##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|- | ------------------------------------------------------------------

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

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)

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.  þ.  Yes   ̈  No.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)
*.   ̈.  Yes   ̈  No.

* The registrant has not yet been phased into the interactive data requirements

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                                                                        |  |                             
|----------------------------------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈                                              |  | Accelerated filer   ̈        
|Non-accelerated filer   ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company  þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).   ̈  Yes  þ  No

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 May 17, 2010)











---

##### Table of Contents

FIRST EQUITY PROPERTIES, INC.

FORM 10-Q

TABLE OF CONTENTS



|                              |  |                                                                                         |  |   
|----------------------------- |  | --------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION |  | PAGE                                                                                   
|                              |  |                                                                                        
|Item 1.                       |  | Financial Statements                                                                    |  |   
|                              |  | Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009                   |  | 3 
|                              |  | Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited) |  | 4 
|                              |  | Statement of Shareholders Equity for the three months ended March 31, 2010 (unaudited) |  | 5 
|                              |  | Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) |  | 6 
|                              |  | Notes to Financial Statements                                                           |  | 7 
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations   |  | 8 
|Item 3.                       |  | Controls and Procedures                                                                 |  | 9 
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                        
|                              |  |                                                                                        
|Item 6.                       |  | Exhibits                                                                                |  | 10
|SIGNATURES                    |  | 11                                                                                     



2



---

##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

FIRST EQUITY PROPERTIES, INC.

BALANCE SHEETS



|                                                                                               |  |                |             |                   |   |          
|---------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ----------------- | - | ---------
|                                                                                               |  | March 31, 2010 |             | December 31, 2009
|Assets                                                                                         |  |                | (unaudited) |                   |   |          
|                                                                                               |  |               
|Cash and cash equivalents                                                                      |  | $              | 1,044       |                   | $ | 82       
|                                                                                               |  |               
|Deferred tax asset                                                                             |  |                | 6,110       |                   |   | 6,110    
|                                                                                               |  |               
|Notes receivable and accrued interest - affiliates                                             |  |                | 2,548,700   |                   |   | 2,510,836
|                                                                                               |  |                |             |                   |   |          
|                                                                                               |  |               
|Total assets                                                                                   |  | $              | 2,555,854   |                   | $ | 2,517,028
|                                                                                               |  |                |             |                   |   |          
|                                                                                               |  |               
|Liabilities and Shareholders Equity                                                           |  |                |             |                   |   |          
|                                                                                               |  |               
|Accounts payable                                                                               |  | $              | 20,446      |                   | $ | 1,575    
|                                                                                               |  |               
|Federal income taxes payable                                                                   |  |                | 1,047       |                   |   | 651      
|Accounts payable and accrued interest - affiliates                                             |  |                | 1,672,420   |                   |   | 1,655,102
|                                                                                               |  |                |             |                   |   |          
|                                                                                               |  |               
|Total liabilities                                                                              |  |                | 1,693,913   |                   |   | 1,657,328
|                                                                                               |  |               
|Shareholders equity                                                                           |  |                |             |                   |   |          
|                                                                                               |  |               
|Common stock, $0.01 par value; 40,000,000
 shares authorized; 1,057,628 issued and
outstanding |  |                | 10,576      |                   |   | 10,576   
|                                                                                               |  |               
|Preferred stock, $0.01 par value; 4,960,000
 shares authorized; none issued or
outstanding     |  |                | -           |                   |   | -        
|                                                                                               |  |               
|Paid in capital                                                                                |  |                | 1,376,682   |                   |   | 1,376,682
|Retained earnings (deficit)                                                                    |  |                | (525,317)   |                   |   | (527,558)
|                                                                                               |  |                |             |                   |   |          
|                                                                                               |  |               
|Total shareholders equity                                                                     |  |                | 861,941     |                   |   | 859,700  
|                                                                                               |  |                |             |                   |   |          
|                                                                                               |  |               
|Total liabilities and shareholders equity                                                     |  | $              | 2,555,854   |                   | $ | 2,517,028
|                                                                                               |  |                |             |                   |   |          

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



3



---

##### Table of Contents

FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF OPERATIONS

(unaudited)



|                                             |  |                                     |           |      |   |          
|-------------------------------------------- |  | ----------------------------------- | --------- | ---- | - | ---------
|                                             |  | For the three monthsended
March 31,
|                                             |  | 2010                                |           | 2009
|Revenue                                      |  |                                     |           |      |   |          
|Interest income                              |  | $                                   | 59,364    |      | $ | 59,364   
|                                             |  |                                    
|Operating Expenses                           |  |                                     |           |      |   |          
|                                             |  |                                    
|General and administrative                   |  |                                     | 29,023    |      |   | 27,599   
|Legal and professional fees                  |  |                                     | 10,386    |      |   | 8,989    
|                                             |  |                                     |           |      |   |          
|Total operating expenses                     |  |                                     | 39,409    |      |   | 36,588   
|                                             |  |                                     |           |      |   |          
|                                             |  |                                    
|Income before interest expense and taxes     |  |                                     | 19,955    |      |   | 22,776   
|                                             |  |                                    
|Other income (expense)                       |  |                                     |           |      |   |          
|Interest expense                             |  |                                     | (17,318)  |      |   | (17,318) 
|                                             |  |                                     |           |      |   |          
|Income before income taxes                   |  |                                     | 2,637     |      |   | 5,458    
|Income tax (expense) benefit                 |  |                                     | (396)     |      |   | (613)    
|                                             |  |                                     |           |      |   |          
|                                             |  |                                    
|Net income applicable to common shareholders |  | $                                   | 2,241     |      | $ | 4,845    
|                                             |  |                                     |           |      |   |          
|                                             |  |                                    
|Earnings (loss) per share                    |  | $                                   | -         |      | $ | 0.01     
|                                             |  |                                     |           |      |   |          
|                                             |  |                                    
|Weighted average shares outstanding          |  |                                     | 1,057,628 |      |   | 1,057,628
|                                             |  |                                     |           |      |   |          

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



4



---

##### Table of Contents

FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

For the three months ended March 31, 2010



|                            |  |              |  |         |        |                    |   |           |  |   |              |   |  |   |        
|--------------------------- |  | ------------ |  | ------- | ------ | ------------------ | - | --------- |  | - | ------------ | - |  | - | -------
|                            |  | Common Stock |  | Paid in |        | Retained
Earnings/ |   |           | 
|                            |  | Shares       |  | Amount  |        | Capital            |   | (Deficit) |  |   | Total Equity
|Balances at January 1, 2010 |  | 1,057,628    |  | $       | 10,576 |                    | $ | 1,376,682 |  | $ | (527,558     | ) |  | $ | 859,700
|                            |  |              |  |         |       
|Net income (unaudited)      |  | -            |  |         | -      |                    |   | -         |  |   | 2,241        |   |  |   | 2,241  
|                            |  |              |  |         |        |                    |   |           |  |   |              |   |  |   |        
|                            |  |              |  |         |       
|Balances at March 31, 2010  |  | 1,057,628    |  | $       | 10,576 |                    | $ | 1,376,682 |  | $ | (525,317)    |   |  | $ | 861,941
|                            |  |              |  |         |        |                    |   |           |  |   |              |   |  |   |        

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



5



---

##### Table of Contents

FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                                                              |  |                                     |          |      |   |          
|----------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | -------- | ---- | - | ---------
|                                                                                                                              |  | For the three monthsended
March 31,
|                                                                                                                              |  | 2010                                |          | 2009
|Cash Flows from Operating Activities                                                                                          |  |                                     |          |      |   |          
|Net Income                                                                                                                    |  | $                                   | 2,241    |      | $ | 4,845    
|Adjustments to reconcile net income applicable to
common shareholders to net cash provided by
(used in) operating activities: |  |                                     |          |      |   |          
|                                                                                                                              |  |                                    
|(Increase) decrease in                                                                                                        |  |                                     |          |      |   |          
|Interest receivable - affiliates                                                                                              |  |                                     | (59,364) |      |   | (59,364) 
|Notes receivable - affiliates                                                                                                 |  |                                     | 21,500   |      |   | (95,000) 
|Deferred tax asset                                                                                                            |  |                                     | -        |      |   | 613      
|                                                                                                                              |  |                                    
|Increase (decrease) in                                                                                                        |  |                                     |          |      |   |          
|Accounts payable                                                                                                              |  |                                     | 18,871   |      |   | 10,090   
|Federal income taxes payable                                                                                                  |  |                                     | 396      |      |   | -        
|Accounts payable and accrued interest - affiliates                                                                            |  |                                     | 17,318   |      |   | 28,031   
|                                                                                                                              |  |                                     |          |      |   |          
|                                                                                                                              |  |                                    
|Net cash provided by (used for) operating                                                                                     |  |                                     | 962      |      |   | (110,785)
|                                                                                                                              |  |                                     |          |      |   |          
|                                                                                                                              |  |                                    
|Net increase (decrease) in cash and cash equivalents                                                                          |  |                                     | 962      |      |   | (110,785)
|                                                                                                                              |  |                                    
|Cash and cash equivalents at the beginning of period                                                                          |  |                                     | 82       |      |   | 115,418  
|                                                                                                                              |  |                                     |          |      |   |          
|                                                                                                                              |  |                                    
|Cash and cash equivalents at the end of period                                                                                |  | $                                   | 1,044    |      | $ | 4,633    
|                                                                                                                              |  |                                     |          |      |   |          

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



6



---

##### Table of Contents

FIRST EQUITY PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1.      ORGANIZATION AND BASIS OF PRESENTATION

First Equity Properties, Inc. (FEPI, The Company, We, Us, or Our) is the successor in interest
to WESPAC Investors Trust III, a California real estate investment trust (WESPAC) originally established August 22, 1983. FEPI is a Nevada Corporation. Our Company is headquartered in Dallas, Texas.

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, and accordingly, 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 sheets, statements of operations, statements of shareholders equity and statements of cash flows, have been included. 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, 2009.

Operating results for the
three months ended March 31, 2010, are not necessarily indicative of the results that may be expected for the year ended December 31, 2010.

NOTE 2.      FEDERAL INCOME TAXES

The accompanying interim unaudited 2010 financial statements contain an estimated accrual for current federal income taxes calculated using the graduated
tax rate as published by the Internal Revenue Service (IRS). The first quarter tax accrual was calculated base on a rate of 15%. In addition, the deferred tax asset was analyzed and determined to be unchanged.

NOTE 3.      LEASES

The Company has a long term operating lease commitment with an affiliated entity, Income Opportunity Realty Investors, Inc. (IOT) an
affiliated entity. The lease extends through October 31, 2011. The total lease expense for the three months ended March 31, 2010 was $17,152 which is included in General and Administrative expenses of the Statements of Operations.

NOTE 4.      RELATED PARTY

Transactions involving related parties cannot be presumed to be carried out on an arms length basis due to the absence of free market forces that
naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in the
best interests of our company.

The Company has a lease agreement with IOT, an affiliated entity. The lease commenced November 1, 2008
and extends through October 31, 2011, see Note 3. Leases.

The Company has an administrative agreement with Prime Income Asset
Management, Inc., an affiliated entity, for accounting and administrative services. The total expense for the three months ended March 31, 2010 was $7,500 which is included in General and Administrative expenses of the Statements of Operations.



7



---

##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | ------------------------------------------------------------------------------------

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This Quarterly
Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from
time to time, are based on beliefs and assumptions made by, and information currently available to, management. When used, the words anticipate, believe, estimate, expect, intend,
may, might, plan, project, result, should, will and similar expressions which do not relate solely to historical matters are intended to identify forward-looking
statements. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one
or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected by the forward-looking statements. We caution you that while
forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements. Accordingly, investors should use caution in
relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Results of Operations

The following
discussion is based on our Statement of Operations within our Financial Statements as presented in Part 1, Item 1 of this report for the three months ended March 31, 2010 and 2009. The discussion is not meant to be an all inclusive
discussion of the changes within our operations. Instead, we have focused on the significant items relevant to obtain an understanding of the changes in our operations.

Our sole source of income is from interest on notes receivables from two affiliated entities. The ability of these entities to make payments on these
note obligations is imperative for us to continue as a going concern. The outstanding principal balance on these notes is currently not being paid down, thus, the income from these notes are consistent and comparable to prior periods.

Comparison of the three months ended March 31, 2010 to the same period ended 2009.

We reported a net income applicable to common shareholders of $2,241 for the three months ended March 31, 2010 as compared to a net income to common
shareholders of $4,845 for the same period ended 2009.

The decrease was due to an increase in the audit and filing fees as compared to the
period ended 2009. Income tax expense marginally decreased due to the reduction in earnings.

Liquidity and Capital Resources

General

Our
principal liquidity needs for the next twelve months are funding of normal recurring expenses including interest expense, leases, legal and administrative fees, and federal income tax payments.

Our principal source of cash is proceeds from interest income on our notes receivables.

The following significantly impacted our balance sheet as of March 31, 2010:



| |  |  | Our notes receivable and accrued interest  affiliates increased as we did not collect the interest owed us on those notes.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | Our accounts payables increased due to the accruals for lease and administrative expenses incurred and not paid.
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Our accounts payables and accrued interest  affiliates increased due to unpaid interest expense.
| | - |  | -------------------------------------------------------------------------------------------------

Cash Flow Summary

The following
summary discussion of our cash flow is based on the statements of cash flows as presented in Item 1 and is not meant to be an all-inclusive discussion of the changes in our cash flow.

We had an insignificant change in cash from operating activities as compared to prior year. In the current year, we did not collect on our receivables
nor did we pay the notes owed to affiliated entities. Interest income and expense was offset by collecting and paying interest due.

We
anticipate that our cash flows from operating activities will be sufficient to provide for our current cash flow needs.



8



---

##### Table of Contents

|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------



|(a) | Evaluation of Disclosure Controls and Procedures.
|--- | -------------------------------------------------

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 Chief Financial 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 Chief Financial 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 required to be included in the Companys periodic SEC filings.



|(b) | Changes in Internal Controls over Financial Reporting.
|--- | ------------------------------------------------------

There have been no changes in the Companys internal controls over financial reporting during the quarter ended March 31, 2010,
that have materially affected or are reasonably likely to materially affect the Companys internal controls over financial reporting.



9



---

##### Table of Contents

PART II  OTHER INFORMATION



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



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



10



---

##### Table of Contents

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: May 17, 2010 |  |  |  | By: |  | /s/ Gene S. Bertcher         
|                   |  |  |  |     |  |                               |  | Gene S. Bertcher Vice
President & Treasurer (Acting Principal Executive Officer and Chief Financial Officer)



11