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 March 31, 2003

                                       OR

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

             For the transition period from _________ to __________

                          COMMISSION FILE NUMBER 1-7949

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

                  Delaware                               72-0888772
                  --------                               ----------
     (State or other jurisdiction of        (IRS Employer Identification Number)
      Incorporation or organization)

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

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

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

As of May 15, 2003 there were 1,996,271 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

                                                                           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...............8-10

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition And Results of Operations......................10-15

         Item 3.  Quantitative and Qualitative Disclosure About
                  Market Risk..............................................15

         Item 4.  Controls and Procedures..................................15

Part II - Other Information (Unaudited)

         Item 1.  Legal Proceedings........................................16-18

         Item 2.  Changes in Securities and Use of Proceeds................18

         Item 3.  Defaults Upon Senior Securities..........................18

         Item 4.  Submission of Matters to a Vote of Security Holders......18

         Item 5.  Other Information........................................18

         Item 6.  Exhibits and Reports on Form 8-K.........................18-19

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


                                       2
<PAGE>

                   Regency Affiliates, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets

                                                       March 31,    December 31,
                                                         2003           2002
                                                      -----------   -----------
                                                      (Unaudited)    (Audited)
                                                      -----------   -----------
Assets
  Current Assets
      Cash and Cash Equivalents                       $    58,309   $   101,041
      Accounts receivable, net of allowance                    --           225
      Loan receivable                                          --       250,000
      Accrued receivables                                 211,863       164,374
      Notes receivable - current                          593,907       560,573
      Income taxes receivable                                  --        11,149
      Other current assets                                 20,308        14,710
                                                      -----------   -----------
         Total current assets                             884,387     1,102,072

  Notes receivable, net of current portion                513,093       546,427

  Property, Plant and Equipment, Net                    2,016,978     2,037,277

  Investment in partnerships                           37,903,338    36,433,721

  Other Assets
      Aggregate inventory                                 833,453       833,611
      Debt issuance costs, net of amortization            352,973       412,731
      Deferred costs                                      250,000       250,000
      Other                                                 1,373         1,373
                                                      -----------   -----------
         Total other assets                             1,437,799     1,497,715
                                                      -----------   -----------

         Total Assets                                 $42,755,595   $41,617,212
                                                      ===========   ===========

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


                                       3
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                      March 31,          December 31,
                                                                                        2003                 2002
                                                                                    ------------         ------------
                                                                                     (Unaudited)           (Audited)
                                                                                    ------------         ------------
<S>                                                                                 <C>                  <C>
Liabilities and Shareholders' Equity
  Current Liabilities
      Current portion of long-term debt                                             $ 13,632,272         $ 13,353,260
      Note payable - banks                                                               798,210              798,938
      Current portion of notes payable - other                                           130,036              130,036
      Accounts payable                                                                   309,620              365,252
      Accrued expenses                                                                 1,958,554            1,899,342
      Loans payable                                                                       70,000                   --
      Taxes payable                                                                      183,571              183,571
                                                                                    ------------         ------------
         Total current liabilities                                                    17,082,263           16,730,399

  Notes payable - other, net of current portion                                        3,254,098            3,254,098
  Long term debt, net of current portion                                               1,174,034            1,292,013

  Shareholders' equity
      Serial preferred stock not subject to mandatory redemption                       1,052,988            1,052,988
         (maximum liquidation preference $24,975,312 in 2003 and 2002,
         respectively
      Common stock, par value $.01; 25,000,000 shares authorized ; 3,110,296              27,055               27,055
         shares issued and 1,996,271 shares outstanding in 2003 and
         1,995,771 shares outstanding in 2002
      Additional paid-in capital                                                       6,106,846            6,106,846
      Readjustment resulting from quasi-reorganization at December 31, 1987           (1,670,596)          (1,670,596)
      Retained earnings                                                               18,186,698           17,282,200
      Note receivable - sale of stock                                                 (2,440,000)          (2,440,000)
      Treasury stock, 1,115,025 shares in 2003 and 2002                                  (17,791)             (17,791)
                                                                                    ------------         ------------
         Total shareholders' equity                                                   21,245,200           20,340,702
                                                                                    ------------         ------------

         Total Liabilities and Shareholders' Equity                                 $ 42,755,595         $ 41,617,212
                                                                                    ============         ============
</TABLE>

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


                                       4
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Operations
                   Three Months Ended March 31, 2003 and 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  2003              2002
                                                                              -----------       -----------
<S>                                                                           <C>               <C>
Revenues                                                                      $        --       $        --
                                                                              -----------       -----------

Costs and expenses
  Selling and administrative                                                      346,913           389,560
                                                                              -----------       -----------

(Loss) from operations                                                           (346,913)         (389,560)

Income from equity investment in partnerships                                   1,570,555         1,486,660
Rental income                                                                      23,896                --
Dividends and interest                                                             41,212            55,087
Other income                                                                        1,492               833
Interest expense                                                                 (385,744)         (299,298)
                                                                              -----------       -----------
Income before income tax expense, and minority interest                           904,498           853,722
Income tax expense                                                                     --                --
Minority interest                                                                      --             5,490
                                                                              -----------       -----------
Income from continuing operations                                                 904,498           859,212

Loss from operations of discontinued components, net of $0 tax effect in               --          (177,999)
  2003 and 2002
                                                                              -----------       -----------
Net income                                                                    $   904,498       $   681,213
                                                                              ===========       ===========

Net income per common share:
  Basic
      Continuing operations                                                   $      0.45              0.44
      Discontinued operations                                                          --             (0.09)
                                                                              -----------       -----------
                                                                              $      0.45       $      0.35
                                                                              ===========       ===========

  Diluted
      Continuing operations                                                   $      0.29       $      0.44
      Discontinued operations                                                          --             (0.09)
                                                                              -----------       -----------
                                                                              $      0.29              0.35
                                                                              ===========       ===========

Weighted average number of common shares outstanding
  Basic                                                                        1,996, 271         1,939,874
  Diluted                                                                       3,084,746         1,956,512
</TABLE>

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


                                       5
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                   Three Months Ended March 31, 2003 and 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           2003              2002
                                                                       -----------       -----------
<S>                                                                    <C>               <C>
Cash flows from operating activities
  Net income                                                           $   904,498       $   681,213
  Adjustments to reconcile net income to net cash
      used by operating activities
         Depreciation and amortization                                      80,057            90,589
         Minority interest                                                      --            (5,490)
         Income from equity investment in partnerships                  (1,570,555)       (1,486,660)
         Distribution of management fee earnings from partnership          100,938           104,303
         Interest accretion on long-term debt                              279,012           252,040
         Changes in operating assets and liabilities
            Accounts receivable                                                225           133,909
            Loan receivable                                                250,000                --
            Accrued receivables                                            (47,490)          (55,084)
            Income taxes receivable                                         11,149                --
            Inventory                                                           --            24,620
            Other current assets                                            (5,598)          (10,531)
            Accounts payable                                               (55,632)           91,928
            Accrued expenses                                                59,371           189,376
                                                                       -----------       -----------
               Net cash provided by operating activities                     5,975            10,213
                                                                       -----------       -----------

Cash flows from investing activities
  Capital expenditures                                                          --          (194,907)
  Other                                                                         --             2,055
                                                                       -----------       -----------
               Net cash (used) by investing activities                          --          (192,852)
                                                                       -----------       -----------

Cash flows from financing activities
  Net short-term borrowings (payments)                                      69,272            23,393
  Net long-term borrowings (payments)                                     (117,979)          144,344
                                                                       -----------       -----------
               Net cash provided (used) by financing activities            (48,707)          167,737
                                                                       -----------       -----------

Increase (decrease) in cash and cash equivalents                           (42,732)          (14,902)
Cash and cash equivalents - beginning                                      101,041           310,093
                                                                       -----------       -----------
Cash and cash equivalents - ending                                     $    58,309       $   295,191
                                                                       ===========       ===========
</TABLE>

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


                                       6
<PAGE>

                    Regency Affiliates, Inc. and Subsidiaries
           Condensed Consolidated Statements of Cash Flows (continued)
                   Three Months Ended March 31, 2003 and 2002
                                   (Unaudited)

                                                              2003         2002
                                                            -------      -------
Supplemental disclosures of cash flow information:
  Cash paid during the year for:
      Income taxes                                          $    --      $    --
      Interest                                               49,681       39,366

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


                                       7
<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 the requirements of
            Regulation S-B and with the instructions to Form 10-QSB.
            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-month period ended March 31, 2003 are not
            necessarily indicative of the results that may be expected for the
            year ended December 31, 2003. For further information, refer to the
            consolidated financial statements and footnotes thereto included in
            the Registrant Company and Subsidiaries' annual report on Form
            10-KSB for the year ended December 31, 2002.

            The balance sheet at December 31, 2002 has been derived from the
            audited financial statements at that date but does not include all
            of the information and footnotes required by generally accepted
            accounting principles for complete financial statements.

            Principles of Consolidation - The consolidated financial statements
            include the accounts of Regency Affiliates, Inc. (the "Company"),
            its former wholly owned subsidiaries, Speed.com, Inc., Rustic Crafts
            International, Inc. ("Rustic Crafts") through September 30, 2002,
            the date upon which substantially all of its net operating assets
            were disposed and Neptune Trading Co., Inc. ("Neptune") through
            November 26, 2002, its 80% owned subsidiaries, National Resource
            Development Corporation ("NRDC"), Transcontinental Drilling Company
            ("Drilling") and RegTransco, Inc. ("RTI") and its 75% owned
            subsidiary, Iron Mountain Resources, Inc. 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. Diluted per share computations assume conversion of
            convertible debt and stock options outstanding that are "in the
            money". 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 quarter ended March 31, 2002 to
            reflect this change in capital structure.

            The weighted average number of shares used in basic earnings per
            share computations for 2003 and 2002 was approximately 1,996,271 and
            1,939,874, respectively. The weighted average number of shares used
            in the computation of diluted earnings per share for 2003 and 2002
            was approximately 3,084,746 and 1,956,512, respectively.

Note 3. Investment in Partnership

            In March 2003, the General Services Administration of the United
            States agreed to extend the lease term of the building owned by
            Security Land and Development Company Limited Partnership
            ("Security") until October 31, 2018. The Company owns a limited
            partnership interest in Security. The extended lease provides for a
            fixed annual gross rent of approximately $12,754,000 (or
            approximately $17.79 per square foot). Security is responsible for
            all operating expenses of the building as well as for upgrading
            certain of the building's common areas.


                                       8
<PAGE>

Note 3. Related Party Transactions

            In order to satisfy the Company's immediate working capital needs,
            in March 2003, the Company obtained a credit facility from Royalty
            Holdings LLC ("Royalty"), an affiliate of Messrs. Levy and Hasson,
            directors of the Company, pursuant to which the Company may borrow
            an aggregate of up to $300,000 from Royalty. Amounts borrowed under
            the facility are evidenced by a demand note which bears interest at
            a rate of 8% per annum. The principal amount outstanding under the
            facility as of March 31, 2003 was $70,000.

            Pursuant to a License Agreement entered into in March 2003, Royalty
            Management, Inc., which is wholly-owned by Laurence Levy, the
            Company's President and a director, provides New York City office
            space, office supplies and services to the Company for $100,000 per
            year.

Note 4. Legal Proceedings

            On March 6, 2003, the defendants in the action entitled Gatz et al.
            v. Ponsoldt, Sr., et al., filed motions to dismiss the Amended
            Complaint for lack of personal jurisdiction and improper venue, and
            for failure to allege claims on which relief could be granted. The
            motions are pending.

            Between June 30, 2001 and June 30, 2002, the Company maintained
            Directors and Officers insurance with National Union Fire Insurance
            Company of Pittsburgh, PA. ("National Union"), an affiliate of
            American International Companies with a limit of liability of
            $3,000,000 and a retention of $150,000. On January 17, 2003
            attorneys representing National Union sent a letter indicating their
            opinion that coverage under the policy would not include the above
            named action due to the "Insured vs. Insured" exclusion of the
            policy. The Company has requested reconsideration with respect to
            National Union's coverage position. To date, a final determination
            has not been made.

            On January 14, 2003, Alex Y.W. Ding, plaintiff in legal proceedings
            in the Supreme Court of British Columbia with regard to the
            disposition of the Glas-Aire subsidiary, wholly discontinued his
            proceedings against all defendants, thereby withdrawing his
            complaint.

Note 5. Subsequent Events

            In April 2003, the Company entered into an amendment to the
            partnership agreement for Security. Under the amendment, the net
            proceeds of a loan to Security will be distributed to the Company
            and the non-Regency partners on a 50/50 basis, provided that such
            allocation would result in a minimum distribution to the Company of
            $39,000,000 (a "qualified financing"). The amendment also provides
            that, following a qualified financing, the Company will be 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, (ii) once it has received $2,000,000 of cash
            flow distributions, a $180,000 annual management fee and (iii) a 50%
            interest in all other distributions from Security. The foregoing
            percentages are inclusive of the Company's interest as a limited
            partner in 1500 Woodlawn, the general partner of Security. The
            amendment is being held in escrow pending consummation of a
            qualified financing, and will not become effective if a qualified
            financing is not consummated on or prior to August 5, 2003.

            On April 9, 2003, the Company sent a letter to the plaintiffs in the
            action described in Note 4 above, notifying them of the terms of a
            proposed refinancing by Security of its existing indebtedness and
            requesting that the plaintiffs voluntarily waive the balance of the
            court-ordered notice period relating to a monetization of the
            Security interest. The plaintiffs declined to waive the balance of
            the notice-period.


                                       9
<PAGE>

            On April 18, 2003, plaintiffs filed motions for a temporary
            restraining order and preliminary injunction seeking to prevent the
            monetization of the Company's Security interest, or alternatively,
            preventing use of the proceeds of the monetization. A hearing was
            held on April 21, 2003, following which the Court denied plaintiffs'
            motion to prevent the monetization and held in abeyance plaintiffs'
            motion for a preliminary injunction with respect to the use of
            proceeds of a monetization. The Company understands that the
            plaintiffs intend to proceed with their motion for a preliminary
            injunction seeking to enjoin the Company from paying certain accrued
            obligations to the Company's prior and current management and the
            Company's prior and current controlling shareholders. Plaintiffs
            were granted permission by the Court to conduct certain depositions
            within 45 days following the April 21 hearing in connection with
            their continuing pursuit of a preliminary injunction, after which
            the Court would determine whether to schedule a hearing. The Company
            intends to oppose any effort by the plaintiffs to interfere with the
            Company's use of proceeds of the proposed qualified financing. The
            parties are pursuing discovery limited to the issues raised by the
            preliminary injunction motion, but no hearing date has been set for
            that motion.

            In April 2003, Royalty advanced an additional $70,000 to the Company
            under the existing credit facility, making the principal amount
            outstanding under the facility $140,000 at April 28, 2003.

            In April 2003, the Company granted the following stock options to
            its officers and directors:

                  25,000 options at an exercise price of $1.35 to each of
                  Messrs. Levy and Hasson.

                  15,000 options at an exercise price of $2.40 to each of
                  Messrs. Glasser and Fleishman one-third of which, in each
                  case, become exercisable on December 31, 2003, 2004, and 2005,
                  respectively.

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

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 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. This Form 10-QSB contains forward-looking statements within
            the "safe harbor" provisions of the Private Securities Litigation
            Reform Act of 1995 with respect to our financial condition, results
            of operations and business. All forward looking statements in this
            Form 10-QSB are made only as of the date of this report, and we do
            not undertake any obligation to update these forward-looking
            statements even though circumstances may change in the future. 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:


                                       10
<PAGE>

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

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

      (iii) An unsecured default in the lease on the property owned by Security
            or its sudden catastrophe from uninsured acts of God or war could
            have a materially adverse impact upon the Company's investment in
            Security and therefore its financial position and results of
            operations.

      (iv)  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.

            The following discussion and analysis of the financial condition and
            results of operations of Regency Affiliates, Inc. (the "Company" or
            "we") should be read in conjunction with the accompanying financial
            statements and related notes included in Item 1 of this report as
            well as our 2002 Annual Report on Form 10-KSB.

General.

            The Company is committed to enhancing the value of the Company's
            Common Stock by seeking opportunities to monetize its existing
            assets and by seeking new business opportunities on an opportunistic
            basis. There can be no assurance that any such opportunities or
            transactions will present themselves to the Company, or, if they do,
            that they will be on terms acceptable to the Company. The Company's
            Shareholders' Equity at March 31, 2003 was $21,245,200 as compared
            to $20,559,387 on March 31, 2002, an increase of 3.3%.

Liquidity and Capital Resources.

            The Company's investment in Security provided the Company with
            management fees of approximately $100,000 per annum through January
            2003. In the years ended December 31, 2002 and December 31, 2001,
            the Company's income from the equity investment in Security was
            $6,354,678 and $5,607,465, respectively. Income from these funds is
            presently committed for the amortization of the outstanding
            principal balance on Security's real estate mortgage and, while the
            Company's equity investment has increased to $37,903,338 as of March
            31, 2003, Security did not provide liquidity to us in excess of the
            $100,000 annual management fee. The Partnership Agreement provides
            for the distribution of "Sale or Refinancing Proceeds" in accordance
            with the partners' positive tax capital account balances. At
            December 31, 2002, we were the only partner in Security that had a
            positive tax capital account balance. We have previously been
            successful in obtaining financing with respect to the Security
            interest to fund our acquisitions and cash flow deficits. In April
            2003, we entered into an amendment to the Security partnership
            agreement in contemplation of a possible refinancing of the property
            owned by Security. Such refinancing, which is anticipated to
            constitute a "qualified financing" within the meaning of the
            partnership agreement amendment, would materially improve our
            liquidity and capital resources. (See Note 5 to the Company's
            Condensed Consolidated Financial Statements, above). While there can
            be no assurance that a qualified financing will be consummated, the
            general partner of Security has informed the Company that it is
            negotiating the terms of a new loan for Security that would
            constitute a qualified financing, and that it intends to consummate
            the qualified financing as soon as possible.


                                       11
<PAGE>

            In order to satisfy the Company's immediate working capital needs,
            in April 2003 the Company obtained a loan facility from Royalty
            Holdings LLC ("Royalty"), an affiliate of Messrs. Levy and Hasson,
            pursuant to which the Company may borrow up to an aggregate of
            $300,000 from Royalty. Amounts borrowed are evidenced by a demand
            note that bears interest at a rate of 8% per annum. The principal
            amount outstanding under the loan facility as of March 31, 2003 and
            May 15, 2003, was $70,000 and $140,000, respectively.

            On October 16, 2002, the Company redeemed all the shares of Common
            Stock owned by Statesman Group, Inc. ("Statesman"), a former
            shareholder of the Company. The Company funded the redemption from
            the proceeds of an aggregate of $4,750,000 borrowed from Royalty, an
            affiliate of current management, in exchange for two notes - a
            $3,500,000 5% Convertible Promissory Note due October 16, 2012 and a
            $1,250,000 9% Promissory Note due October 16, 2007. Both notes allow
            interest to accrue without current payment. The principal and
            interest under the Convertible Promissory Note may be converted into
            Common Stock at a conversion rate of $2.00 per shares. On November
            7, 2002, Royalty converted $1,495,902 of the principal amount of the
            Convertible Promissory Note plus accrued interest into 750,000
            shares of Common Stock. The 9% Promissory Note must be prepaid upon
            our receipt of sufficient proceeds from our investment in Security
            after discharging certain other indebtedness. The Company has the
            right to prepay the amount outstanding under the Convertible Note
            upon thirty days prior written notice to Royalty, during which time
            Royalty has the right to convert such outstanding amount into Common
            Stock. In the event that a qualified financing, as described above,
            is consummated, the Company intends to notify Royalty of its
            intention to prepay the Convertible Note.

            Following the termination of the 1999 Plan of Merger involving the
            Company's 80% subsidiary, National Resource Development Corporation,
            with Cotton Valley Resources Corporation, we installed limited
            aggregate crushing and marketing operations at the Groveland Mine in
            an informal joint venture with another company. We continue to
            explore the possibility of establishing a permanent infrastructure
            to commercialize the inventory of previously quarried and stockpiled
            aggregate at the Groveland Mine. In December 2001, the aggregate
            inventory was sold to Iron Mountain Resources, Inc., a 75% owned
            subsidiary of Regency. 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.

            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. Rustic Crafts received
            the following consideration from the buyer of its operating assets:
            a note for $707,000; a note for $400,000 with interest payable on
            September 30, 2003 absent the occurrence of certain events requiring
            prepayment; and $200,000 (the proceeds of which were from a $250,000
            loan from Regency to the buyer which was satisfied in January 2003).
            Additionally, Rustic Crafts entered into a three year lease with the
            buyer for Rustic Crafts' land and building which Rustic Crafts
            retained, requiring payments of $6,500 per month for a thirty six
            (36) month term.


                                       12
<PAGE>

            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 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 Regency 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. $125,000 of such amount has been paid to date.
            The balance of the non-mortgage indebtedness to PNC Bank is due
            (with accrued interest) on or before September 30, 2003.

            We continue to explore opportunities that will provide additional
            liquidity and cash flow. Our ability to continue in existence is
            partly dependent upon our ability to attain satisfactory levels of
            operating cash flows and/or our ability to continue borrowing.

2003 Compared to 2002

      For the three months ended March 31, 2003:

            No revenue from sales was generated by the company in either period.

            Selling and administrative expenses were reduced by $42,647 or 10.9%
            in 2003 compared to 2002. Increases in professional fees were offset
            by reduction in executive compensation and related expenses. Sales
            and administrative expenses of the former operating subsidiaries are
            included in discontinued operations.

            Income from equity investment in partnership increased $83,895 over
            2002 due to the reduction of interest expenses on the lower loan
            principal balance of Security.

            Interest expense increased by $86,446 or 28.9% in 2003 over 2002 as
            a result of increased loan balances due to the addition of the
            Royalty Notes and higher interest rates on the Rustic Crafts Loans.

            Loss from discontinued operations decreased $177,999 which sum
            represented Rustic Crafts loss in the first quarter of 2002.

            Net income increased by $223,285 in 2003 over 2002 or 32.7%. The
            increase was primarily due to the elimination of losses of
            discontinued operations in the amount of $177,999 and a reduction in
            selling and administrative expenses of $42,647.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

            In July 2001, the FASB issued SFAS No. 141, Business Combinations
            (FAS No. 141) and FAS No. 142, Goodwill and Other Intangible Assets
            (FAS No. 142). FAS No. 141 requires business combinations initiated
            after June 30, 2001 to be accounted for using the purchase method of
            accounting, and broadens


                                       13
<PAGE>

            the criteria for recording intangible assets separate from goodwill.
            Recorded goodwill and intangibles will be evaluated against these
            new criteria and may result in certain intangibles being included in
            goodwill, or alternatively, amounts initially recorded as goodwill
            may be separately identified and recognized apart from goodwill.
            Under FAS No. 142, goodwill and certain assets will no longer be
            subject to amortization but will be reviewed for potential
            impairment annually or upon the occurrence of an impairment
            indicator. Such intangible assets will be written down and charged
            to operations only in the periods in which the recorded value of
            goodwill and certain intangibles is determined to be more than its
            fair value. Other intangible assets will continue to be amortized
            over their useful lives. The statements became effective for fiscal
            years beginning after December 15, 2001.We adopted the provisions of
            each statement, which apply to goodwill and certain intangibles
            acquired prior to June 30, 2001, on January 1, 2002. The adoption of
            these standards had the impact of reducing our amortization of
            goodwill commencing January 1, 2002. There was no impairment of
            goodwill upon adoption of FAS No. 142. We recorded an impairment
            charge of $487,757 based upon our annual review of our goodwill
            during the fourth quarter of 2002. Future impairment reviews may
            result in additional periodic write-downs. During the year ended
            December 31, 2002, we recognized goodwill impairment of $487,757
            resulting in a balance in goodwill of $0 at year end. Impairment was
            recognized due to the fact that the market price of the major assets
            of the business (land, building, improvements) approximated the
            historical cost basis of those assets and the net cash flows of
            future operations were projected to be negative.

            In August 2001, the FASB issued SFAS 144, Accounting for the
            Impairment or Disposal of Long-Lived Assets (FAS No. 144). This
            standard supersedes SFAS 121, Accounting for the Impairment of
            Long-Lived Assets to Be Disposed Of, and provides a single
            accounting model for long-lived assets to be disposed of. This
            standard significantly changes the criteria that would have to be
            met to classify an asset as held-for-sale. This distinction is
            important because assets to be disposed of are stated at the lower
            of their fair values or carrying amounts and depreciation is no
            longer recognized. The new rules will also supersede the provisions
            of APB Opinion 30, Reporting the Results of Operations--Reporting
            the Effects of Disposal of a Segment of a Business, and
            Extraordinary, Unusual and Infrequently Occurring Events and
            Transactions (APB 30), with regard to reporting the effects of a
            disposal of a segment of a business and will require expected future
            operating losses from Discontinued Operations to be displayed in
            Discontinued Operations in the period in which the losses are
            incurred, rather than as of the measurement date as presently
            required by APB 30. This statement is effective for fiscal years
            beginning after December 15, 2001. We adopted this statement on
            January 1, 2002. The adoption of FAS No. 144 did not have a material
            impact on our operations or financial position.

            In May 2002, the FASB issued SFAS 145, Rescission of FASB Statements
            No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
            Corrections (FAS No. 145). FAS No. 145 eliminates Statement 4 (and
            Statement 64, as it amends Statement 4), which requires gains and
            losses from extinguishments of debt to be aggregated and, if
            material, classified as an extraordinary item, and thus, also the
            exception to applying Opinion 30 is eliminated as well. This
            statement is effective for years beginning after May 2002 for the
            provisions related to the rescission of Statements 4 and 64, and for
            all transactions entered into beginning May 2002 for the provision
            related to the amendment of Statement 13. The adoption of FAS No.
            145 did not have a material effect on our operations or financial
            position.

            In June 2002, the FASB issued SFAS 146, Accounting for Costs
            Associated with Exit or Disposal Activities (FAS No. 146). This
            statement requires recording costs associated with exit or disposal
            activities at their fair values when a liability has been incurred.
            Under previous guidance, certain exit costs were accrued upon
            management's commitment to an exit plan. Adoption of this Statement
            is required with the beginning of fiscal year 2003. We adopted this
            statement on January 1, 2003. The adoption of FAS No. 146 did not
            have a material impact on our operations or financial position. In
            December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
            Compensation -- Transition


                                       14
<PAGE>

            and Disclosure an amendment of FASB Statement No. 123 (FAS No. 148).
            This Statement amends SFAS 123, Accounting for Stock-Based
            Compensation (FAS No. 123), to provide alternative methods of
            transition for an entity that voluntarily changes to the fair value
            based method of accounting for stock-based employee compensation. It
            also amends the disclosure provisions of that Statement to require
            prominent disclosure about the effects on reported net income of an
            entity's accounting policy decisions with respect to stock-based
            employee compensation. Finally, this Statement amends APB Opinion
            No. 28, Interim Financial Reporting, to require disclosure about
            those effects in interim financial information. We intend to
            continue to account for stock-based compensation based on the
            provisions of APB Opinion No. 25. FAS No. 148's amendment of the
            transition and annual disclosure provisions of FAS No. 123 are
            effective for fiscal years ending after December 15, 2002, and the
            disclosure requirements for interim financial statements are
            effective for interim periods beginning after December 15, 2002. We
            have adopted the disclosure provisions of FAS No. 148 effective
            December 31, 2002.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

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

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


                                       15
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

      On February 7, 2002, a complaint naming the Company 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, Gatz et al. v. Ponsoldt, Sr., et al., Case No.
4:02 CV 3113 (D. Neb.) (the "Shareholder Litigation"), was filed in the Federal
District Court for the District of Nebraska by two dissident Regency
shareholders, Edward E. Gatz and Donald D. Graham, against the Company, its
former Board of Directors and Statesman (the "Original Defendants"). The
five-count complaint purported to be brought on behalf of the named plaintiffs,
individually, as members of a class of our shareholders, and derivatively, and
it purported to allege RICO violations against Mr. Ponsoldt, Sr. and Statesman,
and direct and derivative breaches of fiduciary duties by former members of our
Board of Directors. The complaint asserted that plaintiffs' claims arose from a
variety of actions taken from 1993 to the present, including the Company's 1996
employment agreement with Mr. Ponsoldt, Sr., the options granted to Statesman
pursuant to a 1997 agreement, as amended in 1998, Statesman's exercise of its
options, the exchange of our interest in Glas-Aire Industries Group, Ltd. for
shares of our common stock and cash, and our reverse stock split which was
approved at our 2002 stockholder meeting. In addition to damages, the complaint
sought to void the shares owned and controlled by Mr. Ponsoldt, Sr. and
Statesman. On or about July 24, 2002 the plaintiffs moved for a preliminary
injunction which sought, among other things, to enjoin any funding to Mr.
Ponsoldt Sr., under his employment agreement, any acquisition by or transfer of
our stock to Mr. Ponsoldt, Sr. or Statesman, prohibiting the redemption of
Series C preferred stock, barring the monetization of the Security 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.

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

      On August 30, 2002, the defendants moved to dismiss the Complaint in the
Shareholder Litigation, on the grounds that the court does not possess personal
jurisdiction over the individual defendants and for failure to state a claim for
which relief could be granted. On the same date, defendants also filed their
opposition to plaintiffs' preliminary injunction motion.

      Following an announcement of our October 2002 restructuring transaction
(the "Restructuring Transaction"), Plaintiffs filed a motion to impose sanctions
on October 18, 2002, and an amended motion for preliminary injunction on October
23, 2002. On October 21, 2002, the Magistrate Judge denied Plaintiffs' motion
for sanctions, and on October 24, 2002, the District Judge denied both of
Plaintiffs' preliminary injunction motions and, pursuant to the parties'
agreement, entered an order requiring the defendants to give plaintiffs ten days
pre-closing notice of any transaction that concerned a monetization of our
interest in Security.

      On November 8, 2002, Plaintiff Graham delivered a letter to the Company
alleging various wrongs by our former Board of Directors, including the Board's
approval of the recapitalization, and making various demands of the Board. On
November 12, 2002 we responded, informing Mr. Graham we would form an
independent committee of the Board to investigate his allegations and demands.

      On November 15, 2002, Plaintiffs filed a motion seeking leave to file an
amended complaint adding allegations that had occurred since the Complaint was
filed, and adding additional parties. On December 23, 2002, the Magistrate Judge
granted Plaintiffs leave to file an amended complaint over Original Defendants'
objections.

      Plaintiffs' Amended Complaint was filed January 7, 2003, against Original
Defendants, and adding as defendants Mr. Laurence Levy, Royalty Management,
Inc., and Royalty Holding, LLC (the "Royalty Defendants"). The Amended Complaint
was filed under seal, pursuant to a protective order entered by the Court on
August 29, 2002, allegedly to prevent disclosure of our confidential
information. The Amended Complaint is similar to the original complaint in most
respects, continuing the original allegations made against the Original
Defendants, but it also alleges that the Restructuring Transaction had given
rise to additional breaches of fiduciary duties and violations of RICO by the
Original Defendants and the Royalty Defendants. The Amended Complaint also
purports to claim that the recapitalization constituted a fraudulent conveyance.
The Amended Complaint seeks compensatory damages, costs, interest and attorneys'
fees against all Defendants, treble damages against Ponsoldt, Sr., Statesman and
the Royalty Defendants, and also punitive damages against Ponsoldt, Sr. and
Statesman. Plaintiffs have also asked for a declaration that all stock issued to
Statesman, Ponsoldt, Sr., or their affiliates is void, and they ask that the
Restructuring Transaction be set aside as a fraudulent conveyance.


                                       16
<PAGE>

      On March 6, 2003, the Original Defendants again filed motions to dismiss
the Amended Complaint for lack of personal jurisdiction, improper venue, and for
failure to allege claims on which relief could be granted. The motions are
pending.

      On April 9, 2003, the Company sent a letter to the Plaintiffs, notifying
them of the terms of a proposed refinancing by Security of its existing
indebtedness and requesting that the Plaintiffs voluntarily waive the balance of
the court-ordered notice period relating to a monetization of the Security
interest. The Plaintiffs declined to waive the balance of the notice-period.

      On April 18, 2003, Plaintiffs filed motions for a temporary restraining
order and preliminary injunction seeking to prevent the monetization of the
Company's Security interest, or alternatively, preventing use of the proceeds of
the monetization. A hearing was held on April 21, 2003, following which the
Court denied Plaintiffs' motion to prevent the monetization and held in abeyance
Plaintiffs' motion for a preliminary injunction with respect to the use of
proceeds of a monetization. The Company understands that the Plaintiffs intend
to proceed with their motion for a preliminary injunction seeking to enjoin the
Company from paying certain accrued obligations to the Company's prior and
current management and the Company's prior and current controlling shareholders.
Plaintiffs were granted permission by the Court to conduct certain depositions
within 45 days following the April 21 hearing in connection with their
continuing pursuit of a preliminary injunction, after which the Court would
determine whether to schedule a hearing. The Company intends to oppose any
effort by the Plaintiffs to interfere with the Company's use of proceeds of the
proposed qualified financing. The parties are pursuing discovery limited to the
issues raised by the preliminary injunction motion, but no hearing date has been
set for that motion.

      On May 16, 2003, the Special Committee appointed to investigate the
allegations and demands made by Mr. Graham in his November 2002 letter,
delivered its report with respect to five of such demands. A copy of the report,
together with its adopting resolutions, is attached hereto as Exhibit 99.2 and
is incorporated herein by reference. The Special Committee concluded, among
other things, that the Restructuring Transaction was properly approved and
consummated, and that such approval and consummation did not constitute a breach
of fiduciary duty by the Company's Board of Directors. The Special Committee
also determined that continued prosecution of the derivative claims relating to
the Restructuring Transaction is not in the best interests of the Company and
the shareholders whose interests would best be served by dismissal of such
derivative claims, and directed the Board of Directors to cause the Corporation
to file a motion to dismiss and/or for summary judgment dismissing such claims.


                                       17
<PAGE>

ITEM 2. CHANGES IN SECURITIES.

      None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

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

      None.

ITEM 5. OTHER INFORMATION.

      None.

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

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

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

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

              3.1(i)(f)       Certificate of Designation - Series E Preferred
                                    Stock, $100 Stated Value, $.10 par value
                                    (filed as Exhibit 4.1 to 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)


                                       18
<PAGE>

              10.1            2003 Stock Incentive Plan of the Company (filed as
                                    Exhibit 10.1 to the Company's Annual Report
                                    on Form 10-KSB for the year ended December
                                    31, 2002, filed on April 15, 2003, and
                                    incorporated herein by reference.)

              10.2            License Agreement dated March 17, 2003, between
                                    the Company and Royalty Management, Inc.
                                    (filed as Exhibit 10.6 to the Company's
                                    Annual Report on Form 10-KSB for the year
                                    ended December 31, 2002, filed on April 15,
                                    2003, and incorporated herein by reference.)

              10.3            Demand Note from the Company in favor of Royalty
                                    Holdings LLC (filed as Exhibit 10.7 to the
                                    Company's Annual Report on Form 10-KSB for
                                    the year ended December 31, 2002, filed on
                                    April 15, 2003, and incorporated herein by
                                    reference.)

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

              99.2            Report of the Special Committee of the Company's
                                    Board of Directors and adopting resolutions.

      (b)   Reports on Form 8-K

            Date                   Item Reported            Financial Statements
            ----                   -------------            --------------------
            March 20, 2003               5                         None.


                                       19
<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: May 20, 2003                       /s/ Laurence S. Levy
------------------                       ---------------------------------------
                                         (President and Chief Executive Officer)


Date: May 20, 2003                       /s/ Neil N. Hasson
------------------                       ---------------------------------------
                                         (Chief Financial Officer)

<PAGE>

                                  CERTIFICATION

I, Neil N. Hasson, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 20, 2002
                                                     /s/ Neil N. Hasson
                                                     -----------------------
                                                         Neil N. Hasson
                                                         Chief Financial Officer

<PAGE>

                                  CERTIFICATION

I, Laurence. S. Levy, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 20, 2002
                                                     /s/ Laurence S. Levy
                                                     -----------------------
                                                         Laurence S. Levy
                                                         Chief Executive Officer

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

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

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

      3.1(i)(f)        Certificate of Designation - Series E Preferred Stock,
                             $100 Stated Value, $.10 par value (filed as Exhibit
                             4.1 to 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)

      10.1             2003 Stock Incentive Plan of the Company (filed as
                             Exhibit 10.1 to the Company's Annual Report on Form
                             10-KSB for the year ended December 31, 2002, filed
                             on April 15, 2003, and incorporated herein by
                             reference.)

<PAGE>

      10.2             License Agreement dated March 17, 2003, between the
                             Company and Royalty Management, Inc. (filed as
                             Exhibit 10.6 to the Company's Annual Report on Form
                             10-KSB for the year ended December 31, 2002, filed
                             on April 15, 2003, and incorporated herein by
                             reference.)

      10.3             Demand Note from the Company in favor of Royalty Holdings
                             LLC (filed as Exhibit 10.7 to the Company's Annual
                             Report on Form 10-KSB for the year ended December
                             31, 2002, filed on April 15, 2003, and incorporated
                             herein by reference.)

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

      99.2             Report of the Special Committee of the Company's Board of
                             Directors and adopting resolutions.