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 June 30, 2000 COMMISSION FILE NO. 1-7949

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

Registrant’s Telephone Number (executive office), including Area Code:
(561-220-7662)

Registrant’s Telephone Number (administrative office), including Area Code:
(402-330-7460)

      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 – 17,203,686 shares as of July 31, 2000, including 4,040,375 shares held by a majority owned subsidiary.

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TABLE OF CONTENTS

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REGENCY AFFILIATES, INC.

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The following pages contain the information required by Part I, Item 1.

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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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

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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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

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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)

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

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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)

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

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	Supplemental disclosure of non cash 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 86,833 shares of common stock as payment for public relations and consulting services rendered.

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

	In 1999 the Company issued a promissory note of $650,000 for the purchase of an equity investment in Glas-Aire.

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

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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 three-month and six-month periods ended June 30, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. 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, 1999.

B. Principles of Consolidation – 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 Resources Development Corporation (“NRDC”), Transcontinental Drilling Company (“Drilling”) and RegTransco, Inc. (“RTI”), and its majority owned subsidiary Glas-Aire Industries Group, Ltd. (“Glas-Aire”). All significant inter-company 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 (net income less preferred stock dividend requirements and periodic accretion) by the weighted average number of common shares outstanding during the relevant period. Diluted earnings per share computations assume the exercise of common stock options and the conversion of Series E, 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 method (“FIFO”). Inventory is comprised of the following at June 30, 2000:

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E. Aggregate Inventory – Aggregate inventory consists of 70+ million short tons and is stated at lower of cost or market. The Company is subject to a royalty agreement which requires the payment of certain royalties to a previous owner of the aggregate upon sales 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 period 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 on management’s estimate, if necessary. 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.

Note 2. Investment in Partnership

      In November 1994, the Company purchased a limited partnership interest in Security Land and Development Company Limited Partnership (“Security”), which owns and operates an office complex. The Company has limited voting rights and is entitled to be allocated 95% of the profit and loss of the partnership until October 31, 2003 (the lease termination date of the sole tenant of the office complex) and 50% thereafter. The Company is to receive certain limited cash flow after debt service, and a contingent equity build-up depending upon the value of the project upon termination of the lease. The Company is also entitled to receive certain management fees relating to the partnership. The Company can force the sale of the property after December 31, 2004.

      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 lease between the United States of America, acting by and through the General Services Administration (“GSA”). Effective November 1, 1994, Security and the GSA entered into a nine-year lease (the “Lease”) for 100% of the building. Security has received an opinion of the Assistant General Counsel to the GSA that lease payments are not subject to annual appropriation by the United States Congress and the obligations to make such payments are unconditional general obligations of the United States Government.

      The Company accounts for the investment in partnership on the equity method, whereby the carrying value of the investment is increased or decreased by the Company’s

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allocable share of income or loss. The investment in partnership included in the Consolidated Balance Sheet at June 30, 2000 was $22,176,949. The income from the Company’s equity investment in the partnership for the three months and six months ended June 30, 2000 was $1,193,165 and $2,323,682.

Summarized operating data for Security for the three months and six months ended June 30, 2000, and June 30, 1999, is as follows:

Note 3. Notes Payable

      The Company’s subsidiary, Rustic Crafts, has established a $1,000,000 line of credit with PNC Bank. The line of credit expires on September 18, 2000 and bears interest at the Bank’s prime rate minus one-half percent (9.0% at June 30, 2000). The accounts receivable, inventory and other assets, such as property and equipment, of Rustic Crafts have been pledged as collateral to secure the line of credit. The line of credit is guaranteed by the Company. At June 30, 2000, the amount outstanding under the line of credit was $421,000.

      The Company’s subsidiary, Glas-Aire, has established a Canadian $1,000,000 (U.S. $680,000) line of credit with a Canadian bank. The line of credit expires in April 2001, and is collateralized by accounts receivable and inventory and bears interest at the rate of the Canadian bank’s prime rate plus one-half percent (6.6% at June 30, 2000). At June 30, 2000, the amount outstanding under the line of credit was $134,103.

Note 4. 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, 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 June 30, 2000, the amount outstanding under the Loan is $10,894,038, including interest for the three months and six months ended June 30, 2000 of $200,472 and $381,320, respectively.

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      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 $767,500 to finance the acquisition of new equipment and to install such equipment in the facility. Principal payments on one loan of $604,000 began in 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.

      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 7.52% to 9.0% at June 30, 2000. The outstanding balance on these loans is $1,778,495 at June 30, 2000.

      Rustic Craft’s real and personal property, equipment, accounts receivable, inventory and other general intangibles are pledged as security for the loans. The loans are also guaranteed by the Company. The security agreement requires Rustic Crafts to maintain certain financial ratios. Rustic Crafts was in compliance with such ratios at June 30, 2000.

      Lease Obligations – Glas-Aire has two long-term lease obligations to purchase equipment. These obligations are five-year capital leases and have been recorded as a capital asset and long-term debt. The equipment is pledged as collateral for the leases. The terms of the leases require equal monthly installment of $7,484 including principal and interest over a five year period. Interest rates on the leases range from 6.5% to 8.6%. The total outstanding balance of these lease obligations is $168,331 at June 30, 2000.

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Note 5. 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 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.

      At June 30, 2000, the Company’s net deferred tax liabilities, utilizing a 34% effective tax rate, consists of:

      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 $29,235,000. 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 months and six months ended June 30, 2000, the tax effect of net operating loss carryforwards reduced the current provision for federal income taxes by approximately $146,000 and $261,000, respectively. The Company provided for Canadian, state income and the alternative minimum tax in the three months and six months ended June 30, 2000 in the amount of ($701) and $65,194, respectively.

Note 6. 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

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shares in exchange for 885 shares of preferred stock and paid cash in the amount of $159,300 for 1,593 shares. 88.5 shares of preferred stock are being held pending a new series of preferred stock.

Note 7. Proposed Acquisitions

      In early 2000, the Company announced that it had executed Letters of Intent to acquire 55% of Knight Enterprises, Inc., and 100% of Southwest Mill and Lumber Company and its affiliate Valley Wholesale Supply Corp. The Company anticipated that these acquisitions would be financed by borrowings secured by the assets acquired, additional borrowings secured by the Company’s partnership interest in Security Land and Development Company, and from proceeds of a private placement of preferred stock.

      Consummation of the transactions contemplated by the Letters of Intent were subject to the completion of due diligence by the Company, the execution of definitive purchase agreements and completion of audits of the financial statements to determine among other things, the final purchase price. As of August 10, 2000, definitive purchase agreements have not been executed. Furthermore, certain terms of the transaction have changed significantly from those contemplated and set forth in the Letters of Intent. While the Company continues to talk with the sellers or their representatives in an effort to reach agreements, there can be no assurance that either of the transactions will be consummated.

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 shareholders’ values. The Company’s Shareholders’ Equity at June 30, 2000 was $14,720,400 as compared to $12,113,813 at June 30, 1999, an increase of $2,606,587 for the twelve months ended June 30, 2000.

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 six-month period ending June 30, 2000, the Company’s income from its equity investment in the Partnership was $2,323,682. 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 has increased to $22,176,949, the partnership

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does not provide 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.

      In 1998, Rustic Crafts purchased a building of 126,000 square feet located near the current facility in Scranton, Pennsylvania. The purchase of this facility was funded by new borrowings from PNC Bank in the form of a first mortgage term loan in the amount of $960,000. Rustic Crafts also obtained financing of approximately $923,000 from PNC Bank to equip the facility and purchase new equipment. The move to the new facility was completed in 1999 and has significantly increased the operating capacity and enabled Rustic Crafts to more efficiently fill its current orders and increase its customer base. On the date of acquisition of the new facility, a tenant was renting 23,000 square feet of this facility at a base rent of $17,400 per year plus an allocable share of the real estate taxes. The Company intends to maintain this tenant relationship on an ongoing basis and has rented an additional 28,000 square feet to another tenant at an annual minimum rent of $71,680.

      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 in 1999 of a proposed merger, 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 to commercialize the inventory of previously quarried and stockpiled aggregate at the Groveland Mine in cooperation with an experienced aggregate supply company.

      On April 22, 1999, the Company acquired 513,915 shares (35%) of the outstanding common stock of Glas-Aire for the issuance of a promissory note of $650,000 and $1,213,000 in cash. As of September 23, 1999, Regency had acquired 51.3% of the common stock of Glas-Aire. These common stock acquisitions were effected by open market purchases, with the funding provided by an affiliate of Statesman Group, Inc. on an unsecured basis, by direct purchases from Glas-Aire, and by a common stock exchange agreement between the Company and certain shareholders of Glas-Aire. Under the common stock exchange agreement, the Company issued 1,188,000 shares of its restricted common stock in exchange for 288,000 Glas-Aire common shares held by the shareholders.

      The Company also sold 2,852,375 shares of its common stock to Glas-Aire for cash of $1,967,960 and 86,000 shares of Glas-Aire common stock. The proceeds were used to repay the funding provided by an affiliate of Statesman Group and other general corporate requirements.

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      The Company continues to explore opportunities to acquire companies with operations that will provide additional liquidity and cash flow. In early 2000, the Company announced that it had executed Letters of Intent to acquire 55% of Knight Enterprises, Inc., and 100% of Southwest Mill and Lumber Company and its affiliate Valley Wholesale Supply Corp. The Company anticipated that these acquisitions would be financed by borrowings secured by the assets acquired, additional borrowings secured by the Company’s partnership interest in Security Land and Development Company, and from proceeds of a private placement of preferred stock.

      Consummation of the transactions contemplated by the Letters of Intent were subject to the completion of due diligence by the Company, the execution of definitive purchase agreements and completion of audits of the financial statements to determine among other things, the final purchase price. As of August 10, 2000, definitive purchase agreements have not been executed. Furthermore, certain terms of the transaction have changed significantly from those contemplated and set forth in the Letters of Intent. While the Company continues to talk with the sellers or their representatives in an effort to reach agreements, there can be no assurance that either of the transactions will be consummated.

Results of Operations

      In September 1999, the Company acquired a 51% interest in Glas-Aire which manufactures automotive accessories, therefore, the consolidated financial statements for June 30, 2000 include the operations of Glas-Aire. The operations of the Company also include the operations of Rustic Crafts, which is engaged in the manufacture of decorative fireplaces, heater logs and related accessories.

Three Months Ended June 30, 2000 compared to 1999

      Net sales increased $2,070,090 in 2000 over the similar period in 1999. The increase is due to the inclusion of $2,401,356 of sales from Glas-Aire, offset by a decrease in sales at Rustic Crafts of $328,141. The decrease at Rustic Crafts was due to smaller backlogs and a decrease in sales of low margin products.

      Gross margin increased $604,419 due to gross margins from Glas-Aire of $596,569 an increases in gross margins at Rustic Crafts of $10,975. Rustic Crafts increased their gross margin as a percent of sales from 14.5% in 1999 to 24.7% in 2000 reflecting their emphasis on manufacturing efficiency, reduction of factory overhead and manufacture of higher margin products.

      Selling and administrative expenses increased $712,043 in 2000 as compared to 1999. Selling and administrative expenses of Glas-Aire were $601,168 in 2000. Corporate administrative expenses reflect significantly higher consulting and contract expenses related to increased acquisition, financing and public relations activities. Also, executive bonuses in 1999 reflected a second quarter adjustment to correct first quarter accruals.

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      Income from equity in partnership increased $126,050. This increase is due to a decrease in interest expense resulting from payment of principal offset by increases in operating expenses within the partnership for the quarter.

      Interest expense in 2000 remained about the same as in the prior year. Increased interest expense on the KBC loan and loans at Rustic Crafts was offset by the elimination of interest expense on the zero coupon bonds and short-term financing to acquire an equity interest in Glas-Aire.

      Income tax expense in 2000 reflects an adjustment to tax expense at Glas-Aire in an amount approximately equal to the accrual for other companies.

      Net income decreased $25,718 in 2000 compared to 1999. Increased equity earnings from the partnership and a reduction in the loss at Rustic Crafts were offset by higher corporate administrative expenses and a reduction in interest income resulting from lower short-term cash investments.

Six Months Ended June 30, 2000 compared to 1999

      Total sales increased $3,249,502 in the first six months of 2000 compared to 1999. The six months of 2000 include $3,963,164 of sales of Glas-Aire in which the Company acquired a 51% interest in September 1999. Sales of Rustic Crafts declined by $714,869 in 2000 due to the reduction in backlog at the beginning of the year and the company’s focus on higher margin products and an effort to reduce its reliance on its major customer.

      Total gross margin increased $1,004,979 due to the gross margin of Glas-Aire of $1,024,900. Gross margins at Rustic Crafts remained about the same as in prior years reflecting the success of the company’s strategy to focus on higher margin products. The material cost of goods sold was reduced from almost 50% of sales in 1999 to about 31% in 2000.

      Selling and administrative expenses increased $1,178,812 in 2000 over 1999, including selling and administrative expenses of Glas-Aire of $912,501. Corporate administrative expenses increased significantly primarily due to higher consulting and contract fees in 2000. These expenses include approximately $162,060 for outside consultants and public relations expense. Fees associated with financing and acquisitions were also higher in 2000.

      Income from partnership increased $211,567 primarily due to a reduction in interest expense related to long-term financing offset by an increase in operating expenses within the partnership.

      Other income decreased due to lower short-term investment balances in 2000. Short-term investments were liquidated to provide operating funds.

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      Total interest expense remained approximately the same in 2000. The reduction in interest due to the retirement of the zero coupon bonds in late 1999 was offset by higher interest expense at Rustic Crafts and on the KBC bank loan.

      Net income decreased $87,939 in 2000 compared to 1999. This decrease is attributable to a decrease in net operating income of $173,833 in spite of the contribution of Glas-Aire of $112,399. The reduction is primarily due to increased corporate administrative expenses as described above. Management believes that administrative expenses in the last half of 2000 will be approximately the same as the last half in 1999.

Year 2000 Issues.

      The Company had not anticipated any material difficulties associated with Year 2000 issues, and none materialized. The Company made no significant expenditures in connection with Year 2000 issues.

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 had a negative cash flow from operations for the first six months in 2000. The Company’s current operations do not generate sufficient cash flow to cover corporate operating expenses and thus the Company must rely on its cash reserves 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 and to obtain financing using its assets as collateral.

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	(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.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

      None.

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.

      Exhibit 27 – Financial Data Schedule.

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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)

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