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

FORM 10-K

Commission File Number 0-10695

REGENCY EQUITIES CORP.
(Exact name of registrant as specified in its charter)

11845 West Olympic Boulevard, Suite 900
Los Angeles, California 90064
(Address of principal executive offices, including zip code)

(310) 876-0569
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common stock ($.01 par value)
(Title of Class)

     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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

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     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [   ] No [X]

     The aggregate market value of the voting securities held by nonaffiliates of the registrant as of June 30, 2002, based upon the average of the bid and asked prices on that date, was approximately $282,954. For purposes of this calculation, all officers and directors of the registrant were considered affiliates, as were all beneficial owners (whether individuals, entities or groups) of more then ten percent of the registrant’s Common Stock.

     Number of shares of Common Stock, par value $.01, outstanding as of March 26, 2003: 87,283,661.

     Documents Incorporated by Reference: None.

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PART I

Item 1. Business.

The corporate headquarters of Regency Equities Corp. (the “Company”) are located at 11845 West Olympic Boulevard, Suite 900, Los Angeles, California 90064. The Company shares this suite on a rent-free basis with the accounting firm of Engel, Kalvin, McMillan & Company, LLP. The Company’s Chief Financial Officer, Morris Engel, is a partner in Engel, Kalvin, McMillan & Company, LLP. The Company has two employees: Mr. Engel and Allan L. Chapman, the Company’s Chairman of the Board, Chief Executive Officer and President.

The Company owns a shopping center in Grand Rapids, Michigan. Approximately 12% of the shopping center’s space is leased to a tenant. The balance of the shopping center’s space has been vacant since July 1997. The Company sustained a net operating loss of $71,213 from this property in 2002. For further information regarding the Grand Rapids property, see the Company’s financial statements and notes thereto that are included in this Annual Report on Form 10-K.

During 2002 and the preceding several years, substantially all of the Company’s remaining assets have consisted of cash which has been deposited with several major United States banks. For further information regarding the amount of revenue, operating profit or loss and identifiable assets attributable to the Company’s various operations, reference is made to the Company’s financial statements and notes thereto that are included in this Annual Report on Form 10-K.

First Lincoln Holdings, Inc., a Delaware corporation, beneficially owns 72,867,965 shares of the Company’s common stock, which represents 83.48% of the Company’s outstanding common stock. Of that aggregate number of shares, First Lincoln Holdings, Inc. is the record owner of 1,010,000 shares and Evergreen Acceptance Corporation, a Delaware corporation and a wholly owned subsidiary of First Lincoln Holdings, Inc., is the record owner of 71,857,965 shares. Martin Oliner, who is a director of the Company, is the Chairman of the Board of Directors, President, Chief Executive Officer and sole stockholder of First Lincoln Holdings, Inc.

The nature and direction of the future business and operations of the Company are uncertain. The Board of Directors intends to consider suitable business ventures for the Company.

Item 2. Properties.

See “Item 1. Business.” The Company does not own any real property other than the Grand Rapids shopping center described above.

Item 3. Legal Proceedings.

Not applicable.

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

No matters were submitted to the Company’s stockholders during the quarter ended December 31, 2002.

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PART II

Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters.

(a)  Market Information.

Until February 8, 1995, the principal market for the Company’s common stock was the Nasdaq National Market System. On that date, primarily as a result of the Company’s February 7, 1995 cash dividend which represented approximately 77.5% of its total assets, the Company’s stock was delisted from the Nasdaq National Market System. The common stock is now traded over-the-counter, and there is not an active market for such stock.

The following table reflects the highest and lowest per share prices for the Company’s common stock as quoted for the periods indicated. Because there is no longer an established, active public trading market for the Company’s common stock, the following prices may not be an accurate indication of the value of such stock.

(b)  Holders.

The number of record holders of the Company’s common stock on March 13, 2003 was 1,509.

(c)  Dividends.

The Company has not historically paid regular dividends on its common stock and does not presently intend to do so in the future. On February 7, 1995, the Company paid an extraordinary cash dividend of $.15 per share to stockholders of record as of January 30, 1995. The Company has not paid any other dividends since February 7, 1995.

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Item 6. Selected Financial Data.^(a)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company conducts limited business operations, and its future is uncertain. See “Item 1. Business” for a discussion of the Company’s business and future direction. The following discussion should be read in conjunction with the Company’s financial statements and notes thereto that are included elsewhere in this Annual Report on Form 10-K.

(a)

Results of Operations.

     (i)  Year Ended December 31, 2002 Compared with Year Ended December 31, 2001.

The Company recorded a loss before income taxes of $181,041 in 2002 compared to a loss of $150,157 in 2001. The increase in loss resulted principally from (i) a decrease in interest income of $71,080, (ii) an increase in stock transfer agent fees of $6,183, (iii) an increase in rental property utilities of $7,190, (iv) an increase in rental property management fees of $2,250 and (v) an increase in rental property insurance of $2,303. The decrease in operating results was partially offset by a decrease in professional fees of $58,317.

     (ii)  Year Ended December 31, 2001 Compared with Year Ended December 31, 2000.

The Company recorded a loss before income taxes of $150,157 in 2001 compared to a loss before income taxes of $76,362 in 2000. The increase in loss resulted principally from (i) a decrease in interest income of $31,733, (ii) an increase in accounting fees of $8,212 due to a change in auditing firms and Securities and Exchange Commission required reviews of the Company’s Quarterly Reports on Form 10-Q, and (iii)

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an increase in legal fees of $42,246 due to two proposed mergers which were terminated during the year. The increase in operating loss was offset in part by a decrease of $7,003 in rental operating expenses

(b)  Liquidity, Capital Resources and Future Operations.

As of December 31, 2002, the Company had cash in the amount of $2,736,423 invested in interest-bearing demand deposit accounts with two major United States banks. The Company has sufficient cash for its current operating needs; the Company does not currently have any material commitments for capital expenditures; and it has no present plans to incur any indebtedness.

The business direction of the Company is uncertain. As a result, the reported financial information contained in this Annual Report on Form 10-K is not necessarily indicative of future operating results or of future financial condition.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company has exposure to interest rate changes as a result of interest rate changes relating to the cash and cash equivalent balances that it maintains with two banks. However, the Company believes that any such reasonably anticipated changes in interest rates are unlikely to have a material effect on the Company’s financial position and results of operations.

Item 8. Financial Statements and Supplementary Data.

The information with respect to this item is set forth in the Company’s financial statements and notes thereto included in this Annual Report on Form 10-K and listed in the Index to Financial Statements and Financial Statement Schedules set forth in Item 15 herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On February 12, 2001, the Company filed with the Securities and Exchange Commission (the “Commission”) a Current Report on Form 8-K regarding a change in accountants. On February 20, 2001, the Company filed with the Commission an amendment to its Current Report on Form 8-K for the purpose of setting forth additional information regarding its change in accountants.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

The directors and executive officers of the Company are as follows:

William J. Adams has served as Secretary and a director of the Company since June 1992 and is presently engaged in the private practice of law. Mr. Adams served as Vice President, Secretary and General Counsel of First Lincoln Holdings, Inc., an insurance holding company which was formerly called First Executive Corporation, from 1982 through May 1993, and as a director and as Secretary and General Counsel of Evergreen Acceptance Corporation, a subsidiary of First Lincoln Holdings, Inc., from 1982 through May 1993.

Allan L. Chapman has served as Chairman of the Board of Directors, Chief Executive Officer and President of the Company since June 30, 1992. He has also served as President of the Sterling Group, an actuarial consulting firm, since March 1991. He served as a Senior Vice President and a director of Executive Life Insurance Company from 1980 until February 1991 and as a Vice President of First Executive Corporation (now called First Lincoln Holdings, Inc.), an insurance holding company, from 1980 until February 1991.

Morris Engel has served as Chief Financial Officer of the Company since May 1991 and as Treasurer since March 1993. He has also been a partner in the accounting firm of Engel, Kalvin, McMillan & Company, LLP since November 1990. Mr. Engel was a partner in the accounting firm of Laventhol & Horwath from 1969 to 1990.

Ira L. Gottshall has served as a director of the Company since August 1992. Mr. Gottshall is Regional Vice President of IOF Foresters, which is an insurance company. Mr. Gottshall served as President of National Affiliated Corp., an insurance holding company, from January 1997 until January 1998. Prior to 1997, Mr. Gottshall served as an executive officer of several other insurance companies, including as President and Chief Executive Officer of First Delaware Life Insurance Company from July 1991 until January 1994 and as a Vice President of Evergreen Acceptance Corporation from September 1992 until January 1994.

Martin Oliner has served as a director of the Company since November 1993 and has been engaged in the private practice of law since 1972. Mr. Oliner serves as Chairman of the Board of Directors, President and Chief Executive Officer of First Lincoln Holdings, Inc., which is an insurance holding company.

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Directors are elected at the annual meeting of stockholders to serve during the ensuing year and until a successor is duly elected and qualified. In February 2003, Ronald LaBow resigned as a director of the Company, and in March 2003, Peter M. Graham resigned as a director of the Company. Officers serve at the pleasure of the Board of Directors. There are no family relationships between or among any of the directors and executive officers of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 and regulations adopted thereunder require the Company’s directors and officers and persons who own more than ten percent of the outstanding shares of the Company’s common stock (collectively, the “Reporting Persons”) to file with the Securities and Exchange Commission and the Company initial reports of ownership and reports of changes in ownership of the Company’s common stock and other equity securities. Based solely upon (i) the Company’s review of the Forms 3, 4 and 5 that were furnished by the Reporting Persons to the Company pursuant to Section 16(a) and applicable regulations during and with respect to the Company’s most recent fiscal year and (ii) written representations received by the Company from its directors and officers, the Company believes that all applicable Section 16(a) filing requirements were complied with on a timely basis by the Reporting Persons during and with respect to the Company’s most recent fiscal year.

Item 11. Executive Compensation.

(a)  Summary Compensation Table.

The following table sets forth all compensation paid or awarded by the Company for services rendered during the fiscal years ended December 31, 2002, December 31, 2001 and December 31, 2000 to its Chief Executive Officer. No executive officer or other employee of the Company had aggregate compensation for salary and bonus in excess of $100,000 during the most recently completed fiscal year.

SUMMARY COMPENSATION TABLE

																		Long-Term Compensation
																		Awards								Payouts
						Annual Compensation																Securities
																		Restricted				Underlying								All Other
Name and														Other Annual				Stock				Options/				LTIP				Compensation
Principal Position		Year				Salary ($)				Bonus ($)				Compensation ($)				Awards($)				SARs(#)				Payouts($)				($)(1)
Allan L. Chapman			2002			$	36,000				0				0				0				0				0			$	3,000
Chairman, Chief			2001			$	36,000				0				0				0				0				0			$	4,000
Executive Officer and President			2000			$	36,000				0				0				0				0				0			$	4,000

(b)  Compensation of Directors.

During 2002, the Company’s directors received $1,000 per Board meeting and $500 per committee meeting attended.

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(c)  Indemnification Agreements.

The Company has entered into an indemnification agreement with each of its current directors and executive officers. The indemnification agreements provide for the mandatory indemnification of each director and executive officer by the Company with respect to proceedings arising out of or related to actions taken or omitted to be taken by the individuals as directors, officers, employees or agents of the Company. Under the agreements, the Company is obligated to indemnify each of these individuals to the fullest extent permitted by Delaware law and, if requested, is obligated to advance the reasonable expenses of any such individual with respect to a proceeding, unless independent legal counsel determines that such payments are not permitted. The Company’s obligations under these agreements continue notwithstanding the cessation of the individuals’ tenure as directors and officers of the Company.

(d)  Compensation Committee Interlocks and Insider Participation.

The sole member of the Company’s Stock Option/Compensation Committee is William J. Adams. Mr. Adams is the Company’s Secretary, which is not a salaried position.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

With respect to each person known by the Company to be the beneficial owner of more than five percent of its common stock, each director of the Company, each of the Company’s executive officers named in the Summary Compensation Table presented above and all directors and executive officers of the Company as a group, the following table sets forth the number of shares of common stock beneficially owned as of March 1, 2003 by each such person or group and the percentage of the outstanding shares of the Company’s common stock beneficially owned as of March 1, 2003 by each such person or group. Unless otherwise indicated, each of the following stockholders has, to the Company’s knowledge, sole voting and investment power with respect to the shares beneficially owned, except to the extent that such authority is shared by spouses under applicable law or otherwise noted herein. Information presented below with respect to persons or groups owning more than five percent of the Company’s common stock is based upon Schedule 13D or 13G filings made by such persons or groups with the Securities and Exchange Commission.

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Equity Compensation Plan Information

The following table sets forth certain information as of December 31, 2002 regarding securities authorized for issuance under the Company’s equity compensation plans.

The compensation plans approved by security holders represent the Company’s 1986 Stock Option Plan and Incentive Stock Option Plan.

Item 13. Certain Relationships and Related Transactions.

Morris Engel, the Company’s Chief Financial Officer and Treasurer, is a partner in the accounting firm of Engel, Kalvin, McMillan & Company, LLP. The Company paid fees of $16,227 to Engel, Kalvin, McMillan & Company, LLP in 2002 in consideration for accounting and tax services rendered by that firm.

Item 14. Controls and Procedures.

Within the 90-day period prior to the filing date of this report, an evaluation was conducted under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company that is required to be disclosed in the Company’s reports that are filed under the Exchange Act. Subsequent to the date that the Chief Executive Officer and Chief Financial Officer completed their evaluation, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect such internal controls.

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PART IV

Item 15. Exhibits, Financial Statements and Financial Statement Schedules and Reports on Form 8-K.

(a)  Index to Financial Statements and Financial Statement Schedules.

(b)  Exhibits.

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(c)  Reports on Form 8-K.

The Company did not file any Reports on Form 8-K for the quarter ended December 31, 2002.

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SIGNATURES

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

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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CERTIFICATIONS

I, Allan L. Chapman, certify that:

1.		I have reviewed this annual report on Form 10-K of Regency Equities Corp.;
2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	(a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	(b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
	(c)		presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

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

	(a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.

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

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I, Morris Engel, certify that:

1.		I have reviewed this annual report on Form 10-K of Regency Equities Corp.;
2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	(a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	(b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
	(c)		presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

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

	(a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.

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

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REGENCY EQUITIES CORP.

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 15(a)(1) and 15(a)(2)

FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

THREE YEARS ENDED DECEMBER 31, 2002

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REPORT OF INDEPENDENT AUDITORS

Board of Directors
Regency Equities Corp.

We have audited the accompanying balance sheets of Regency Equities Corp. as of December 31, 2002 and 2001, and the related statements of operations, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Regency Equities Corp. as of December 31, 2002 and 2001 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Los Angeles, California
February 20, 2003

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REGENCY EQUITIES CORP.

BALANCE SHEETS

See accompanying notes to financial statements.

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REGENCY EQUITIES CORP.

STATEMENTS OF OPERATIONS

See accompanying notes to financial statements.

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REGENCY EQUITIES CORP.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THREE YEARS ENDED DECEMBER 31, 2002

See accompanying notes to financial statements.

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REGENCY EQUITIES CORP.

STATEMENTS OF CASH FLOWS

See accompanying notes to financial statements.

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE A — SIGNIFICANT ACCOUNTING POLICIES

BUSINESS: Regency Equities Corp. (the “Company”) is incorporated in the state of Delaware. The Company owns and leases to third parties a shopping center in Grand Rapids, Michigan.

CASH: Cash at December 31, 2002 is deposited with two major U.S. banks. At December 31, 2002 and throughout the year the Company has maintained balances in its bank accounts in excess of the federally insured limit.

DEPRECIATION: Rental property is depreciated over its estimated useful life of 25 years using the straight-line method.

LONG-LIVED ASSETS: The Company periodically reviews long-lived assets for impairment to determine whether any events or circumstances indicate that the carrying amount of the assets may not be recoverable. In determining if an impairment exists, management estimates the future undiscounted cash flows expected to be received, including the eventual disposition of the asset, less the related estimated cash out-flows expected to be incurred. If an impairment is indicated based upon the above, a determination is made of the asset's estimated fair value based upon recent appraisals. If the estimated fair value is less than the asset's net book value, an impairment is recognized.

RENTAL INCOME: The Company recognizes minimum rents from leases on a straight-line basis over the lease term. Overage rentals are recognized in the period earned.

INCOME TAXES: Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities.

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

ACCOUNTING ESTIMATES: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

EARNINGS PER SHARE: In February 1997, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (SFAS) No. 128 Earnings Per Share (“EPS”). SFAS No. 128 requires dual presentation of basic EPS and diluted EPS on the face of all income statements issued after December 15, 1997 for all entities with complex capital structures. Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. As the Company does not have any stock options, warrants or other convertible securities outstanding, basic and diluted EPS are the same, and only basic EPS is presented.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations.” This statement addresses financial accounting and reporting for business combinations and supersedes Accounting Principles Bulletin (“APB”) Opinion No. 16, “Business Combinations,” and SFAS No. 38, “Accounting for Pre-Acquisition Contingencies of Purchased Enterprises.” All business combinations in the scope of this statement are to be accounted for using one method, the purchase method. The provisions of this statement apply to all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method for those business combinations is prohibited. This statement also applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001 or later. This statement is not applicable to the Company.

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE A — SIGNIFICANT ACCOUNTING POLICIES (continued)

In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets.” This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, “Intangible Assets.” It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. It is effective for fiscal years beginning after December 15, 2001. Early application is permitted for entities with fiscal years beginning after March 15, 2001, provided that the first interim financial statements have not been issued previously. This statement is not applicable to the Company.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This statement applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development, and/or the normal operation of long-lived assets, except for certain obligations of lessees. This statement is not applicable to the Company.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement replaces SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,” the accounting and reporting provisions of APB No. 30, “Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business, and amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The Company does not expect adoption of SFAS No. 143 to have a material impact, if any, on its financial position or results of operations.

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE A — SIGNIFICANT ACCOUNTING POLICIES (continued)

In April 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 updates, clarifies, and simplifies existing accounting pronouncements. This statement rescinds SFAS No. 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in Accounting Principles Board No. 30 will now be used to classify those gains and losses. SFAS No. 64 amended SFAS No. 4 and is no longer necessary as SFAS No. 4 has been rescinded. SFAS No. 44 has been rescinded as it is no longer necessary. SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-lease transactions. This statement also makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practices. This statement is not applicable to the Company.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” This statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF Issue 94-3, a liability for an exit cost, as defined, was recognized at the date of an entity’s commitment to an exit plan. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002 with earlier application encouraged. This statement is not applicable to the Company.

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE A — SIGNIFICANT ACCOUNTING POLICIES (concluded)

In October 2002, the FASB issued SFAS No. 147 “Acquisition of Certain Financial Institutions,” SFAS No. 147 removes the requirement in SFAS No. 72 and Interpretation 9 thereto, to recognize and amortize any excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired as an unidentifiable intangible asset. This statement requires that those transactions be accounted for in accordance with SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” In addition, this statement amends SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” to include certain financial institution-related intangible assets. This statement is not applicable to the Company.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” an amendment of SFAS No. 123. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. This statement is effective for financial statements for fiscal years ending after December 15, 2002. The Company has not yet determined the impact SFAS No. 148 will have on its financial statements.

NOTE B — RENTAL ACTIVITY

The Company, as lessor, leases space in a shopping center (the Center) located in Grand Rapids, Michigan.

In July 1997, the lease for the tenant occupying approximately 12.5% of the Center expired. The tenant continues to occupy the space on a month-to-month basis. Minimum rent in connection with this tenant is $3,500 per month.

The remaining approximately 87.5% of the Center is vacant.

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE C — INCOME TAXES

The provision for income taxes consists of:

The reconciliation of the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes is as follows:

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE C — INCOME TAXES (BENEFIT) (continued)

Deferred tax assets (liabilities) consist of:

A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The net deferred assets reflects management’s estimate of the amount which will be realized from future profitability with reasonable certainty. The net change in the total valuation allowance for the years ended December 31, 2002, 2001, and 2000 were $76,466, $63,795 and $153,027, respectively. The increases in 2002 and 2001 result primarily from management’s assessment of the value of the Company’s loss carryforward incurred in those years.

(Continued)

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REGENCY EQUITIES CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE C — INCOME TAXES (BENEFIT) (concluded)

The Company had operating loss carryforwards at December 31, 2002 for federal income tax purposes as follows:

The Company also had significant California and Michigan state operating loss carryforwards at December 31, 2002.

The Company made income tax payments of $1,220, $2,020 and $2,020 during 2002, 2001 and 2000, respectively.

NOTE D — INCENTIVE STOCK OPTION PLANS

The Company has incentive stock option plans for certain officers that provide for options to be granted at a price equal to fair market value at the date of the grant. Options cannot be exercised after ten years from the date of the grant or more than three months after the termination of an optionee’s employment with the Company. No stock options were granted or exercised in 2000, 2001 or 2002. No options were outstanding at December 31, 2002; however, options were available to be granted for 5,450,000 shares.

NOTE E — RELATED PARTY TRANSACTIONS

The current Chief Financial Officer is a partner in a certified public accounting firm which provides accounting and tax services to the Company. Fees paid by the Company to that firm were $16,227 in 2002, $20,227 in 2001 and $11,182 in 2000.

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REPORT OF INDEPENDENT AUDITORS
FINANCIAL STATEMENT SCHEDULES

Board of Directors
Regency Equities Corp.

Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedules II and III are presented for purposes of complying with the Securities and Exchange Commission’s rules and are not a part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

The Supplemental Information — Selected Quarterly Financial Data was not audited by us and, accordingly, we do not express an opinion on it.

Singer Lewak Greenbaum & Goldstein LLP

Los Angeles, California
February 20, 2003

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REGENCY EQUITIES CORP.
SUPPLEMENTAL INFORMATION
SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)

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REGENCY EQUITIES CORP.

VALUATION AND QUALIFYING ACCOUNTS — SCHEDULE II