Exhibit 21 - Page 1 of 12















                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------



To the Board of Directors of
Phoenix Leasing Incorporated:

        We have audited the accompanying  consolidated balance sheets of Phoenix
Leasing Incorporated (a California  corporation) and Subsidiaries as of June 30,
1996 and 1995. These  consolidated  balance sheets are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated balance sheets based on our audits.

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

        In our  opinion,  the  consolidated  balance  sheets  referred  to above
present  fairly,  in all material  respects,  the financial  position of Phoenix
Leasing  Incorporated  and  Subsidiaries  as of  June  30,  1996  and  1995,  in
conformity with generally accepted accounting principles.




San Francisco, California,                                 ARTHUR ANDERSON LLP
September  4, 1996


<PAGE>

                                                       Exhibit 21 - Page 2 of 12

                 
                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                                June 30,
                                                          1996           1995
                                                      -----------    -----------

Cash and cash equivalents                             $ 3,767,098    $ 4,100,325
Investments in marketable securities                    1,287,323      7,298,771
Trade accounts receivable, net of allowance
  for doubtful accounts of $31,246 and $237,458
  at June 30, 1996 and 1995, respectively                 989,030        913,437
Receivables from Phoenix Leasing Partnerships and
  other affiliates                                      3,955,935      3,975,262
Notes receivable from related party                     8,767,694      5,574,452
Equipment inventory                                     2,240,448           --
Equipment subject to lease                             17,792,847     17,044,686
Investments in Phoenix Leasing Partnerships             1,773,887      1,577,419
Property and equipment, net of accumulated
  depreciation of $11,398,438 and $10,457,763
  at June 30, 1996 and 1995, respectively               6,933,608      7,669,302
Other assets                                            3,011,229      2,366,983
                                                      -----------    -----------

        TOTAL ASSETS                                  $50,519,099    $50,520,637
                                                      ===========    ===========

                      LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:

Short-term lines of credit                            $ 1,750,000    $      --
Warehouse lines of credit                              16,930,044     17,644,012
Payables to affiliates                                  2,155,626      5,832,765
Accounts payable and accrued expenses                   3,205,932      2,829,490
Deferred revenue                                          328,676      1,059,736
Long-term debt                                            620,899        229,390
Deficit in investments in Phoenix 
  Leasing Partnerships                                    761,214      1,164,445
                                                      -----------    -----------

        TOTAL LIABILITIES                              25,752,391     28,759,838
                                                      -----------    -----------

Minority Interests in Consolidated Subsidiaries            27,615         37,639
                                                      -----------    -----------

Commitments and Contingencies (Note 14)

SHAREHOLDER'S EQUITY:

Common stock, without par value, 30,000,000
  shares authorized, 5,433,600 issued and
  outstanding at June 30, 1996 and 1995,
  respectively                                             20,369         20,369
Additional capital                                     11,466,920      5,508,800
Retained earnings                                      13,251,804     16,193,991
                                                      -----------    -----------

        TOTAL SHAREHOLDER'S EQUITY                     24,739,093     21,723,160
                                                      -----------    -----------

        TOTAL LIABILITIES AND SHAREHOLDER'S
          EQUITY                                      $50,519,099    $50,520,637
                                                      ===========    ===========


<PAGE>

                                                       Exhibit 21 - Page 3 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 1. Summary of Significant Accounting Policies:

        a.  Organization - Phoenix Leasing  Incorporated and  subsidiaries  (the
Company),  a wholly owned subsidiary of Phoenix American  Incorporated (PAI), is
engaged in the organization  and management of partnerships  which specialize in
the  purchase  and  lease  of  primarily  high-technology  and  data  processing
equipment.  The partnerships  purchase equipment directly from equipment vendors
for lease to financial,  commercial and industrial  businesses and  governmental
agencies.   The  partnerships   also  finance   transactions  in  the  areas  of
microcomputers  and emerging growth  companies.  The Company has also engaged in
similar  leasing  activities  for its own  account.  The Company  also  provides
ongoing equipment  maintenance  services for end-users of  high-technology  data
processing equipment and graphic plotters.

        b. Principles of Consolidation - The consolidated  financial  statements
include  the  accounts  of  Phoenix  Leasing  Incorporated  and  its  wholly  or
majority-owned  subsidiaries  and  subsidiaries  over which the  Company  exerts
control.  All  significant  intercompany  accounts  and  transactions  have been
eliminated in consolidation.

             Except as otherwise explained below,  minority interests in the net
assets and net income or loss of  majority-owned  subsidiaries  are allocated on
the basis of the proportionate ownership interests of the minority owners.

             Four  of  the  consolidated  subsidiaries  are  California  limited
partnerships  (the  Partnerships)  which  are  general  partners  of four of the
Phoenix  Leasing  Partnerships.  As of June 30,  1996,  the  Company  held a 50%
general  partner  ownership  interest  in two of the  Partnerships  and a  62.5%
interest  in one and a 70%  interest  in the  fourth.  Under  the  terms  of the
partnership agreements, profits and losses attributable to acquisition fees paid
to the  Partnerships  from Phoenix  Leasing  Partnerships  are  allocated to the
limited  partner (the minority owner in the  Partnerships)  in proportion to the
limited  partner's  ownership  interest.  All  remaining  profits and losses are
allocated to the Company.  Distributions  to the partners are made in accordance
with the terms of the partnership agreement.  The limited partner of each of the
Partnerships  is  Lease  Management  Associates,   Inc.,  a  Nevada  corporation
controlled by an officer of the Company, who is the owner of PAI.

        c.  Management,  Acquisition  and  Incentive Fee Income - As of June 30,
1996,  the Company is the  corporate  general  partner in 13 actively  operating
limited partnerships and manager of 9 actively operating joint ventures,  all of
which own and lease equipment.  Eight of the partnership  agreements provide for
payment of management fees based on partnership  revenues and  acquisition  fees
when the  partnerships'  assets are  acquired.  Five of the limited  partnership
agreements  provide for payment of  management  fees and  liquidation  fees (see
discussion later in this footnote). Most of the joint venture agreements provide
for payment of management fees based on joint venture revenues.

         These partnerships and the  joint ventures are collectively referred to
as the "Phoenix Leasing Partnerships."

        d. Investments - Investments in Phoenix Leasing Partnerships reflect the
Company's  equity basis in the Phoenix  Leasing  Partnerships.  Under the equity
method of accounting the original investment is recorded at cost and is adjusted
periodically  to  recognize  the  Company's   share  of  earnings,   losses  and
distributions after the date of acquisition.  The Company has adopted the equity
method of accounting on the basis of its control and significant  influence over
the Phoenix Leasing Partnerships.


<PAGE>

                                                       Exhibit 21 - Page 4 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 1. Summary of Significant Accounting Policies (continued):

        e.  Liquidation Fee Income - The Company earns  liquidation  fees not to
exceed 15% of the net  contributed  capital  from seven of the  partnerships  in
consideration  for the services and activities  performed in connection with the
disposition of the  partnerships'  assets.  Management of the Company  concluded
that the total liquidation fees to be earned over the life of these partnerships
may not be fully realizable. Accordingly, the Company recognizes liquidation fee
income  when the fees are paid by the  partnerships.  The Company  received  and
recognized $1,062,046 and $3,221,000 in liquidation fees from these partnerships
during the years ended June 30, 1996 and 1995, respectively.

         In three other partnerships,  cash distributions  received in excess of
the allocated  cumulative net profits  represent a liquidation  fee which cannot
exceed, in the aggregate, 7.792% of the net contributed capital.

        f. Lease Accounting - The Company's leasing  operations  consist of both
financing  and operating  leases.  The finance  method of accounting  for leases
records as unearned  income,  at the  inception of the lease,  the excess of net
rentals  receivable  and  estimated  residual  value over the cost of the leased
equipment.  Unearned income is amortized monthly over the term of the lease on a
declining  basis  to  provide  an  approximate  level  rate  of  return  on  the
unrecovered  cost of the  investment.  Initial direct costs of  originating  new
leases are capitalized and amortized over the initial lease term.

         Under the  operating  method  of  accounting  for  leases,  the  leased
equipment  is  recorded  as  an  asset,   at  cost,  and  is  depreciated  on  a
straight-line  basis over its  estimated  useful life,  ranging up to six years.
Rental  income  represents  the rental  payments due during the period under the
terms of the lease.

         The Company is the lessor in  leveraged  lease  agreements  under which
computer  equipment  having an  estimated  useful life of 5 years was leased for
periods  from 4-5 years.  The Company is the equity  participant  and  equipment
owner. A portion of the purchase price was furnished by third-party financing in
the form of  long-term  debt that  provides  no  recourse  to the Company and is
secured by a first lien on the financed equipment.

        g.  Property and  Equipment - Property and  equipment  which the Company
holds for its own use are recorded at cost and  depreciated  on a  straight-line
basis over estimated useful lives ranging up to 45 years.

        h.  Income Taxes - The Company is  included in consolidated and combined
 tax returns filed by PAI.

        i.  Deferred  Revenue  -  Deferred  revenue  is the  result  of  selling
maintenance  contracts  which  provide  service over a specific  period of time.
Deferred  revenue is amortized on a straight-line  basis over the service period
not to exceed 5 years.

        j.  Investments  in Marketable  Securities -  Investments  in marketable
securities, are stated at cost and consist primarily of United States government
obligations. Interest is recognized when earned.

        k.  Use of  Estimates  - The  preparation  of  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make  estimates  and  assumptions  that affect the amounts  reported  amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.






<PAGE>

                                                       Exhibit 21 - Page 5 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 1. Summary of significant Accounting Policies (continued):

        l.  Reclassification - Certain  1995 balances have  been reclassified to
conform to the 1996 presentation.


Note 2.  Receivables from Phoenix Leasing Partnerships and Other Affiliates:

        Receivables  from  Phoenix  Leasing  Partnerships  and other  affiliates
consist of the following for the years ended June 30:


                                                  1996           1995
                                               ----------     ----------


Management fees                                $  416,149     $  330,158
Acquisition fees                                   74,099        102,994
Other receivables from Phoenix
 Leasing Partnerships                           3,458,687      3,535,110
Other receivables from corporate affiliates         7,000          7,000
                                               ----------     ----------

                                               $3,955,935     $3,975,262
                                               ==========     ==========

Note 3. Investments in Phoenix Leasing Partnerships:

         The Company  records its  investments in Phoenix  Leasing  Partnerships
under the equity method of accounting.  The ownership interest percentages vary,
ranging  from .5% up to 25%.  As  general  partner,  the  Company  has  complete
authority in, and responsibility for, the overall management and control of each
partnership,   which  includes   responsibility   for  supervising   partnership
acquisition,  leasing,  remarking and sale of equipment.  Distributions  of cash
from  the  partnerships  are  made at the  discretion  of the  general  partner;
historically,  a  significant  portion of the  partnerships'  earnings  has been
distributed annually.

         A shareholder  of PAI and officers of the Company also have general and
limited partner interests in several of the partnerships.

      The activity in the  investments in Phoenix Leasing  Partnerships  for the
years ended June 30 are as follows:


                                                  1996           1995
                                              -----------    -----------

          Balance, beginning of year          $   412,974    $(1,120,980)
          Additional investments                  830,085        688,615
          Equity in earnings                    2,093,488      2,412,056
          Cash distributions                   (2,323,874)    (1,566,717)
                                              -----------    -----------

          Balance, end of year                $ 1,012,673    $   412,974
                                              ===========    ===========

      The  Company's  total  investments  in Phoenix  Leasing  Partnerships  are
comprised  of  investments  in  certain   partnerships   which  are  subject  to
fluctuations due to partnerships' performances and timing of cash distributions.
At times the investment in those partnerships will be a deficit.

      Certain of the partnership  agreements  require the Company to restore any
deficit in its capital  account to zero at the  dissolution of the  partnership.
This deficit is a result of cash distributions  received and losses allocated to
the Company.  The Company has determined that in certain partnerships it will be

<PAGE>

                                                       Exhibit 21 - Page 6 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 3. Investments in Phoenix Leasing Partnerships (continued):

unlikely  that the deficit  investment  will reverse and as a result  during the
year ended June 30, 1993 the Company elected to make capital contributions prior
to partnership dissolution totaling $2,028,733. As of April 1, 1992, the Company
elected to forgo any future  cash  distributions  from,  and will not record its
share  of  future  earnings  generated  from  the  operations  of,  one of these
partnerships.  The Company has deferred any future cash  distributions  from two
other partnerships. The Company believes that it would be likely that any future
cash  distributions  received from these partnerships would have to be paid back
at the dissolution of the partnerships.  The Company will continue to record fee
income earned from the  management  of, and  acquisition  of equipment for these
partnerships.

      The  aggregate   positive  investment  and  aggregate  deficit  investment
balances are presented  separately on the balance sheets as of June 30, 1996 and
1995.

      The partnerships own and lease equipment.  All debt of the partnerships is
secured by the equipment and is without  recourse to the general  partners.  The
unaudited  financial  statements  of  the  partnerships  reflect  the  following
combined,  summarized  financial  information  as of June  30,  1996 and for the
twelve months then ended:


                 Assets                         $  182,995,000
                 Liabilities                        29,989,000
                 Partners' Capital                 153,006,000
                 Revenue                            46,353,000
                 Net Income                         18,826,000

Note 4.  Equipment Subject to Lease:

      Equipment subject to lease includes the Company's investments in leveraged
leases, investments in financing leases, operating leases and notes receivable.

      Equipment subject to lease consists of the following at June 30:


                                                1996           1995
                                            -----------    -----------
        Equipment on lease, net of 
         accumulated depreciation 
         of $258,102                        $    92,008    $      --
        Leverage leases                       1,589,772      1,696,703
        Equipment held for resale               305,840           --
        Investment in financing leases       12,036,604     13,284,177
        Operating leases                        207,793           --
        Notes receivable                      3,560,830      2,063,806
                                            -----------    -----------

                                            $17,792,847    $17,044,686
                                            ===========    ===========
        Leverage Leases:

      The  Company's  net  investment  in  leveraged  leases is  composed of the
following elements at June 30:


<PAGE>

                                                       Exhibit 21 - Page 7 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 4.  Equipment Subject to Lease (continued):


                                                        1996           1995
                                                    -----------    -----------
         Rental receivable (net of principal
          and interest on the nonrecourse debt)     $      --      $      --
         Estimated residual value of leased assets    2,498,233      2,759,783
         Less: Unearned and deferred income            (908,461)    (1,063,080)
                                                    -----------    -----------

         Investment in leveraged leases               1,589,772      1,696,703
         Less: Deferred taxes arising from
          leveraged leases                           (2,651,124)    (2,960,190)
                                                    -----------    -----------
         Net investment in leveraged leases         $(1,061,352)   $(1,263,487)
                                                    ===========    ===========

       Investment in Financing Leases:

      The Company has entered  into direct  lease  arrangements  with  companies
engaged in the development of technologies and other growth industry  businesses
operating  in  different   industries  located  throughout  the  United  States.
Generally,  it is the  responsibility  of the lessee to provide  maintenance  on
leased equipment.

      The Company's net investment in financing leases consists of the following
at June 30:


                                                        1996           1995
                                                    -----------    -----------


           Minimum lease payments to be received    $16,089,868    $17,731,628
           Less: unearned income                     (4,053,263)    (4,447,451)
                                                    -----------    -----------

           Net investment in financing leases       $12,036,605    $13,284,177
                                                    ===========    ===========

      Minimum rentals to be received on noncancellable  financing leases for the
years ended June 30, are as follows:


                    1997                       $  4,161,068
                    1998                          4,171,699
                    1999                          4,248,885
                    2000                          2,367,834
                    2001                          1,080,674
                    Thereafter                       59,708
                                               ------------

                    Total                      $ 16,089,868
                                               ============

       Notes Receivable:

      Notes receivable for the years ended June 30, are as follows:


                                                        1996           1995
                                                    -----------    -----------
      Notes receivable from emerging growth
      and other companies with stated interest
      ranging from 10% to 22.6% per annum
      receivable in installments ranging from
      36 to 85 months collateralized by the
      equipment financed                            $ 3,560,830    $ 2,063,806
                                                    ===========    ===========



<PAGE>

                                                       Exhibit 21 - Page 8 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 5.  Sale of Leased Assets and Notes Receivable:

        The Company  acquires  leased or financed  equipment  with the intent to
subsequently   sell  those   assets  to  a  trust  which   issues  lease  backed
certificates.  As of June 30, 1996, the Company has acquired $15,805,227 is such
leased or financed  equipment  which is included in equipment  subject to lease.
The Company uses proceeds from its two warehouse  lines of credit to purchase or
finance this  equipment.  During the holding  period the Company  recognizes the
revenues  generated from these leases or notes and the interest  expense related
to the drawdowns from the warehouse lines of credit.

        On November  29,  1995,  the Company  entered  into an agreement to sell
certain assets and notes receivables with a net carrying value of $27,337,402 to
a trust for the  purpose  of the trust  issuing  lease  backed  certificates  in
exchange for cash proceeds. The Company recognized a gain on this transaction of
$459,632. The leased backed certificates are recourse only to the assets used to
collateralize the obligation. Under the terms of the agreement, the Company will
continue  to  acquire  and sell  additional  assets to the trust over the twelve
month period  beginning  November 30, 1995 and ending November 28, 1996.  During
the period  November 30, 1995 through June 30, 1996, the Company sold additional
assets to the trust for  $4,807,746.  These assets had a net  carrying  value of
$4,225,596, resulting in a gain of $582,150.

Note 6.  Property and Equipment:

       Major classes of property and equipment at June 30 are as follows:


                                                      1996           1995
                                                  -----------    -----------
           Land                                   $ 1,077,830    $ 1,077,830
           Buildings                                7,352,608      7,345,648
           Office furniture, fixtures
            and equipment                           8,573,547      8,259,319
           Other                                      843,450        766,975
                                                  -----------    -----------

                                                   17,847,435     17,449,772
           Less accumulated depreciation 
            and amortization                      (11,398,438)   (10,457,763)
           Inventory held for resale                  484,611        677,293
                                                  -----------    -----------
           Net Property and Equipment             $ 6,933,608    $ 7,669,302
                                                  ===========    ===========

      PAI owns its headquarters building in San Rafael,  California. The Company
paid  $7,749,476 to purchase the land and  construct  the building.  The cost of
construction  was paid for with a  combination  of  $2,749,476  in cash from the
Company's  operations and a $5,000,000  advance from PAI. The $5,000,000 advance
is included as a reduction in receivable from Phoenix Leasing  Partnerships  and
other  affiliates.  PAI has pledged the market value of the building as security
for a $5,000,000  Industrial Revenue Bond ("IDB") which PAI has with the City of
San  Rafael,  California.  The  principal  of the IDB is  payable  in a lump sum
payment on October 1, 2004.  The Company paid  $248,325 and $206,798 in interest
payments  related  to the IDB  during  the year  ended  June 30,  1996 and 1995,
respectively.

      As of June 30,  1996,  a portion of the  Company's  headquarters  has been
leased to third parties.  The remaining lease term is for less than one year and
the minimum lease payments receivable are as follows:


                        1997                $  370,093
                                            ==========




<PAGE>

                                                       Exhibit 21 - Page 9 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 7.  Investments in Marketable Securities:

      In May 1993, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 115 - Accounting for Certain Investments in
Debt and Equity  Securities  (SFAS 115).  The Company  adopted this statement on
July 1, 1994. This pronouncement  prescribes specific  accounting  treatment for
investments based on their classification as either held-to-maturity  securities
(HTM),  available-for-sale securities (AFS) or trading securities, as defined in
the statement.

      As of June 30, 1996, all securities  held by the Company are classified as
AFS and are reported at their amortized cost of $1,287,323,  which  approximates
fair value. This value includes Class C Equipment  Investment Trust Certificates
(Class C Shares) valued at $1,248,843 and equities valued at $38,479. As of June
30, 1995,  all  securities  are  classified as HTM and are reported at amortized
cost of $7,298,771,  which  approximated fair value.  Gross unrealized gains and
gross  unrealized  losses on such  securities  as of June 30, 1996 and 1995 were
immaterial.

      As of June  30,  1996,  none of the  securities  held by the  Company  had
specified contractual  maturities.  Contractual maturities of securities held as
of June 30, 1995, are as follows:

         1995
         ----
         Held-To-Maturity Securities

         Due in one year or less                        $ 4,202,115
         Due after one through five years                 3,096,656
                                                        -----------
   
         Total                                          $ 7,298,771
                                                        ===========

      During fiscal year 1996, the Company sold $3,000,000 in face value of U.S.
Treasury Notes, which were classified as HTM as of June 30, 1995. As a result of
the sale, the Company  changed the  classification  of all of its U.S.  Treasury
Notes from HTM to AFS in  accordance  with SFAS No. 115. The sale resulted in an
immaterial gain, and proceeds were used for general corporate purposes.

Note 8.  Fair Value of Financial Instruments:

      Marketable Securities

      The  carrying  amounts  of marketable  securities reported  in the balance
sheets approximate their fair values.

      Leases,  Notes Receivable, and Debt

      The fair values of the Company's leases,  notes  receivable,  and debt are
estimated  based on the market prices of similar  instruments  or on the current
market interest rates for instruments with similar terms, maturities, and risks.
The estimated fair values of the Company's leases,  notes  receivable,  and debt
approximate the carrying amounts reported in the balance sheets.


Note 9.  Short-Term and Warehouse Lines of Credit:

      To  provide interim financing for equipment and working capital needs, the
Company  executes  lines of credit which consist of short-term  notes with banks
with interest  rates equal to the prime rate or the banks' index rate. All lines
of credit are renewable annually at the banks' option.


<PAGE>

                                                      Exhibit 21 - Page 10 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 9.  Short-Term and Warehouse Lines of Credit (continued):

      As of  June  30,  1996,  the  Company,  through  PAI,  had  access  to one
short-term line of credit totaling $2.5 million. of which $750,000 was available
for borrowing at June 30, 1996. Draw downs under this credit line are secured by
the Company's receivable from Phoenix Leasing Partnerships.

      In addition,  the Company has two secured  short-term  warehouse  lines of
credit totaling $37.5 million,  which are used to provide interim  financing for
the acquisition of equipment and the financing of notes  receivable.  As of June
30,  1996,  $16.9  million of these lines have been drawn  down.  The draw downs
under these lines are  collateralized  by  investments  in financing  leases and
notes  receivable  included in equipment  subject to lease. The interest rate is
tied to the IBOR  (Eurodollar)  rate.  The initial  commitment  period for these
lines of credit is 18 months and may be extended to 36 months at the  discretion
of the  bank.  Principal  payments  are  based on the  lesser  of the  aggregate
payments  received  by the  Company on its leases  and notes  receivable  or the
aggregate  principal and interest amount  outstanding on the payment date of the
credit line.

      In connection with the Company's lines of credit, various financial ratios
and other  covenants must be  maintained.  The Company has guaranteed its right,
title and interest in certain of its assets and the future  receipts  from these
assets in order to secure payment and performance of these credit lines.

      Additional  information  relating to the Company's  short-term  bank lines
follows:


                                                     1996            1995
                                                 ------------    ------------
       Balance at June 30                        $ 18,680,044    $ 17,644,012
       Maximum amount outstanding                  32,111,837      17,644,012
       Average amount outstanding                  13,828,284       2,522,340
       Weighted average interest rate
         during the period                              7.56%            7.9%


Note 10.  Long-Term Debt:

      Long-term debt consists of the following at June 30:


                                                         1996           1995
                                                      ----------    ----------
         Mortgage payable at varying interest
       rates with an initial rate of 8.75% secured
       by a first deed of trust on real property
       with a cost of $250,000.  Note is amortized
       over 83 months with monthly payments of $559
       with a final payments of $122,151.             $  154,238    $  160,944



         Note payable to a bank, collateralized
        by the assets of Phoenix Leasing Liquidation
        Corporation, a subsidiary of the Company, 
        with a variable rate of interest tied to the
        bank's prime rate payable in 30 consecutive
        monthly installments.                            466,661            -



<PAGE>

                                                      Exhibit 21 - Page 11 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996



    Note 10.  Long-Term Debt (continued):

         Note payable at 9.75% secured by computer
        equipment with a cost of $668,994. Note is
        amortized over 46 months with monthly
        payments of $16,887                                   -         68,446
                                                      ----------    ----------
            Total long-term debt                      $  620,899    $  229,390
                                                      ==========    ==========


      The aggregate  long-term  debt  maturities for the fiscal years ended June
30, are as follows:


                     1997                          $  440,034
                     1998                              40,039
                     1999                               6,706
                     2000                               6,706
                     2001                               5,588
                     2002 and thereafter              121,826
                                                   ----------
                     Total                         $  620,899
                                                   ==========

Note 11.  Profit Sharing Plan:

        The  Company  has a  profit  sharing  plan  covering  substantially  all
employees who meet certain age and service  requirements.  Contributions  to the
plan by the Company are made at the  discretion of the board of  directors.  The
profit sharing  expense was $600,000 for the years ended June 30, 1996 and 1995,
respectively.

Note 12. Leased Facilities:

        The Company  leases office and  warehouse  space in various parts of the
country and had annual rental expense of approximately $417,000 and $402,000 for
the years ended June 30, 1996 and 1995, respectively.

Note 13.  Transactions with Related Parties:

        The  Company  provides  an  interest  bearing  line of  credit  totaling
$8,000,000 to PAI's controlling  shareholder which is secured by common stock of
Phoenix Precision  Graphics,  Inc. (an unaffiliated Nevada  corporation).  As of
June 30, 1996 and 1995,  $6,646,209  and  $4,837,814  of this line of credit has
been drawn down and is included in notes  receivable  from related party.  As of
June 30, 1996 and 1995, Phoenix Precision Graphics is in a start-up mode and has
cumulative losses of $9,120,711 and $5,959,708, respectively.

        The  Company  provides  an  interest  bearing  line of  credit  to PAI's
controlling  shareholder,  which is secured by common stock of Phoenix Fiberlink
Inc.  (an  unaffiliated  Nevada  Corporation).  As of June 30,  1996  and  1995,
$2,121,484  and  $736,638  of this line of  credit  has been  drawn  down and is
included in notes receivable from related party.

        The Company  earned a  management  fee from an affiliate of $556,453 and
$678,947  for the  years  ended  June 30,  1996  and  1995,  respectively.  This
management fee is included in Portfolio management fees.

        The Company paid an affiliate  an asset  management  fee of $305,770 and
$1,026,714 for the years ended June 30, 1996 and 1995, respectively. These asset
management  fees  are  included  in  equipment  lease  operations,  maintenance,
remarking and administrative fees.


<PAGE>

                                                      Exhibit 21 - Page 12 of 12

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 14.  Commitments and Contingencies:

        The Company has entered into agreements which contain specific  purchase
commitments.  The Company may satisfy these commitments by purchasing  equipment
for its own  account  or by  assigning  equipment  purchases  to its  affiliated
partnerships. At June 30, 1996 the Company anticipates being able to satisfy its
future  obligations  under the  agreements  and  intends  to assign  most of the
purchases under the agreements to its affiliated partnerships.

        The Company enters into commitments to purchase and sell high-technology
equipment  on behalf of a corporate  affiliate.  The Company is  reimbursed  for
these services.

        The Company is party to legal  actions which arise as part of the normal
course of its business.  The Company believes,  after consultation with counsel,
that it has meritorious  defenses in these actions,  and that the liability,  if
any, will not have a material  adverse  effect on the financial  position of the
Company.