<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the Transition period from          to


Commission file number               0-11777
                       ---------------------------------------------------------

                          FIRST EQUITY PROPERTIES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in the charter)


            Nevada                                               95-6799846
----------------------------------                           -------------------
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

              1800 Valley View Lane, Suite 160, Dallas, Texas 75234
            ---------------------------------------------------------
                    (Address of principal executive offices)

                                  214-750-5800
            ---------------------------------------------------------
              (Registrant's telephone number, including area code)

            ---------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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
    -----         -------

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS.

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes   X   .    No
    -----         -------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         As of March 31, 2003, registrant had 10,570,944 shares of Common Stock
issued and outstanding.


<PAGE>


                  FIRST EQUITY PROPERTIES, INC. & SUBSIDIARIES


                                    FORM 10-Q
                                 March 31, 2003


                                      INDEX


<Table>
<Caption>
                                                                                                   Page No.
<S>                                                                                                <C>
Part I Financial Information:

   Item 1.    Financial Statements

     Consolidated Balance Sheets
       March 31, 2003 (Unaudited) and December 31, 2002.................................................3

     Consolidated Statement of Earnings (Unaudited)
       Three Months Ended March 31, 2003 and 2002.......................................................4

     Consolidated Statement of Cash Flows (Unaudited)
       Three Months Ended March 31, 2003 and 2002.......................................................5

     Notes to Consolidated Financial Statements.........................................................6

   Item 2.    Management's Discussion and Analysis of Financial
     Condition and Results of Operations................................................................7

   Item 4.    Controls and Procedures...................................................................7

Part II Other Information:

   Item 6.    Exhibits and Reports on Form 8-K..........................................................7
</Table>

                                       2

<PAGE>


                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                            March 31, 2003    December 31,
                                                             (Unaudited)         2002
                                                            --------------   --------------
<S>                                                         <C>              <C>
                                     ASSETS

Cash and cash equivalents                                   $        6,487   $        5,450
Accounts receivable - affiliate                                    346,338          346,338
Notes and interest receivable                                      594,456               --
Investments                                                     40,528,449       41,113,449
                                                            --------------   --------------

                                                            $   41,475,730   $   41,465,237
                                                            ==============   ==============


                      LIABILITIES AND SHAREHOLDERS' EQUITY


Accounts payable - trade                                    $      239,999   $      239,999
Accounts payable - affiliate                                     2,913,933        2,958,933
                                                            --------------   --------------

       Total liabilities                                         3,153,932        3,198,932

Minority interest in limited partnership                           547,498          547,498

Shareholders' equity
   Common stock, $0.01 par, 40,000,000 shares
     authorized, 10,570,944 shares issued and outstanding          105,710          105,710
   Capital in excess of par value                                1,281,548        1,281,548
   Retained earnings                                            36,387,042       36,331,549
                                                            --------------   --------------

         Total shareholders' equity                             37,774,300       37,718,807
                                                            --------------   --------------

                                                            $   41,475,730   $   41,465,237
                                                            ==============   ==============
</Table>


                                       3

<PAGE>


                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
               For the three months ended March 31, 2003 and 2002
                                   (Unaudited)

<Table>
<Caption>
                                          2003          2002
                                      -----------   -----------
<S>                                   <C>           <C>
Revenue
   Management fees                    $    47,555   $    44,959
   Interest income                          9,459            19
                                      -----------   -----------

                                           57,014        44,978
Operating expenses
   General and administrative                 833           852
   Legal and professional fees                688         2,601
                                      -----------   -----------

       Total operating expenses             1,521         3,453
                                      -----------   -----------

       NET EARNINGS                   $    55,493   $    41,525
                                      ===========   ===========

Earnings per share                    $        --   $        --
                                      ===========   ===========

Weighted average shares outstanding    10,570,944    10,570,944
                                      ===========   ===========
</Table>


                                       4

<PAGE>


                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the three months ended March 31, 2003 and 2002
                                   (Unaudited)

<Table>
<Caption>
                                                                      2003           2002
                                                                  -----------    -----------
<S>                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net earnings                                                   $    55,493    $    41,525
     Adjustments to reconcile net income to net cash
       provided by (used for) operating activities
      (Increase) decrease in
       Accounts receivable - affiliate                                     --        (33,319)
       Interest receivable                                             (9,456)            --
     Increase (decrease) in
       Accounts payable - affiliate                                   (45,000)       (10,000)
                                                                  -----------    -----------

           Net cash provided by (used for) operating activities         1,037         (1,794)

Net increase (decrease) in cash and cash equivalents                    1,037         (1,794)

Cash and cash equivalents at beginning of period                        5,450          8,985
                                                                  -----------    -----------

Cash and cash equivalents at end of period                        $     6,487    $     7,191
                                                                  ===========    ===========

Noncash investing and financing activities:

    Exchange of investment for note receivable                    $   585,000    $        --
</Table>

                                       5


<PAGE>


                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2003
                                   (Unaudited)

NOTE A - BASIS OF PRESENTATION

         The accompanying 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.
         Accordingly, they do not include all of the information and footnotes
         required by generally accepted accounting principles for complete
         financial statements. Operating results for the interim period
         presented are not necessarily indicative of the results that may be
         expected for the year ended December 31, 2003. For further information,
         refer to the Company's annual report on Form 10-K for the year ended
         December 31, 2002.


                                       6

<PAGE>


                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES

Item 2.       Managements Discussion and Analysis of
              Financial Condition and Results of Operations

Results of Operations

Three months ended March 31, 2003 compared to three months ended March 31, 2002

Revenues increased to $57,014 from prior year of $44,978 due to increased
interest income on the note receivable. Total operating expenses decreased to
$1,521 in 2003 from $3,453 in 2002.

The decrease in operating expenses was due to lower legal and professional fees
in 2003.

Financial Condition and Liquidity

At March 31, 2003, the Company had total assets of $41,475,730 compared to
$41,465,237 at December 31, 2002. Cash and cash equivalents were $6,487. During
the first quarter of 2003, the Company exchanged an investment in stock for a
note receivable in the amount of $585,000.

Total liabilities were $3,153,932 versus $3,198,932 at December 31, 2002.

Item 4.       Controls and Procedures
Based on their most recent evaluation, which was completed within 90 days of the
filing of this Form 10-Q, our Acting Principal Executive Officer and Chief
Financial Officer, believe our disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) are effective. There were not any
significant changes in internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
and there has not been any corrective action with regard to significant
deficiencies and material weaknesses.

Part II Other Information

     Item 6.    Exhibits and Reports on Form 8 - K

       (a)      Exhibits

         Exhibit 99.1 - Certification Pursuant to 18 U.S.C. Section 1350, as
         Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

       (b)      Reports on Form 8-K - None

                                       7

<PAGE>


                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to he signed on its behalf by the
undersigned thereunto duly authorized.

                                              FIRST EQUITY PROPERTIES, INC.


May 15, 2003                           /s/    Ronald E. Kimbrough, Director,
                                              Vice President and Treasurer



                                       8


<PAGE>



                                  CERTIFICATION

I, Ronald E. Kimbrough, Acting Principal Executive Officer and Chief Financial
Officer of First Equity Properties, Inc. ("the Company"), certify that:

1.       I have reviewed this quarterly report on Form 10-Q of the Company;

2.       Based on my knowledge, this quarterly 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 quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly 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 quarterly report;

4.       I am responsible for establishing and maintaining internal controls and
         procedures and have:

         a.       designed such internal controls to insure that material
                  information relating to the company and its consolidated
                  subsidiaries is made known to me by others within those
                  entities, particularly for the periods presented in this
                  quarterly report;

         b.       evaluated the effectiveness of the Company's internal controls
                  as of a date within 90 days prior to the filing date of this
                  quarterly report; and

         c.       presented in this quarterly report my conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on a date within 90 days prior to the filing date of this
                  quarterly report;


                                       9

<PAGE>




                            CERTIFICATION (CONTINUED)


5.       I have disclosed to the Company's auditors and Audit Committee of the
         Board of Directors (or persons fulfilling the equivalent function):

         a.       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the Company's
                  ability to record, process, summarize, and report financial
                  data and have identified for the Company'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
                  Company's internal controls; and

6.       I have indicated in this quarterly 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 my
         most recent evaluation, including corrective actions with regard to
         significant deficiencies and material weaknesses.



/s/ Ronald E. Kimbrough


Ronald E. Kimbrough
Acting Principal Executive Officer and Chief Financial Officer
May 15, 2003



                                       10

<PAGE>

                               Index to Exhibits

<Table>
<Caption>
Exhibit
Number          Description
-------         -----------
<S>             <C>
Exhibit 99.1 -  Certification Pursuant to 18 U.S.C. Section 1350, as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002
</Table>