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 September 30, 2001

                                       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)
 incorporation or organization)                     Number


          729 South Federal Highway, Suite 307, Stuart, Florida 34994
               (Address of principal executive offices) (Zip Code)


        Registrant's Telephone Number, including Area Code (561) 220-7662

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                Yes   X                                              No _____
                    -----

     As of November 1, 2001 there were 19,398,773  shares of the $ .40 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.......................8-14

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.......................................15-19

Part II - Other Information

Item 1.    Legal Proceedings...............................................20

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

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

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

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

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

Signatures.................................................................21


<PAGE>

<TABLE>
<CAPTION>


                    Regency Affiliates, Inc. and Subsidiaries
                           Consolidated Balance Sheets

Part I - Financial Information

Item 1. Financial Statements
                                                                             September 30,           December 31,
                                                                                2001                      2000
                                                                                ----                      ----
                                                                             (Unaudited)
Assets
Current Assets

<S>                                                                             <C>                       <C>
Cash and Cash Equivalents                                                       $3,074,735                $928,636
Accounts receivable, net of allowance                                            2,213,346               2,553,589
Income taxes receivable                                                            162,359                  24,556
Inventory                                                                        2,176,942               2,243,726
Other current assets                                                               287,918                 127,728
                                                                                   -------                 -------

                     Total current assets                                        7,915,300               5,878,235

Property, Plant and Equipment, Net                                               4,070,349               4,343,170

Investment in partnerships                                                      28,774,971              24,575,881
Other Assets
           Aggregate inventory                                                     834,364                 834,675
           Goodwill, net of amortization                                           772,919                 820,774
           Debt issuance costs, net of amortization                                409,569                 551,343
           Other                                                                     4,180                  12,751
                                                                                     -----                  ------

                     Total other assets                                          2,021,032               2,219,543
                                                                                 ---------                ---------

                                                                               $42,781,652             $37,016,829
                                                                               ===========             ===========

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

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                    Regency Affiliates, Inc. and Subsidiaries
                           Consolidated Balance Sheets

                                                                                            September 30,     December 31,
                                                                                                 2001             2000
                                                                                                 ----             ----
                                                                                             (Unaudited)
<S>                                                                                           <C>              <C>
Current Liabilities
                 Current portion of long-term debt                                            $353,562         $128,510
                 Notes Payable - Banks                                                       1,913,150          692,174
                 Notes payable - Related Parties                                             1,211,503          776,000
                 Accounts payable                                                              784,597        1,080,904
                 Accrued expenses                                                            1,938,616          899,837
                 Taxes payable                                                                 151,549           78,820
                                                                                               -------           ------
                      Total current liabilities                                              6,352,977        3,656,245

Long term debt, net of current portion                                                      14,269,711       13,072,341
Deferred income taxes                                                                          383,979          402,048
Minority interest in consolidated subsidiaries                                               3,950,709        3,810,143
Shareholders' equity
         Serial preferred stock not subject to mandatory
         redemption (maximum liquidation preference
            $24,975,312 in 2001 and 2000, respectively)                                      1,052,988        1,052,988
            Common stock, par value $.40 authorized 25,000,000
            shares; issued and outstanding 17,251,619
            shares in 2001 and 2000                                                          6,900,659        6,900,659
            Additional paid-in capital                                                       2,308,484        2,308,484
            Readjustment resulting from quasi-reorganization at
            December 31, 1987                                                               (1,670,596)      (1,670,596)
            Retained earnings                                                               12,832,025       10,915,990
            Accumulated other comprehensive income                                            (261,251)         (93,440)
            Treasury stock, 4,052,825 shares in 2001 and 2000                               (3,338,033)      (3,338,033)
                                                                                            -----------      -----------
                      Total shareholders' equity                                            17,824,276       16,076,052
                                                                                            ----------       ----------
                                                                                           $42,781,652      $37,016,829
                                                                                           ===========      ===========

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                    Regency Affiliates, Inc. and Subsidiaries
                      Consolidated Statements of Operations
             Three and Nine Months Ended September 30, 2001 and 2000
                                  (Unaudited)

                                                              Three Months Ended                      Nine Months Ended
                                                      September 30,        September 30,        September 30,     September 30,
                                                          2001                 2000                 2001               2000
                                                          ----                 ----                 ----               ----

<S>                                                     <C>                  <C>              <C>                   <C>
  Net Sales                                             $3,358,715         $4,268,915          $9,953,146           $9,379,262
    Costs and expenses
    Costs of goods sold                                  2,498,605          3,095,179           7,213,058            6,863,669
    Selling and administrative                           1,148,741          1,263,602           3,759,649            3,455,326
                                                         ---------          ---------           ---------            ---------

                                                         3,647,346          4,358,781          10,972,707           10,318,995
                                                         ---------          ---------          ----------           ----------
            Income (loss) from operations                 (288,631)           (89,866)        (1,019,561)             (939,733)
            Income from equity investment
              in partnerships                            1,450,983          1,179,122          4,199,089             3,502,804
            Other income (expense), net                     64,350             48,052             81,152                80,972
            Interest expense                              (363,854)          (314,619)          (985,868)             (891,198)
                                                          ---------          ---------          ---------             ---------
            Income before income tax expense,              862,848            822,689          2,274,812             1,752,845
              and minority interest
            Income tax expense                            (112,892)          (145,741)          (218,211)             (210,935)
            Minority interest                              (79,784)           (91,925)          (140,566)             (124,286)
                                                           --------           --------          ---------             ---------
            Net income                                    $670,172           $585,023         $1,916,035            $1,417,624
                                                          ========           ========         ==========            ==========

            Net income per common share:
                   Basic                                     $0.05              $0.04              $0.15                 $0.11
                                                             -----              -----              -----                 -----

                   Diluted                                   $0.05              $0.04              $0.15                 $0.10
                                                             =====              =====              =====                 =====


          The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                    Regency Affiliates, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                  Nine Months Ended September 30, 2001 and 2000
                                   (Unaudited)

                                                                                           September 30,       September 30,
                                                                                               2001                2000
                                                                                               ----                ----

Cash flows from operating activities
<S>                                                                                       <C>                   <C>
           Net income                                                                     $1,916,035            $1,417,624
           Adjustments to reconcile net income to net cash
                 used by operating activities
                        Depreciation and amortization                                        532,365               367,054
                        Change in deferred income taxes                                      (18,069)               30,131
                        Minority interest                                                    140,566               124,286
                        Stock issued for services rendered                                         -               292,134
                        Income from equity investment in partnerships                     (4,199,089)           (3,502,804)
                        Distribution of equity earnings in partnership                             -               106,250
                        Interest amortization on long-term debt                              650,764               708,331
                        Changes in operating assets and liabilities
                            Accounts receivable                                              340,243              (141,444)
                            Inventory                                                         67,095              (714,411)
                            Other current assets                                            (297,993)               59,191
                            Accounts payable                                                (296,307)               41,357
                            Accrued expenses                                               1,111,507                88,269
                                                                                           ---------                ------
                                       Net cash from (used by) operating activities          (52,883)           (1,124,032)
                                                                                             --------           -----------
Cash flows from investing activities
           Capital expenditures                                                              (69,915)             (175,458)
           Other                                                                               8,571                 5,089
                                                                                               -----                 -----
                                       Net cash (used by) investing activities               (61,344)             (170,369)
                                                                                             --------             ---------
Cash flows from financing activities
           Net short-term borrowings (payments)                                            1,656,479                41,895
           Net long-term borrowings (payments)                                               771,658               (99,208)
           Redemption of Series E preferred stock                                                  -              (159,300)
           Other                                                                                   -               (23,410)
           Dividends paid                                                                          -                (5,000)
                                                                                                   -                -------
                                      Net cash from (used by) financing activities         2,428,137              (245,023)
                                                                                           ---------              ---------

Foreign currency translation adjustment                                                     (167,811)             (100,059)
Increase (decrease) in cash and cash equivalents                                           2,146,099            (1,639,483)
Cash and cash equivalents - beginning                                                        928,636             2,348,989
                                                                                             -------             ---------

Cash and cash equivalents - ending                                                        $3,074,735              $709,506
                                                                                          ==========              ========

                      Supplemental disclosures of cash flow information: Cash
                                paid during the year for:
                                          Income taxes                                      $211,960             $399,786
                                          Interest                                           155,940              197,531


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

</TABLE>


<PAGE>



Supplemental disclosures of noncash investing and financing activities:

     In 2000,  the Company  issued 95,877 shares of common stock in exchange for
885 shares of Series E preferred stock.

     In 2000,  the Company  issued 114,000 shares of common stock as payment for
costs in connection with acquisition of Glas-Aire.

     In 2000, the Company issued 147,254 shares of common stock for services.

     In 2000,  accrued  compensation  in the  amount of  $650,000  payable to an
officer was converted to debt.

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

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



<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 nine month  periods  ended  September  30, 2000 and
               September 30, 2001 are not necessarily  indicative of the results
               that may be expected  for the years ended  December  31, 2000 and
               December  31,  2001.  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, 2000.

          B.   Principals  of  Consolidation   and  Nature  of  Business  -  The
               consolidated financial statements include the accounts of Regency
               Affiliates,  Inc. (the "Company"),  its wholly owned  subsidiary,
               Rustic Crafts  International,  Inc.  ("Rustic  Crafts"),  its 80%
               owned  subsidiaries,  National Resource  Development  Corporation
               ("NRDC"),  Transcontinental  Drilling  Company  ("Drilling")  and
               RegTransco,   Inc.  ("RTI")  and  its   approximately  50%  owned
               subsidiary,  Glas-Aire Industries Group, Ltd. ("Glas-Aire").  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. The shares of the Company
               held by Glas-Aire  were  treated as treasury  shares for earnings
               per share computations.

          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:


<PAGE>


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

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

                                                            September 30,  2001

                  Raw materials and supplies                     $944,354
                  Work-in-process                                 222,967
                  Finished products                               959,621
                  -----------------                             ----------
                                                               $2,126,942

          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.  The  Company  has made only  casual
               sales of the inventory during the periods.

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

          G.   Change in Reporting Period - Prior to December 31, 2000 Glas-Aire
               had a fiscal year end of January 31. As a result,  the  Company's
               condensed statement of operations for the nine month period ended
               September 30, 2000  included the financial  activity of Glas-Aire
               for the months of February through September 2000 only.

               Had the financial  activity of Glas-Aire for the month of January
               2000 been included,  the Company's loss from operations  would be
               as follows:



<PAGE>


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

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

                   Net Sales                                     $11,782,544
                                                                 -----------
                   Costs and expenses
                              Costs of goods sold                  8,421,774
                              Selling and administrative           4,092,204
                                                                   ---------
                   Total expenses                                $12,513,978
                                                                 -----------
                   Loss from operations                            $(731,434)
                                                                 ============


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
               entitled to receive  operating  income in the form of  management
               fees relating to the Partnership.

               Security  was   organized  to  own  and  operate  two   buildings
               containing   approximately   717,000  net  rentable  square  feet
               consisting  of  a  two-story  office  building  and  a  connected
               six-story office tower. The building was purchased by Security in
               1986 and is located on approximately  34.3 acres of land which is
               also owned by Security.  The  building  has been  occupied by the
               United  States  Social   Security   Administration's   Office  of
               Disability  and  International  Operations for  approximately  24
               years under 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.

               Effective November 30, 2000 the Company invested $10,000 for a 5%
               limited   partnership   interest   in   1500   Woodlawn   Limited
               Partnership, the general partner of Security.


<PAGE>


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

Note 2. Investment in Partnership (continued)

               The Company  accounts for the investment in  partnerships  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   partnerships   included  in  the
               Consolidated Balance Sheets at September 30, 2001 is $28,774,971.

               The  income  from  the   Company's   equity   investment  in  the
               Partnerships  for the nine months  ended  September  30, 2001 was
               $4,199,089.

               Summarized  operating  data for  Security  for the three and nine
               months ended  September  30, 2001 and  September  30, 2000, is as
               follows:

<TABLE>
<CAPTION>


                                                          Three Months Ended                 Nine Months Ended
                                                          ------------------                 -----------------
                                                    September 30,     September 30,   September 30,  September 30,
                                                          2001           2000             2001            2000
                                                          ----           ----             ----            ----

<S>                                                     <C>              <C>            <C>              <C>
      Revenue                                           $3,433,245       $3,314,136     $10,246,680      $9,944,759

           Operating Expenses                              860,172         866,222        2,585,613       2,640,078
           Depreciation and Amortization                   664,160         710,067        2,096,294       2,130,201
           Interest Expense, Net                           431,367         496,666        1,294,101       1,487,318
                                                           -------         -------        ---------       ---------

           Net Income                                   $1,477,546       $1,241,181      $4,270,672      $3,687,162
                                                        ----------       ----------      ----------      ----------
</TABLE>

Note 3. Notes Payable - Banks

               On October 24,  2000,  the Company  obtained a  commitment  for a
               short term loan of $100,050  from a bank bearing  interest at the
               prime rate plus three-fourths  percent,  adjusted monthly.  As of
               September  30, 2001 $76,000  remained  outstanding;  the interest
               rate  was  10.25%.   This   obligation   is   guaranteed  by  two
               shareholders, one of whom is a former officer and director of the
               Company.

               The  Company's  subsidiary,  Rustic  Crafts,  has  established  a
               $1,000,000  line of  credit  with PNC  Bank.  The line of  credit
               expires on May 18, 2002 and bears  interest  at the Bank's  prime
               rate minus one-half percent. 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
               September  30,  2001,  the amount  outstanding  under the line of
               credit was $994,921.

               The Company's subsidiary,  Glas-Aire,  has established a Canadian
               $3,000,000 (U.S. $2,040,000) line of credit with a Canadian bank.
               The line of credit is collateralized  by accounts  receivable and
               inventory and bears  interest at the rate of the Canadian  bank's
               prime rate plus  one-half  percent.  At September  30, 2001,  the
               amount outstanding under the line of credit was $842,229.


<PAGE>


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

Note 4. Notes Payable - Related Parties

               The Company has  outstanding  $448,000  of demand  notes  bearing
               interest at 10% payable to a principal shareholder.  Additionally
               the  Company  has  outstanding  a $763,503  demand  note  bearing
               interest  at a rate of  prime  minus 1% to its  President.  These
               obligations  are secured by the shares of Glas-Aire  owned by the
               Company.

Note 5. Long-Term Debt

               KBC Bank Loan - On June 24,  1998,  the  Company  refinanced  the
               long-term  debt  previously  outstanding  with  Southern  Indiana
               Properties,  Inc. ("SIPI") and entered into a Loan Agreement (the
               "Loan") with KBC Bank N.V.  ("KBC").  Under the terms of the Loan
               Agreement,  KBC advanced $9,383,320.  The due date of the Loan is
               November  30, 2003 with  interest at the rate of 7.5%  compounded
               semi-annually on each June 1 and December 1, commencing  December
               1, 1998. The interest may be paid by the Company in cash on these
               semi-annual dates or the Company may elect to add the interest to
               the principal of the Loan then  outstanding.  As of September 30,
               2001,  the  amount  outstanding  under  the Loan is  $11,961,658,
               including   $649,850  of  interest  for  the  nine  months  ended
               September 30, 2001.

               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.

               Equipment  Loans  -  In  connection  with  the  purchase  of  the
               building,  PNC Bank  loaned the  Company a total of  $767,000  to
               finance the  acquisition  of new  equipment  and to install  such
               equipment  in the  facility.  Principal  payments  on one loan of
               $604,000 began March 2000 for 120 months in amounts sufficient to
               amortize  the  outstanding  balance  over twenty years from March
               2000.  In March 2000 the interest rate was changed to the average
               weekly yield on U.S. Treasury Bills,  plus 200 basis points.  The
               remaining  loan in the original  amount of $163,500 is payable in
               equal monthly installments of $2,518.


<PAGE>


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

Note 5. Long-Term Debt (continued)

               Miscellaneous  Loan - - In June 1999,  Rustic Crafts  obtained an
               additional  loan  from  PNC  Bank  for  the  purpose  of  funding
               additional  equipment purchases and working capital in the amount
               of $156,000.  The loan is payable in equal monthly  installments,
               including principal and interest, of $3,153.

               The interest  rates on the mortgage  loan, the equipment loan and
               the miscellaneous loan range from approximately 7.25% to 8.25% at
               September  30, 2001.  The  outstanding  balance on these loans is
               $1,677,381 at September 30, 2001.

               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.

               Glas-Aire's  long term debt  amounts to $984,234 and is comprised
               of  capital  leases of $97,317  and  installment  obligations  of
               $886,917.

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
               $27,000,000. These losses can be carried forward to offset future
               taxable  income  and,  if not  utilized,  will  expire in varying
               amounts beginning in the year 2001.

               For the three and nine months ended September 30, 2001, and 2000,
               the tax effect of net operating  loss  carryforwards  reduced the
               current   provision   for  regular   Federal   income   taxes  by
               approximately  $163,000 and $424,000,  respectively.  The Company
               provided $210,935 and $145,741 for Canadian, state income and the
               alternative  minimum  tax in the  three  and  nine  months  ended
               September 30, 2001 and 2000, respectively.



<PAGE>


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

Note 7. Redemption of Series E Preferred Stock

               On January 31, 2000, the holders of the Series E preferred  stock
               either  converted their preferred  shares to the Company's common
               stock or received cash equal to the par value of the shares, plus
               accrued dividends. The Company issued 95,877 of its common shares
               in exchange  for 885 shares of  preferred  stock and paid cash in
               the amount of $159,300 for 1,593 shares.

Note 8. Subsequent Events

               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.

               The exchange rate was based on  negotiations  between the parties
               and  confirmed  as to fairness by  independent  valuation  firms,
               hired by respective committees of each of the Boards of Directors
               of Regency and Glas-Aire.

               The former  president of Glas-Aire  has  commenced  litigation in
               British Columbia, Canada against Glas-Aire and the Company, among
               others  asserting,   among  other  things,  that  the  Regency  -
               Glas-Aire transaction is in breach of bank agreements, securities
               law and fiduciary duties owed to Glas-Aire and its  shareholders.
               The defendants are vigorously defending this litigation.

               On October 15, 2001, Statesman Group, Inc. exercised an option to
               acquire  6,100,000  shares of the  Company's  common  stock.  The
               exercise  price was $.40 per share (par  value)  rather  than the
               formula price in the option, which would have yielded the Company
               approximately  25% less.  Statesman  Group issued its  $2,440,000
               five year note to the Company as payment, secured (in addition to
               the  shares  purchased)  by  the  20%  stock  interest  owned  by
               Statesman in NRDC, the Company's 80% owned subsidiary.



<PAGE>


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  and  continues  to  commit  both
               financial  and  personnel  resources  to  an  active  merger  and
               acquisition  program  in order to  enhance  common  stockholders'
               values. The Company's  Shareholders' Equity at September 30, 2001
               was $17,824,276 as compared to $15,308,128 at September 30, 2000,
               an increase of $2,516,148  for the twelve months ended  September
               30, 2001.

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  September  30, 2001,  the Company's
               income from its equity  investment in the Partnership (as well as
               its interest in Security's  General Partner,  1500 WoodLawn L.P.)
               was $4,199,089. 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  $28,774,971,
               neither  provides  liquidity  to the  Company  in  excess  of the
               $100,000 annual  management fee. The Company has,  however,  been
               successful   in   obtaining   financing   with  respect  to  this
               investment.

               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.

               The Company has had discussions with several companies  regarding
               the possible  sale of its  interest in NRDC.  To  facilitate  the
               discussions  concerning  a possible  sale,  the NRDC zero  coupon
               bonds (secured by the aggregate inventory),  were retired in 1999
               by the issuance of 121,000 shares of the Company's  common stock.
               Following  the  termination  of the 1999 NRDC Plan of Merger with
               Cotton  Valley  Resources  Corporation,   the  Company  installed
               limited  aggregate  crushing  and  marketing  operations  at  the
               Groveland Mine in an informal joint venture with another company.
               The Company is also exploring the  possibility of  establishing a
               permanent  infrastructure  during the year 2001 or  thereafter to
               commercialize the inventory of previously quarried and stockpiled
               aggregate  at  the  Groveland   Mine  in   cooperation   with  an
               experienced aggregate supply company.

               In October 2001,  the Company  announced  that it had completed a
               transaction  for the disposition of its interest in its partially
               owned subsidiary,  Glas-Aire Industries Group Ltd. ("Glas-Aire").
               Prior to the transaction,  each  corporation  owned a substantial
               percentage of the common stock of the other, and they had certain
               officers  and  directors  in  common.  Pursuant  to an  agreement
               entered into on September  17, 2001,  amended on October 1, 2001,
               Regency 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.
               Regency's cash position  improved as a result of the transaction.
               However, it is still not able to generate positive cash flow from
               operations,  and  the  Glas-Aire  transaction  will  not  have an
               immediate positive impact on cash flow.

               The Statesman Group,  Inc.  exercised an option it has held since
               1997 to acquire 6,100,000 shares of the Company's Common Stock on
               October 15, 2001. As a result of the  transaction,  the Statesman
               Group owns  approximately  38.2% of the  Company's  common stock.
               Pursuant  to an  Agreement  dated  June 3, 1997,  as amended  and
               restated on March 24,  1998,  Statesman  Group,  Inc. was granted
               options to purchase  6,100,000  million  shares of Common  Stock.
               Statesman owned  approximately  25% of the Company's  outstanding
               common stock prior to the issuance of these options.

               On  October  15,  2001,  Statesman  exercised  the option in full
               pursuant to an agreement  that (1) provided for a purchase  price
               at $.40 per share (par value)  rather  than the formula  price in
               the option,  which would have  yielded the Company  approximately
               25% less and (2) provided for  collateral for the $2.44 million 5
               year note issued by  Statesman to the Company (in addition to the
               shares  purchased) in the form of the 20% stock interest owned by
               Statesman  in  National  Resource  Development  Corporation,  the
               Company's 80% owned  subsidiary.  The transaction will not effect
               liquidity  of the  Company,  as no  payments  are due on the note
               until maturity in five years.

               Statesman Group,  Inc. is an international  business  corporation
               organized  under the laws of the Bahamas.  Statesman's  principal
               business is the making of  investments  in the United  States and
               elsewhere.  The Statesman  Irrevocable Trust dated April 15, 1991
               is the controlling person of Statesman. The Statesman Trust is an
               irrevocable trust for the benefit of William R. Ponsoldt,  Jr., a
               director  of the  Company,  Tracey A.  Ponsoldt,  now married and
               sometimes known as Tracey A. Powers, and Christopher J. Ponsoldt,
               all  children  of William  R.  Ponsoldt,  Sr. The  trustee of the
               Statesman  Trust,  dated April 15, 1991, is  Liedenhall  Bank and
               Trust, Nassau,  Bahamas,  which has the sole right to control the
               disposition  of and vote the  Company's  securities  acquired  by
               Statesman.

Results of Operations

               The following  discussion is of the Company's  historic  results.
               Going  forward,  results  will  be  materially  affected  by  the
               disposition of Glas-Aire.

               As a result  of the  Glas-Aire  transaction,  the  operations  of
               Regency will no longer  include the operations of Glas-Aire as in
               the historical  financial statements herein. The Form 8-K/A filed
               on  November  5, 2001 by Regency  shows the pro forma  effects at
               June 30,  2001 of the  removal of the assets and  liabilities  of
               Glas-Aire  from  the  Regency  balance  sheet,  as  well  as  the
               elimination of Glas-Aire's  minority  interest in Regency and the
               receipt of $2,500,000  from  Glas-Aire.  The pro forma  financial
               statements in Form 8-K/A also reflect,  for the period ended June
               30,  2001,  the  removal  of the  results  of  operations  of and
               minority  interest in the income of Glas-Aire.  Readers are urged
               to review those pro forma financial statements for information as
               to how the sale of Glas-Aire  is likely to affect  Regency in the
               immediate  future.  Similar  effects  would  occur for the period
               ended September 30, 2001. On a balance sheet basis, the Glas-Aire
               transaction  reduced  assets  by  approximately  $4  million  and
               stockholders  equity by  approximately  $2 million.  On an income
               statement basis, Glas-Aire represented  approximately 76% and 86%
               of Regency's  net revenues for 2000 and the six months ended June
               30,  2001,  respectively,  although  the effect on net income was
               only  approximately  9% and 11% in the pro forma results for 2000
               and the six months ended June 30, 2001,  respectively.  Regency's
               cash position  improved as a result of the transaction.  However,
               it is  still  not  able  to  generate  positive  cash  flow  from
               operations,  and the  exchange  with  Glas-Aire  will not have an
               immediate positive impact on cash flow from operations.

2001 Compared to 2000

For the three-months ended September 30, 2001:

               Net sales decreased $910,200 over the similar period in 2000. The
               decrease is due to $519,302 in decreased sales from Glas-Aire and
               $5,637 from NRDC,  plus a decrease  in sales at Rustic  Crafts of
               $385,261.  The  decrease  at  Rustic  Crafts  was due to  smaller
               backlogs  at December  31, 2000 and the  decrease in sales of low
               margin products.

               Gross  margin  decreased  $313,626.  The  decrease  is  due  to a
               decrease in gross margin from Glas-Aire of $104,226 and from NRDC
               of $3,993,  plus a decrease in gross margin from Rustic Crafts of
               $205,407.

               Selling and administrative expenses decreased $114,861 in 2001 as
               compared to 2000.  These include an increase of $2,415 related to
               Glas-Aire offset by a net reduction of selling and administrative
               expenses incurred by Regency, Rustic Crafts and NRDC amounting to
               $117,276.

               Income  from  equity in  partnerships  increased  $271,861.  This
               increase is due to a decrease in interest expense  resulting from
               payment of principal  offset by  increases in operating  expenses
               for the  quarter as to  Security  and income  resulting  from the
               Company's  acquisition  of a 5% limited  partnership  interest in
               Woodlawn, L.P.

               Interest expense increased by $49,235 and is largely attributable
               to  increased  interest  expense  on  the  KBC  loan,   increased
               indebtedness of Glas-Aire, indebtedness to related parties offset
               by borrowings costs of Rustic Crafts.

               Net income  increased  $85,149 in 2001  compared to 2000 of which
               $271,861  represents  increased equity earnings from partnerships
               less  losses  from  operations  (net of income  tax and  minority
               interest) of $186,712.

               For the nine months ended September 30, 2001:

               Net sales  increased  $573,884 in 2001 over the similar period in
               2000, of which $273,569 and $5,206 is  attributable  to Glas-Aire
               and  NRDC,   respectively,   and  $934,528  is   attributable  to
               Glas-Aire's   change  in  fiscal  year  Sales  of  Rustic  Crafts
               decreased $639,419 during this period.

               Gross margin  increased  $224,495 of which  $153,995 , ($258,609)
               and $6,723 is derived  from  Glas-Aire,  Rustic  Crafts and NRDC,
               respectively.   The   remaining   difference   of   $322,386   is
               attributable to Glas-Aire's change in fiscal year.

               Selling and  administrative  expenses increased $304,323 and were
               incurred  primarily by  Glas-Aire  ($244,342),  a  difference  of
               $216,943  attributable  to  Glas-Aire's  change in year end,  and
               decreases for Regency of ($120,751) and Rustic Crafts ($36,211).

               Income  from  equity in  partnerships  increased  $696,285.  This
               increase is due to a decrease in interest expense  resulting from
               payment of principal  offset by  increases in operating  expenses
               for the  quarter as to  Security  and income  resulting  from the
               Company's  acquisition  of a 5% limited  partnership  interest in
               Woodlawn, L.P.

               Interest expense increased by $94,670 and is largely attributable
               to  increased  interest  expense  on  the  KBC  loan,   increased
               indebtedness of Glas-Aire, indebtedness to related parties offset
               by borrowings costs of Rustic Crafts.

               Net  income  increased  $498,411,  of which  $696,285  represents
               increased  equity  earnings from  partnerships,  less losses from
               operations (net of income tax and minority interest) of $197,874.

Forward-Looking Statements

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

               As a result,  actual results of the Company may differ materially
               from  those   results   contemplated   by  such   forward-looking
               statements which include, but are not limited to:

               (i)  The Company's current operations do not generate  sufficient
                    cash flow to cover corporate operating expenses and thus the
                    Company  must  rely  on  external   sources  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,  notwithstanding  the receipt
                    of the $2,500,000 resulting from the Glas-Aire transaction.

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

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

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

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


<PAGE>



                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On  September  13, 2001 in the  Supreme  Court of British  Columbia,  the former
president  of Glas-Aire  has  commenced  litigation  in against  Glas-Aire,  the
Company, Mr. Ponsoldt and Mr. Baldinger asserting,  among other things, that the
Regency - Glas-Aire transaction is in breach of bank agreements,  securities law
and fiduciary duties owed to Glas-Aire and its shareholders.  The defendants are
vigorously defending this litigation.

ITEM 2. CHANGES IN SECURITIES.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

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

On October 16, 2001 the Company  filed a current  report on Form 8-K  disclosing
the exchange of shares with Glas-Aire.  That filing was amended on Form 8-K/A on
November 5, 2001 to include pro forma financial information.

On October 25, 2001 the Company  filed a current  report on Form 8-K  disclosing
the exercise of the Statesman Group stock option.



<PAGE>


                                   SIGNATURES

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

                                                     REGENCY AFFILIATES, INC.
                                                     (Registrant)

Date: November 27, 2001                              /s/ Marc H. Baldinger
                                                     ---------------------
                                                    (Chief Financial Officer and
                                                     Director)