<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED September 30, 1995 COMMISSION FILE NO. 1-7949
REGENCY AFFILIATES, INC.
(Exact Name Of Registrant As Specified In Its Charter)
Delaware 72-0888772
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
10842 Old Mill Road, #5, Omaha, Nebraska 68154
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (402) 330-7460
5445 D.T.C. Parkway., Suite 300, Greenwood Village, CO 80111
- ------------------------------------------------------ -----
(Former name, former address and former fiscal year, if changed)
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
-------- ---------
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
$.40 Par Value Common Stock- 11,188,997 shares as of October 31, 1995.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements...........................................................................3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations....................................................................................12
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................15
Item 2. Changes in Securities.........................................................................15
Item 3. Defaults Upon Senior Securities...............................................................15
Item 4. Submission of Matters to a Vote of Security Holders...........................................15
Item 5. Other Information.............................................................................15
Item 6. Exhibits and Reports on Form 8-K..............................................................15
</TABLE>
2
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REGENCY AFFILIATES, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following pages contain the information required by Part I, Item 1.
3
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
----------- -----------
ASSETS (UNAUDITED)
CURRENT ASSETS
<S> <C> <C>
Cash $ 98,313 $ 150,027
Accounts receivable 2,157 2,129
Prepaid expenses 18,141 --
----------- -----------
118,611 152,156
----------- -----------
OTHER ASSETS
Investment in partnership 1,266,063 450,000
Inventory 850,000 850,000
Other 19,755 21,676
----------- -----------
2,135,818 1,321,676
----------- -----------
Total Assets $ 2,254,429 $ 1,473,832
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ -- $ 300,000
Notes payable - related party 80,000 105,800
Accounts payable 126,083 73,382
Accrued expenses 108,520 5,705
----------- -----------
314,603 484,887
----------- -----------
LONG-TERM DEBT 314,500 296,500
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 107,897 111,391
SERIAL PREFERRED STOCK SUBJECT TO MANDATORY
REDEMPTION 340,454 261,454
SHAREHOLDERS' EQUITY
Serial preferred stock not subject to mandatory redemption (maximum
liquidation preference, $24,885,382) 1,052,988 1,052,988
Common stock, par value $.40, authorized 25,000,000 shares issued and
outstanding 11,188,997 and 10,546,997 shares (net of 22,460
treasury shares) 4,456,308 4,199,508
Paid in capital 140,000
Readjustment resulting from quasi-reorganization at December 31, 1987 (1,670,596) (1,670,596)
Accumulated deficit (2,801,725) (3,262,300)
----------- -----------
1,176,975 319,600
----------- -----------
Total Liabilities and Shareholders' Equity $ 2,254,429 $ 1,473,832
=========== ===========
</TABLE>
4
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
--------------- ---------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 534 $ -- $ 534 $ --
OPERATING EXPENSES
General and administrative expenses 77,697 4,995 208,767 89,666
Other Expenses 63,906 -- 63,906 --
Interest expense 12,399 -- 30,584 --
--------- --------- --------- ---------
INCOME (LOSS) FROM
OPERATIONS (153,468) (4,995) (302,723) (89,666)
INCOME FROM EQUITY
INVESTMENT IN PARTNERSHIP 220,000 -- 907,000 --
--------- --------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE AND
MINORITY INTEREST 66,532 (4,995) 604,277 (89,666)
INCOME TAX EXPENSE (13,000) -- (103,000) --
MINORITY INTEREST 1,094 -- 3,494 --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 54,626 $ (4,995) $ 504,771 $ (89,666)
========= ========= ========= =========
NET INCOME (LOSS)
APPLICABLE TO COMMON
STOCK (after accrued preferred stock
dividends of $15,790, $0, $44,195 and
$0 respectively) $ 38,836 $ (4,995) $ 460,576 $ (89,666)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE
(primary and fully diluted) $ 0.00 $ (0.00) $ 0.04 $ (0.01)
========= ========= ========= =========
</TABLE>
5
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $ 504,771 $ (89,666)
Adjustments to reconcile net income (loss) to net cash used by
operating activities:
Minority interest (3,494) --
Income from equity investment in partnership (907,000) --
Interest amortization on long-term debt 18,000 --
Changes in operating assets and liabilities:
Prepaid expenses (27,204) --
Other assets 1,892 --
Accounts payable 36,912 --
Accrued liabilities 102,815 (774)
--------- ---------
Net cash used by operating activities (273,308) (90,440)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Distribution from partnership 100,000 --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net short-term borrowings (payments) (325,800) 86,864
Proceeds from issuance of preferred stock 167,200 --
Proceeds from issuance of common stock 352,800 --
Preferred stock dividends paid (28,406) --
Offering costs (44,200) --
--------- ---------
Net cash provided by financing activities 121,594 86,864
---------
INCREASE (DECREASE) IN CASH (51,714) (3,576)
CASH-BEGINNING 150,027 3,922
--------- ---------
CASH-ENDING $ 98,313 $ 346
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS 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 nine-month period ended
September 30, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. 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, 1994.
B. Principles of Consolidation - The consolidated financial statements
include the accounts of Regency Affiliates, Inc. (the "Company") and
its 80% owned subsidiaries National Resource Development Corporation
("NRDC"), Transcontinental Drilling Company ("Drilling") and
RegTransco, Inc. ("RTI"). All significant intercompany balances and
transactions have been eliminated in consolidation.
C. Earnings (Loss) Per Share - Net income (loss) per common share was
determined by dividing the net income (loss) applicable to common
stock by the average number of common shares actually outstanding.
The effects of the outstanding convertible securities were not
considered since the conversion provisions of such securities are
"contingent" provisions and can only be exercised in the event of an
occurrence or non- occurrence of specified future events. In
addition, the shares to be issued in connection with the conversion
provisions of certain securities will be based on the fair value of
the Company's common stock at date of conversion.
D. Inventory - Inventory, which consists of aggregate, is stated at
lower of cost or market. Liens have been attached to the aggregate
inventory by the note payable to the related party and the holders
of the zero coupon bonds. 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 sales of the
aggregate.
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E. Income Taxes - Effective January 1, 1993, the Company adopted
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, if necessary,
to reduce the deferred tax asset to the amount that will, more
likely than not, be realized. Income tax expense is the current tax
payable or refundable for the period plus or minus the net change in
the deferred tax assets and liabilities.
F. In March 1995, the Financial Accounting Standards Board issued a new
standard (SFAS 121), "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." SFAS 121
requires that long-lived assets and certain identifiable intangibles
to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. SFAS 121 is effective for
financial statements for fiscal years beginning after December 15,
1995. The Company intends to adopt SFAS 121 in the first quarter of
1996 and its effect on its financial position or results of
operations has not yet been determined.
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. INVESTMENT IN PARTNERSHIP
In November 1994, the Company invested $350,000 for a limited
partnership interest in Security Land and Development Company
Limited Partnership ("Security"), which owns and operates an office
complex. The Company has limited voting rights and is entitled to be
allocated 95% of the profit and loss of the partnership until
October 31, 2003 (the lease termination date of the sole tenant of
the office complex) and 50% thereafter. The Company is to receive
certain limited cash flow after debt service, and a contingent
equity build-up depending upon the value of the project upon
termination of the lease. The Company is also entitled to receive
certain management fees relating to the partnership.
Security was organized to own and operate, for investment purposes,
a building of approximately 717,000 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 22 years under leases between the United States of
America, acting by and through the General Services Administration
("GSA"). Effective November 1, 1994, Security and the GSA entered
into a nine-year lease (the "Lease") for 100% of the building.
Security has received an opinion of the Assistant General Counsel to
the GSA that lease payments are not subject to annual appropriation
by the United States Congress and the obligations to make such
payments are unconditional general obligations of the United States
Government.
The Company accounts for the investment in partnership on the equity
method, whereby the carrying value of the investment is increased or
decreased by the Company's allocable share of income or loss. The
investment in partnership included in the Consolidated Balance Sheet
at September 30, 1995 was $1,037,000. The income and undistributed
earnings from the Company's equity investment in the partnership for
the three months and nine months ended September 30, 1995 were
$220,000 and $907,000, respectively.
9
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Summarized operating data for Security for the three months and nine
months ended September 30, 1995 is as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
<S> <C> <C>
Revenues $ 3,054,454 $ 9,324,845
Operating Expenses (740,463) (2,155,622)
Depreciation and Amortization (1,022,168) (3,074,406)
Interest Expense, Net (1,059,739) (3,139,819)
----------- -----------
Net Income $ 232,084 $ 954,998
=========== ===========
</TABLE>
NOTE 3. STOCK OFFERING
Through a private placement memorandum dated November 18, 1994, the
Company offered for sale 80 units of securities, each unit
consisting of 88.5 shares of 12.5% cumulative convertible Series E
preferred stock and 6,000 shares of common stock. The units were
priced at $10,000 per unit. As of September 30, 1995, subscriptions
for 57 units were received netting the Company $477,254 after
offering costs of $92,746.
Purchasers of units were issued financial statements containing
certain errors resulting from the improper accounting treatment of
the acquisition of NRDC. (The acquisition was recorded at the
appreciated market value of NRDC's inventory whereas the cost of
such inventory to NRDC was substantially lower). Management intends
to offer such purchasers rescission, however, because the appraised
fair value of the underlying net assets of NRDC are significantly in
excess of the carrying value for accounting purposes, management
believes the likelihood of rescission is remote.
NOTE 4. INCOME TAXES
As referred to in Note 1, the Company adopted SFAS 109, "Accounting
for Income Taxes," effective January 1, 1993. The deferred taxes are
the result of long-term temporary differences between financial
reporting and tax reporting for 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.
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At September 30, 1995, the Company's net deferred tax asset, utilizing
a 34% effective tax rate, consists of:
<TABLE>
<S> <C>
Deferred tax assets:
Investment partnership earnings $ 2,255,000
Net operating loss carryforwards 14,975,000
----------
Total deferred tax assets before valuation
allowance 17,230,000
Valuation allowance (17,230,000)
----------
Net deferred tax asset $ -0-
==========
</TABLE>
The valuation allowance was established to reduce the net deferred
tax asset to the amount that will more likely than not be realized.
This reduction is necessary due to uncertainty of the Company's
ability to utilize the net operating loss and tax credit
carryforwards before they expire.
For regular federal income tax purposes, the Company has remaining
net operating loss carryforwards of approximately $47,700,000. These
losses can be carried forward to offset future taxable income and,
if not utilized, will expire in varying amounts beginning in the
year 2000.
For the nine months ended September 30, 1995, the tax effect of net
operating loss carryforwards reduced the current provision for
federal income taxes by approximately $550,000.
NOTE 5. ACQUISITION COSTS
Other expenses include costs incurred in connection with the
proposed acquisition of certain companies with which negotiations
were terminated in the third quarter. Such costs include legal,
accounting, and commitment fees and travel and related costs.
11
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources.
On June 4, 1993, the Company entered into an Acquisition Agreement with
Statesman Group, Inc., a Bahamian international business corporation
("Statesman"), and National Resource Development Corporation (Delaware) (the
"Acquisition Agreement"), which provided for Statesman or its nominees to
acquire 2,975,000 shares of the Company's $0.40 par value common stock, 208,850
shares of the Company's Series C Preferred stock and 20% of the outstanding
shares of Transcontinental Drilling Co., a subsidiary of the Company. Statesman
undertook to deliver to the Company 80% of the issued and outstanding common
shares of National Resource Development Corporation (Delaware), the owner of
approximately 75 million short tons of previously quarried and stock piled rock
located at the site of the Groveland Mine in Dickinson County, Michigan (the
"Aggregate").
The scheduled closing of July 6, 1993 under the Acquisition Agreement was
deferred to July 7, 1993. At that time, various modifications were made to the
June 4, 1993 Acquisition Agreement, including the substitution of National
Resource Development Corporation ("NRDC"), a Nevada corporation formed on June
29, 1993 for National Resource Development Corporation (Delaware), which newly
formed corporation was wholly owned by Statesman and acquired title to the
Aggregate. On July 7, 1993, 2,975,000 shares of the Company's common stock,
208,850 shares of the Company's Cumulative Contingent Convertible Senior
Preferred Series C stock and 20% of the outstanding shares of Transcontinental
Drilling Co. were delivered to Statesman (the "1993 Transaction").
Statesman, in addition to receiving the rights to 28.78% of the Company's
common stock under the Acquisition Agreement, received irrevocable proxies over
855,991 shares of Regency's $0.40 par value common stock. The proxies, when
combined with the 2,644,710 shares of Regency common stock owned directly by
Statesman as of September 30, 1995, entitled Statesman to vote a total of
3,500,701 shares, or approximately 31% of the 11,188,997 outstanding shares as
of September 30, 1995.
As reflected in the financial statements of Regency Affiliates, Inc., the
carrying value of NRDC's Aggregate is $850,000. This represents the purchase
cost of NRDC at a figure approximating the historical cost of NRDC's underlying
assets and liabilities and does not reflect the fair market value of the
Aggregate. Management believes that $15 million is a fair appraisal of the
current fair market value of the Aggregate.
On November 18, 1994, Regency Affiliates, Inc. acquired a limited
partnership interest in Security Land and Development Company Limited
Partnership ("Security") for an equity investment of $350,000, which investment
was used to pay brokerage fees related to Regency's purchase of its interest in
Security. Regency has no obligation to make any further capital contribution to
Security. Security owns the 34.3 acre complex at 1500 Woodlawn Drive, Woodlawn,
MD containing the Security West Building, an approximately 717,011 square foot,
two-phase office building, consisting of a two-story office building and a
connected six-story office tower occupied by the United States
12
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Social Security Administration Office of Disability and International Operations
under a nine year lease expiring October 31, 2003 (the "Lease"). The
construction of the Security West Building was completed in 1972 and the
building has been occupied by the Social Security Administration since then
under prior leases between the U.S. Government and Security.
During 1994, Security completed the placement of a $56,450,000
non-recourse project note, due November 15, 2003, issued by Security. The
placement of the project note was undertaken by the issuance of 7.90%
certificates of participation and was underwritten by Dillon Read & Co., Inc.
The net proceeds received from the sale of the certificates will be used to
refinance existing debt of Security related to the project, to finance certain
alterations to the project by Security, to fund certain reserves and to pay
costs of issue. The project note is a non-recourse obligation of Security and is
payable solely from the Lease payments from the U.S. Government, which rental
payments under the Lease are not subject to annual appropriation by the United
States Congress and accordingly, the obligations to make such payments are
unconditional general obligations of the government backed by the full faith and
credit of the United States.
The terms of the Security Land and Development Company Limited Partnership
Agreement (as amended) and the project note (which note will be fully amortized
over the term of the lease) call for Regency Affiliates, Inc. to be allocated
95% of the profits and losses of Security until October 31, 2003, and 50%
thereafter. Regency is to receive certain limited cash flow after debt service,
and a contingent equity build-up depending upon the value of the project upon
termination of the Lease. Regency will also receive certain management fees
relating to Security.
The equity investment of $350,000 in Security Land And Development Company
Limited Partnership was financed in part by the delivery of a promissory note to
Security in the amount of $300,000. The note to Security carried interest at the
"prime rate" as set forth in the "Money Rates" section of the Wall Street
Journal and was due July 8, 1995. At the option of the Company, the Note to
Security was paid by the issuance of 400,000 shares of the Company's Common
Stock on or about July 14, 1995.
In the fiscal quarter ending September 30, 1995, the Company's investment
income from Security was $220,000. Management anticipates that the investment in
Security will provide Regency Affiliates, Inc. with limited cash flow,
approximating $100,000 per annum, and a contingent buildup of equity in
Security, resulting from an allocation by Security of 95% of the booked income
to the Company, that could result in a 50% beneficial interest in the Security
West Building at the termination of the lease in 2003. Despite the cash flow
from Security and the working capital raised by the Private Placement, the
Company continues to suffer from a relative lack of liquidity and capital
resources.
In the last quarter of 1994, Regency Affiliates, Inc. commenced a private
placement of its Cumulative Convertible $100 Series-E Preferred Stock and $0.40
p.v. Common Stock (the "Private Placement") in a transaction reported on Form D,
Notice of Sale of Securities Pursuant To Regulation D, filed with the Securities
and Exchange Commission on November 23, 1994, the contents of which are
incorporated herein by reference thereto. As of September 30, 1995, Regency
Affiliates, Inc. had placed 57 Units ($570,000) of the $350,000 minimum,
$800,000 maximum offering. The securities
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<PAGE> 14
were offered in 80 Units, each consisting of 88.5 shares in Cumulative
Convertible $100 Series-E Preferred Stock and 6,000 shares of the Common Stock,
to accredited investors as defined in Regulation D for a cost of $10,000 per
unit. The proceeds of the offering are being used to fund the Company's
investment in Security Land And Development Company Limited Partnership, for
working capital and to fund acquisitions. Because of the restatement of the
acquisition cost of NRDC, management has determined to offer rescission to the
purchasers in the Private Placement. Management believes there is no substantial
likelihood that the purchasers will exercise rescission because the restatement
does not result from a change in the fair market value of the Aggregate.
As part of the 1993 transaction with NRDC, the Company received a working
capital loan of $100,000 from Statesman Group, Inc., which loan was originally
scheduled to mature on July 7, 1995 and carries a 10% interest obligation
payable quarterly in arrears. Statesman has agreed to extend the maturity of its
loan to January 1, 1996. Effective March 31, 1995, Statesman converted $20,000
of its loan into 12,000 shares of the Company's $0.40 par value Common Stock and
177 shares of the Company's Cumulative Convertible $100 Series E Preferred
Stock. As of September 30, 1995, the balance owed Statesman was $80,000.
Regency Affiliates, Inc. is continuing to explore opportunities for the
acquisition of companies with operations that will provide additional liquidity
and cash flow. The Company anticipates that such acquisitions would be financed
by borrowings secured by the assets acquired and by the Aggregate.
Results of Operations.
Operations of Regency Affiliates, Inc. and its subsidiaries in the quarter
ending September 30, 1995 were limited to the Company's ongoing effort to secure
acquisitions and/or business combinations to provide the Company with material
operations and cash flow.
The statement of operations reflects the income from investment in
Security of $220,000 and $907,000 for the three months and nine months ended
September 30, 1995, respectively, which represents 95% of the net income of
Security Land and Development Company Limited Partnership. Interest expense
includes interest on NRDC's zero coupon bonds, the loan to Statesman and the
note to Security.
Other expenses includes costs associated with acquisitions on which
negotiations have been terminated. These costs include legal, accounting and
commitment fees as well as travel and related out of pocket costs to employees
and consultants.
In March 1995, the Financial Accounting Standards Board issued a new
standard (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." SFAS 121 requires that long-lived assets
and certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS 121 is
effective for financial statements for fiscal years beginning after December 15,
1995. The Company intends to adopt SFAS 121 in the first quarter of 1996 and its
effect on its financial position or results of operations has not yet been
determined.
14
<PAGE> 15
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company has been named a defendant in Ronald C. Bourg, et al. v.
Continental Oil Company, Case No. 95-3192, United States District Court, Eastern
District of Louisiana, New Orleans Division, a personal injury action arising
from an alleged injury to the plaintiff while working on a stationary platform
in the Gulf of Mexico. The Company has denied all liability and has requested a
voluntary dismissal from the plaintiff on the grounds that the Company was
misidentified as an oil and gas pipeline operator.
ITEM 2. CHANGES IN SECURITIES.
Statesman Group, Inc. has consented to an amendment to the Certificate of
Designation of the Company's Cumulative Contingent Convertible $100 Series-C
Preferred stock which will eliminate the contingent conversion rights of these
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There have been no defaults in the payment of principal or interest with
respect to any senior indebtedness of Regency Affiliates, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the vote of security holders during the
reporting period ending September 30, 1995.
ITEM 5. OTHER INFORMATION.
On November 13, 1995, Pamlyn Kelly, Ph.D., a Director of the Company, was
elected interim President of the Company to serve until her successor is duly
elected.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Dated-August 28, 1995
Item Reported-Resignations of Registrant's Directors
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<PAGE> 16
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)
11-16-95 By: /s/ Pamlyn Kelly, Ph.D.
- ----------- ------------------------
Date Pamlyn Kelly, PhD
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 98,313
<SECURITIES> 0
<RECEIVABLES> 2,157
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 118,611
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,254,429
<CURRENT-LIABILITIES> 314,603
<BONDS> 314,500
<COMMON> 4,456,308
340,454
1,052,988
<OTHER-SE> (4,332,321)
<TOTAL-LIABILITY-AND-EQUITY> 2,254,429
<SALES> 534
<TOTAL-REVENUES> 534
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 272,673
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,584
<INCOME-PRETAX> 604,277
<INCOME-TAX> 103,000
<INCOME-CONTINUING> 504,771
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 504,771
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
