<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

FOR THE FISCAL YEAR ENDED       December 31, 2000
                             -----------------------
                                       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 its charter)

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

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

Registrant's telephone number, including area code              214 750-5800
                                                             -------------------
Securities registered pursuant to Section 12(b) of the Act:

    Title of each class                Name of each exchange on which registered
           None

---------------------------            -----------------------------------------

---------------------------            -----------------------------------------

           Securities registered pursuant to section 12(g) of the Act:
                     Common Stock, par value $0.01 per share

--------------------------------------------------------------------------------
                                (Title of class)

--------------------------------------------------------------------------------
                                (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 ......... No ..X....

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of 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. [ ]

              APPLICABLE ONLY TO REGISTRANTS 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 Section 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 [ ]

     As of March 15, 2001, registrant had 10,570,944 shares of common stock
issued and outstanding. Of the total shares outstanding, 2,642,736 shares were
held by other than those who may be deemed to be affiliated, but the aggregate
market value of such shares held by non-affiliates is not ascertainable since no
trading market presently exists for the shares of common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>   2

ITEM 1. BUSINESS.

     First Equity Properties, Inc. ("We" or "FEPI" or the "Company") was
incorporated by the filing of Articles of Incorporation in the State of Nevada
on December 19, 1996. Its fiscal year ends December 31 of each year.

     Prior to January 1, 1997, the Company's only business consisted of the
management and operation of three motel properties in the Spokane, Washington
area. Until June 30, 1998, the Company, through its own operations, was engaged
in the hospitality business (management and operation of three motel properties,
one of which was exchanged for a residential property and two of such properties
have been sold under a contract for deed). During the fiscal years ended
December 31, 1998 and 1999, the Company, through its subsidiaries was engaged in
property management (management of commercial real property, including retail
centers, office buildings, industrial properties and hotels), and real estate
brokerage (services in locating, leasing and purchasing real estate). Since
October 1999, the Company and its subsidiaries have conducted no substantial
business, but are available to engage in property management and real estate
brokerage activities. See the Notes to the Consolidated Financial Statements for
a break out of revenues, expenses and earnings contributions of each separate
line of business.

TRANSACTION OF SUCCESSION.

     FEPI is the successor-in-interest to Wespac Investors Trust III, a
California real estate investment trust ("WESPAC") originally established August
22, 1983 which had its shares of beneficial interest, no par value, registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934. Wespac was the
subject of two filings for protection under Chapter 11 of the United States
Bankruptcy Code, one filed April 13, 1988 (the "1988 Reorganization") which
resulted in a plan of reorganization approved and confirmed by the court on
March 29, 1989 with certain amendments, and which was closed by the court on
August 21, 1992 and a filing made January 27, 1994 in the case styled IN RE:
WESPAC INVESTORS TRUST III, Case No. 94-00228-K11, in the United States
Bankruptcy Court for the Eastern District of Washington (the "1994
Reorganization"). A plan of reorganization dated March 22, 1996 (as modified)
was confirmed by Order Confirming Plan of Reorganization dated May 15, 1996,
entered May 20, 1996, as amended by order entered October 29, 1996 approving
First Modification to Plan of Reorganization (the "Modified Plan"). Pursuant to
the Modified Plan, and shareholders' approval, Wespac was converted from a
California business trust into a Nevada corporation, coupled with a change of
the name of the resulting entity. Pursuant to


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such transaction, persons deemed to be prior holders of shares of beneficial
interest, no par value, of Wespac became holders of FEPI Common Stock on a
one-for-one exchange basis. On February 11, 1997, the Court entered its final
decree which closed the 1994 Reorganization. See "Item 3. Legal Proceedings."

HOSPITALITY BUSINESS

     Prior to December 31, 1996, the Company's only business consisted of
ownership and operation of two Comfort Inn hotels and one Rodeway Inn hotel
(sold June 1, 1997 and foreclosed on by the Company in January 1998) located in
Spokane, Washington. The two Comfort Inn hotels are The Comfort Inn-Valley (a
76-room hotel located at N. 905 Sullivan Road, Spokane Valley, Washington) and
The Comfort Inn-North (a 96-room hotel located at N. 7111 Division Street,
Spokane, Washington). Such properties are collectively referred to as the
"Spokane Properties."

     During June 1998, FEPI entered into a contract for deed to sell the two
Comfort Inn hotels (Comfort Inn North and Comfort Inn Valley) to an unaffiliated
Washington corporation for a total of $4,000,000 with a small down payment and
an all inclusive wrap-around note which "wraps" certain existing underlying
indebtedness. As a part of the transaction, FEPI ceded the management of the
properties to the unaffiliated Washington corporation and it assumed the
underlying indebtedness due to US Bank.

     Also during June, 1998, FEPI exchanged the Rodeway Inn hotel to an
unaffiliated party for a residential property in Couer d'Alene, Idaho which has
since been sold. Such Rodeway Inn had previously been sold on June 1, 1997 to a
corporation owned by a former director and officer of the Company. The Rodeway
Inn is a 90-room hotel located at W. 4301 Sunset Boulevard, Spokane, Washington.
See "Item 13. Certain Relationships and Related Transactions." During January
1998, the Company foreclosed on the Spokane Rodeway following a failure of
performance by the purchaser on the related note receivable. See the Notes to
the Consolidated Financial Statements.

     Such dispositions ended the Company's direct ownership in the hospitality
line of business.

PROPERTY MANAGEMENT

     Effective January 1, 1997, the Company acquired all of the issued and
outstanding Common Stock of Carmel Realty, Inc., a Texas Corporation ("Carmel"),
and an 81.6% limited partnership interest in Carmel Realty Services, Ltd., a
Texas limited partnership ("CRSL"). The general partner of CRSL is Basic Capital
Management,


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Inc., a Nevada corporation ("BCM") which is the contractual advisor to and for
performs administrative services for five other publicly held entities which are
engaged in the real estate business. See also "Item 12. Certain Relationships
and Related Transactions." Carmel is engaged in the management and direction of
various portfolios of commercial real property including retail centers, office
buildings, industrial properties and hotels. Carmel maintained the management
responsibility for five hotels totaling 1,000 rooms and approximately 15,000,000
square feet of commercial real estate through September 30, 1999. CRSL managed
multi-family portfolios which included over 32,000 multi-family units through
seven third-party regional management companies through September 30, 1999.

     Both Carmel and CRSL provided management services primarily to four
publicly-traded real estate entities throughout the continental United States
through September 30, 1999. Under such arrangements Carmel or CRSL received a
fee of 5% or less of the monthly gross rents collected on the properties under
Management. CRSL subcontracted with other entities for the provision of property
level services. All property management contracts pursuant to which Carmel and
CRSL provided management services to the four publicly-traded real estate
entities are subject to cancellation on 30 days' written notice. Carmel and CRSL
have not expended any significant sum during each of the last two fiscal years
on research and development activities. Effective October 1, 1999, the four
publicly traded real estate entities transferred management of their properties
to another entity and Carmel and CRSL ceased all such management activities.

     The real estate business overall, including management of real estate, is
highly competitive and Carmel and CRSL compete with numerous entities engaged in
similar activities, some of which may have greater financial resources than
those of Carmel and/or CRSL. Management of Carmel and CRSL believe that success
against such competition is dependent upon the geographic location of the
properties, the performance of the property managers in areas such as marketing,
collections and the ability to control operating expenses, the amount of new
construction in the area and maintenance and appearance of each individual
property. Additional competitive factors with respect to commercial industrial
properties are the ease of access to the property, adequacy of related
facilities such as parking, and sensitivity to market conditions in setting rent
levels. With respect to multi-family residential units, competition is also
based upon the design and mix of the units and the ability to provide a
community atmosphere for tenants. Management of Carmel and CRSL also believe
that general economic circumstances and trends and new properties in the


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vicinity of each of the properties managed by Carmel and CRSL are also
competitive factors.

     At March 15, 2001, Carmel and CRSL had no employees.

REAL ESTATE BROKERAGE

     Carmel also provides real estate brokerage services (on a nonexclusive
basis) to four publicly-traded real estate entities and a number of other
entities and individuals and receives brokerage commissions under varying
arrangements from a fixed amount to a sliding scale on a percentage basis. In
general, such services include assistance in locating, leasing or purchasing
real estate. Carmel receives fees equal to the lesser of (i) a percentage of the
cost of acquisition, inclusive of commissions, if any, paid to nonaffiliated
brokers, or (ii) the compensation customarily charged in arm's-length
transactions by others rendering similar property acquisition services as an
ongoing public activity in the same geographical location and for comparable
property. During the fourth quarter of 1999, the four publicly-traded real
estate entities transferred their brokerage operations to another entity.

ITEM 2. PROPERTIES.

     The Company's principal offices are located at 1800 Valley View Lane, Suite
1160, Dallas, Texas 75234. In the opinion of the Company's management, the
Company's offices are suitable and adequate for its present operations.

     Prior to December 31, 1996, the Company's only business consisted of
ownership and operation of two Comfort Inn hotels and one Rodeway Inn hotel
(sold effective June 1, 1997 and foreclosed upon during January 1998) located in
Spokane, Washington, all of which were disposed of during 1998. Although the
record title to the Comfort Inn hotels may remain in the Company at December 31,
2000, subject to the Contract for Deed, the Company considers it has disposed of
such properties. Record title to one of the Comfort Inn hotels was distributed
to the purchaser in January 2001. Except for any remaining record title to the
one Comfort Inn hotel, the Company owns no real property.

ITEM 3. LEGAL PROCEEDINGS.

     During January 1988, four of the elected Trustees of Wespac resigned
pursuant to an agreement with U.S. Real Estate Advisors, Inc. ("USREA"), a
privately held California corporation, and four new trustees were elected, all
of whom were officers of USREA. Also, during January 1988 Wespac entered into
certain financing


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<PAGE>   6

arrangements with USREA and on April 13, 1988 the Trustees who were also
officers of USREA caused Wespac to file for protection under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
Central District of California under case No. 88-02222-JR which resulted in a
plan of reorganization approved and confirmed by the Court on March 29, 1989
with certain amendments. The 1988 Reorganization was closed by the Bankruptcy
Court on August 21, 1992. Wespac acted as a Debtor-in-Possession in the 1988
reorganization which concluded in the Third Amended Plan of Reorganization dated
January 24, 1989 (the "1989 Plan"), confirmation of which served to re-vest all
assets of the Estate in Wespac, free and clear of all liabilities except those
payable under the 1989 Plan. As provided for by that 1989 Plan, USREA exercised
its warrants by purportedly forgiving $715,586.50 which Wespac allegedly owed
under an Amended Financing Agreement. Wespac then liquidated all real estate
assets except a shopping center in Ogden, Utah (later sold) and three hotels
located in Spokane, Washington consisting of The Rodeway Inn-Spokane House, The
Comfort Inn Valley, and The Comfort Inn North. The 1988 Reorganization was
closed by the Court on August 21, 1992.

     On January 27, 1994, Wespac again instituted a Chapter 11 bankruptcy
proceeding styled IN RE: WESPAC INVESTORS TRUST III, Case No. 94-00228-K11, in
the United States Bankruptcy Court for the Eastern District of Washington, to
seek a restructuring of the assets and liabilities of Wespac, in response to
certain litigation that resulted in at least one judgment. A plan of
reorganization dated March 22, 1996 (as modified) was confirmed by Order
Confirming Plan of Reorganization dated May 15, 1996, entered May 20, 1996 (the
"Confirmed Plan"). During the process of consummation of the Confirmed Plan, and
on the eve of issuance of the final decree with respect to the Confirmed Plan,
and emergence from the 1994 Reorganization, the Board of Trustees of Wespac by
motion filed October 29, 1996 sought a modification of the Confirmed Plan which
resulted in the entry of an Order from the Court approving the First
Modification to Plan of Reorganization (as modified) (the "Modification").

     Pursuant to the Confirmed Plan, Class 6 consisted of the Allowed Interest
of former public shareholders in "Old Common Stock," all of which was canceled
on the Effective Date of the Confirmed Plan (June 15, 1996) with one share of
beneficial interest of Wespac deemed to be exchanged for each share of Allowed
Interest, other than Greenbriar Corporation who were then to hold in the
aggregate 25% of the New Shares of Beneficial Interest. After objections to
proofs of interest demonstrating an interest in another entity, it was
determined that the Allowed Interest of such holders were equivalent to
2,642,236 Shares of Beneficial Interest.


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<PAGE>   7

     Also, pursuant to the Confirmed Plan, upon the Effective Date, Greenbriar
Corporation reduced its claim to the so-called "USREA Shares" acquired from
Zimco to equal 25% of the Allowed Interest (a total of 2,642,736 Shares of
Beneficial Interest) and Nevada Sea Investments, Inc. ("Nevada Sea") was deemed
to exercise an option to receive all such Shares of Beneficial Interest. In
addition, in the compromise of the Wespac Creditors' Claim, Greenbriar
Corporation was to receive, pursuant to the Confirmed Plan, 50% of the issued
and outstanding Shares of Beneficial Interest, but prior to the Effective Date
of the Confirmed Plan, by agreement, Greenbriar Corporation entered into an
arrangement pursuant to which Greenbriar Corporation conveyed to Nevada Sea an
undivided 50% in and to the creditors' claim resulting in an undivided 25% out
of an aggregate of 50% of New Shares of Beneficial Interest of Wespac to be
issued, on a "when issued" basis, to Nevada Sea in consideration of cancellation
of certain indebtedness. As a result, prior to the implementation of the
procedures set forth in the Modification and as of November 29, 1996, there were
deemed to be 10,570,944 Shares of Beneficial Interest, no par value of Wespac,
available for issuance to Shareholders, of which 2,642,736 Shares were issuable
to public shareholders (an aggregate of 25% of such Shares), 2,642,736 Shares
were issuable to Greenbriar Corporation (an aggregate of 25% of such Shares) and
5,285,472 Shares of Beneficial Interest were issuable to Nevada Sea (an
aggregate of 50% of such Shares).

     Confirmation of the Confirmed Plan (as modified) served to re-vest all
assets of the estate in Wespac free and clear of all liabilities except those
payable pursuant to the Confirmed Plan. Under the Confirmed Plan, Wespac
retained the Spokane Properties and all allowed claims have been provided for or
paid. The effect of the Modification was to distribute to the shareholders of
Wespac a proposal to convert Wespac from a California business trust into a
Nevada corporation through the "Incorporation Procedure" described therein,
coupled with a change of the name of Wespac. Such proposal was distributed to
the shareholders of Wespac who, by November 29, 1996, approved the proposal by a
vote in excess of 84% in favor. The Incorporation Procedure was implemented.
Following completion of the Incorporation Procedure Wespac submitted to the
Court a Certificate of Substantial Consummation and requested the entry of a
Final Decree on January 24, 1997 to close the 1994 Reorganization. The Final
Decree was entered by the Court February 11, 1997.

     The Company's subsidiaries are involved in certain legal actions arising in
the ordinary course of business. Management of the Company believes that such
litigation and claims, individually and in the aggregate, will be resolved
without material effect upon the Company's financial position or results of
operations.


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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     FEPI's shares of Common Stock, par value $0.01 per share, are available for
trading in the over-the-counter market, but to the knowledge of management of
FEPI, no shares have traded since their issuance. The CUSIP Number is
320097-10-8. The shares of Beneficial Interest of WESPAC traded through the
first quarter of 1988 and, at one time, were quoted on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ"). Since cessation of
trading on NASDAQ, there has been no established, independent trading market for
the shares of Beneficial Interest of WESPAC or the shares of Common Stock of
FEPI as the successor.

     No cash dividends have been declared or paid during the period from January
1, 1994 to the present on either the shares of Beneficial Interest of the Trust
or the shares of Common Stock of FEPI as the successor.

     As of March 15, 2001, the 10,570,944 shares of Common Stock of FEPI issued
and outstanding were held by approximately 2,400 holders of record.

ITEM 6. SELECTED FINANCIAL DATA.

     The selected consolidated historical financial data presented below for the
four fiscal years ended December 31, 2000 and the period from June 15, 1996
(fresh start) through December 31, 1996 are derived from the audited
consolidated financial statements and reflect (i) the adoption of fresh start
reporting in accordance with AICPA Statement of Position 90-7, (ii) confirmation
and consummation of the Modified Plan, (iii) the transaction of succession, and
(iv) the acquisition by the Company of Carmel Realty, Inc. and an 81.6% limited
partnership interest in Carmel Realty Services, Ltd. The following data should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto included elsewhere herein and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."


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<TABLE>
<CAPTION>
                                                                        Year Ended                                     Period
                                                                       December 31,                                 June 15, 1996
                                             -----------------------------------------------------------------        December
                                                 2000              1999            1998               1997            31, 1996
                                             ------------      ------------     ------------      ------------      ------------
<S>                                          <C>               <C>              <C>               <C>               <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:

   Revenues ............................     $    285,733      $ 19,638,650     $ 35,563,209      $ 33,370,720      $  1,475,831

   Operating Costs .....................               --        15,234,044       16,300,214         8,381,325         1,484,023

   General and Administrative ..........           70,554         1,655,537         1,72,368         1,658,681           101,554

   Interest Expense ....................          326,471           448,477          486,730           399,368           209,946

   Earnings (loss) Before Income
Taxes ..................................         (111,292)        2,203,464       16,151,691        22,931,346          (319,692)

   Income tax expense (current) ........               --           200,906          (93,623)         (596,215)               --

   Income tax (expense) benefit
(deferred) .............................               --                --        5,300,000         5,300,000                --
                                             ------------      ------------     ------------      ------------      ------------
      Net earnings (loss) ..............     $   (111,292)     $  2,002,558     $ 10,758,068      $ 27,635,131      $   (319,692)
                                             ============      ============     ============      ============      ============
      Net earnings (loss) per share ....     $       (.01)     $       0.19     $       1.02      $       2.61      $      (0.03)
                                             ============      ============     ============      ============      ============
   Weighted Average Shares
outstanding ............................       10,570,944        10,570,944       10,570,944        10,570,944        10,570,944

CONSOLIDATED BALANCE SHEET DATA:

   Total Assets ........................       55,259,416      $ 58,970,877     $ 51,698,791      $ 74,148,980      $  5,822,865

   Short Term Debt .....................        2,048,559         2,234,040        4,336,145         3,951,906           879,761

   Long Term Debt ......................               --                --        2,776,336         2,830,913         3,875,538

   Stockholders' Equity ................       37,560,864        37,672,156       35,669,598        61,202,697         1,067,566

   Minority Interest in Subsidiary .....       10,074,447        10,074,447        8,916,712         6,163,464                --
</TABLE>


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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.

     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.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2000, the company had total assets of $55,259,416. Of that
amount $44,679 was held in cash. The Company's debt at December 31, 2000 totaled
$2,048,559, which includes mortgage notes payable related to the motel
properties owned by the Company.

RESULTS OF OPERATIONS

     Net loss was $111,292 in 2000 compared to prior year earnings of
$2,002,558. The decrease resulted from loss of management and brokerage
contracts in October 1999.

ENVIRONMENTAL MATTERS

     Under various federal, state and local environmental laws, ordinances and
regulations, the Company may be potentially liable for removal or remediation
costs, as well as certain other potential costs, relating to hazardous or toxic
substances (including governmental fines and injuries to persons and property)
where any property-level manager in the employee of a subsidiary of the Company
may have arranged for the removal, disposal or treatment of hazardous or toxic
substances. Management is not aware of any environmental liability relating to
the above matters that would have a material adverse effect on the Company's
business, assets or results of operations.


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INFLATION

     The effects of inflation on the Company's operations are not quantifiable.
To the extent that inflation affects interest rates, the Company's earnings from
any short-term investments and the cost of new financings as well as the cost of
variable rate financing will be affected.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company is exposed to market risk from changes in interest rates which
may adversely affect its financial position, results of operations and cash
flows. In seeking to minimize the risks from interest rate fluctuations, the
Company manages exposures through its regular operating activities. The Company
does not use financial instruments for trading or other speculative purposes and
is not a party to any leveraged financial instruments.

     Based upon the Company's market risk sensitive instruments (including
variable rate debt) outstanding at December 31, 1999, the Company has determined
that there was no material market risk exposure to the Company's financial
position, results of operations or cash flows as of such date.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The Financial Statements, together with an index thereto, are attached
hereto following the signature page to this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     Not applicable.


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<PAGE>   12

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

DIRECTORS

     The business affairs of the Company are managed by, or under the direction
of, the Board of Directors. The Board of Directors is responsible for the
general investment policies of the Company and for such general supervision of
the business of the Company conducted by its officers, agents, employees,
advisors or independent contractors as may be necessary to insure that such
business conforms to policies adopted by the Board of Directors. Pursuant to
Article III, Section 3.1, of the Bylaws of the Company, there shall not be less
than three (3) nor more than fifteen (15) directors of the Company. The number
of directors shall be determined from time to time by resolution of the
directors and the last fixing of that number of directors was at three (3) at
the time of creation of the Company. The initial three directors were the three
members of the Board of Trustees of the Trust. The term of office of each
director is one year and until the election and qualification of his or her
successor. Directors may succeed themselves in office and are to be elected at
the annual meeting of stockholders or appointed by the Company's incumbent Board
of Directors.

     The current directors of the Company (both of whom are also executive
officers) are listed below, together with their ages, all positions and offices
with the Company, their principal occupation, business experience and
directorship with other companies during the last five years or more. Each of
the following individuals was named as a director in the Articles of
Incorporation of the Company filed December 19, 1996. A vacancy exists on the
Board of Directors following the resignation effective March 1, 1997 of Georgie
Liebelt. See "Item 13. Certain Relationships and Related Transactions."


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<TABLE>
<CAPTION>
     NAME                  AGE               POSITION WITH THE COMPANY
     ----                  ---               -------------------------
<S>                        <C>        <C>
Karl L. Blaha              53         President

F. Terry Shumate           61         Vice President, Secretary and Treasurer
</TABLE>

     Karl L. Blaha is President (since October 1993), and a Director (since June
1996) of American Realty Investors, Inc. ("ARL"), a New York Stock Exchange
listed entity engaged in real estate; President (since September 1999),
Executive Vice President and Director of Commercial Management (April 1992 to
August 1995) of Basic Capital Management, Inc. ("BCM"), a contractual advisor to
many entities engaged in the real estate business, Income Opportunity Realty
Investors, Inc. ("IORI"), a publicly-held REIT, Transcontinental Realty
Investors, Inc. ("TCI"), a publicly-held REIT; Executive Vice President (since
November 1998) and Director of Commercial Asset Management (January 1998 to
August 1999) of NRLP Management Corp. ("NMC"), the managing general partner of
National Realty, L.P. ("NRLP"), and its operating partnership, National
Operating L.P. ("NOLP"), a wholly-owned subsidiary of ARL; Executive Vice
President (October 1992 to July 1997) of Carmel Realty, Inc. ("Carmel Realty"),
a company which is available to provide real estate brokerage services and
commercial property management services. Mr. Blaha was also a member of the
Board of Trustees of Wespac from June 19, 1996 until implementation of the
Incorporation Procedure.

     For more than the past five years, Mr. Shumate has been Vice President and
Secretary of Syntek West, Inc. (real estate investment). He has been Secretary
and Treasurer of Carmel Realty (property management and real estate brokerage)
since June 1992; sole director and President, Secretary and Treasurer of Carmel
Realty Services, Inc. (property management) since July 1990; Vice President of
SAMI (February 1989 to December 1996); and Vice President of BCM (May 1990 to
December 1996); director, Chairman of the Board, Vice President, Secretary and
Treasurer of Nevada Sea Investments, Inc. (from May 1995 to March 1997), the
owner and holder of 50% of the issued and outstanding common stock of the
Company. He was Vice President, Secretary and Treasurer of One Realco
Corporation (real estate) until March 18, 1997. Mr. Shumate was also a member of
the Board of Trustees and Vice President, Secretary and Treasurer of Arlington
Realty Investors (now known as Watermark Investors Trust), a publicly-held REIT,
from November 10, 1993 until December 5, 1995. Mr. Shumate was also a member of
the


                                      -13-
<PAGE>   14

Board of Trustees of Wespac from June 19, 1996 until implementation of the
Incorporation Procedure.

     There are no family relationships among the directors or executive officers
of the Company.

MEETINGS AND COMMITTEES OF DIRECTORS

     The Company's Board of Directors acted upon four matters by unanimous
written consent since December 19, 1996 and has held no formal meetings. The
Board of Directors has no standing audit, nominating or compensation committee.

COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT.

     Under the securities laws of the United States, the Company's directors,
executive officers, and any person holding more than 10% of the Company's shares
of common stock are required to report their ownership of the Company's shares
and any changes in ownership to the Commission. Specific due dates for these
reports have been established and the Company is required to report any failure
to file by the date. All the filing requirements were satisfied by the Company's
directors, executive officers and 10% holders during 1996. In making these
statements, the Company has relied on the written representations of its
directors and executive officers and its 10% holders and copies of the reports
that they filed with the Commission, both with respect to the Trust, as a
predecessor to the Company, and the Company.

ITEM 11. EXECUTIVE COMPENSATION.

     Neither the executive officers nor directors received salaries or cash
compensation from the Company or its predecessor, Wespac, for acting in such
capacity during the two years ended December 31, 2000, in an amount required to
be disclosed under this item. The only director or executive officer who
received salaried compensation from the Company or its predecessor, Wespac, was
Georgie Liebelt whose compensation until her resignation effective March 1, 1997
was $59,000 per year plus a $6,000 per year car allowance. The Company has no
retirement, annuity or pension plan covering its directors or executive
officers.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The Company's voting securities consist of the shares of common stock, par
value $0.01 per share. As of March 15, 2001, according to the stock transfer
records of the Company and other information available to the Company, the
following persons were


                                      -14-
<PAGE>   15

known to be the beneficial owners of more than five percent (5%) of the
outstanding shares of common stock of the Company:

<TABLE>
<CAPTION>
                                                                         AMOUNT AND
                                                                         NATURE OF
                                                                         BENEFICIAL        PERCENT OF
TITLE OF CLASS                NAME AND ADDRESS OF BENEFICIAL OWNER       OWNERSHIP           CLASS
--------------                ------------------------------------       ----------        ---------
<S>                           <C>                                     <C>                  <C>
Shares of Common Stock, par   Nevada Sea Investments, Inc.            5,285,472 shares        50%
value $0.01 per share         1800 Valley View Lane
                              Suite 160
                              Dallas, Texas 75234

Shares of Common Stock, par   Greenbriar Corporation                  2,642,736 shares        25%
value $0.01 per share         4265 Kellway Circle
                              Dallas, Texas 75248
</TABLE>

----------
(1)  Based on 10,570,944 shares of common stock outstanding on March 15, 2001.

     As of March 15, 2001, according to the stock transfer records of the
Company and other information available to the Company, each of the directors
and executive officers of the Company, and all present executive officers and
directors as a group, beneficially own the following shares:

<TABLE>
<CAPTION>
                                                                         AMOUNT AND
                                                                         NATURE OF
                                                                         BENEFICIAL        PERCENT OF
TITLE OF CLASS                NAME AND ADDRESS OF BENEFICIAL OWNER       OWNERSHIP          CLASS(a)
--------------                ------------------------------------       ----------        ---------
<S>                           <C>                                        <C>               <C>
Shares of Common Stock,       Karl L. Blaha                                 none              none
par value $0.01               1800 Valley View Lane, Suite 160
per share                     Dallas, Texas 75234

Shares of Common Stock,       F. Terry Shumate                              none              none
par value $0.01               1800 Valley View Lane, Suite 160
per share                     Dallas, Texas 75234

Shares of Common Stock,       All officers and directors as a group         none              none
par value $0.01
per share
</TABLE>

----------
(a)  Based on 10,570,944 shares of common stock outstanding on March 15, 2001.


                                      -15-
<PAGE>   16

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     On June 25, 1996, in connection with the Confirmed Plan, the Company
received an advance of funds from Nevada Sea in the amount of $250,000 unsecured
and bearing interest at the rate of 8% per annum. All principal and interest
under such advances is due June 14, 1998. Subsequent to the initial advance,
Nevada Sea and/or its affiliates have advanced an additional $2,391,552 to the
Company under the same terms and conditions. During 1999, the Company required
all amounts advanced together with interest at the rate of 8% per annum.

     Effective January 1, 1997, the Company acquired from Syntek West, Inc., a
Nevada corporation, all of the issued and outstanding common stock of Carmel
Realty, Inc., a Texas corporation ("Carmel") and an 81.6% limited partnership
interest in Carmel Realty Services, Ltd., a Texas limited partnership ("CRSL")
for an aggregate purchase price of $22,500,000, which was paid by the issuance
of 32,500 shares of Series A 8% Cumulative Preferred Stock with a liquidation
value of $1,000 per share (the "Series A Preferred Stock"). The Series A
Preferred Stock has a right to cumulative cash dividends of $80 per share per
annum, payment of $1,000 per share in the event of dissolution, liquidation of
winding up of the Company before any distribution is made to the holders of
Common Stock, optional redemption at any time at a price of $1,000 per share,
plus cumulative dividends, no right to conversion into any other securities of
the Company, and no voting rights except as may be required by law. See "Item 1.
Business," for a brief description of businesses of Carmel and CRSL and see the
Notes to the Financial Statements. During 1998, the Company redeemed all of its
$32,500,000 preferred stock in exchange for reduction of receivables from Syntek
West, Inc.

     Effective January 1, 1997 the Company contracted with Regis Management
Corporation, a subsidiary of Carmel, to manage the day-to-day operations of the
Spokane Properties for 5% of the gross revenues from the Spokane Properties.
Such management arrangement ceased at the time of disposition of the Spokane
Properties during June 1998.

     Effective June 1, 1997, the Company sold a 90-room Roadway Inn located at
W. 4301 Sunset Boulevard, Spokane, Washington to Georgie Liebelt. At the time of
the sale the Company paid off the underlying debt secured by the property sold.
Ms. Liebelt was appointed a Trustee of Wespac in January 1994 and served in that
capacity until implementation of the Incorporation Procedure. She was an initial
director of the Company and Regional Director for


                                      -16-
<PAGE>   17

the Company responsible for all operations involving the hotel properties
located in Spokane, Washington. Ms. Liebelt resigned as a Director effective
March 1, 1997. The purchase price for the Roadway Inn was $1,475,000 paid by the
delivery of a promissory note from Spokane House, Inc. (a Washington corporation
wholly owned by Georgie Liebelt) secured by a Deed of Trust covering the
property and a security interest on all related personal property. Such note
bore interest at 5% per annum for the period from June 1, 1997 to June 1, 1998
and was to increase by 1% per annum until it reached 9% for the period from June
1, 2001 to July 10, 2002. At the time of maturity of the Note, Spokane House,
Inc. was obligated to pay the lesser of (i) the total of the unpaid principal
and interest due on the note, or (ii) the appraised value of the property as of
June 1, 2002. In addition, the Company loaned to Spokane House, Inc. $160,000 to
fund needed renovations on the property. Commencing March 1, 1997, Spokane
House, Inc. became the operator of the property, retaining all income and paying
all expenses relating to the operation of the property. In January 1998 the
Company foreclosed on the property following a failure of performance on the
promissory note and wrote off the $160,000 loan. The Company exchanged the
property in June 1998 for a residential property in Couer d'Alene, Idaho (since
sold). See also the Notes to the Consolidated Financial Statements.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a)  Financial Statements. The following documents are filed as part of
     this report:

<TABLE>
<CAPTION>
          1. Consolidated Financial Statements.                             Page
                                                                            ----
<S>                                                                         <C>
          Independent auditor's report                                       F-1

          Consolidated Balance Sheets as of December 31, 2000 and 1999       F-2

          Consolidated Statements of Operations for the three years
          ended December 31, 2000 and the period from June 15, 1996
          (fresh start) through December 31, 1996                            F-3

          Consolidated Statements of Changes in Shareholders' Equity
          for the three years ended December 31, 2000 and the period
          from June 15, 1996 (fresh start) through December 31, 1996         F-4

          Consolidated Statements of Cash Flows for the three years
          ended December 31, 2000 and the period from June 15, 1996
          (fresh start) through December 31, 1996                            F-5

          Notes to Consolidated Financial Statements                         F-6
</TABLE>

                                      -17-
<PAGE>   18


          2. Financial Statement Schedules.

          All other schedules and financial statements are omitted
          because they are not applicable or the required information is
          shown in the financial statements or notes thereto.

     (b) Reports on Form 8-K. During the last quarter of the period
     covered by this report, no reports on Form 8-K were filed.

     (c) Exhibits. The following documents are filed herewith as exhibits
     or incorporated by the references indicated below:

     EXHIBIT
   DESIGNATION                          DESCRIPTION OF EXHIBIT

       2.1           Plan of Reorganization (as modified) dated March 22, 1996
                     (incorporation by reference is made by Exhibit 2.1 to Form
                     8-K of First Equity Properties, Inc. for event reported
                     June 19, 1996).

       2.2           First Amended Disclosure Statement (as modified) dated
                     March 22, 1996 (incorporation by reference is made to
                     Exhibit 2.2 to Form 8-K of First Equity Properties, Inc.
                     for event reported June 19, 1996).

       2.3           Order Confirming Plan of Reorganization dated May 15, 1996
                     entered May 20, 1996 (incorporation by reference is made to
                     Exhibit 2.3 to Form 8-K of First Equity Properties, Inc.
                     for event reported June 19, 1996).


                                      -18-
<PAGE>   19

       2.4           First Modification to Plan of Reorganization (as modified)
                     dated October 29, 1996 (incorporation by reference is made
                     to Exhibit 2.4 to Form 8-K of First Equity Properties, Inc.
                     for event reported June 19, 1996).

       2.5           Ex parte Order approving modification to Plan of
                     Reorganization (as modified) entered October 29, 1996
                     (incorporation by reference is made to Exhibit 2.5 to Form
                     8-K of First Equity Properties, Inc. for event reported
                     June 19, 1996).

       2.6           Certificate of Substantial Consummation dated January 21,
                     1997 (incorporation by reference is made to Exhibit 2.6 to
                     Form 8-K of First Equity Properties, Inc. for event
                     reported June 19, 1996).

       2.7           Final Decree issued by the Court on February 11, 1997
                     (incorporation by reference is made to Exhibit 2.7 to Form
                     8-K of First Equity Properties, Inc. for event reported
                     June 19, 1996).

       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).


                                      -19-
<PAGE>   20


       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.)

       21*           Subsidiaries of the Registrant


     *filed herewith


                                      -20-
<PAGE>   21

                                   SIGNATURES


     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed by the undersigned, thereunto duly
authorized.

                                         FIRST EQUITY PROPERTIES, INC.
Dated: March 29, 2001

                                         By  /s/  F. TERRY SHUMATE
                                           -------------------------------------
                                           F. Terry Shumate, Director,
                                           Vice, President, Secretary
                                           and Treasurer

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacity and on the
date indicated.

<TABLE>
<S>                                      <C>                                      <C>
/s/  KARL L. BLAHA                       Director and President (Principal        March 29, 2001
------------------------------------     Executive Officer)
Karl L. Blaha


/s/  F. TERRY SHUMATE                    Director, Vice President, Secretary      March 29, 2001
------------------------------------     and Treasurer (Principal Financial and
F. Terry Shumate                         Accounting Officer)
</TABLE>


<PAGE>   22

                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                      <C>
INDEPENDENT AUDITOR'S REPORT                                                              F-1

CONSOLIDATED FINANCIAL STATEMENTS

     Balance sheets as of December 31, 2000 and 1999                                      F-2

     Statements of operations for the years ended December 31, 2000, 1999 and 1998        F-3

     Statements of changes in shareholders' equity for the years ended
       December 31, 2000, 1999 and 1998                                                   F-4

     Statements of cash flows for the years ended December 31, 2000, 1999 and 1998        F-5

     Notes to financial statements                                                        F-6
</TABLE>

All other schedules and financial statements are omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.


<PAGE>   23


                          INDEPENDENT AUDITOR'S REPORT



Board of Directors
First Equity Properties, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of First Equity
Properties, Inc. and subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for the years ended December 31, 2000, 1999 and 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of First
Equity Properties, Inc. and subsidiaries as of December 31, 2000 and 1999 and
the results of their operations and their cash flows for the years ended
December 31, 2000, 1999 and 1998, in conformity with generally accepted
accounting principles.




March 29, 2001
Dallas, Texas


                                      F-1
<PAGE>   24

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  December 31,

<TABLE>
<CAPTION>
                                                                 2000             1999
                                                             ------------     ------------
<S>                                                          <C>              <C>
                                     ASSETS

Cash and cash equivalents                                    $     44,679     $        550
Accounts receivable - affiliate                                   966,359               --
Investments                                                    51,137,790       55,512,710
Notes receivable                                                3,110,588        3,457,617
                                                             ------------     ------------

                                                             $ 55,259,416     $ 58,970,877
                                                             ============     ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Notes payable                                                $  2,048,559     $  2,234,040
Accounts payable - trade                                        5,548,224        5,548,224
Accounts payable - affiliate                                       27,322        3,370,010
Income taxes payable                                                   --           72,000
                                                             ------------     ------------

         Total liabilities                                      7,624,105       11,224,274

Minority interest in subsidiary                                10,074,447       10,074,447

Shareholders' equity
  Preferred stock, $.01 par value; 4,960,000 shares
     authorized; none issued or outstanding                            --               --
  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                                            36,173,606       36,284,898
                                                             ------------     ------------

         Total shareholders' equity                            37,560,864       37,672,156
                                                             ------------     ------------

                                                             $ 55,259,416     $ 58,970,877
                                                             ============     ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                      F-2
<PAGE>   25

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              For the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                            2000              1999              1998
                                        ------------      ------------      ------------
<S>                                     <C>               <C>               <C>
Revenue
   Commissions                          $         --      $ 10,061,286      $ 15,088,330
   Management fees                                --         5,431,460         7,011,188
   Consulting fees                                --         2,748,452         9,580,256
   Other                                       1,566         1,093,872         2,724,191
   Interest                                  284,167           303,580           145,153
   Motel                                          --                --         1,014,091
                                        ------------      ------------      ------------

                                             285,733        19,638,650        35,563,209
Operating expenses
   Consulting fees                                --         5,308,225         5,500,000
   Salaries and wages                             --         4,361,715         5,062,774
   Goodwill amortization                          --         2,819,995            63,229
   General and administrative                 24,241         1,655,537         1,472,368
   Minority interest in earnings
     of subsidiary                                --         1,157,732         2,753,250
   Insurance and taxes                            --           894,669           810,717
   Legal and accounting                       46,313           307,313           214,951
   Other operating expenses                       --           201,020         1,353,393
   Depreciation and amortization                  --           100,729           182,735
   Telephone and utilities                        --            56,998           126,364
   Repairs and maintenance                        --            20,238            77,625
   Advertising and promotion                      --             5,410            81,653
   Franchise fees                                 --                --            73,523
                                        ------------      ------------      ------------

         Total operating expenses             70,554        16,889,581        17,772,582
                                        ------------      ------------      ------------

Earnings from operations                     215,179         2,749,069        17,790,627

Other expenses
     Interest expense                       (326,471)         (448,477)         (486,730)
                                        ------------      ------------      ------------
Earnings (loss) before income taxes
     and loss on sale of assets             (111,292)        2,300,592        17,303,897

Loss on sale of assets                            --           (97,128)       (1,152,206)
                                        ------------      ------------      ------------

Earnings before income taxes                (111,292)        2,203,464        16,151,691

Income tax benefit (expense)
     Current                                      --          (200,906)          (93,623)
     Deferred                                     --                --        (5,300,000)
                                        ------------      ------------      ------------
                                                  --          (200,906)       (5,393,623)
                                        ------------      ------------      ------------

         NET EARNINGS (LOSS)            $   (111,292)     $  2,002,558      $ 10,758,068
                                        ============      ============      ============

Earnings (loss) per share               $      (0.01)     $        .19      $       1.02
                                        ============      ============      ============

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

   The accompanying notes are an integral part of these financial statements.
                                      F-3

<PAGE>   26

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
              For the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                      Common Stock               Preferred Stock            Capital      Retained
                                -------------------------   --------------------------     in excess     earnings         Total
                                  Shares         Amount        Shares         Amount        of par       (deficit)        equity
                                -----------   -----------   -----------   ------------    -----------   -----------    ------------
<S>                             <C>           <C>           <C>           <C>             <C>           <C>            <C>
Balances at January 1, 1998      10,570,944   $   105,710        32,500   $ 32,500,000    $ 1,281,548   $27,315,439    $ 61,202,697

Redemption of preferred stock            --            --       (32,500)   (32,500,000)            --            --     (32,500,000)

Dividends paid                           --            --            --             --             --    (3,791,167)     (3,791,167)

Net earnings                             --            --            --             --             --    10,758,068      10,758,068
                                -----------   -----------   -----------   ------------    -----------   -----------    ------------
Balances at December 31, 1998    10,570,944       105,710            --             --      1,281,548    34,282,340      35,669,598

Net earnings                             --            --            --             --             --     2,002,558       2,002,558
                                -----------   -----------   -----------   ------------    -----------   -----------    ------------

Balances at December 31, 1999    10,570,944       105,710            --             --      1,281,548    36,284,898      37,672,156

Net loss                                 --            --            --             --             --      (111,292)       (111,292)
                                -----------   -----------   -----------   ------------    -----------   -----------    ------------

Balances at December 31, 2000    10,570,944   $   105,710            --             --    $ 1,281,548   $36,173,606    $ 37,560,864
                                ===========   ===========   ===========   ============    ===========   ===========    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                      F-4


<PAGE>   27

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Year Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                              2000              1999              1998
                                                          ------------      ------------      ------------
<S>                                                       <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net earnings (loss)                                      $   (111,292)     $  2,002,558      $ 10,758,068
   Adjustments to reconcile net earnings
     (loss) to net cash used for operating activities
   Depreciation and amortization                                    --           100,729           245,964
   Minority interest                                                --         1,157,735         2,753,250
   Loss on sale of assets and write-off                             --         2,897,133         1,152,206
   Gain on forgiveness of debt                                      --          (214,707)               --
   (Increase) decrease in
       Accounts receivable - trade                                  --          (483,280)          (50,379)
       Deferred tax asset                                           --                --         5,300,000
       Accounts receivable - affiliate                        (966,359)        3,304,283       (20,521,209)
       Prepaid expenses and other assets                            --            (1,885)           14,500
   Increase (decrease) in
       Accounts payable                                             --         6,099,751          (141,421)
       Accounts payable - affiliate                            153,145       (15,348,123)          166,164
       Accrued expenses                                             --           217,553           249,441
       Accrued interest - affiliate                             77,117                --                --
       Income taxes payable                                    (72,000)         (166,500)         (357,715)
       Other                                                        --            75,444                --
                                                          ------------      ------------      ------------

  Net cash used for operating activities                      (919,389)         (359,309)         (431,131)

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sale of investment                                 --           525,000                --
   Purchase of property and equipment                               --           (54,105)         (242,001)
   Sale of motels and equipment                                     --                --           488,425
   Payments received on notes receivable                       347,029           121,568            20,815
                                                          ------------      ------------      ------------

Net cash provided by investing activities                      347,029           592,463           267,239

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from notes payable - affiliate                     801,970                --           467,769
   Payments on long-term debt                                 (185,481)         (558,303)         (123,084)
                                                          ------------      ------------      ------------

Net cash provided by (used for) financing activities           616,489          (558,303)          344,685
                                                          ------------      ------------      ------------

Net increase (decrease) in cash and cash equivalents            44,129          (325,149)          180,793

Cash and cash equivalents at beginning of period                   550           325,699           144,906
                                                          ------------      ------------      ------------

Cash and cash equivalents at end of period                $     44,679      $        550      $    325,699
                                                          ============      ============      ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                      F-5
<PAGE>   28

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


NOTE A - HISTORY

     WesPac Investors Trust III ("WesPac), a California business trust, was
     originally organized on August 22, 1983. On January 24, 1994, WesPac
     instituted a Chapter 11 bankruptcy proceeding in the United States
     Bankruptcy Court for the Eastern District of Washington. A Plan of
     Reorganization dated March 22, 1996 (as modified) was confirmed by order
     dated May 15, 1996 and was amended by Order entered October 29, 1996
     approving the First Modification to Plan of Reorganization (the "Modified
     Plan"). Pursuant to the Modified Plan, WesPac was converted from a
     California business trust into a Nevada corporation. First Equity
     Properties, Inc. (the "Company"), which was incorporated in Nevada on
     December 19, 1996, was the surviving entity following the incorporation of
     WesPac into a California corporation and subsequent merger of that
     California corporation with and into the Company accomplished by Articles
     of Merger and a Plan of Merger filed in the States of California and Nevada
     on December 24, 1996. The Company automatically, by operation of law,
     succeeded to all of the assets, rights, duties, liabilities and obligations
     of the California corporation (as the immediate successor to WesPac) upon
     the effectiveness of the Merger on December 24, 1996.

     In general, the Modified Plan provided for the cancellation of the former
     publicly-held shares on the effective date of the Modified Plan with one
     share of the Company deemed to be exchanged for each former publicly-held
     share with the former public shareholders to hold, in the aggregate, 25% of
     the equity interest in the Company. Confirmation of the Modified Plan
     served to re-vest all assets of the estate of WesPac free and clear of all
     liabilities, except those payable pursuant to the Modified Plan. Under the
     Modified Plan, WesPac retained the Certain Motel Properties and all allowed
     claims were provided for or paid.

NOTE B - FRESH START REPORTING

     In accordance with AICPA Statement of Position 90-7, "Financial Reporting
     by Entities in Reorganization Under the Bankruptcy Code", ("SOP 90-7") the
     Company was required to adopt "fresh start" reporting and reflect the
     effects of such adoption in the financial statements as of June 15, 1996.
     The ongoing impact of the adoption of fresh-start reporting is reflected in
     the accompanying financial statements.

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Nature of Operations

     The Company and its subsidiaries provided management services to a variety
     of commercial and residential real estate entities throughout the
     continental United States. Effective October 1, 1999, substantially all of
     the contracts for management services were transferred from the Company. In
     addition, the Company indirectly invests in real estate entities and
     marketable securities through its investment in the preferred stock of
     Realty Advisors, Inc.


                                      F-6
<PAGE>   29

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     Principles of Consolidation

     The consolidated financial statements include the accounts of First Equity
     Properties, Inc., its wholly-owned subsidiary Carmel Realty, Inc. and its
     majority-owned subsidiary, Carmel Realty Services, Ltd. All significant
     intercompany accounts and transactions have been eliminated in
     consolidation.

     Cash Equivalents

     For purposes of the statement of cash flows, the Company considers all
     short-term investments with original maturities of three months or less to
     be cash equivalents.

     Property, Equipment, Depreciation and Amortization

     Property and equipment in place on June 15, 1996 are stated at fair value
     in accordance with fresh-start reporting. Additions are stated at cost.
     Depreciation and amortization are provided over the estimated useful lives
     of the assets on the straight-line method. Maintenance and repairs of a
     routine nature are charged to expense. Renewals and betterments which
     extend the useful life of existing assets are capitalized and depreciated
     over their estimated useful lives.

     Investments

     Investments consist of non-marketable investments in private companies, and
     are carried at the lower of cost or estimated net realizable value.

     Goodwill

     Goodwill represents the excess of cost over the fair value of assets
     acquired and is being amortized using the straight-line method over 40
     years. The carrying value of goodwill is periodically reviewed by the
     Company based on the expected future operating cash flows of the related
     business unit. It was determined in 1999 that, due to the publicly traded
     real estate entities transferring their management and brokerage contracts
     to another entity, impairment had occurred and the unamortized goodwill has
     been charged to operations in 1999.

     Accounting Estimates

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make certain
     estimates and assumptions that affect the amounts reported in the financial
     statements and accompanying notes. Actual results could differ from those
     estimates.


                                      F-7
<PAGE>   30

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     Income Taxes

     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
     Taxes". SFAS 109 requires an asset and liability approach to financial
     accounting for income taxes. In the event differences between the financial
     reporting basis and the tax basis of the Company's assets and liabilities
     result in deferred tax assets, SFAS 109 requires an evaluation of the
     probability of being able to realize the future benefits indicated by such
     assets. A valuation allowance is provided for a portion or all of the
     deferred tax assets when there is an uncertainty regarding the Company's
     ability to recognize the benefits of the assets in future years.

     Credit Risk

     The Company's trade accounts receivable arise in the normal course of
     business and primarily relate to management of commercial and residential
     properties located throughout the United States. Such receivables are
     unsecured. The Company performs ongoing credit evaluations of the entities
     from whom such amounts are receivable. The Company places its cash
     investments in high credit quality institutions and, by policy, limits the
     amount of credit exposure to any one institution.

     Earnings (Loss) per Share

     Earnings (loss) per share (EPS) are calculated in accordance with Statement
     of Financial Accounting Standards No. 128, Earnings per Share (SFAS 128),
     which was adopted in 1997 for both years presented. Basic EPS is computed
     by dividing income available to common shareholders by the weighted average
     number of common shares outstanding during the period. Diluted EPS does not
     apply to the Company due to the absence of dilutive potential common
     shares. The adoption of SFAS 128 had no effect on previously reported EPS.

NOTE D - ACCOUNTS RECEIVABLE - AFFILIATES

<TABLE>
<CAPTION>
                                                 2000             1999
                                             ------------     ------------
<S>                                          <C>              <C>
RBA Partners                                 $    682,831     $         --
Regis Realty                                      283,528               --
                                             ------------     ------------

                                             $    966,359     $         --
                                             ============     ============
</TABLE>


                                      F-8

<PAGE>   31

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE E - INVESTMENTS

     The investment in Realty Advisors, Inc. preferred stock at December 31,
     2000 and 1999 is $51,137,790 and $55,512,710, respectively, and represents
     464,889 and 504,661 shares, respectively, of no par value, non-voting
     preferred stock with a liquidation value of $110 per share. These shares do
     not earn dividends. Realty Advisors, Inc. is an affiliated company.

NOTE F - NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                      2000            1999
                                                                                   -----------     -----------
<S>                                                                                <C>             <C>
     Mortgage notes payable to a bank, bearing interest at 3.5% in excess of the
     U.S. T-Bill rate (as defined), payable in monthly installments of $26,886
     including interest through maturity on April 1, 2000; subsequently
     extended, collateralized by certain motel property and equipment.             $ 2,048,559     $ 2,234,040

     At December 31, 2000 maturities of notes payable are as follows:

           2001                                                                      2,048,559
                                                                                   -----------

                                                                                   $ 2,048,559
                                                                                   ===========
</TABLE>

NOTE G - NOTES PAYABLE - AFFILIATE

     The Company has a revolving line of credit with Nevada Sea Investments,
     Inc., a shareholder. Amounts borrowed under the line bear interest at 8%
     per year and are due on demand.

NOTE H - INCOME TAXES

     Income tax expense (benefit) differed from the amounts computed by applying
     the U.S. federal income tax rate of 35% to pretax income in 2000, 1999 and
     1998 as a result of the following:

<TABLE>
<CAPTION>
                                                     2000            1999             1998
                                                 ------------    ------------     ------------
<S>                                              <C>             <C>              <C>
           Computed expected tax expense         $         --    $    749,178     $  5,655,000
           Alternative minimum tax credit                  --        (677,334)              --
           Federal income tax                              --              --          238,500
           Miscellaneous timing differences                --         129,062         (499,877)
                                                 ------------    ------------     ============
                                                 $         --    $    200,906     $  5,393,623
                                                 ============    ============     ============
</TABLE>

                                   F-9
<PAGE>   32

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE I - RELATED PARTY TRANSACTIONS

     Effective January 1, 1997 the Company contracted with Regis Management
     Corporation (Regis) to manage the day-to-day operations of the motel
     properties for 5% of gross revenues. Regis is a subsidiary of Carmel
     Realty, Inc. Such contract terminated at the time of disposition of the
     motel properties.

     The Company provided management services primarily to five affiliated
     publicly traded real estate entities throughout the United States. Under
     such arrangements, the Company received a fee of 5% or less of the monthly
     gross rents collected on the properties under management. The Company
     subcontracts with other entities for the provision of property level
     services. All property management contracts, constituting substantially all
     management service revenues, with the five publicly traded real estate
     entities were cancelled effective October 1, 1999.

     The Company also provided real estate brokerage services to the five
     affiliated publicly traded real estate entities and a number of other
     entities, and receives brokerage commissions under varying arrangements
     from a fixed amount to a sliding scale on a percentage basis. In general,
     such services include providing assistance in locating, leasing or
     purchasing real estate. The Company receives fees equal to the lesser of
     (i) a percentage of the cost of acquisition, inclusive of commissions, if
     any, paid to nonaffiliated brokers, or (ii) the compensation customarily
     charged in similar transactions by others rendering similar property
     acquisition services. The contracts for the brokerage services were also
     cancelled effective October 1, 1999. These contracts represented
     substantially all brokerage and commission service revenue.

     Effective January 1, 1997, the Company acquired from a related party, 100%
     of the outstanding common stock of Carmel Realty, Inc. and an 81.6% limited
     partnership interest in Carmel Realty Services, Ltd. (the "Acquired
     Companies"), for a purchase price of $32,500,000, consisting of 32,500
     shares of Series A 8% Cumulative Preferred Stock having a liquidation value
     of $1,000 per share (the "Preferred Stock"). Accordingly, the acquired
     Companies' results of operations are included in the consolidated financial
     statements since the date of acquisition. The excess of the purchase price
     over assets acquired approximated $3,035,000 and was being amortized over
     40 years. Due to the fact that the service contracts with the five
     affiliated publicly traded real estate entities were cancelled and that
     this goodwill purchase was based on the continuing revenue stream from
     those contracts, the remainder of goodwill was charged to operations in
     1999.

                                      F-10

<PAGE>   33

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE J - FINANCIAL INSTRUMENTS

     The estimated fair values of the Company's financial instruments at
     December 31, 2000 and 1999 follow:

<TABLE>
<CAPTION>
                                                     2000                           1999
                                         ----------------------------    ----------------------------
                                           Carrying         Fair           Carrying          Fair
                                            Amount          Value           Amount           Value
                                         ------------    ------------    ------------    ------------
<S>                                      <C>             <C>             <C>             <C>
     Accounts receivable - affiliates    $    966,359    $    966,359    $         --    $         --
     Investments                           51,137,790      51,137,790      55,512,710      55,512,710
     Note receivable                        3,110,588       3,110,588       3,457,617       3,457,617
     Notes payable                          2,048,559       2,048,559       2,234,043       2,234,043
</TABLE>

     The carrying values of cash and cash equivalents, accounts receivable and
     payable, and accrued liabilities approximate fair value due to short-term
     maturities of these assets and liabilities.

     Investments are accounted for using the cost method and pertain to
     investments in companies for which fair values are not readily available,
     but are believed to exceed carrying amounts.

     The aggregate fair value of notes payable and notes payable-affiliate
     approximate carrying amounts due to their short maturities.

NOTE K - COMMITMENTS AND CONTINGENCIES

     The Company is involved in various legal actions incidental to its
     business. In Management's opinion, none of these actions will have a
     material adverse effect on the Company's financial position.

NOTE L - SALE AND FORECLOSURE OF HOTEL PROPERTY

     During June 1998, FEPI entered into a contract for deed to sell two motels
     to an unaffiliated Washington corporation for a total of $4,000,000 with a
     small down payment and an all inclusive wrap-around note which
     "wraps"certain existing underlying indebtedness. As a part of the
     transaction, FEPI ceded the management of the properties to the
     unaffiliated Washington corporation and it assumed the underlying
     indebtedness due to US Bank.

     Also during June 1998, FEPI exchanged the remaining motel property with an
     unaffiliated party for a residential property near Couer d'Alene, Idaho,
     which was subsequently sold.


                                      F-11
<PAGE>   34

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE M - SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                     2000           1999              1998
                                                 ------------    ------------     ------------
<S>                                              <C>             <C>              <C>
Cash paid during the year for:
  Interest                                       $    221,000    $         --     $    518,476
  Income taxes                                         76,000         367,009               --
Noncash investing and financing activities:
  Note payable exchanged for
       amounts due to affiliate                     3,495,833              --               --
  Stock issued to company to retire debt                   --      15,560,710               --
  Dividend paid for notes payable                          --              --        3,791,167
  Preferred stock investment exchanged
       for notes payable                            4,374,920              --        1,573,000
  Receivables exchanged for
       preferred stock                                     --              --       32,500,000
Details of sale of motel properties
  Sales price                                              --              --        4,520,776
  Note receivable                                          --              --       (3,600,000)
  Residential property                                     --              --         (620,000)
  Expenses paid                                            --              --         (111,575)
  Note payable assumed                                     --              --          299,224
                                                 ------------    ------------     ------------
  Net cash from sale of motel properties         $         --    $         --     $    488,425
                                                 ============    ============     ============
Details of sale of Carmel Property Management
  Sales price                                              --         283,528               --
  Assets sold                                              --      (2,162,144)              --
  Liabilities transferred                                  --       1,878,616               --
                                                 ------------    ------------     ------------
  Net cash from sale                             $         --    $         --     $         --
                                                 ============    ============     ============
</TABLE>

NOTE N - EMPLOYEE BENEFIT PLAN

     The Company has a 401(k) plan for the benefit of its employees. Employees
     can contribute to the plan up to 15% of their salary, subject to certain
     maximum dollar amounts set forth by the Internal Revenue Service, pursuant
     to a salary reduction agreement, upon meeting age and length of service
     requirements. The Companies' matching contribution is a discretionary
     percentage of electing employees' contributions, and totaled $-0-, $9,923
     and $4,320 in 2000, 1999 and 1998, respectively.


                                      F-12
<PAGE>   35

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE O - BUSINESS SEGMENTS

     In 1999 and 1998, the Company's operations have been classified into three
     business segments: hospitality, property management and real estate
     brokerage. These segments have separate financial information and, to a
     large extent, separate management and operating groups. Hospitality relates
     to the operations of the Company's three motel properties, which were sold
     in 1998. Property management relates to services rendered primarily to five
     publicly-traded real estate entities, in connection with the management of
     commercial real property, including retail centers, office buildings,
     industrial properties and hotels. Real estate brokerage relates to services
     rendered primarily to five publicly-traded real estate entities, in
     connection with locating, leasing and purchasing real estate. Summarized
     financial data by segment for 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                        2000
                             ----------------------------------------------------------------------------------------
                             Hospitality       Property     Real Estate                   Adjustments
                               Business       Management     Brokerage        Other      & Eliminations  Consolidated
                             ------------    ------------   ------------   ------------  --------------  ------------
<S>                          <C>             <C>            <C>            <C>            <C>            <C>
Revenues                     $         --    $         --   $         --   $    285,733   $         --   $    285,733
                             ============    ============   ============   ============   ============   ============

Operating profit             $         --    $         --   $         --   $         --   $         --   $         --
                             ============    ============   ============   ============   ============   ============
General corporate expenses                                                                                    397,025
Loss before income taxes                                                                                 $   (111,292)
                                                                                                         ============
   Identifiable assets       $               $         --   $         --                                 $       --
                             ============    ============   ============
   Corporate assets                                                                                        55,259,416
                                                                                                         ------------
                                                                                                         $ 55,259,416
                                                                                                         ============
</TABLE>

     Corporate assets include cash and cash equivalents, investments and
     deferred tax assets.

<TABLE>
<CAPTION>
                                                                            1999
                             ----------------------------------------------------------------------------------------
                             Hospitality       Property     Real Estate                   Adjustments
                               Business       Management     Brokerage        Other      & Eliminations  Consolidated
                             ------------    ------------   ------------   ------------  --------------  ------------
<S>                          <C>             <C>            <C>            <C>            <C>            <C>
Revenues                     $         --    $ 12,374,533   $ 10,061,286   $    505,756   $ (3,322,915)  $ 19,618,660
                             ============    ============   ============   ============   ============   ============

Operating profit (loss)      $         --    $  8,660,172   $  7,041,273   $    505,756   $ (3,322,915)  $ 12,884,286
                             ============    ============   ============   ============   ============   ============
General corporate expenses                                                                                 (9,523,090)
Minority interest in
  earnings of subsidiary                                                                                   (1,157,732)
                                                                                                         ------------
Earnings before income taxes                                                                             $  2,203,464
                                                                                                         ============
Identifiable assets          $         --    $         --   $         --                                 $         --
                             ============    ============   ============
Corporate assets                                                                                           58,970,877
                                                                                                         ------------
                                                                                                         $ 58,970,877
                                                                                                         ============
</TABLE>


                                      F-13

<PAGE>   36

                 FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           December 31, 2000 and 1999


NOTE O - BUSINESS SEGMENTS - CONTINUED

<TABLE>
<CAPTION>
                                                                       1998
                             ----------------------------------------------------------------------------------------
                             Hospitality       Property     Real Estate                   Adjustments
                               Business       Management     Brokerage        Other      & Eliminations  Consolidated
                             ------------    ------------   ------------   ------------  --------------  ------------
<S>                          <C>             <C>            <C>            <C>            <C>            <C>
Revenues                     $  1,014,091    $ 23,183,685   $ 15,088,330   $    628,040   $ (4,350,937)  $ 35,563,209
                             ============    ============   ============   ============   ============   ============

Operating profit (loss)      $ (1,756,678)   $ 16,195,171   $ 10,540,089   $    628,040   $         --   $ 25,606,622
                             ============    ============   ============   ============   ============   ============
General corporate expenses                                                                                 (6,701,681)
   Minority interest in
      earnings of subsidiary                                                                               (2,753,250)
                                                                                                         ------------
Earnings before income taxes                                                                             $ 16,151,691
                                                                                                         ============
Identifiable assets          $  5,829,462    $  1,668,392   $        --                                  $  7,497,854
                             ============    ============   ===========
Corporate assets                                                                                           44,200,937
                                                                                                         ------------
                                                                                                         $ 51,698,791
                                                                                                         ============
</TABLE>

     Corporate assets include cash and cash equivalents, notes receivable and
     investments.

NOTE P - COMPREHENSIVE INCOME

     Statement of Financial Accounting Standards No. 130, Reporting
     Comprehensive Income, (SFAS 130), requires that total comprehensive income
     be reported in the financial statements. For the years ended December 31,
     2000, 1999, and 1998, the Company's comprehensive income was equal to its
     net income and the Company does not have income meeting the definition of
     other comprehensive income.


                                      F-14
<PAGE>   37

<TABLE>
<CAPTION>
     EXHIBIT
     NUMBER          DESCRIPTION
     -------         -----------
     <S>             <C>
       2.1           Plan of Reorganization (as modified) dated March 22, 1996
                     (incorporation by reference is made by Exhibit 2.1 to Form
                     8-K of First Equity Properties, Inc. for event reported
                     June 19, 1996).

       2.2           First Amended Disclosure Statement (as modified) dated
                     March 22, 1996 (incorporation by reference is made to
                     Exhibit 2.2 to Form 8-K of First Equity Properties, Inc.
                     for event reported June 19, 1996).

       2.3           Order Confirming Plan of Reorganization dated May 15, 1996
                     entered May 20, 1996 (incorporation by reference is made to
                     Exhibit 2.3 to Form 8-K of First Equity Properties, Inc.
                     for event reported June 19, 1996).

       2.4           First Modification to Plan of Reorganization (as modified)
                     dated October 29, 1996 (incorporation by reference is made
                     to Exhibit 2.4 to Form 8-K of First Equity Properties, Inc.
                     for event reported June 19, 1996).

       2.5           Ex parte Order approving modification to Plan of
                     Reorganization (as modified) entered October 29, 1996
                     (incorporation by reference is made to Exhibit 2.5 to Form
                     8-K of First Equity Properties, Inc. for event reported
                     June 19, 1996).

       2.6           Certificate of Substantial Consummation dated January 21,
                     1997 (incorporation by reference is made to Exhibit 2.6 to
                     Form 8-K of First Equity Properties, Inc. for event
                     reported June 19, 1996).

       2.7           Final Decree issued by the Court on February 11, 1997
                     (incorporation by reference is made to Exhibit 2.7 to Form
                     8-K of First Equity Properties, Inc. for event reported
                     June 19, 1996).

       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).
</TABLE>


<PAGE>   38

<TABLE>
<CAPTION>
     EXHIBIT
     NUMBER          DESCRIPTION
     -------         -----------
     <S>             <C>
       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.)

       21*           Subsidiaries of the Registrant


     *filed herewith
</TABLE>