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FORM 10-Q

UNITED STATES

SECURITIES AND
EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

x    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED MARCH 31, 2007

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 000-11777

FIRST EQUITY PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 95-6799846                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

1800 Valley View Lane, Suite 300

Dallas, Texas 75234

(Address of principal executive offices)

(Zip Code)

(469) 522-4200

(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 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. Yesx.    No ̈.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of accelerated filer in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filerx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈.    Nox.

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 ̈.    No ̈.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of Common Stock, as of the latest practicable date.



|                             |  |                                
|---------------------------- |  | -------------------------------
|Common Stock, $.01 par value |  | 1,057,628                      
|(Class)                      |  | (Outstanding at April 30, 2007)



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FIRST EQUITY PROPERTIES, INC.

FORM 10-Q

TABLE OF CONTENTS



|                              |  |                                                                                         |  |  
|----------------------------- |  | --------------------------------------------------------------------------------------- |  | -
|PART I: FINANCIAL INFORMATION |  | PAGE                                                                                   
|                              |  |                                                                                        
|Item 1.                       |  | FinancialStatements                                                                     |  |  
|                              |  | Balance Sheets at March 31, 2007 (unaudited) and December 31, 2006                      |  | 3
|                              |  | Statements of Earnings for the three months ended March 31, 2007 and 2006 (unaudited)   |  | 4
|                              |  | Statement of Stockholders Equity for the three months ended March 31, 2007 (unaudited) |  | 5
|                              |  | Statements of Cash Flows for the three months ended March 31, 2007 and 2006 (unaudited) |  | 6
|                              |  | Notes to Financial Statements                                                           |  | 7
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations   |  | 8
|Item 3.                       |  | Quantitative and Qualitative Disclosure about Market Risk                               |  | 8
|Item 4.                       |  | Controls and Procedures                                                                 |  | 8
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                        
|                              |  |                                                                                        
|Item 6.                       |  | Exhibits                                                                                |  | 9
|SIGNATURE PAGES               |  | 10                                                                                     



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FIRST EQUITY PROPERTIES, INC.

BALANCE SHEETS



|                                                                                               |  |                |           |   |                   |   |           |  
|---------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                               |  | March 31, 2007 |           |   | December 31, 2006 |  
|                                                                                               |  | (unaudited)    |           |   |                   |  
|Assets                                                                                         |  |                |           |  
|Cash and cash equivalents                                                                      |  | $              | 409       |   |                   | $ | 63,672    |  
|Notes and interest receivable                                                                  |  |                | 2,466,904 |   |                   |   | 2,407,540 |  
|                                                                                               |  |                |           |   |                   |   |           |  
|Total assets                                                                                   |  | $              | 2,467,313 |   |                   | $ | 2,471,212 |  
|                                                                                               |  |                |           |   |                   |   |           |  
|                                                                                               |  |               
|Liabilities and Stockholders Equity                                                           |  |                |           |   |                   |   |           |  
|Accrued liabilities                                                                            |  | $              | 2,950     |   |                   | $ |          |  
|Federal income taxes payable                                                                   |  |                | 19,409    |   |                   |   | 37,501    |  
|Accounts payable  affiliate                                                                   |  |                | 1,827,980 |   |                   |   | 1,847,980 |  
|                                                                                               |  |                |           |   |                   |   |           |  
|Total liabilities                                                                              |  |                | 1,850,339 |   |                   |   | 1,885,481 |  
|                                                                                               |  |               
|Stockholders equity                                                                           |  |                |           |   |                   |   |           |  
|Common stock, $0.01 par, 40,000,000 shares authorized, 1,057,628 shares issued and outstanding |  |                | 10,576    |   |                   |   | 10,576    |  
|Additional paid-in capital                                                                     |  |                | 1,376,682 |   |                   |   | 1,376,682 |  
|Retained earnings (deficit)                                                                    |  |                | (770,284  | ) |                   |   | (801,527  | )
|                                                                                               |  |                |           |   |                   |   |           |  
|Total stockholders equity                                                                     |  |                | 616,974   |   |                   |   | 585,731   |  
|                                                                                               |  |                |           |   |                   |   |           |  
|                                                                                               |  | $              | 2,467,313 |   |                   | $ | 2,471,212 |  
|                                                                                               |  |                |           |   |                   |   |           |  

The accompanying notes are an integral part of these Financial Statements.



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FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF EARNINGS

(unaudited)



|                                    |  |                                      |           |   |      |   |           |  
|----------------------------------- |  | ------------------------------------ | --------- | - | ---- | - | --------- | -
|                                    |  | For the Three Months Ended March 31, |          
|                                    |  | 2007                                 |           |   | 2006 |  
|Revenue                             |  |                                      |           |   |      |   |           |  
|Interest income                     |  | $                                    | 59,363    |   |      | $ | 59,364    |  
|                                    |  |                                     
|Operating Expenses                  |  |                                      |           |   |      |   |           |  
|General and administrative          |  |                                      | 735       |   |      |   | 1,057     |  
|Legal and professional fees         |  |                                      | 7,710     |   |      |   | 11,680    |  
|                                    |  |                                      |           |   |      |   |           |  
|Total operating expenses            |  |                                      | 8,445     |   |      |   | 12,737    |  
|                                    |  |                                      |           |   |      |   |           |  
|Operating income                    |  |                                      | 50,918    |   |      |   | 46,627    |  
|                                    |  |                                     
|Corporate income tax expense        |  |                                      | (19,675   | ) |      |   | (15,750   | )
|Deferred tax benefit                |  |                                      |          |   |      |   | 13,600    |  
|                                    |  |                                      |           |   |      |   |           |  
|NET EARNINGS                        |  | $                                    | 31,243    |   |      | $ | 44,477    |  
|                                    |  |                                      |           |   |      |   |           |  
|Earnings per share                  |  |                                      |           |   |      |   |           |  
|Net earnings                        |  | $                                    | .03       |   |      | $ | .04       |  
|                                    |  |                                      |           |   |      |   |           |  
|Weighted average shares outstanding |  |                                      | 1,057,628 |   |      |   | 1,057,628 |  
|                                    |  |                                      |           |   |      |   |           |  

The accompanying notes are an integral part of these Financial Statements.



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FIRST EQUITY PROPERTIES, INC.

STATEMENT OF STOCKHOLDERS EQUITY

For the Three Months Ended March 31, 2007

(unaudited)



|                         |  |              |  |         |        |                  |   |           |               |   |          |   |  |   |        
|------------------------ |  | ------------ |  | ------- | ------ | ---------------- | - | --------- | ------------- | - | -------- | - |  | - | -------
|                         |  | Common Stock |  | Paid-in |        | RetainedEarnings |   |           | Stockholders
|                         |  | Stock        |  | Capital |        | Capital          |   | (Deficit) |               |   | Equity  
|Balance, January 1, 2007 |  | 1,057,628    |  | $       | 10,576 |                  | $ | 1,376,682 |               | $ | (801,527 | ) |  | $ | 585,731
|Net income               |  |             |  |         |       |                  |   |          |               |   | 31,243   |   |  |   | 31,243 
|                         |  |              |  |         |        |                  |   |           |               |   |          |   |  |   |        
|Balance, March 31, 2007  |  | 1,057,628    |  | $       | 10,576 |                  | $ | 1,376,682 |               | $ | (770,284 | ) |  | $ | 616,974
|                         |  |              |  |         |        |                  |   |           |               |   |          |   |  |   |        

The accompanying notes are an integral part of these Financial Statements.



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FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                            |  |                                     |         |   |      |   |          |  
|------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------- | - | ---- | - | -------- | -
|                                                                                            |  | For the Three MonthsEnded March 31, |        
|                                                                                            |  | 2007                                |         |   | 2006 |  
|Cash Flows From Operating Activities:                                                       |  |                                     |         |   |      |   |          |  
|Net earnings                                                                                |  | $                                   | 31,243  |   |      | $ | 44,477   |  
|Adjustments to reconcile net income to net cash provided by (used for) operating activities |  |                                     |         |   |      |   |          |  
|(Increase) decrease in                                                                      |  |                                     |         |   |      |   |          |  
|Interest receivable                                                                         |  |                                     | (59,364 | ) |      |   | 60,684   |  
|Deferred tax asset                                                                          |  |                                     |        |   |      |   | (10,200  | )
|Increase (decrease) in                                                                      |  |                                     |         |   |      |   |          |  
|Accounts payable                                                                            |  |                                     | 2,950   |   |      |   | (204     | )
|Federal income taxes payable                                                                |  |                                     | (18,092 | ) |      |   | 12,350   |  
|Accounts payable  affiliate                                                                |  |                                     | (20,000 | ) |      |   | (101,000 | )
|                                                                                            |  |                                     |         |   |      |   |          |  
|Net cash provided by (used for) operating activities                                        |  |                                     | (63,263 | ) |      |   | 6,107    |  
|                                                                                            |  |                                     |         |   |      |   |          |  
|                                                                                            |  |                                    
|Net increase (decrease) in cash and cash equivalents                                        |  |                                     | (63,263 | ) |      |   | 6,107    |  
|                                                                                            |  |                                    
|Cash and cash equivalents, at the beginning of period                                       |  |                                     | 63,672  |   |      |   | 4,029    |  
|                                                                                            |  |                                     |         |   |      |   |          |  
|                                                                                            |  |                                    
|Cash and cash equivalents, at the end of period                                             |  | $                                   | 409     |   |      | $ | 10,136   |  
|                                                                                            |  |                                     |         |   |      |   |          |  

The accompanying notes are an integral part of these Financial Statements.



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FIRST EQUITY PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE A. BASIS OF PRESENTATION

The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim
financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the
United States of America for complete financial statements. In the opinion of management of First Equity Properties, Inc., all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of First Equity
Properties, Inc.s balance sheet, statement of earnings and statement of cash flows, have been included.

The financial statements for the period
ended March 31, 2007 do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America for complete financial statements. You should read these financial statements in
conjunction with the financial statements and footnotes thereto in our annual report on Form 10-K for the year ended December 31, 2006. Hereafter in this document, First Equity Properties, Inc. is referred to as FEPI.

Operating results for the three-month period ended March 31, 2007, are not necessarily indicative of the results that may be expected for the year ended
December 31, 2007.

NOTE B. FEDERAL INCOME TAXES

The accompanying unaudited 2007 financial statements contain an accrual for current federal income taxes calculated using an estimated tax rate of 34%. There are no significant differences between the Companys net income for financial
and income tax reporting.



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following
discussion and analysis provide information which management believes is relevant to an assessment and understanding of the Companys results of operations and financial condition. The discussion should be read in conjunction with the financial
statements and notes thereto.

Liquidity and Capital Resources

As of March 31, 2007 and December 31, 2006, the company had total assets of $2,467,313 and $2,471,212, respectively. Of that amount $409 and $63,672 was held in cash as of March 31, 2007 and December 31, 2006,
respectively.

Results of Operations

The
Companys sole source of income is from interest on notes receivables from affiliated entities. The average income received from interest was approximately $59,000 for the three months ended March 31, 2007 and 2006, respectively.

The Companys revenues are consistent with the prior year. The major operating expenses are related to the professional fees required to maintain the
organization. These expenses are relatively consistent and comparable to prior year. The increase in income tax expense is due to the company using all of its net operating loss (NOL) carry forwards in prior years.

Financial Condition and Liquidity

The Companys significant
assets consist of two notes receivables from affiliated parties of $2,466,904 and $2,407,540 as of March 31, 2007 and December 31, 2006, respectively. The increase in the current year amount is due to three months of interest income
accrued as of March 31, 2007. The Company is using a tax rate of 34% to estimate the current periods tax provision. The Company has accrued $19,409 as of March 31, 2007 for the estimated tax liability.

The Companys payable consists of four affiliated payables totaling $1,827,980 and $1,847,980 as of March 31, 2007 and December 31, 2006, respectively.
The Company has paid down $20,000 of this obligation in the current period. The obligations are non-interest bearing and carry no stated maturity dates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES



|(a) | As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management,
including the Companys Vice President, Treasurer and Chief Accounting Officer, and Acting Principal Executive Officer of the Companys disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that
evaluation, the Companys Vice President, Treasurer and Chief Accounting Officer and Acting Principal Executive Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting him to material
information relating to the Company (including its consolidated subsidiaries) required to be included in the Companys periodic SEC filings.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | There have been no changes in the Companys internal controls over financial reporting during the quarter ended March 31, 2007, that have materially affected or are
reasonably likely to materially affect the Companys internal controls over financial reporting.
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ITEM 6. EXHIBITS

The following exhibits are filed with this report or incorporated by reference as indicated;



|              |  |                                                                                                                                                                                                                                                                                                                                                                
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                    
|              | 
|3.1           |  | Articles of Incorporation of Wespac Property Corporation as filed with and endorsed by the Secretary of State of California on December 16, 1996 (incorporation by reference is made to
Exhibit 3.1 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).                                                                            
|              | 
|3.2           |  | Articles of Incorporation of First Equity Properties, Inc. filed with and approved by the Secretary of State of Nevada on December 19, 1996 (incorporation by reference is made to
Exhibit 3.2 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).                                                                                 
|              | 
|3.3           |  | Bylaws of First Equity Properties, Inc. as adopted December 20, 1996 (incorporation by reference is made to Exhibit 3.3 to Form 8-K of First Equity Properties, Inc. for event
reported June 19, 1996).                                                                                                                                                        
|              | 
|3.4           |  | Agreement and Plan of Merger of Wespac Property Corporation and First Equity Properties, Inc. dated December 23, 1996 (incorporation by reference is made to Exhibit 3.4 to
Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).                                                                                                       
|              | 
|3.5           |  | Articles of Merger of Wespac Property Corporation into First Equity Properties, Inc. as filed with and approved with the Secretary of State in Nevada December 24, 1996 (incorporation by
reference is made to Exhibit 3.5 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).                                                     
|              | 
|3.6           |  | Certificate of Designation of Preferences and Relative Participating or Optional of Other Special Rights and Qualifications, Limitations or Restrictions thereof of the Series A 8%
Cumulative Preferred Stock (incorporation by reference is made to Exhibit 3.6 to Form 10-KSB of First Equity Properties, Inc. for the fiscal year ended December 31, 1996.)
|              | 
|31.1*         |  | Certification of Acting Principal Executive Officer and Chief Financial and Accounting Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934                                                                                                                                                                                   
|              | 
|32.1*         |  | Rule 1350 Certification of Acting Principal Executive Officer and Chief Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350                                                                                                                                                                                                                    

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|* | Filed herewith.
|- | ---------------



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SIGNATURE PAGE

Pursuant to the requirements 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.



|                     |  |  |  |                               |  |                                                          
|-------------------- |  |  |  | ----------------------------- |  | ---------------------------------------------------------
|                     |  |  |  | FIRST EQUITY PROPERTIES, INC.
|                     |  |  | 
|Date: April 30, 2007 |  |  |  | By:                           |  | /s/ Steven A. Abney                                      
|                     |  |  |  |                               |  | Steven A. Abney                                          
|                     |  |  |  |                               |  | Vice President, Treasurer, Chief Financial and Accounting
|                     |  |  |  |                               |  | Officer and Acting Principal Executive Officer