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 June 30, 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 June 30,
1997.

Transitional small business disclosure format:

                               Yes _____ No __X__


<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)
                                                      June 30,  December 31,
ASSETS                                                  1997       1996
                                                       ------     ------

Cash and cash equivalents                              $1,133     $2,155

Accounts receivable (net of allowance for
  losses on accounts receivable of $41 at June
  30, 1997 and December 31, 1996, respectively)            37         30

Notes receivable (net of allowance for losses on
  notes receivable of $359 at June 30, 1997 and
  December 31, 1996)                                      302        302

Equipment on operating leases and held for lease
  (net of accumulated depreciation of $1,295 and
  $1,316 at June 30, 1997 and December 31, 1996,
  respectively)                                          --            2

Property, cable systems and equipment (net of
  accumulated depreciation of $420 and $358 at
  June 30, 1997 and December 31, 1996,
  respectively)                                           806        841

Cable subscriber lists and franchise rights (net
  of accumulated amortization of $592 and $512
  at June 30, 1997 and December 31, 1996,
  respectively)                                           700        780

Investment in joint ventures                              635        730

Other assets                                              165        151
                                                       ------     ------

    Total Assets                                       $3,778     $4,991
                                                       ======     ======

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

  Accounts payable and accrued expenses                $  379     $  397

  Liquidation fees payable to General Partner             953        953
                                                       ------     ------

    Total Liabilities                                   1,332      1,350
                                                       ------     ------

Partners' Capital

  General Partner                                         338        322

  Limited Partners, 480,000 units authorized,
    366,432 units issued and 345,974 units
    outstanding at June 30, 1997 and December
    31, 1996                                            2,101      3,312

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

    Total Partners' Capital                             2,446      3,641
                                                       ------     ------

    Total Liabilities and Partners' Capital            $3,778     $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    Six Months Ended
                                              June 30,            June 30,
                                           1997      1996      1997      1996
                                          -----     -----     -----     -----
INCOME

  Rental income                           $   7     $  66     $  81     $ 183
  Cable subscriber revenues                 154       147       300       293
  Equity in earnings from
   joint ventures, net                       75        84       107       133
  Interest income, notes receivable        --        --          18      --
  Other income                               21        57        35        97
                                          -----     -----     -----     -----

    Total Income                            257       354       541       706
                                          -----     -----     -----     -----

EXPENSES

  Depreciation and amortization              72       114       144       248
  Lease related operating expenses         --           7         2        13
  Program service, cable system              39        37        80        72
  Management fees to General Partner          9        17        21        33
  Provision for (recovery of) losses
   on receivables                             2       (16)        3       (31)
  General and administrative expenses        84       109       182       203
                                          -----     -----     -----     -----

    Total Expenses                          206       268       432       538
                                          -----     -----     -----     -----

Net income before income taxes               51        86       109       168
Income tax benefit (expense)               --        --           3        (1)
                                          -----     -----     -----     -----

NET INCOME                                $  51     $  86     $ 112     $ 167
                                          =====     =====     =====     =====



NET INCOME PER LIMITED
  PARTNERSHIP UNIT                        $ .12     $ .21     $ .27     $ .41
                                          =====     =====     =====     =====

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

ALLOCATION OF NET INCOME:
  General Partner                         $   8     $  13     $  17     $  25
  Limited Partners                           43        73        95       142
                                          -----     -----     -----     -----

                                          $  51     $  86     $ 112     $ 167
                                          =====     =====     =====     =====

        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)
                                                           Six Months Ended
                                                                June 30,
                                                             1997      1996
                                                           -------   -------
Operating Activities:
  Net income                                               $   112   $   167

    Adjustments to reconcile net income to
      net cash provided by operating
      activities:
        Depreciation and amortization                          144       248
        Gain (loss) on sale of equipment                        (2)       28
        Equity in earnings from joint ventures, net           (107)     (133)
        Provision for (recovery of) early
         termination, financing leases                        --         (34)
        Provision for losses on accounts receivable              3         3
        Gain on sale of marketable securities                 --          (5)
        Increase in accounts receivable                        (10)      (13)
        Decrease in accounts payable and
         accrued expenses                                      (18)     (221)
        Decrease (increase) in deferred income tax asset        (2)        1
        Increase in other assets                               (12)       (1)
                                                           -------   -------

Net cash provided by operating activities                      108        40
                                                           -------   -------

Investing Activities:
  Principal payments, financing leases                        --          34
  Principal payments, notes receivable                        --          13
  Proceeds from sale of equipment                                2        21
  Proceeds from sale of securities                            --          11
  Distributions from joint ventures                            202       262
  Property, cable systems and equipment                        (27)      (33)
                                                           -------   -------

Net cash provided by investing activities                      177       308
                                                           -------   -------

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                       (1,022)     (959)

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

Cash and cash equivalents, end of period                   $ 1,133   $ 2,981
                                                           =======   =======


        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 June 30, 1997 the recorded  investment in
notes that are  considered  to be impaired was  $661,000,  for which the related
allowance for losses is $235,000.  The average  recorded  investment in impaired
loans during the six months ended June 30, 1997 was approximately $661,000.

        At June 30, 1996,  the recorded  investment in notes that are considered
to be impaired  was  $609,000.  Included in this amount was $496,000 of impaired
notes for which the  related  allowance  for losses is $11,000  and  $113,000 of
impaired notes for which there is no allowance.  The average recorded investment
in impaired  loans during the six months  ended June 30, 1996 was  approximately
$611,000.

        The activity in the allowance for losses on notes receivable  during the
six months ended June 30, 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 six months ended June 30,
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:

                                             June 30,   December 31,
                                               1997         1996
                                               ----         ----
                                             (Amounts in Thousands)

        Assets                               $2,304       $2,700
        Liabilities                             425          372
        Partners' Capital                     1,879        2,328

                                   Three Months Ended      Six Months Ended
                                        June 30,               June 30,
                                     1997      1996         1997       1996
                                     ----      ----         ----       ----
                                            (Amounts in Thousands)

        Revenue                     $ 466     $ 685        $ 952     $1,248
        Expenses                      252       303          461        636
        Net Income                    214       382          491        612


Financing Joint Ventures

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


                                             June 30,    December 31,
                                               1997         1996
                                               ----         ----
                                            (Amounts in Thousands)

        Assets                                $  32        $  44
        Liabilities                              11           10
        Partners' Capital                        21           34



<PAGE>


                                                                    Page 7 of 12




                                   Three Months Ended      Six Months Ended
                                        June 30,               June 30,
                                     1997      1996         1997       1996
                                     ----      ----         ----       ----
                                            (Amounts in Thousands)

        Revenue                     $   6     $  22        $  20     $   42
        Expenses                        2         3            5          8
        Net Income                      4        19           15         34

Foreclosed Cable Systems Joint Venture

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


                                             June 30,    December 31,
                                               1997         1996
                                               ----         ----
                                            (Amounts in Thousands)

        Assets                              $ 1,673      $ 1,635
        Liabilities                             323          265
        Partners' Capital                     1,350        1,370

                                   Three Months Ended      Six Months Ended
                                        June 30,               June 30,
                                     1997      1996         1997       1996
                                     ----      ----         ----       ----
                                            (Amounts in Thousands)

        Revenue                     $ 225   $   226      $   436     $  432
        Expenses                      225       216          448        432
        Net Income (Loss)              -         10          (12)        -




<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  $51,000  and  $112,000  during the three and six months
ended June 30,  1997,  respectively,  as  compared  to net income of $86,000 and
$167,000  during the same  periods in the  preceding  year.  The decrease in net
income for the three and six months ended June 30 1997, as compared to the prior
year, is  attributable  to a decline in total revenues that exceeded the decline
in total expenses.

        Total  revenues  decreased by $97,000 and $165,000 for the three and six
months ended June 30, 1997, respectively, as compared to the same periods in the
previous  year.  This  decrease is primarily  the result of a decrease in rental
income and other  income.  The decline in rental  income of $59,000 and $102,000
for the three and six months ended June 30, 1997, respectively,  compared to the
same periods in the prior year, as well as the decrease in depreciation expense,
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 June 30,  1997,  as compared to $3.1 million at
June 30, 1996.

        The  decrease  in other  income of $36,000 and $62,000 for the three and
six months  ended June 30, 1997,  respectively,  compared to the same periods in
the prior year, also contributed to the reduction in total revenues. The decline
in other income is a result of a decrease in interest income  generated from the
Partnership's cash account. This decrease is due to a reduction in the amount of
cash held at June 30, 1997 compared to the prior year.

        The decrease in total revenues as a result of a decline in rental income
and other  income is  partially  offset by an increase  in interest  income from
notes receivable of $18,000 for the six months ended June 30, 1997,  compared to
the same period in the prior year.  This is due to the  Partnership  receiving a
disbursement  of  proceeds  during  1997  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  liabilities
which may have arisen after the payoff.

        Total  expenses  for the  three  and six  months  ended  June  30,  1997
decreased by $62,000 and $106,000, respectively, as compared to the same periods
in 1996. The decline in total expenses is primarily attributable to decreases in
depreciation and amortization  expense of $42,000 and $104,000 for the three and
six months  ended June 30, 1997,  respectively,  compared to the same periods in
the previous year.  The decrease in  depreciation  expense,  with respect to the
Partnership's leasing activities,  as discussed  previously,  is a result of the
declining equipment portfolio.

        Another  factor  contributing  to the decrease in total  expenses is the
decline in general  and  administrative  expenses of $25,000 and $21,000 for the
three and six months ended June 30, 1997, respectively,  as compared to the same
periods in 1996. The decrease in general and administrative expenses is a result
of a decline in legal fees  incurred  during the three and six months ended June
30, 1997, compared to the same periods in 1996.

        Partially  offsetting the decrease in depreciation and amortization,  as
well as, the decrease in general and  administrative  expenses is an increase in
provision for losses on receivables of $18,000 and $34,000 for the three and six
months ended June 30, 1997, respectively, as compared to the same periods in the
prior year. During the three and six months ended June 30, 1996, the Partnership
made an adjustment to the  allowance  for losses on  receivables  of $16,000 and
$31,000, respectively.   This  was  a  result  of  a  portion  of  an  allowance


<PAGE>


                                                                    Page 9 of 12

for early  terminations  of finance  leases being  recovered  and  recognized as
income at June 30, 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
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 $154,000  and  $300,000  for the three and six months ended June 30,
1997, respectively,  and program services expense of $39,000 and $80,000 for the
same periods in 1997, as compared to cable  subscriber  revenues of $147,000 and
$293,000  for the three and six months ended June 30,  1996,  respectively,  and
program services expense of $37,000 and $72,000 during the same periods in 1996.
Both cable subscriber  revenue and program services expense remained  relatively
the same for the three and six months ended June 30, 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 $9,000 and
$26,000  for the three and six months  ended  June 30,  1997,  respectively,  as
compared  to the same  periods in 1996,  is the result of the closure of several
equipment  joint  ventures  during  the fourth  quarter of 1996,  as well as one
equipment joint venture experiencing  declines in rental income and gain on sale
of equipment.

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 six months  ended June 30,  1997,  the net cash  provided  by
leasing,  financing and cable  television  activities was $108,000,  compared to
$87,000  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  for the six months ended June 30, 1997 compared to the same period in
the prior year. The Partnership  received  distributions  from joint ventures of
$202,000 for the six months  ended June 30,  1997,  compared to $262,000 for the
same period in 1996. The decline in distributions for the six months ended  June


<PAGE>


                                                                   Page 10 of 12

30, 1997, compared to 1996, is due to one equipment joint venture experiencing a
decline in cash available for distributions as a result of a reduction in rental
income and sales proceeds received.

        As of June 30, 1997, the Partnership owned equipment held for lease with
a purchase price of $1,859,000 and a net book value of $0 compared to $1,350,000
and $6,000,  respectively  at June 30,  1996.  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 six
months  ended  June  30,  1997  and  1996.  As a  result,  the  cumulative  cash
distributions  to the Limited  Partners are  $83,887,000 and $81,288,000 at June
30,  1997  and  1996,   respectively.   The  General  Partner  did  not  receive
distributions during the six months ended June 30, 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

                                  June 30, 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
         ----                     -----                          ---------



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


August 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


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


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