10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from                    to

Commission File Number 000-11777

FIRST EQUITY PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

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

1603 LBJ Freeway, Suite 300

Dallas, Texas 75234

(Address of principal executive offices)

(Zip Code)

(469) 522-4200

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☑.  Yes   ☐  No.

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

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

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

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

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

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

Common Stock, $.01 par value	1,057,628
(Class)	(Outstanding at June 1, 2016)

1

FIRST EQUITY PROPERTIES, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements
	Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015	3
	Statements of Operations for the three months ended March 31, 2016 and 2015 (unaudited)	4
	Statement of Shareholders' Equity for the three months ended March 31, 2016 (unaudited)	5
	Statements of Cash Flows for the three months ended March 31, 2016 and 2015  (unaudited)	6
	Notes to Financial Statements	7-8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Controls and Procedures	10
PART II. OTHER INFORMATION
Item 6.	Exhibits	11
SIGNATURES		12-15

2

PART I. FINANCIAL INFORMATION

ITEM  1. FINANCIAL STATEMENTS

FIRST EQUITY PROPERTIES, INC.

BALANCE SHEETS

	March 31, 2016			December 31, 2015
Assets	(unaudited)
Notes receivable and accrued interest - related parties		2,105,666			2,106,229
Cash and cash equivalents		1,716			867
Total assets	$	2,107,382		$	2,107,096
Liabilities and Shareholders' Equity
Notes payable and accrued interest - related parties	$	836,730		$	836,953
Accounts payable - other		31,859			669
Accounts payable - related parties		368,957			381,958
Total liabilities		1,237,546			1,219,580
Shareholders' equity
Common stock, $0.01 par value; 40,000,000 shares authorized; 1,057,628 issued and outstanding		10,576			10,576
Preferred stock, $0.01 par value; 4,960,000 shares authorized; none issued or outstanding		-			-
Paid in capital		1,376,682			1,376,682
Retained earnings (deficit)		(517,422	)		(499,742	)
Total shareholders' equity		869,836			887,516
Total liabilities and shareholders' equity	$	2,107,382		$	2,107,096

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

3

FIRST EQUITY PROPERTIES, INC.

STATEMENT OF OPERATIONS

(unaudited)

	For the three months ended
	March 31,
	2016			2015
Revenue
Interest income - from related parties	$	51,220		$	52,090
Total income		51,220			52,090
Operating Expenses
General and administrative - related parties		15,000			15,000
General and administrative		2,718			4,896
Legal and professional fees		30,829			15,602
Total operating expenses		48,547			35,498
Income (loss) before interest expense and taxes		2,673			16,592
Other income (expense)
Interest expense - related parties		(20,353	)		(21,792	)
Income (loss) before income taxes		(17,680	)		(5,200	)
Income tax expense		-			-
Net income (loss) applicable to common shareholders	$	(17,680	)	$	(5,200	)
Earnings (loss) per share	$	(0.02	)	$	(0.01	)
Weighted average shares outstanding		1,057,628			1,057,628

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

4

FIRST EQUITY PROPERTIES, INC.

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the three months ended March 31, 2016

(unaudited)

	Common Stock						Retained
					Paid in		Earnings
	Shares		Amount		Capital		(Deficit)			Total Equity
Balances at January 1, 2016		1,057,628	$	10,576	$	1,376,682	$	(499,742	)	$	887,516
Net income (loss)		-		-		-		(17,680	)		(17,680	)
Balances  at March 31, 2016		1,057,628	$	10,576	$	1,376,682	$	(517,422	)	$	869,836

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

5

FIRST EQUITY PROPERTIES, INC.

STATEMENT OF CASH FLOWS

(unaudited)

	For the three months ended
	March 31,
	2016			2015
Cash Flows from Operating Activities
Net Income (Loss)	$	(17,680	)	$	(5,200	)
Adjustments to reconcile net income applicable to common shareholders to net cash provided by (used in) operating activities:
(Increase) decrease in
Interest receivable - related parties		563			1,562
Increase (decrease) in
Accounts payable - other		31,190			15,671
Accounts payable - related parties		(13,001	)		8,999
Interest payable - related parties		(223	)		(936	)
Federal income tax payable		-			-
Net cash provided by (used for) operating activities		849			20,096
Cash Flows from Investing Activities
Notes receivable - related parties		-			19,100
Net cash provided by (used for) investing activities		-			19,100
Cash Flows from Financing Activities
Notes payable - related parties		-			(39,765	)
Net cash provided by (used for) financing activities		-			(39,765	)
Net increase (decrease) in cash and cash equivalents		849			(569	)
Cash and cash equivalents at the beginning of period		867			1,776
Cash and cash equivalents at the end of period	$	1,716		$	1,207
Supplemental disclosures of cash flow information:
Cash paid for interest expense to related parties	$	20,577		$	22,730
Cash received for interest on notes receivable	$	51,783		$	53,653

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

6

FIRST EQUITY PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1.      ORGANIZATION AND BASIS OF PRESENTATION

Organization and business

First Equity Properties, Inc. is a Nevada based corporation organized in December 19, 1996 and the Company is headquartered in Dallas, TX. The Company's principal line of business and source of revenue is currently investments and interest on notes receivable.  The Company is currently in the business of real estate investing.  FEPI is a publicly traded company however, no trading market presently exists for the shares of common stock and its value is therefore not determinable.

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading.  In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included.

The year-end Balance Sheet at December 31, 2015, was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements.  For further information, refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

Cost capitalization

Costs related to planning and developing a project are capitalized and classified as Real Estate development costs in the Consolidated Balance Sheets. We capitalized certain operating expenses until development is substantially complete, but no later than one year from the cessation of major development activity.

Newly issued accounting pronouncements

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our statements, including that which we have not yet adopted.  We do not believe that any such guidance will have a material effect on our financial position or results of operation

NOTE 2.  FEDERAL INCOME TAXES

The Company accounts for income taxes in accordance with Accounting Standards Codification, ("ASC") No. 740, "Accounting for Income Taxes". ASC 740 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, ASC 740 requires an evaluation of the probability of being able to realize the future benefits indicated.

Recognition of the benefits of deferred tax assets will require the Company to generate future taxable income. There is no assurance that the Company will generate earnings in future years.

7

NOTE 3.  NOTES RECEIVABLE AND ACCRUED INTEREST – RELATED PARTIES

Receivables from related parties primarily consist of two notes of $1,565,292 and $489,154 which are due to the Company in quarterly installments of interest only. The notes accrue interest at 10% per annum.  The maturity date of these notes has been extended to December 31, 2017.  A payment was received in March 2016 for $51,783 which paid the remaining interest balance due in 2015.

	2016		2015
Notes receivable – related parties
Unsecured, due on demand, interest rate of 10%, due monthly	$	2,054,446	$	2,054,446
Accrued interest – related parties		51,220		51,783
Total notes and accounts receivable – related parties	$	2,105,666	$	2,106,229

NOTE 4.  NOTES PAYABLE AND ACCRUED INTEREST – RELATED PARTIES

	2016		2015
Uncollateralized notes payable – related parties
due on demand, interest rate of 10%, payable quarterly	$	816,376	$	816,376
Accrued interest and intercompany – related parties		20,354		20,577
Total notes payable – related parties	$	836,730	$	836,953

	Principal and interest payments due by period
	Total		2017		2018		2019		2020		2021		therafter
Long term debt	$	836,730	$	836,730	$	-	$	-	$	-	$	-	$	-
	$	836,730	$	836,730	$	-	$	-	$	-	$	-	$	-

NOTE 5.  RELATED PARTIES TRANSACTIONS

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

The Company has an administrative agreement with Pillar Income Asset Management, Inc., an affiliated entity, for accounting and administrative services.  The total expense of the three months ended March 31, 2016 was $15,000 which is included in General and Administrative expenses of the Statements of Operations.

NOTE 6.  SUBSEQUENT EVENTS

The Company has evaluated subsequent events through May 31, 2016, the date the financial statements were available to be issued, and has determined that there are none to be reported.

8

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

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

Related parties

We apply ASC Topic 805, "Business Combinations", to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may  deal if one party controls or can significantly influence the decision making  of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity.

Results of Operations

The following discussion is based on our Statement of Operations within our Financial Statements as presented in Part 1, Item 1 of this report for the three months ended March 31, 2016 and 2015. The discussion is not meant to be an all inclusive discussion of the changes within our operations. Instead, we have focused on the significant items relevant to obtain an understanding of the changes in our operations.

The results of operations for the three months ended March 31, 2016, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Our sole source of income is from the interest received on affiliated receivables.  The principal balances on those receivables have been consistent for the past years, thus making our revenues consistent from year to year.  Expenses are primarily related to professional and administrative fees and interest on affiliated notes.

Comparison of the three months ended March 31, 2016 to the same period ended 2015.

We reported net loss applicable to common shareholders of ($17,680) for the three months ended March 31, 2016 as compared to a net loss to common shareholders of ($5,200) for the same period ended 2015.

The increase in net loss is primarily due to the increase in legal and professional fees due to the timing of the audit review billing.

Liquidity and Capital Resources

General

Our principal liquidity needs for the next twelve months are funding of normal recurring expenses including interest expense and legal and administrative fees.

Our principal source of cash is proceeds from interest income on our notes receivables.  The following impacted our balance sheet as of March 31, 2016:

Our accounts payable – other increased due to the accrual of the 2015 audit review fee.

9

ITEM 3. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

A review and evaluation was performed by management under the supervision and with the participation of the   Principal Executive Officer and Chief Financial Officer of the effectiveness of the Company's disclosure controls and procedures, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of March 31, 2016. Based upon that most recent evaluation, which was completed as of the end of the period covered by this Form 10-K, the Principal Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at March 31, 2016 to ensure that information required to be disclosed in reports that the Company files submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time period specified by the Securities and Exchange Commission ("SEC") rules and forms. As a result of this evaluation, there were no significant changes in the Company's internal control over financial reporting during the period ended March 31, 2016 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

(b) Changes in Internal Controls over Financial Reporting. There have been no changes in the Company's internal controls over financial reporting during the quarter ended March 31, 2016, that have materially affected or are reasonably likely to materially affect the Company's internal controls over financial reporting.

10

PART II – OTHER INFORMATION

ITEM  6. EXHIBITS

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

ExhibitNumber	Description
3.1	Articles of Incorporation of Wespac Property Corporation as filed with and endorsed by the Secretary of State of California on December 16, 1996 (incorporation by reference is made to Exhibit 3.1 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.2	Articles of Incorporation of First Equity Properties, Inc. filed with and approved by the Secretary of State of Nevada on December 19, 1996 (incorporation by reference is made to Exhibit 3.2 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.3	Bylaws of First Equity Properties, Inc. as adopted December 20, 1996 (incorporation by reference is made to Exhibit 3.3 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.4	Agreement and Plan of Merger of Wespac Property Corporation and First Equity Properties, Inc. dated December 23, 1996 (incorporation by reference is made to Exhibit 3.4 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.5	Articles of Merger of Wespac Property Corporation into First Equity Properties, Inc. as filed with and approved with the Secretary of State in Nevada December 24, 1996 (incorporation by reference is made to Exhibit 3.5 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.6	Certificate of Designation of Preferences and Relative Participating or Optional of Other Special Rights and Qualifications, Limitations or Restrictions thereof of the Series A 8% Cumulative Preferred Stock (incorporation by reference is made to Exhibit 3.6 to Form 10-KSB of First Equity Properties, Inc. for the fiscal year ended December 31, 1996.)
31.1*	Certification of Principal Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
31.2*	Certification of Principal Financial and Accounting Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
32.1*	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

_____________________________

* Filed herewith.

11

SIGNATURE PAGE

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

	FIRST EQUITY PROPERTIES, INC.
Date: June 1, 2016	By:	/s/ Daniel J. Moos
		Daniel J. Moos Director, President & Treasurer
	FIRST EQUITY PROPERTIES, INC.
Date: June 1, 2016	By:	/s/ Steven Shelley
		Steven Shelley Director, Vice President & Secretary

12

EX-31.1

EXHIBIT 31.1

RULE 13a – 14(a)/15d – 14(a) CERTIFICATION

I, Daniel J. Moos, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Equity Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining internal controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to insure that material information relating to the registrant including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

Date: June 1, 2016	By:	/s/ Daniel J. Moos
		Daniel J.  Moos President and Treasurer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

RULE 13a – 14(a)/15d – 14(a) CERTIFICATION

I, Steven Shelley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Equity Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining internal controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to insure that material information relating to the registrant including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

Date: June 1, 2016	By:	/s/ Steven Shelley
		Steven Shelley Vice President & Secretary (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of First Equity Properties, Inc. (the "Company"), on Form 10-Q for the period ended March 31, 2016, as filed with Securities Exchange Commission on the date hereof (the "Report"), Daniel J. Moos, Director, President and Treasurer of the Company, and Steven Shelley, Vice President and Secretary of the Company, each hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: June 1, 2016	By:	/s/ Daniel J. Moos
		Daniel J. Moos President and Treasurer

Date: June 1, 2016	By:	/s/ Steven Shelley
		Steven Shelley Vice President and Secretary

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Jun. 01, 2016
Document and Entity Information
Entity Registrant Name	FIRST EQUITY PROPERTIES INC
Entity Trading Symbol	fepi
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Entity Central Index Key	0000726516
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		1,057,628
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

XML

BALANCE SHEETS - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Assets {1}
Notes receivable and accrued interest - related parties	$ 2,105,666	$ 2,106,229
Cash and cash equivalents	1,716	867
Total assets	2,107,382	2,107,096
Liabilities and Shareholders' Equity
Notes payable and accrued interest - related parties	836,730	836,953
Accounts payable - other	31,859	669
Accounts payable - related parties	368,957	381,958
Total liabilities	1,237,546	1,219,580
Shareholders' equity
Common stock, $0.01 par value; 40,000,000 shares authorized; 1,057,628 issued and outstanding	10,576	10,576
Preferred stock, $0.01 par value; 4,960,000 shares authorized; none issued or outstanding	0	0
Paid in capital	1,376,682	1,376,682
Retained earnings (deficit)	(517,422)	(499,742)
Total shareholders' equity	869,836	887,516
Total liabilities and shareholders' equity	$ 2,107,382	$ 2,107,096

XML

BALANCE SHEETS PARENTHETICALS - $ / shares	Mar. 31, 2016	Dec. 31, 2015
PARENTHETICALS
Common Stock, Par Value	$ 0.01	$ 0.01
Common Stock, Shares Authorized	40,000,000	40,000,000
Common Stock, Shares Issued	1,057,628	1,057,628
Common Stock, Shares Outstanding	1,057,628	1,057,628
Preferred Stock, Par Value	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	4,960,000	4,960,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0

XML

STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue
Interest income - from related parties	$ 51,220	$ 52,090
Total income	51,220	52,090
Operating Expenses
General and administrative - related parties	15,000	15,000
General and administrative	2,718	4,896
Legal and professional fees	30,829	15,602
Total operating expenses	48,547	35,498
Income (loss) before interest expense and taxes	2,673	16,592
Other income (expense)
Interest expense - related parties	(20,353)	(21,792)
Income (loss) before income taxes	(17,680)	(5,200)
Income tax expense	0	0
Net income (loss) applicable to common shareholders	$ (17,680)	$ (5,200)
Earnings (loss) per share	$ (0.02)	$ (0.01)
Weighted average shares outstanding	1,057,628	1,057,628

XML

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - 3 months ended Mar. 31, 2016 - USD ($)	Common Stock Shares	Common Stock Amount	Paid in Capital	Retained Earnings (Deficit)	Total Equity
Balances at Jan. 01, 2016	1,057,628	10,576	1,376,682	(499,742)	887,516
Net income (loss)				$ (17,680)	$ (17,680)
Balances at Mar. 31, 2016	1,057,628	10,576	1,376,682	(517,422)	869,836

XML

STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flows from Operating Activities
Net Income (Loss)	$ (17,680)	$ (5,200)
(Increase) decrease in
Interest receivable - related parties	563	1,562
Increase (decrease) in
Accounts payable - other	31,190	15,671
Accounts payable - related parties	(13,001)	8,999
Interest payable - related parties	(223)	(936)
Federal income tax payable	0	0
Net cash provided by (used for) operating activities	849	20,096
Cash Flows from Investing Activities
Notes receivable - related parties	0	19,100
Net cash provided by (used for) investing activities	0	19,100
Cash Flows from Financing Activities
Notes payable - related parties	0	(39,765)
Net cash provided by (used for) financing activities	0	(39,765)
Net increase (decrease) in cash and cash equivalents	849	(569)
Cash and cash equivalents at the beginning of period	867	1,776
Cash and cash equivalents at the end of period	1,716	1,207
Supplemental disclosures of cash flow information:
Cash paid for interest expense to related parties	20,577	22,730
Cash received for interest on notes receivable	$ 51,783	$ 53,653

XML

ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2016

ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1.      ORGANIZATION AND BASIS OF PRESENTATION

Organization and business

First Equity Properties, Inc. is a Nevada based corporation organized in December 19, 1996 and the Company is headquartered in Dallas, TX. The Company's principal line of business and source of revenue is currently investments and interest on notes receivable.  The Company is currently in the business of real estate investing.  FEPI is a publicly traded company however, no trading market presently exists for the shares of common stock and its value is therefore not determinable.

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading.  In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included.

The year-end Balance Sheet at December 31, 2015, was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements.  For further information, refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

Cost capitalization

Costs related to planning and developing a project are capitalized and classified as Real Estate development costs in the Consolidated Balance Sheets. We capitalized certain operating expenses until development is substantially complete, but no later than one year from the cessation of major development activity.

Newly issued accounting pronouncements

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our statements, including that which we have not yet adopted.  We do not believe that any such guidance will have a material effect on our financial position or results of operation

XML

FEDERAL INCOME TAXES

3 Months Ended

Mar. 31, 2016

FEDERAL INCOME TAXES

FEDERAL INCOME TAXES

NOTE 2.  FEDERAL INCOME TAXES

The Company accounts for income taxes in accordance with Accounting Standards Codification, ("ASC") No. 740, "Accounting for Income Taxes". ASC 740 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, ASC 740 requires an evaluation of the probability of being able to realize the future benefits indicated.

Recognition of the benefits of deferred tax assets will require the Company to generate future taxable income. There is no assurance that the Company will generate earnings in future years.

XML

NOTES RECEIVABLE AND ACCRUED INTEREST - RELATED PARTIES

3 Months Ended

Mar. 31, 2016

NOTES RECEIVABLE AND ACCRUED INTEREST - RELATED PARTIES

NOTES RECEIVABLE AND ACCRUED INTEREST - RELATED PARTIES

NOTE 3.  NOTES RECEIVABLE AND ACCRUED INTEREST – RELATED PARTIES

Receivables from related parties primarily consist of two notes of $1,565,292 and $489,154 which are due to the Company in quarterly installments of interest only. The notes accrue interest at 10% per annum.  The maturity date of these notes has been extended to December 31, 2017.  A payment was received in March 2016 for $51,783 which paid the remaining interest balance due in 2015.

	2016		2015
Notes receivable – related parties
Unsecured, due on demand, interest rate of 10%, due monthly	$	2,054,446	$	2,054,446
Accrued interest – related parties		51,220		51,783
Total notes and accounts receivable – related parties	$	2,105,666	$	2,106,229

XML

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES

3 Months Ended

Mar. 31, 2016

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES

NOTE 4.  NOTES PAYABLE AND ACCRUED INTEREST – RELATED PARTIES

	2016		2015
Uncollateralized notes payable – related parties
due on demand, interest rate of 10%, payable quarterly	$	816,376	$	816,376
Accrued interest and intercompany – related parties		20,354		20,577
Total notes payable – related parties	$	836,730	$	836,953

	Principal and interest payments due by period
	Total		2017		2018		2019		2020		2021		therafter
Long term debt	$	836,730	$	836,730	$	-	$	-	$	-	$	-	$	-
	$	836,730	$	836,730	$	-	$	-	$	-	$	-	$	-

XML

RELATED PARTIES TRANSACTIONS

3 Months Ended

Mar. 31, 2016

RELATED PARTIES TRANSACTIONS

RELATED PARTIES TRANSACTIONS

NOTE 5.  RELATED PARTIES TRANSACTIONS

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

The Company has an administrative agreement with Pillar Income Asset Management, Inc., an affiliated entity, for accounting and administrative services.  The total expense of the three months ended March 31, 2016 was $15,000 which is included in General and Administrative expenses of the Statements of Operations.

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2016

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 6.  SUBSEQUENT EVENTS

The Company has evaluated subsequent events through May 31, 2016, the date the financial statements were available to be issued, and has determined that there are none to be reported.

XML

ACCOUNTING POLICIES (POLICIES)

3 Months Ended

Mar. 31, 2016

Accounting Policies

Organization and Business

Organization and business

First Equity Properties, Inc. is a Nevada based corporation organized in December 19, 1996 and the Company is headquartered in Dallas, TX. The Company's principal line of business and source of revenue is currently investments and interest on notes receivable.  The Company is currently in the business of real estate investing.  FEPI is a publicly traded company however, no trading market presently exists for the shares of common stock and its value is therefore not determinable.

Basis of presentation

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading.  In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included.

The year-end Balance Sheet at December 31, 2015, was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements.  For further information, refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

Cost capitalization

Cost capitalization

Costs related to planning and developing a project are capitalized and classified as Real Estate development costs in the Consolidated Balance Sheets. We capitalized certain operating expenses until development is substantially complete, but no later than one year from the cessation of major development activity.

Newly issued accounting pronouncements

Newly issued accounting pronouncements

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our statements, including that which we have not yet adopted.  We do not believe that any such guidance will have a material effect on our financial position or results of operation

XML

NOTES RECIEVABLE AND ACCRUED INTEREST - RELATED PARTIES (Tables)

3 Months Ended

Mar. 31, 2016

NOTES RECIEVABLE AND ACCRUED INTEREST - RELATED PARTIES

NOTES RECEIVABLE AND ACCRUED INTEREST - RELATED PARTIES

	2016		2015
Notes receivable – related parties
Unsecured, due on demand, interest rate of 10%, due monthly	$	2,054,446	$	2,054,446
Accrued interest – related parties		51,220		51,783
Total notes and accounts receivable – related parties	$	2,105,666	$	2,106,229

XML

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES (Tables)

3 Months Ended

Mar. 31, 2016

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES {2}

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES

	2016		2015
Uncollateralized notes payable – related parties
due on demand, interest rate of 10%, payable quarterly	$	816,376	$	816,376
Accrued interest and intercompany – related parties		20,354		20,577
Total notes payable – related parties	$	836,730	$	836,953

	Principal and interest payments due by period
	Total		2017		2018		2019		2020		2021		therafter
Long term debt	$	836,730	$	836,730	$	-	$	-	$	-	$	-	$	-
	$	836,730	$	836,730	$	-	$	-	$	-	$	-	$	-

XML

NOTES RECEIVABLE AND ACCRUED INTEREST - RELATED PARTIES (DETAILS) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
NOTES RECEIVABLE AND ACCRUED INTEREST - RELATED PARTIES Details
Unsecured, due on demand, interest rate of 10%, due monthly	$ 2,054,446	$ 2,054,446
Accrued interest - related parties	51,220	51,783
Total notes and accounts receivable - related parties	$ 2,105,666	$ 2,106,229

XML

RECEIVABLES RELATED PARTIES (DETAILS)	Mar. 31, 2016 USD ($)
RECEIVABLES RELATED PARTIES Details
Receivable related parties primary note 1 mature on 31/12/2015	$ 1,565,292
Receivable related parties primary note 2 3/31/2016	$ 489,154
Notes accrued interest per annum at	10.00%
Payment received	$ 51,783

XML

NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES (DETAILS) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
NOTES PAYABLE AND ACCRUED INTEREST - RELATED PARTIES DETAILS
Uncollateralized notes payable - related parties due on demand, interest rate of 10%, payable quarterly	$ 816,376	$ 816,376
Accrued interest and intercompany - related parties	20,354	20,577
Total notes payable - related parties	$ 836,730	$ 836,953

XML

LONG TERM DEBT PAYMENTS DUE BY PERIOD (DETAILS) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
LONG TERM DEBT PAYMENTS DUE BY PERIOD Details
Long term debt Payments due in 2017	$ 836,730	$ 836,730
Long term debt Payments due in 2018		0
Long term debt Payments due in 2019	0
Long term debt Payments due in 2020		0
Long term debt Payments due in 2021	0
Long term debt Payments due Thereafter		0
Long term debt Payments due Total	$ 836,730	$ 836,730

XML

RELATED PARTIES TRANSACTIONS (DETAILS)	3 Months Ended
	Mar. 31, 2016 USD ($)
RELATED PARTIES TRANSACTIONS Details
Total expense	$ 15,000