Page 1 of 12

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   -----------

                                   FORM 10-QSB

   __X__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                  For the quarterly period ended March 31, 1997

                                       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 0-12593
                                                -------


                         PHOENIX LEASING INCOME FUND VII
--------------------------------------------------------------------------------
                                   Registrant

            California                                     68-0001202
-----------------------------                 ----------------------------------
      State of Jurisdiction                   I.R.S. Employer Identification No.


2401 Kerner Boulevard, San Rafael, California                  94901-5527
--------------------------------------------------------------------------------
    Address of Principal Executive Offices                      Zip Code

       Registrant's telephone number, including area code: (415) 485-4500
                                                           --------------

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 __X__ No _____

345,974 Units of Limited  Partnership  Interest were outstanding as of March 31,
1997.

Transitional small business disclosure format:

                               Yes __X__ No _____


<PAGE>


                                                                    Page 2 of 12

                          Part I. Financial Information
                          -----------------------------
                          Item 1. Financial Statements
                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                 (Amounts in Thousands Except for Unit Amounts)
                                   (Unaudited)
                                                        March 31,  December 31,
ASSETS                                                    1997         1996
                                                         ------       ------

Cash and cash equivalents                                $  980       $2,155

Accounts receivable (net of allowance for
  losses on accounts receivable of $41 at
  March 31, 1997 and December 31, 1996,
  respectively)                                              57           30

Notes receivable (net of allowance for losses
  on notes receivable of $359 at March 31, 1997
  and December 31, 1996)                                    302          302

Equipment on operating leases and held for lease
  (net of accumulated depreciation of $1,308 and
  $1,316 at March 31, 1997 and December 31, 1996,
  respectively)                                               1            2

Property, cable systems and equipment (net of
  accumulated depreciation of $389 and $358 at
  March 31, 1997 and December 31, 1996,
  respectively)                                             833          841

Cable subscriber lists and franchise rights (net
  of accumulated amortization of $552 and $512 at
  March 31, 1997 and December 31, 1996, respectively)       740          780

Investment in joint ventures                                644          730

Other assets                                                160          151
                                                         ------       ------

    Total Assets                                         $3,717       $4,991
                                                         ======       ======

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

  Accounts payable and accrued expenses                  $1,324       $1,350
                                                         ------       ------

    Total Liabilities                                     1,324        1,350
                                                         ------       ------

Partners' Capital

  General Partner                                           331          322

  Limited Partners, 480,000 units authorized,
    366,432 units issued and 345,974 units
    outstanding at March 31, 1997 and December
    31, 1996                                              2,058        3,312

  Unrealized gains on available-for-sale securities           4            7
                                                         ------       ------

    Total Partners' Capital                               2,393        3,641
                                                         ------       ------

    Total Liabilities and Partners' Capital              $3,717       $4,991
                                                         ======       ======


        The accompanying notes are an integral part of these statements.

<PAGE>


                                                                    Page 3 of 12

                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Amounts in Thousands Except for Per Unit Amounts)
                                   (Unaudited)

                                                         Three Months Ended
                                                             March 31,
                                                          1997       1996
                                                         ------     ------
INCOME

  Rental income                                          $   73     $  118
  Equity in earnings from joint ventures, net                32         49
  Interest income, notes receivable                          18       --
  Cable subscriber revenue                                  146        146
  Other income                                               15         39
                                                         ------     ------

    Total Income                                            284        352
                                                         ------     ------

EXPENSES

  Depreciation and amortization                              72        134
  Lease related operating expenses                            1          6
  Program service, cable system                              41         35
  Management fees to General Partner                         13         16
  Provision for (recovery of) losses on receivables        --          (16)
  General and administrative expenses                        99         95
                                                         ------     ------

    Total Expenses                                          226        270
                                                         ------     ------

Net income before income taxes                               58         82
Income tax benefit (expense)                                  3         (1)
                                                         ------     ------

NET INCOME                                               $   61     $   81
                                                         ======     ======



NET INCOME PER LIMITED PARTNERSHIP UNIT                  $  .15     $  .20
                                                         ======     ======

DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT               $ 3.78     $ 3.78
                                                         ======     ======

ALLOCATION OF NET INCOME:
  General Partner                                        $    9     $   12
  Limited Partners                                           52         69
                                                         ------     ------

                                                         $   61     $   81
                                                         ======     ======


        The accompanying notes are an integral part of these statements.

<PAGE>


                                                                    Page 4 of 12

                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)
                                                       Three Months Ended
                                                             March 31,
                                                         1997        1996
                                                       -------     -------
Operating Activities:
  Net income                                           $    61     $    81

    Adjustments to reconcile net income to
      net cash provided (used) by operating
      activities:
        Depreciation and amortization                       72         134
        Gain on sale of equipment                           (1)         (5)
        Equity in earnings from joint ventures, net        (32)        (49)
        Provision for (recovery of) early
         termination, financing leases                    --           (17)
        Provision for losses on accounts receivable       --             1
        Decrease (increase) in accounts receivable         (27)          4
        Decrease in accounts payable and accrued
         expenses                                          (26)       (156)
        Decrease (increase) in deferred income
         tax asset                                          (3)          1
        Increase in other assets                            (8)         (1)
                                                       -------     -------

Net cash provided (used) by operating activities            36          (7)
                                                       -------     -------

Investing Activities:
  Principal payments, financing leases                    --            17
  Principal payments, notes receivable                    --             9
  Proceeds from sale of equipment                            1           5
  Distributions from joint ventures                        118         126
  Property, plant and equipment, cable systems             (23)        (12)
                                                       -------     -------

Net cash provided by investing activities                   96         145
                                                       -------     -------

Financing Activities:
  Distributions to partners                             (1,307)     (1,307)
                                                       -------     -------

Net cash used by financing activities                   (1,307)     (1,307)
                                                       -------     -------

Decrease in cash and cash equivalents                   (1,175)     (1,169)

Cash and cash equivalents, beginning of period           2,155       3,940
                                                       -------     -------

Cash and cash equivalents, end of period               $   980     $ 2,771
                                                       =======     =======


        The accompanying notes are an integral part of these statements.

<PAGE>


                                                                    Page 5 of 12

                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.    General.

        The  accompanying  unaudited  condensed  financial  statements have been
prepared by the  Partnership in accordance  with generally  accepted  accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included. Although management believes that the disclosures are adequate to make
the information  presented not misleading,  it is suggested that these condensed
financial  statements be read in conjunction  with the financial  statements and
the notes included in the Partnership's  Financial Statement,  as filed with the
SEC in the latest annual report on Form 10-K.

Note 2.    Reclassification.

        Reclassification  -  Certain  1996  amounts  have been  reclassified  to
conform to the 1997 presentation.

Note 3.    Income Taxes.

        Federal  and state  income  tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.

        Phoenix  Cablevision of Oregon,  Inc. (the  Subsidiary) is a corporation
subject to state and  federal tax  regulations.  The  Subsidiary  reports to the
taxing  authority on the accrual basis.  When income and expenses are recognized
in  different  periods  for  financial  reporting  purposes  than for income tax
purposes,  deferred taxes are provided for such differences  using the liability
method.

Note 4.    Notes Receivable.

        Impaired Notes Receivable.  At March 31, 1997 the recorded investment in
notes that are  considered  to be impaired was  $662,000,  for which the related
allowance for losses is $235,000.  At March 31, 1996 the recorded  investment in
notes that are  considered to be impaired was $613,000.  Included in this amount
is  $113,000 of impaired  notes for which the  related  allowance  for losses is
$11,000  and  $500,000 of impaired  notes for which there is no  allowance.  The
average  recorded  investment  in impaired  loans  during the three months ended
March 31, 1997 and 1996 was approximately $662,000 and $613,000, respectively.

        The activity in the allowance for losses on notes receivable  during the
three months ended March 31, is as follows:

                                                  1997           1996
                                                 -----           ----
                                                (Amounts In Thousands)
        Beginning balance                        $ 359          $ 359
           Provision for losses                    -               -
           Write downs                             -               -
                                                 -----          -----
        Ending balance                           $ 359          $ 359
                                                 =====          =====



<PAGE>


                                                                    Page 6 of 12

Note 5.    Net Income (Loss) and Distributions per Limited Partnership Unit.

      Net income and  distributions  per limited  partnership unit were based on
the limited  partner's share of net income and  distributions,  and the weighted
average number of units  outstanding of 345,974 for the three months ended March
31, 1997 and 1996. For purposes of allocating income (loss) and distributions to
each individual limited partner, the Partnership allocates net income (loss) and
distributions  based  upon each  respective  limited  partner's  ending  capital
account  balance.  The use of  this  method  accurately  reflects  each  limited
partner's  participation in the partnership  including  reinvestment through the
Capital Accumulation Plan. As a result, the calculation of net income (loss) and
distributions per limited  partnership unit is not indicative of per unit income
(loss) and distributions due to reinvestments  through the Capital  Accumulation
Plan.

Note 6.    Investment in Joint Ventures.

Equipment Joint Venture

        The aggregate  financial  information of the equipment  joint venture is
presented below:

                                                      March 31, December 31,
                                                        1997       1996
                                                       ------     ------
                                                      (Amounts in Thousands)

      Assets                                           $2,429     $2,700
      Liabilities                                         333        372
      Partners' Capital                                 2,096      2,328

                                                       Three Months Ended
                                                            March 31,
                                                        1997       1996
                                                       ------     ------
                                                      (Amounts in Thousands)

      Revenue                                          $  486     $  563
      Expenses                                            209        333
      Net Income                                          277        230


<PAGE>


                                                                    Page 7 of 12


Financing Joint Ventures

        The aggregate  financial  information of the financing  joint venture is
presented below:

                                                      March 31, December 31,
                                                        1997       1996
                                                       ------     ------
                                                     (Amounts in Thousands)

      Assets                                           $   34     $   44
      Liabilities                                          11         10
      Partners' Capital                                    23         34

                                                      Three Months Ended
                                                           March 31,
                                                        1997       1996
                                                       ------     ------
                                                     (Amounts in Thousands)

      Revenue                                          $   14     $   19
      Expenses                                              3          4
      Net Income                                           11         15


Foreclosed Cable Systems Joint Venture

        The aggregate  financial  information of the financing  joint venture is
presented below:

                                                      March 31, December 31,
                                                        1997       1996
                                                       ------     ------
                                                     (Amounts in Thousands)

      Assets                                          $ 1,637    $ 1,635
      Liabilities                                         288        265
      Partners' Capital                                 1,349      1,370

                                                      Three Months Ended
                                                           March 31,
                                                        1997       1996
                                                      -------    -------
                                                     (Amounts in Thousands)

      Revenue                                         $  210     $   205
      Expenses                                           223         215
      Net Loss                                           (13)        (10)



<PAGE>


                                                                    Page 8 of 12


                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY


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

Results of Operations

        Phoenix  Leasing  Income  Fund  VII  and  Subsidiary  (the  Partnership)
reported net income of $61,000  during the three months ended March 31, 1997, as
compared to net income of $81,000 during the same period in the preceding year.

        Total revenues decreased by $68,000 for the three months ended March 31,
1997, as compared to the previous year. This decrease is primarily the result of
a $45,000  decline in rental  income,  a $17,000  decline in earnings from joint
ventures,  which will be discussed under "Joint  Ventures",  offset by a $18,000
increase in interest income from notes receivable. The decrease in rental income
and depreciation  expense with respect to the Partnership's  leasing activities,
is the result of an overall reduction in the size of the equipment portfolio due
to ongoing sales. The aggregate original cost of equipment owned directly by the
Partnership  is $2.1 million at March 31,  1997,  as compared to $4.4 million at
March 31, 1996.

        The increase in interest income from notes receivable of $18,000 for the
three  months  ended  March 31,  1997,  compared to the same period in the prior
year, is due to the Partnership  receiving a disbursement of proceeds which were
held in escrow  for a note  receivable  which was paid off in 1995.  In 1995,  a
portion of the proceeds from the payoff of this notes receivable was placed into
escrow  to cover  unanticipated  liabilities  which  may have  arisen  after the
payoff.

        Total  expenses for the three  months ended March 31, 1997  decreased by
$44,000,  as compared to the same period in 1996. The decline is attributable to
decreases in depreciation  and  amortization  expense of $62,000,  lease related
operating  expenses  of $5,000 and  management  fees to the  General  Partner of
$3,000.  Lease related  operating  expenses,  like rental income, is expected to
decline as a result of the ongoing sale of the equipment  portfolio.  Management
fees are also affected by the  liquidation  of the equipment  portfolio.  As the
equipment  portfolio is liquidated,  gross revenues  decline causing  management
fees to be reduced.

        The decrease in total  expenses for the period ended March 31, 1997, was
offset by the absence of a provision for losses on receivables as compared to an
adjustment to the allowance for losses on  receivables  of $16,000 for the three
months ended March 31, 1996.  This is a result of a portion of an allowance  for
early  terminations  of finance  leases being  reversed and being  recognized as
income at March 31, 1996.

        Because Phoenix Leasing Income Fund VII is in its liquidation  stage, it
is not expected that the Partnership  will acquire any additional  equipment for
its leasing  activities.  As a result,  revenues  from  leasing  activities  are
expected to continue to decline as the portfolio is liquidated and the remaining
equipment is released at lower rental rates.

Cable System

        The Partnership acquired a cable system  in satisfaction  of a defaulted



<PAGE>


                                                                    Page 9 of 12

note receivable held by the Partnership.  The Partnership  assumed  ownership of
this cable system on October 28, 1993. The Partnership reported cable subscriber
revenues of $146,000 and program  services  expense of $41,000  during the three
months  ended  March 31,  1997,  as  compared  to cable  subscriber  revenues of
$146,000 and program services expense of $35,000 during the same period in 1996.
Both cable subscriber  revenue and program services expense remained  relatively
the same for the three months ended March 31, 1997 compared to 1996.

Joint Ventures

        The Partnership has made investments in various  equipment and financing
joint ventures along with other affiliated  partnerships  managed by the General
Partner for the purpose of spreading the risk of investing in certain  equipment
leasing and  financing  transactions.  These joint  ventures  are not  currently
making  any  significant  additional  investments  in new  equipment  leasing or
financing  transactions.  As a  result,  the  earnings  and cash  flow from such
investments  are  anticipated  to  continue  to  decline as the  portfolios  are
re-leased at lower rental rates and eventually liquidated.

        The decrease in earnings from  equipment  joint  ventures of $17,000 for
the three months  ended March 31, 1997,  as compared to the same period in 1996,
is the result of the  closure of several  equipment  joint  ventures  during the
fourth quarter of 1996.

Liquidity and Capital Resources

        The  Partnership's  primary  source of  liquidity  comes from  equipment
leasing and financing  activities.  The Partnership has contractual  obligations
with lessees for fixed lease terms at fixed rental amounts and will also receive
payments on its outstanding notes receivable. The Partnership's future liquidity
is dependent upon its receiving payment of such contractual obligations.  As the
initial lease terms expire, the Partnership will continue to renew,  remarket or
sell the equipment.  The future liquidity in excess of the remaining contractual
obligations  will depend upon the General  Partner's  success in re-leasing  and
selling the Partnership's  equipment as it comes off lease. The Partnership also
owns a cable  television  system and has  investments  in equipment  leasing and
foreclosed cable television system joint ventures.

        During the three months ended March 31, 1997,  the net cash  provided by
leasing,  financing and cable  television  activities  was $36,000,  compared to
$19,000  for the  same  period  in the  prior  year.  The net  increase  in cash
generated is due to a decrease in payments on accounts payable.

        Distributions  from joint ventures has become one of the primary sources
of  cash  generated  by  the  Partnership.  Distributions  from  joint  ventures
decreased  slightly for the three  months  ended March 31, 1997  compared to the
same period in the prior year. The Partnership received distributions from joint
ventures of $118,000  for the three  months  ended March 31,  1997,  compared to
$126,000 for the same period in 1996.

        As of March 31, 1997,  the  Partnership  owned  equipment held for lease
with a  purchase  price of  $959,000  and a net book  value  of $0  compared  to
$1,847,000 and $34,000,  respectively  at March 31, 1995. The General Partner is
actively engaged,  on behalf of the Partnership,  in remarketing and selling the
Partnership's off-lease equipment portfolio.

        The Limited Partners received  distributions of $1,307,000 for the three
months  ended  March  31,  1997 and  1996.  As a  result,  the  cumulative  cash
distributions to the Limited Partners are $83,887,000 and  $81,288,000 at  March


<PAGE>


                                                                   Page 10 of 12

31,  1997  and  1996,   respectively.   The  General  Partner  did  not  receive
distributions during the three months ended March 31, 1997 and 1996.

        As the Partnership's asset portfolio continues to decline as a result of
the ongoing  liquidation of assets,  it is expected that the cash generated from
leasing  operations will also decline.  Due to the decrease in cash generated by
leasing and financing activities,  the Partnership is no longer making quarterly
distributions to partners. Distributions are being made semi-annually in January
and July. The Partnership will reach the end of its term on December 31, 1998.

        Cash on hand and cash generated from cable television, equipment leasing
and  financing  operations  has  been  and  is  anticipated  to  continue  to be
sufficient to meet the Consolidated Partnership's ongoing operational expenses.




<PAGE>


                                                                   Page 11 of 12

                         PHOENIX LEASING INCOME FUND VII

                                 March 31, 1997

                           Part II. Other Information.


Item 1.    Legal Proceedings.  Inapplicable.

Item 2.    Changes in Securities.  Inapplicable

Item 3.    Defaults Upon Senior Securities.  Inapplicable

Item 4.    Submission of Matters to a Vote of Securities Holders.  Inapplicable

Item 5.    Other Information.  Inapplicable

Item 6.    Exhibits and Reports on 8-K:

           a)  Exhibits:

               (27)   Financial Data Schedule

           b)  Reports on 8-K:  None



<PAGE>

                                                                   Page 12 of 12

                                   SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) 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.


                                            PHOENIX LEASING INCOME FUND VII
                                            -------------------------------
                                                      (Registrant)

     Date                        Title                         Signature
     ----                        -----                         ---------


  May 13, 1997         Chief Financial Officer,          /S/ PARITOSH K. CHOKSI
-----------------      Senior Vice President,            ----------------------
                       Treasurer and a Director of       (Paritosh K. Choksi)
                       Phoenix Leasing Incorporated
                       General Partner


  May 13, 1997         Senior Vice President,            /S/ BRYANT J. TONG
-----------------      Financial Operations of           ----------------------
                       (Principal Accounting Officer)    (Bryant J. Tong)
                       Phoenix Leasing Incorporated
                       General Partner


  May 13, 1997         Senior Vice President             /S/ GARY W. MARTINEZ
-----------------      and a Director of                 ----------------------
                       Phoenix Leasing Incorporated      (Gary W. Martinez)
                       General Partner


  May 13, 1997         Partnership Controller of         /S/ MICHAEL K. ULYATT
-----------------      Phoenix Leasing Incorporated      ----------------------
                       General Partner                   (Michael K. Ulyatt)