. There is no
     assurances  currently  that  Neptune  or Regency will attain such financing

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

Results of Operations

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

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

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


                                      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)

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

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

     2002 Compared to 2001

       For the six months ended June 30, 2002:

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

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

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

       For the three months ended June 30, 2002:

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

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

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

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


                                      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)

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

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

Forward-Looking  Statements

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

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

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

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

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


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

FORWARD LOOKING STATEMENTS (CONTINUED)

          (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.

          (vi) The  existence  of  the  litigation  filed on May 2, 2002, by two
               dissident  shareholders,  and the existence of the pending motion
               for  preliminary  injunction,  both  of  which  are  described in
               greater  detail  in Part II. Item I of this Report, are adversely
               impacting  the Company's ability to execute its business plan and
               obtain  external  sources  of  funding,  and  the outcome of this
               litigation  may  have  a material adverse impact on the Company's
               business,  financial  condition  and  results  of  operations.



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 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,  Edward  E.  Gatz,  personally guaranteed the loan. We further
     claim  that Horbach converted all or part of the proceeds from the loan for
     his  benefit.

     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. This
     action has been abated in Nebraska until the above litigation in Florida is
     decided.

     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


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


PART II - OTHER INFORMATION (CONTINUED)

     to  a  1997  agreement,  as  amended  in  1998, Statesman's exercise of its
     options,  the  exchange  of  the Company's interest in Glas-Aire Industries
     Group,  Ltd. for Regency Affiliates, Inc. stock and cash, and the Company's
     reverse  stock  split  which was approved at the Company's last shareholder
     meeting.  In  addition  to  damages, the Complaint seeks to void the shares
     owned  and  controlled  by  Mr.  Ponsoldt,  Sr.  and  Statesman Group, Inc.

     On  or  about  July  24,  2002,  the  plaintiffs  moved  for  a preliminary
     injunction  which  seeks,  among other things, to enjoin any funding to Mr.
     Ponsoldt  Sr.,  under  his  employment  agreement,  any  acquisition  by or
     transfer  of  Company  stock to Mr. Ponsoldt, Sr. or Statesman Group, Inc.,
     prohibiting  the  redemption  of  Series  C  preferred  stock,  barring the
     monetization  of  the  Security Land partnership interest without notice to
     the  Court  or  plaintiffs,  and,  in  the  event  of  such  monetization,
     prohibiting  the  distribution  of  any  proceeds  of such monetization.The
     Defendants responses to the Complaint and Motion for Preliminary Injunction
     are  due  to  be  filed  on  August  30,  2002.  The  Company  believes the
     plaintiffs' claims are without merit and is defending, and will continue to
     defend, against them vigorously. However, due to the inherent uncertainties
     of  litigation,  the  Company  cannot  predict the ultimate outcome of this
     litigation.  An unfavorable outcome could have a material adverse impact on
     the  Company's  business,  financial  condition  and results of operations.

     On  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.


                                      19.
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                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES


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

     None.


ITEM 5. OTHER INFORMATION.

     None.


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

     None.




SIGNATURES


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




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



Date: August 30, 2002                  /s/ Marc H. Baldinger
---------------------                  ---------------------
                                      (Chief Financial Officer and Director)


                                      20.
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