Strong Buy Recommendation

STRONG rumor: We are hearing that RAFF is an immediate buy-out candidate. As such, shareholders could be holding a stock valued at $9 in a very short period of time. Negotiations are allegedly in the very final stages. Give IMMEDIATE consideration to RAFF now!

Regency Affiliates Inc (OTCBB:RAFF)

We focus your attention on a very remarkable parent company, that is very profitable, expanding rapidly and has considerably undervalued assets. This company is Regency Affiliates. (OTC BB: RAFF)

The best known subsidiary is Glas-Aire Industries, owned 51% by Regency Affiliates, which recently announced a record share dividend to be paid to its shareholders on March 10, 2000. Other subsidiaries of Regency Affiliates include Rustic Crafts, the world's largest decorative fireplace manufacturer, and National Resource Development Corporation, which owns a large amount of aggregate for road construction.

Regency is constantly looking to expand its business and is currently planning to take over the Southwest Mill and Lumber Company, a California based producer of picture frame moulding and frames. Southwest is believed to be the largest such company in the Western United States.

We are also hearing rumours that Regency Affiliates will be taking over more companies in the next weeks, one of which is in the high tech industry.

Outstanding Shares: 12,744,000 Earnings Per Share: $0.14 Recent Price: $4 1/8

You can read the full press releases at: http://biz.yahoo.com/prnews/000222/fl_regency_1.html http://biz.yahoo.com/e/991118/raff.ob.html

COMPANY OVERVIEW

Regency Affiliates is a *fully* reporting company with substantially undervalued assets. First of all the company has a net operating tax loss carry forward of approximately $30,000,000.

Secondly, Regency Affiliates receives 95% of the income generated by the Security West Building in Woodland, Maryland, until October 31, 2003 and will continue to receive 50% of the income after that date. This multi-story building houses a section of the Social Security Administration and 4,000 employees. The government has already identified this building in its long term planning and negotiations are underway for an extension of the lease until 2018 at a rental of approximately $12,500,000 per year.

Regency Affiliates owns 80% of the National Resource Development Corporation, which owns 75,000,000 tons of sand, gravel and aggregate, already mined and stockpiled in Michigan. This is currently in the books at $0.1 per ton, but it is being sold at $6 per ton. Furthermore, the aggregate exceeds all specifications of the federal Superpave legislation, which mandates the use of hard abrasive rock for all road construction.

Regency Affiliates also owns 100% of Rustic Crafts, a Scranton, Pennsylvania, based company, that is engaged in the manufacture of decorative wood and cast marble fireplaces, fireplace accessories, mantels and other home furnishings. For the nine months ended September 30, 1999 net sales rose 20% to $3,000,000 and net income rose 18% to $1,400,000. This company isexpected to co ntinue to be very profitable.

Finally Regency Affiliates owns 51% of Glas-Aire Industries, a leading OEM manufacturer of bug and wind deflectors for the automotive industry. This company is publicly traded on NASDAQ under the symbol GLAR and went from $6 to $18 over the past few months. This company is profitable and growing at a rate of 50% per year.

SUMMARY

At the current share price of $3 11/16 we find this company very undervalued at least. The recent gains of Glas-Aire Industries are yet to have its effect on the price of Regency shares. The stake the company holds in National Resource Development Corporation is currently valued at $0.1 per ton, although it is being sold at $6 per ton. This will have a strong influence on the company's financial results for following quarters.

We also believe the company will continue to expand into other sectors, which will furtherincrease their revenues. All these things lead us to place a short term price target of at least $8.

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