SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended December 31, 1997

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

                         Commission file number 0-18558


                          NORTHSTAR INCOME FUND-I, L.P.
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)

        DELAWARE                                        84-1105225
(State of organization)                  (I.R.S. Employer Identification Number)

7175 W. JEFFERSON AVENUE, LAKEWOOD, COLORADO              80235
  (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (303) 980-1000


Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Units  of  Class  A
                                                             Limited     Partner
                                                                  Interest
                                                               (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K [ ].

State the aggregate market value of the voting stock held by  non-affiliates  of
the registrant. Not applicable.

                        Exhibit Index Appears on Page 32

                               Page 1 of 33 Pages



<PAGE>



Item 1.   Business
          --------

Northstar   Income   Fund-I,   L.P.,  a  Delaware   limited   partnership   (the
"Partnership"),  is engaged in the business of owning and leasing equipment. CAI
Equipment Leasing I Corp. (the "CAI General  Partner"),  a Colorado  corporation
and a wholly owned subsidiary of Capital Associates, Inc. ("CAI"), and Northstar
Equipment  Leasing Income Inc. (the  "Northstar  General  Partner"),  a Delaware
corporation and an affiliate of Lehman Brothers Inc.  (formerly  Shearson Lehman
Brothers  Inc.),  are the general  partners  of the  Partnership  (the  "General
Partners" or "general partners").

Capital Associates International, Inc. ("CAII"), an affiliate of the CAI General
Partner, is the sole Class B limited partner of the Partnership. In exchange for
its  Class  B  limited  partner  interest,  CAII  contributed  equipment  to the
Partnership  having an aggregate  acquisition value of approximately  $4,899,866
(which  represented 10% of the net offering  proceeds  received from the sale of
Class A limited  partner units and the equipment  contributed by CAII).  CAII is
the largest single investor in the Partnership.

During 1997,  the  Partnership  liquidated  substantially  all of its assets and
distributed  the  related  proceeds  to the  partners  in  accordance  with  the
Partnership Agreement. It is the intent of the general partners to liquidate the
remaining  assets and settle all  liabilities during 1998.  Excess cash, if any,
will  be  distributed  to  the  Partners  in  accordance  with  the  Partnership
Agreement.

The Partnership acquired equipment of various types under lease to third parties
on short-term  leases  (generally five years or less).  All of the equipment was
purchased by CAII directly from manufacturers or other independent third parties
and sold to the Partnership.  The equipment  generally consisted of, but was not
limited to, office technology and manufacturing equipment. The Partnership is in
its liquidation  period, as defined in the Partnership  Agreement.  Accordingly,
the Partnership  did not purchase any equipment  during 1997 and the Partnership
will not acquire any equipment in future periods.

The Partnership  leases  equipment to investment grade and  noninvestment  grade
lessees.   Since  the   Partnership's   formation,   approximately  75%  of  the
Partnership's  total  equipment  under  lease  was  leased to  investment  grade
lessees.  Pursuant to the Partnership Agreement, an investment grade lessee is a
company (1) with a credit  rating of not less than Baa as  determined by Moody's
Investor  Services,  Inc., (2) that has a comparable credit rating as determined
by other  recognized  credit rating services or, (3) if the lessee is not rated,
then a lessee whom the general  partners believe would have received a rating of
Baa, or better, if the lessee would have been rated.

Upon  expiration of an initial lease,  the  Partnership  typically  attempted to
re-lease or sell the equipment to the existing lessee.  If a re-lease or sale to
the lessee was not negotiated,  the  Partnership  attempted to lease or sell the
equipment to a third party. Since the Partnership is in its liquidation  period,
all equipment held as of December 31, 1997 is intended to be sold in 1998.

The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated,  as well as future equipment values and on-going
lessee  creditworthiness.   Because  leasing  is  an  alternative  to  financing
equipment  purchases with debt,  lease rates tend to rise and fall with interest
rates (although lease rate movements  generally lag interest rate changes in the
capital markets).


                                       -2-

<PAGE>



Item 1.   Business, continued
          --------

The  Partnership  has no  employees.  The General  Partners  jointly  manage and
control the affairs of the Partnership. The officers, directors and employees of
the General  Partners  and their  affiliates  perform  services on behalf of the
Partnership.  The General  Partners  are  entitled to receive  certain  fees and
expense reimbursements in connection with the performance of these services. See
Item 10 of this Report,  "Directors and Executive  Officers of the  Partnership"
and Item 13 of this Report, "Certain Relationships and Related Transactions".

The  Partnership  competed  in  the  leasing  marketplace  as a  lessor  with  a
significant  number  of  other  companies,  including  equipment  manufacturers,
leasing  companies  and  financial  institutions.  The  Partnership  is  in  its
liquidation  period,  as defined in the Partnership  Agreement;  therefore,  the
Partnership  currently  competes  mainly  on the basis of the  expertise  of its
General  Partners in remarketing  equipment.  Although the Partnership  does not
account for a significant percentage of the leasing market, the General Partners
believe  the   Partnership's   remarketing   strategies  enable  it  to  compete
effectively in the remarketing markets.

The Partnership  leased equipment to a significant  number of lessees.  In 1997,
three lessees accounted for 22%, 15% and 10%, respectively, of total partnership
revenue.

Item 2.   Properties
          ----------

The  Partnership  does not own or lease any physical  properties  other than the
equipment discussed in Item 1 of this Report, "Business".

Item 3.   Legal Proceedings
          -----------------

Neither the Partnership nor any of the  Partnership's  equipment are the subject
of any material pending legal proceedings.

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

No matters were submitted to a vote of the limited  partners of the Partnership,
through the  solicitation of proxies or otherwise,  during the fourth quarter of
1997.


Item 5.   Market  for the  Partnership's Common  Equity and Related  Stockholder
          ----------------------------------------------------------------------
          Matters
          -------

(a)       The  Partnership's  Class A  limited  partner  units,  Class B limited
          partnership  interest  and  general  partnership   interests  are  not
          publicly  traded.  There is no  established  public trading market for
          such units and interests, and none is expected to develop.

(b)       As of December 31, 1997, there were 3,127 Class A limited partners.



                                       -3-

<PAGE>

Item 5.   Market for the Partnership's  Common  Equity and  Related  Stockholder
          ----------------------------------------------------------------------
          Matters, continued
          -------

(c)       Distributions
          -------------

          During  1997,  the  Partnership   made  five  (5)   distributions   (a
          substantial portion of which constituted a return of capital) to Class
          A limited partners, as follows:

<TABLE>
<CAPTION>

                                                                                           Distributions
                                                                   Distributions Per        of Cash from      Distributions of
                                                                  $500 Class A Limited       Operations        Cash from Sales
             For the              Payment          Total         Partner Unit (computed     (computed on        (computed on
          Quarter Ended         Made During      Distributions    on weighted average)    weighted average)   weighted average)
          -------------         -----------      -------------   ----------------------   -----------------   -----------------

         <S>                   <C>              <C>                   <C>                     <C>                  <C>
          December 31, 1996     January 1997     $ 1,181,479           $ 11.27                 $ 3.58               $  7.69
          March 31, 1997        April 1997           156,394              1.49                    .63                   .86
          June 30, 1998         July 1997            231,069              2.20                   1.62                   .58
          September 30, 1997    October 1997         191,081              1.82                   1.28                   .54
          December 31, 1997     December 1997      1,859,826             17.75                      -                 17.75
                                                 -----------           -------                 ------               -------
                                                 $ 3,619,849           $ 34.53                 $ 7.11               $ 27.42
                                                 ===========           =======                 ======               =======

</TABLE>

          Distributions  may be characterized  for tax,  accounting and economic
          purposes  as a return of  capital,  a return on capital  or both.  The
          portion of each cash  distribution by a partnership  which exceeds its
          net income for the fiscal period may be deemed a return of capital for
          accounting  purposes.  The  total  return  on  capital  over a leasing
          partnership's  life can only be determined at the  termination  of the
          Partnership after all residual cash flows (which include proceeds from
          the re-leasing and sale of equipment after initial lease terms expire)
          have been realized.  However, as the general partners have represented
          for the last several years, a substantial portion of all distributions
          to  the  partners  is  expected  to  be a  return  of  capital.  Total
          distributions  to Class A limited  partners were  $56,455,232 from the
          inception of the  Partnership  through  December 31, 1997 ($538.68 per
          weighted average Class A limited partner unit outstanding).

          The  distribution  for the quarter ended  December 31, 1997,  totaling
          $1,859,826  (cash  from  liquidation)  was paid to the Class A limited
          partners in December 1997.  Distributions  to the General Partners and
          Class B limited  partner  during 1997 are discussed in Item 13 of this
          Report, "Certain Relationships and Related Transactions".

          During 1996, the Partnership made four (4) quarterly  distributions (a
          substantial portion of which constituted a return of capital) to Class
          A limited partners, as follows:

<TABLE>
<CAPTION>

                                                                                           Distributions
                                                                   Distributions Per        of Cash from      Distributions of
                                                                  $500 Class A Limited       Operations        Cash from Sales
             For the              Payment          Total         Partner Unit (computed     (computed on        (computed on
          Quarter Ended         Made During      Distributions    on weighted average)    weighted average)   weighted average)
          -------------         -----------      -------------   ----------------------   -----------------   -----------------

         <S>                   <C>               <C>                  <C>                     <C>                  <C>
          December 31, 1995     January 1996      $   823,614          $  7.86                 $  7.82              $  0.04
          March 31, 1996        April 1996          1,014,098             9.68                    6.34                 3.34
          June 30, 1996         July 1996             681,900             6.51                    3.93                 2.58
          September 30, 1996    October 1996        1,235,365            11.78                    5.53                 6.25
                                                  -----------          -------                 -------              -------
                                                  $ 3,754,977          $ 35.83                 $ 23.62              $ 12.21
                                                  ===========          =======                 =======              =======

</TABLE>

                                       -4-

<PAGE>


Item 5.   Market  for the  Partnership's Common  Equity and  Related Stockholder
          ----------------------------------------------------------------------
          Matters, continued
          -------

(c)       Distributions, continued
          -------------

          The Class B limited partner  distributions of cash from operations are
          subordinated  to the Class A  limited  partners  receiving  cumulative
          distributions of cash from operations, as scheduled in the Partnership
          Agreement (i.e., 15%). Therefore, because the Class A limited partners
          have not received  their total  cumulative  distributions,  CAII,  the
          Class B limited  partner is not receiving  distributions  of cash from
          operations,  and  as a  result  of  this  subordination,  the  general
          partners   anticipate   that  CAII  will  not   receive   any   future
          distributions  of cash  from  operations.  As a  result,  the  general
          partners  anticipate  that CAII will only recover  approximately  $3.6
          million or 73% of its original $4.9 million Class B investment.


Item 6.   Selected Financial Data
          -----------------------

The following  selected  financial  data relates to the years ended December 31,
1993 through 1997. The data set forth below should be read in  conjunction  with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and the financial  statements and notes thereto appearing  elsewhere
herein.

<TABLE>
<CAPTION>

                                                   1997             1996              1995             1994              1993
                                                   ----             ----              ----             ----              ----

<S>                                           <C>              <C>               <C>              <C>               <C>
Total revenue                                  $ 1,672,634      $ 2,767,465       $ 3,911,086      $ 5,266,986       $ 8,223,119

Net income                                         681,121        1,185,997         1,373,906        1,544,149         1,888,272

Net income per weighted average
  Class A limited partner unit outstanding            5.19             9.14             10.74            11.20             14.25

Total assets                                       551,542        4,244,705         6,695,392       11,177,527        18,218,316

Distributions declared to partners               2,764,865        4,501,676         4,721,260        8,118,393         8,160,752

Distributions declared per weighted average
  Class A limited partner unit outstanding           23.27            39.24             42.98            70.99             70.00


</TABLE>

Item 7.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          ----------------------------------------------------------------------
          Results of Operations
          ---------------------

Results of Operations
---------------------

Presented  below are  schedules  (prepared  solely to  facilitate  discussion of
results of  operations  that  follows)  showing  condensed  statements of income
categories and analyses of changes in those  condensed  categories  derived from
the Statements of Income:


                                       -5-

<PAGE>



Item 7.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          ----------------------------------------------------------------------
          Results of Operations, continued
          ---------------------

Results of Operations, continued
---------------------

<TABLE>
<CAPTION>

                                                Condensed                                  Condense
                                            Statements of Income    The effect on        Statements of         The effect of
                                               for the years         net income       Income for the years       net income
                                             ended December 31,      of changes        ended December 31,        of changes
                                          -----------------------      between      ------------------------      between
                                             1997         1996          years           1996        1995           years
                                          ----------  -----------   -------------   ------------ -----------   -------------

<S>                                      <C>         <C>            <C>            <C>          <C>            <C>
Leasing margin                            $  345,028  $   567,279    $ (222,251)    $   567,279  $ 1,050,155    $ (482,876)
Equipment sales margin                       749,526      940,938      (191,412)        940,938      166,969       773,969
Interest income                               55,346       83,396       (28,050)         83,396      131,832       (48,436)
Other income                                       -       33,310       (33,310)         33,310      355,889      (322,579)
Management fees paid to
  general partners                           (50,936)     (99,174)       48,238         (99,174)    (132,506)       33,332
Direct services from general partners       (116,397)     (65,750)      (50,647)        (65,750)     (60,768)       (4,982)
General and administrative expenses         (301,446)    (274,002)      (27,444)       (274,002)    (137,665)     (136,337)
                                          ----------  -----------    ----------     -----------  ------------   ----------
  Net income                              $  681,121  $ 1,185,997    $ (504,876)    $ 1,185,997  $ 1,373,906    $ (187,909)
                                          ==========  ===========    ==========     ===========  ===========    ==========

</TABLE>


The  Partnership is in its  liquidation  period,  as defined in the  Partnership
Agreement,  and  as  expected,  the  Partnership  is not  purchasing  additional
equipment,  initial  leases are expiring and the  equipment is being sold.  As a
result,  both the size of the Partnership's  leasing portfolio and the amount of
leasing  revenue are  declining  (referred to in this  discussion  as "portfolio
run-off").

LEASING MARGIN

Leasing margin consists of the following:

                                           Years ended December 31,
                               -----------------------------------------------
                                   1997             1996               1995
                                   ----             ----               ----

Operating lease rentals        $  832,440      $  1,577,529       $  3,122,669
Direct finance lease income        35,322           132,292            133,727
Depreciation                     (522,734)       (1,142,542)        (2,206,241)
                               ----------      ------------       ------------
  Leasing margin               $  345,028      $    567,279       $  1,050,155
                               ==========      ============       ============

  Leasing margin ratio                 40%               33%                32%
                                       ==                ==                 ==

All components of leasing margin decreased for the years ended December 31, 1997
and  1996,  and are  expected  to  decrease  further,  primarily  as a result of
portfolio run-off.

Leasing margin ratio  fluctuates based upon (i) the mix of direct finance leases
and operating leases,  (ii) remarketing  activities,  and (iii) the relative age
and types of leases in the portfolio.  (Operating leases have a relatively lower
leasing  margin early in the lease term and an increasing  leasing margin as the
lease term  passes.  The  majority of the  Partnership's  leases were  operating
leases).

                                       -6-

<PAGE>



Item 7.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          ----------------------------------------------------------------------
          Results of Operations, continued
          ---------------------

Results of Operations, continued
---------------------

Leasing margin ratio increased  primarily  because of the age and run-off of the
operating leases held by the Partnership.

The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated,  as well as future equipment values and on-going
lessee  creditworthiness.   Because  leasing  is  an  alternative  to  financing
equipment  purchases with debt,  lease rates tend to rise and fall with interest
rates (although lease rate movements  generally lag interest rate changes in the
capital markets).

EQUIPMENT SALES MARGIN

Equipment sales margin consists of the following:

                                                Years ended December 31,
                                     ------------------------------------------
                                         1997             1996           1995
                                         ----             ----           ----

Equipment sales revenue              $ 1,658,916     $  2,396,640    $  538,504
Cost of equipment sales                 (909,390)      (1,455,702)     (371,535)
                                     -----------     ------------    ----------
Equipment sales margin               $   749,526     $    940,938    $  166,969
                                     ===========     ============    ==========

The Partnership is in its liquidation period.  During the liquidation period, as
initial leases terminate,  the equipment is being sold. Equipment sales revenue,
cost of equipment  sales and the resulting  equipment sales margin all decreased
in 1997  compared to 1996 due to  portfolio  run-off.  The increase in equipment
sales  margin in 1996  compared to 1995 is  primarily  due to the success of the
general partners in selling the Partnership's equipment for amounts in excess of
their net book values.

INTEREST INCOME

The decline in interest  income is due to decreases in excess cash available for
investment.

OTHER INCOME

Other income for the year ended December 31, 1995  represented the collection of
previously charged-off accounts receivable from one lessee.

PROVISION FOR LOSSES

The  remarketing  of  equipment  for an amount  greater  than its book  value is
reported as  equipment  sales  margin (if the  equipment  is sold) or as leasing
margin  (if the  equipment  is  re-leased).  The  realization  of less  than the
carrying  value of  equipment  (which is typically  not known until  remarketing
subsequent  to the  initial  lease  termination  has  occurred)  is  recorded as
provision for losses.


                                       -7-

<PAGE>


Item 7.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          ----------------------------------------------------------------------
          Results of Operations, continued
          ---------------------

Results of Operations, continued
---------------------

PROVISION FOR LOSSES, continued

Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the lessee,
including,  for  example,  the  likelihood  that the lessee  will  re-lease  the
equipment.  The nature of the  Partnership's  leasing  activities is that it has
credit and residual value exposure and,  accordingly,  in the ordinary course of
business,  it will incur losses from those exposures.  The Partnership  performs
ongoing quarterly assessments of its assets to identify any other-than-temporary
losses in value.

No  provision  for  losses  were  recorded  in  1997,  1996 or 1995  because  no
other-than-temporary  losses in the value of equipment  were  identified  in the
quarterly assessments of the Partnership's assets.

EXPENSES

Management fees paid to general partners decreased due to portfolio run-off.

Direct services from general  partners and general and  administrative  expenses
increased in 1997 due to expenses associated with liquidating the Partnership.

General and administrative expenses increased in 1996 as compared to 1995 due to
(i) $67,194 reimbursed to the CAI General Partner during the second quarter 1996
for insurance costs related to prior years and (ii) shipping and warehouse costs
related to certain equipment returned to the Partnership.

Liquidity and Capital Resources
-------------------------------

The Partnership funded its activities principally with cash from rents, interest
income and sale of off-lease equipment.  Available cash and cash reserves of the
Partnership  were  invested in interest  bearing  accounts and  short-term  U.S.
government securities pending distributions to the partners.

During  1997,  1996 and 1995,  the  Partnership  declared  distributions  to the
partners of $2,764,865,  $4,501,676 and $4,721,260,  respectively (a substantial
portion  of  which  constituted  a  return  of  capital).  Distributions  may be
characterized for tax,  accounting and economic purposes as a return of capital,
a return  on  capital  or both.  The  total  return  on  capital  over a leasing
partnership's  life can only be determined at the termination of the Partnership
after all residual cash flows (which  include  proceeds from the  re-leasing and
sale of equipment after initial lease terms expire) have been realized. However,
as the  general  partners  have  represented  for  the  last  several  years,  a
substantial  portion of all  distributions  to the  partners is expected to be a
return of capital.

                                      -8-

<PAGE>

Item 7.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          ----------------------------------------------------------------------
          Results of Operations, continued
          ---------------------


Liquidity and Capital Resources, continued
-------------------------------

The general  partners  anticipate that the  Partnership  will generate cash flow
from rentals and equipment sales during 1998 which,  when added to cash and cash
equivalents on hand, should provide sufficient cash to enable the Partnership to
meet its current operating requirements.  Any remaining cash will be distributed
to the partners in accordance with the Partnership Agreement.  The Partnership's
intent is to dissolve and  distribute  all of its assets no later than  December
31, 1998.

The  Class  B  limited  partner   distributions  of  cash  from  operations  are
subordinated to the Class A limited partners receiving cumulative  distributions
of cash from operations,  as scheduled in the Partnership Agreement (i.e., 15%).
Therefore,  because the Class A limited  partners have not received  their total
cumulative  distributions,  CAII,  the Class B limited  partner is not receiving
distributions  of cash from operations,  and as a result of this  subordination,
the  general  partners   anticipate  that  CAII  will  not  receive  any  future
distributions  of cash  from  operations.  As a  result,  the  general  partners
anticipate that CAII will only recover  approximately $3.6 million or 73% of its
original $4.9 million Class B investment.

During 1997, the general partners made a curative  allocation in accordance with
the Partnership  Agreement  whereby the balance in the Class B limited partner's
capital account was reallocated  first to the general partners' capital account,
to the  extent of their  respective  deficit  balances,  and next to the Class A
limited partners' capital accounts.

                                       -9-

<PAGE>



Item 8.   Financial Statements and Supplementary Data
          -------------------------------------------

             Index to Financial Statements and
               Financial Statement Schedule


                                                                           Page
          Financial Statements                                            Number
          --------------------                                            ------

             Independent Auditors' Report                                   11

             Balance Sheets as of December 31, 1997 and 1996                12

             Statements of Income for the years ended
               December 31, 1997, 1996 and 1995                             13

             Statements of Partners' Capital for the years
               ended December 31, 1997, 1996 and 1995                       14

             Statements of Cash Flows for the years
               ended December 31, 1997, 1996 and 1995                       15

             Notes to Financial Statements                                16-24


          Financial Statement Schedule
          ----------------------------

             Independent Auditors' Report                                   25

             Schedule II - Valuation and Qualifying Accounts                26







                                      -10-

<PAGE>



                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------




THE PARTNERS
NORTHSTAR INCOME FUND-I, L.P.:

We have audited the accompanying  balance sheets of Northstar Income Fund-I L.P.
as of  December  31,  1997 and  1996,  and the  related  statements  of  income,
partners' capital, and cash flows for each of the years in the three-year period
ended December 31, 1997. These financial  statements are the  responsibility  of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements 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 financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1, the Partnership is in the liquidation stage, whereby all
assets are expected to be liquidated during 1998 and all cash distributed to the
partners, after satisfaction of liabilities.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Northstar Income Fund-I,  L.P.
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles.

                                    /s/KPMG Peat Marwick LLP
                                    ------------------------
                                    KPMG PEAT MARWICK LLP

Denver, Colorado
February 6, 1998

                                      -11-

<PAGE>



                          NORTHSTAR INCOME FUND-I, L.P.

                                 BALANCE SHEETS
                           December 31, 1997 and 1996

                                     ASSETS

                                                         1997           1996
                                                         ----           ----

Cash and cash equivalents                              $ 100,816    $ 2,456,349
Accounts receivable, net of allowance for doubtful
  accounts of $68,665 in 1997                            372,935        278,149
Equipment held for sale or re-lease                       25,000        324,180
Net investment in direct finance leases                    2,791        131,963
Leased equipment, net                                     50,000      1,054,064
                                                       ---------    -----------

  Total assets                                         $ 551,542    $ 4,244,705
                                                       =========    ===========


                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
  Accounts payable and accrued liabilities             $ 350,882    $   672,315
  Payable to affiliates                                   63,653         22,881
  Rents received in advance                                6,598         18,188
  Distributions payable to partners                            -      1,317,168
                                                       ---------    -----------

  Total liabilities                                      421,133      2,030,552
                                                       ---------    -----------

Partners' Capital (Deficit):
  General partners                                             -       (578,739)
  Limited partners:
    Class A 300,000 units authorized;
      104,802 units issued and outstanding               130,409        790,910
         Class B                                               -      2,001,982
                                                       ---------    -----------

  Total partners' capital                                130,409      2,214,153
                                                       ---------    -----------

  Total liabilities and partners' capital              $ 551,542    $ 4,244,705
                                                       =========    ===========



                 See accompanying notes to financial statements.

                                      -12-

<PAGE>



                          NORTHSTAR INCOME FUND-I, L.P.

                              STATEMENTS OF INCOME
                  Years ended December 31, 1997, 1996 and 1995

                                                1997         1996          1995
                                                ----         ----          ----
REVENUE:
  Operating lease rentals                 $   832,440   $ 1,577,529  $ 3,122,669
  Direct finance lease income                  35,322       132,292      133,727
  Equipment sales margin                      749,526       940,938      166,969
  Interest income                              55,346        83,396      131,832
  Other income                                      -        33,310      355,889
                                          -----------   -----------  -----------

      Total revenue                         1,672,634     2,767,465    3,911,086
                                          -----------   -----------  -----------

EXPENSES:
  Depreciation                                522,734     1,142,542    2,206,241
  Management fees paid to general
    partners                                   50,936        99,174      132,506
  Direct services from general partners       116,397        65,750       60,768
  General and administrative                  301,446       274,002      137,665
                                          -----------   -----------  -----------

      Total expenses                          991,513     1,581,468    2,537,180
                                          -----------   -----------  -----------

NET INCOME                                $   681,121   $ 1,185,997  $ 1,373,906
                                          ===========   ===========  ===========

NET INCOME ALLOCATED:
  To the general partners                 $    96,771   $   157,559  $   165,244
  To the Class A limited partners             544,384       958,099    1,125,998
  To the Class B limited partner               39,966        70,339       82,664
                                          -----------   -----------  -----------

                                          $   681,121   $ 1,185,997  $ 1,373,906
                                          ===========   ===========  ===========

Net income per weighted average
  Class A limited partner unit
  outstanding                             $      5.19   $      9.14  $     10.74
                                          ===========   ===========  ===========

Weighted average Class A limited
  partner units outstanding                   104,802       104,802      104,802
                                          ===========   ===========  ===========





                 See accompanying notes to financial statements.

                                      -13-

<PAGE>



                          NORTHSTAR INCOME FUND-I, L.P.

                         STATEMENTS OF PARTNERS' CAPITAL
                  Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                                                  Class A
                                                                  Limited         Class A           Class B
                                                General           Partner         Limited           Limited
                                                Partners           Units          Partners          Partner           Total
                                               ----------         -------       ------------     ------------      ------------

<S>                                           <C>                <C>           <C>              <C>               <C>
Partners' capital,
  January 1, 1995                              $ (578,739)        104,802       $  7,323,704     $  2,132,221      $  8,877,186

Net income                                        165,244               -          1,125,998           82,664         1,373,906
Distributions declared to partners               (165,244)              -         (4,504,050)         (51,966)       (4,721,260)
                                               ----------         -------       ------------     ------------      ------------

Partners' capital,
  December 31, 1995                              (578,739)        104,802          3,945,652        2,162,919         5,529,832

Net income                                        157,559               -            958,099           70,339         1,185,997
Distributions declared to partners               (157,559)              -         (4,112,841)        (231,276)       (4,501,676)
                                               ----------         -------       ------------     -----------       ------------

Partners' capital,
  December 31, 1996                              (578,739)        104,802            790,910        2,001,982         2,214,153

Adjustments                                       578,739               -          1,233,485       (1,812,224)               -
Net income                                         96,771               -            544,384           39,966           681,121
Distributions declared to partners                (96,771)              -         (2,438,370)        (229,724)       (2,764,865)
                                               ----------         -------       ------------     ------------      ------------

Partners' capital
  December 31, 1997                            $        -         104,802       $    130,409     $          -      $    130,409
                                               ==========         =======       ============     ============      ============



</TABLE>









                 See accompanying notes to financial statements.

                                      -14-

<PAGE>



                          NORTHSTAR INCOME FUND-I, L.P.

                            STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                                                        1997              1996              1995
                                                                        ----              ----              ----
<S>                                                                <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                        $   681,121       $ 1,185,997       $ 1,373,906
  Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation                                                        522,734         1,142,542         2,206,241
    Cost of equipment sales                                             909,390         1,455,702           371,535
    Recovery of investment in direct finance leases                      83,482           528,643           657,974
    Changes in assets and liabilities:
      (Increase) decrease in accounts receivable                       (177,977)           50,844            52,544
      Increase (decrease) in accounts payable and
        accrued liabilities                                            (321,433)          438,081           (78,849)
      Increase (decrease) in payable to affiliates                       40,772            12,411            (1,869)
      Decrease in rents received in advance                             (11,589)          (48,688)           (6,623)
                                                                    -----------       -----------       -----------
Net cash provided by operating activities                             1,726,500         4,765,532         4,574,859
                                                                    -----------       -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to partners                                          (4,082,033)       (4,038,488)       (5,768,700)
                                                                    -----------       -----------       -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 (2,355,533)          727,044        (1,193,841)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                        2,456,349         1,729,305         2,923,146
                                                                    -----------       -----------       -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                            $   100,816       $ 2,456,349       $ 1,729,305
                                                                    ===========       ===========       ===========

</TABLE>












                 See accompanying notes to financial statements.

                                      -15-

<PAGE>



                          NORTHSTAR INCOME FUND-I, L.P.

                          NOTES TO FINANCIAL STATEMENTS

1.   Organization and Summary of Significant Accounting Policies
     -----------------------------------------------------------

     Organization

       Northstar  Income  Fund-I,  L.P.  (the  "Partnership"),  was organized on
       August 26, 1988 as a limited  partnership  under the laws of the State of
       Delaware   pursuant  to  an   Agreement  of  Limited   Partnership   (the
       "Partnership  Agreement").  The Partnership was formed for the purpose of
       owning and leasing  equipment.  During 1997, the  Partnership  liquidated
       substantially  all of its assets and distributed the related  proceeds to
       the partners in  accordance  with the  Partnership  Agreement.  It is the
       intent of the general  partners to  liquidate  the  remaining  assets and
       settle  all   liabilities   during  1998.  Any  remaining  cash  will  be
       distributed to the partners.

       The general partners of the Partnership are CAI Equipment Leasing I Corp.
       (the  "CAI  General  Partner"),  a wholly  owned  subsidiary  of  Capital
       Associates,  Inc.  ("CAI"),  and Northstar  Equipment Leasing Income Inc.
       (the "Northstar General  Partner"),  an affiliate of Lehman Brothers Inc.
       (the  "General  Partners" or "general  partners").  The General  Partners
       manage the Partnership,  including investment of funds, purchase and sale
       of equipment, lease negotiation and other administrative duties.

       Capital Associates International,  Inc. ("CAII"), an affiliate of the CAI
       General  Partner,  is the  Class B limited  partner.  The Class B limited
       partner contributed  equipment totaling $4,899,866 (which represented 10%
       of the net  offering  proceeds  generated  from  sales of Class A limited
       partner units).

     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 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 revenue and expenses
       during the  reporting  period.  For leasing  entities,  this includes the
       estimate of residual  values,  as discussed  below.  Actual results could
       differ from those estimates.

     Partnership Cash Distributions and Allocations of Profit and Loss

       Cash Distributions
       ------------------

       During the Reinvestment Period, as defined in the Partnership  Agreement,
       cash distributions were made as follows:

       The General  Partners and the Class A limited  partners  receive 3.5% and
       96.5%,  respectively,  of cash from operations  until the Class A limited
       partners received annual,  cumulative distributions equal to 14% of their
       contributed  capital.  Thereafter,  the General  Partners and the Class B
       limited  partner  received  3.5% and  96.5%,  respectively,  of cash from
       operations   until   the  Class  B  limited   partner   received   annual
       non-cumulative distributions equal to 11% of its contributed capital. The
       remaining  cash from  operations  was  reinvested or  distributed  to the
       partners as specified in the Partnership Agreement.

                                      -16-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued


1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Partnership  Cash   Distributions  and  Allocations  of  Profit  and  Loss,
     continued

       Cash from equipment  sales was  distributed to the partners to the extent
       necessary to pay any taxes arising from such sales.  The remaining amount
       was generally reinvested.

       After the reinvestment  period, cash is to be distributed to the partners
       in accordance  with the terms of the  Partnership  Agreement,  generally,
       3.5% to the General  Partners with the remaining  96.5%  allocated 90% to
       the Class A limited partners and 10% to the Class B limited partner.

       The Class B limited  partner  distributions  of cash from  operations are
       subordinated  to  the  Class  A  limited  partners  receiving  cumulative
       distributions  of cash from  operations,  as scheduled in the Partnership
       Agreement (i.e.,  15%).  Therefore,  because the Class A limited partners
       have not received their total cumulative distributions, CAII, the Class B
       limited partner, is not receiving  distributions of cash from operations,
       and as a result of this  subordination,  the general partners  anticipate
       that  CAII  will  not  receive  any  future  distributions  of cash  from
       operations.

       During  1997,  the  general  partners  made  a  curative   allocation  in
       accordance  with the  Partnership  Agreement  whereby  the balance in the
       Class B limited  partner's  capital account was reallocated  first to the
       general  partners'  capital  account,  to the extent of their  respective
       deficit  balances,  and next to the  Class A  limited  partners'  capital
       accounts.


       Federal Income Tax Basis Profits and Losses
       -------------------------------------------

       Profits are first  allocated in proportion  to, and to the extent of any,
       losses incurred during prior periods.  Thereafter,  the General Partners,
       as a class, are generally  allocated 3.5% and the Limited Partners,  as a
       class,  are allocated 96.5%. The Class A limited partners and the Class B
       limited  partner are allocated 90% and 10%,  respectively,  of the 96.5%,
       until the Class A limited partners have been allocated an amount equal in
       the aggregate to a 10% annual cumulative  return compounded  quarterly on
       the Class A limited partners' Adjusted Capital Contributions,  as defined
       in the Partnership Agreement.  The Class A limited partners and the Class
       B limited  partner receive 10% and 90%,  respectively,  of the balance of
       the  96.5% in  profits  until the Class B  limited  partner  receives  an
       allocation equal to a 10% annual cumulative  return compounded  quarterly
       on the  Class B  limited  partners'  Adjusted  Capital  Contribution,  as
       defined in the Partnership Agreement.  The remaining balance of the 96.5%
       in  profits  is shared  40% and 60%,  respectively,  between  the Class B
       limited partner and the Class A limited partners.


                                      -17-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued

1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

       Federal Income Tax Basis Profits and Losses, continued
       -------------------------------------------

       Losses are first  allocated in  proportion  to, and to the extent of any,
       prior profits.  Thereafter,  losses are generally allocated 91.45% to the
       Class A limited partners and 8.55% to the Class B limited partner.

       Upon dissolution of the Partnership, the General Partners are required to
       contribute  additional  capital to the  Partnership in an amount equal to
       the lesser of (1) the aggregate deficit in their capital accounts at such
       time, or (2) 1.01% of the limited partners' capital  contributions (which
       amount is equal to $578,739).


     Reclassifications

       Certain  reclassifications  have  been  made to  prior  years'  financial
       statements to conform to the current year's presentation.


     Recently Issued Financial Accounting Standards

       During  1997,  the  Partnership  adopted  SFAS No.  125,  Accounting  for
       Transfer  and  Servicing  of  Financial  Assets  and  Extinguishments  of
       Liabilities ("SFAS No. 125"). SFAS No. 125 provides consistent  standards
       for  distinguishing  transfers  of  financial  assets that are sales from
       transfers that are secured  borrowings.  The adoption of SFAS No. 125 did
       not have a material  impact on the  Partnership's  financial  position or
       results of operations.

     Long-lived Assets

       The  Partnership  accounts for long-lived  assets under the provisions of
       Statement of Financial  Accounting  Standards No. 121, Accounting for the
       Impairment of Long-lived  Assets and for Long-lived Assets to be Disposed
       Of ("SFAS  No.  121").  SFAS No. 121  requires  that  long-lived  assets,
       including  operating leases, and certain  identifiable  intangibles to be
       held and used by an entity be reviewed for impairment  whenever events or
       changes in  circumstances  indicate that the carrying  amount of an asset
       may not be recoverable. In performing the review for recoverability,  the
       entity should  estimate the future cash flows expected to result from the
       use of the asset and its eventual disposition. If the sum of the expected
       future cash flows  (undiscounted  and without  interest  charges) is less
       than the carrying  amount of the asset, an impairment loss is recognized.
       Measurement  of an  impairment  loss  for  long-lived  assets,  including
       operating leases, and identifiable intangibles held by the Partnership is
       based on the fair  value  of the  asset  calculated  by  discounting  the
       expected future cash flows at an appropriate interest rate.


                                      -18-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued

1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Lease Accounting

       Statement  of  Financial  Accounting  Standards  No. 13,  Accounting  for
       Leases,  requires  that a lessor  account  for each  lease by the  direct
       finance,  sales-type or operating lease method. The Partnership currently
       utilizes  the  direct  financing  and  operating  methods  for all of the
       Partnership's equipment under lease. Direct finance leases are defined as
       those leases which transfer  substantially  all of the benefits and risks
       of ownership of the equipment to the lessee. For all types of leases, the
       determination of profit considers the estimated value of the equipment at
       lease termination, referred to as the residual value.

     The Partnership's  accounting methods and their financial reporting effects
     are described below.


     Net Investment in Direct Finance Leases ("DFLs")

       The cost of the equipment, including acquisition fees paid to the general
       partners,  is  recorded  as net  investment  in DFLs on the  accompanying
       balance sheet. Leasing revenue,  which is recognized over the term of the
       lease,  consists  of the  excess  of lease  payments  plus the  estimated
       residual  value over the  equipment's  cost.  Earned income is recognized
       monthly to provide a constant  yield and is  recorded  as direct  finance
       lease income on the accompanying income statements.  Residual values were
       established  at  lease  inception  equal  to the  estimated  value  to be
       received from the equipment  following  termination  of the initial lease
       (which in certain circumstances  includes anticipated re-lease proceeds),
       as determined by the general  partners.  In estimating  such values,  the
       general  partners  considered  all  relevant  information  regarding  the
       equipment and the lessee.


     Equipment on Operating Leases ("OLs")

       The cost of  equipment,  including  acquisition  fees paid to the general
       partners,  is recorded as leased  equipment in the  accompanying  balance
       sheets and is depreciated on a straight-line basis over the lease term to
       an amount equal to the estimated  residual value at the lease termination
       date.  Leasing  revenue  consists  principally  of  monthly  rents and is
       recognized  as  operating  lease  rentals  in  the  accompanying   income
       statements.  Residual values were established at lease inception equal to
       the  estimated  value  to  be  received  from  the  equipment   following
       termination of the initial lease (which in certain circumstances includes
       anticipated release proceeds),  as determined by the general partners. In
       estimating  such values,  the general  partners  considered  all relevant
       information and circumstances regarding the equipment and the lessee.


                                      -19-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued


1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Allowance for Losses

       An allowance for losses is maintained at levels determined by the general
       partners to adequately provide for any  other-than-temporary  declines in
       asset values. In determining losses, economic conditions, the activity in
       the  used  equipment   markets,   the  effect  of  actions  by  equipment
       manufacturers,  the financial condition of lessees,  the expected courses
       of action by lessees with regard to leased  equipment at  termination  of
       the  initial  lease term,  and other  factors  which the general  partner
       believes are relevant, are considered. Asset chargeoffs are recorded upon
       the  termination  or  remarketing  of the  underlying  assets.  The lease
       portfolio  is  reviewed  quarterly  to  determine  the  adequacy  of  the
       allowance for losses.


     Transactions Subsequent to Initial Lease Termination

       After the initial lease term of equipment on lease expires, the equipment
       is either  sold or  re-leased  to the  existing  lessee or another  third
       party. The remaining net book value of equipment sold is removed and gain
       or loss recorded when  equipment is sold.  The  accounting  for re-leased
       equipment  is  consistent  with  the  accounting   described  under  "Net
       Investment in Direct Finance Leases" and "Equipment on Operating  Leases"
       above.

     Income Taxes

       No provision for income taxes has been made in the  financial  statements
       since  taxable  income  or loss is  recorded  in the tax  returns  of the
       individual partners.

     Cash Equivalents

       The Partnership considers short-term,  highly liquid investments that are
       readily convertible to known amounts of cash to be cash equivalents.

       Cash equivalents of $99,816 and $2,448,000 at December 31, 1997 and 1996,
       respectively,  are comprised of  investments in a money market fund which
       invests solely in U.S. Government securities having maturities of 90 days
       or less.

     Equipment Held for Sale or Re-lease

       Equipment  held for sale or  re-lease,  recorded  at the lower of cost or
       market value  expected to be realized,  consists of equipment  previously
       leased to end users which has been returned to the Partnership  following
       lease expiration.


                                      -20-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued

1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Net Income Per Class A Limited Partner Unit

       Net income per Class A limited  partner  unit is computed by dividing net
       income  allocated to the Class A limited partners by the weighted average
       number of Class A limited partner units outstanding during the period.

2.   Net Investment in Direct Finance Leases
     ---------------------------------------

     The  components of the net  investment in direct finance leases at December
     31, 1997 and 1996 were:

                                                           1997          1996
                                                           ----          ----

     Minimum lease payments receivable                  $  20,590     $ 130,149
     Estimated unguaranteed residual value                      -        32,566
     Unearned lease income                                (17,799)      (30,752)
                                                        ---------     ---------
                                                        $   2,791     $ 131,963
                                                        =========     =========

     Minimum  lease  payments  receivable  at  December  31,  1997  are  due  in
     installments as follows:

     Year Ending December 31,
     ------------------------

              1998                                                     $  8,520
              1999                                                        8,520
              2000                                                        3,550
                                                                       --------
              Total                                                    $ 20,590
                                                                       ========

3.   Equipment on Operating Leases
     -----------------------------

     The  Partnership's  investments  in equipment on operating  leases by major
     class as of December 31, 1997 and 1996 were:

                                                         1997           1996
                                                         ----           ----

     Transportation and industrial equipment          $ 429,278    $  3,549,277
     Other                                                    -         618,437
                                                      ---------    ------------
                                                        429,278       4,167,714
     Less:
       Accumulated depreciation                        (319,458)     (2,640,962)
       Allowance for losses                             (59,820)       (472,688)
                                                      ---------    ------------
                                                      $  50,000    $  1,054,064
                                                      =========    ============

                                      -21-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued

3.   Equipment on Operating Leases, continued
     -----------------------------

     Depreciation  expense for 1997, 1996 and 1995 was $522,734,  $1,142,542 and
     $2,206,241, respectively.

     There are no future minimum lease rentals  receivable  under  noncancelable
     operating leases at December 31, 1997.

4.   Transactions With the General Partners and Affiliates
     -----------------------------------------------------

     Management Fees
     ---------------

     As permitted under terms of the Partnership Agreement, the general partners
     receive  management fees equal to 2.675% of monthly gross rentals  received
     by the Partnership (payable 2% to the CAI General Partner and 0.675% to the
     Northstar General Partner),  payable monthly in arrears as compensation for
     services  rendered in connection  with the management of the  Partnership's
     equipment.  Management fees totaled $27,064,  $78,685 and $107,761 in 1997,
     1996 and 1995, respectively.

     Incentive Management Fee
     ------------------------

     The  General  Partners  earn an  incentive  management  fee  equal to 5% of
     monthly gross rentals from re-leases  received by the Partnership  (payable
     4% to the CAI General  Partner and 1% to the  Northstar  General  Partner),
     payable monthly in arrears as compensation for negotiating and consummating
     extensions,   renewals  and  re-leases  of  equipment  and  monitoring  the
     subsequent  performance  of  lessees  as  permitted  under the  Partnership
     Agreement.  Incentive management fees totaled $23,872,  $20,489 and $24,745
     in 1997, 1996 and 1995, respectively.


     Direct Services from General Partners
     -------------------------------------

     The General  Partners and their  affiliates  provide  accounting,  investor
     relations,  billing,  collecting, asset management and other administrative
     services  to  the  Partnership.  The  Partnership  reimburses  the  General
     Partners for these services  performed on its behalf as permitted under the
     terms of the Partnership  Agreement.  Such reimbursements totaled $116,397,
     $65,750 and $60,768 in 1997, 1996 and 1995, respectively.


     Payables to Affiliates
     ----------------------

     Payables to affiliates  consists  primarily of  management  fees and direct
     services payable to the General Partners.


                                      -22-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued

4.   Transactions With the General Partners and Affiliates, continued
     -----------------------------------------------------

     Disposition Fee
     ---------------

     The CAI General Partner earns a subordinated  fee with respect to each sale
     of  equipment  in an amount  not to exceed the lesser of (a) 50% of the fee
     that  would be  charged  by an  unaffiliated  party or (b) 3% of the  gross
     contract price relating to each sale of equipment.  The disposition fee has
     not and will  not be paid to the CAI  General  Partner  until  the  Class A
     limited  partners have received  cash  distributions  in an amount equal to
     their capital contributions plus an 8% annual, cumulative return compounded
     quarterly on their adjusted capital contributions, calculated from the date
     that each  Class A limited  partner is  admitted  to the  Partnership.  The
     Partnership has not accrued any  disposition  fees since inception since it
     is  anticipated  that the  limited  partners  will not  receive the minimum
     distributions described above.

5.   Tax Information (Unaudited)
     ---------------------------

     The following  reconciles  net income for financial  reporting  purposes to
     income for federal income tax purposes for the years ended December 31,:

<TABLE>
<CAPTION>


                                                      1997             1996              1995
                                                      ----             ----              ----

    <S>                                           <C>              <C>              <C>
     Net income per financial statements           $   681,121      $ 1,185,995      $ 1,373,906
     Differences due to:
       Direct finance leases                            83,483          481,984          960,182
       Depreciation                                    200,377          115,760          334,595
       Loss on sale of equipment                       549,962           (3,579)        (200,851)
       Other                                          (293,514)         (26,679)          91,387
                                                   -----------      -----------      -----------
     Partnership income for federal
       income tax purposes                         $ 1,221,429     $ 1,753,481      $ 2,559,219
                                                   ===========      ===========      ===========

</TABLE>


     The following reconciles partners' capital for financial reporting purposes
     to  partners'  capital for federal  income tax purposes for the years ended
     December 31,:

<TABLE>
<CAPTION>

                                                        1997              1996             1995
                                                        ----              ----             ----

    <S>                                          <C>               <C>              <C>
     Partners' capital per financial statements   $     130,409     $   2,214,153    $   5,529,832
     Differences due to:
       Commissions and offering costs                 6,792,543         6,792,543        6,792,543
       Direct finance leases                          8,456,022         8,372,539        7,890,555
       Depreciation                                 (10,414,415)      (10,614,792)     (10,730,552)
       Provision for losses                           3,263,929         3,652,511        3,652,511
       Reduction for excess of fair value over
         basis on contributed property                 (617,411)         (617,411)        (617,411)
       Loss on sale of equipment                       (438,837)         (988,799)        (985,220)
       Other                                            139,034            43,965           70,644
                                                  -------------     -------------    -------------
     Partners' capital for federal income
       tax purposes                               $   7,311,274     $   8,854,709    $  11,602,902
                                                  =============     =============    =============

</TABLE>


                                      -23-

<PAGE>


                          NORTHSTAR INCOME FUND-I, L.P.

                    NOTES TO FINANCIAL STATEMENTS, continued

6.   Disclosures about Fair Value of Financial Instruments
     -----------------------------------------------------

     Statement of Financial  Standards No. 107,  Disclosures about Fair Value of
     Financial   Instruments   specifically  excludes  certain  items  from  its
     disclosure  requirements such as the Company's investment in leased assets.
     The carrying  amounts at December  31, 1997 for cash and cash  equivalents,
     accounts receivable,  accounts payable and accrued liabilities,  payable to
     affiliates,  rents and sale proceeds  received in advance and distributions
     payable to partners approximate their fair values due to the short maturity
     of these instruments.

                                      -24-

<PAGE>




                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



THE PARTNERS
NORTHSTAR INCOME FUND-I, L.P.:

Under date of February 6, 1998,  we reported on the balance  sheets of Northstar
Income Fund-I, L.P. as of December 31, 1997 and 1996, and the related statements
of  income,  partners'  capital,  and cash  flows  for each of the  years in the
three-year  period ended  December 31, 1997,  as contained in the  Partnership's
annual report on Form 10-K for the year 1997.  In connection  with our audits of
the aforementioned  financial statements,  we also audited the related financial
statement  Schedule  II, as listed in the  accompanying  index.  This  financial
statement  schedule is the responsibility of the Partnership's  management.  Our
responsibility  is to express an opinion on this  financial  statement  schedule
based on our audits.

In our opinion,  the related financial  statement  schedule,  when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.


                                     /s/KPMG Peat Marwick LLP
                                     ------------------------
                                     KPMG PEAT MARWICK LLP

Denver, Colorado
February 6, 1998

                                      -25-

<PAGE>



                          NORTHSTAR INCOME FUND-I, L.P.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                  Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>



COLUMN A                         COLUMN B                  COLUMN C                 COLUMN D              COLUMN E
--------                         --------               --------------              --------              --------
                                                           Additions
                                Balance at               (deductions)                                      Balance
                                 beginning                charged to                                       at end
Classification                  of period               other accounts             Deductions             of period
--------------                  ---------               --------------             ----------             ---------
                                                             (1)                      (2)

       1997
---------------------
<S>                             <C>                       <C>                      <C>                   <C>
Allowance for losses:
  Accounts receivable            $       -                 $   68,665               $       -             $  68,665
  Equipment on leases              472,688                   (328,762)                (84,106)               59,820
                                 ---------                 ----------               ---------             ---------
                                 $ 472,688                 $  260,097               $ (84,106)            $ 128,485
                                 =========                 ==========               =========             =========

       1996
---------------------

Allowance for losses:
  Equipment on leases            $ 449,963                 $   41,725               $ (19,000)            $ 472,688
                                 =========                 ==========               =========             =========


      1995
---------------------

Allowance for losses:
  Equipment on leases            $ 494,215                 $  (42,821)              $  (1,431)            $ 449,963
                                 =========                 ==========               =========             =========

</TABLE>





(1)  Represents  reclassifications  to and from other reserve accounts and asset
     and liability accounts.

(2)  Represents allowance charge-offs and write-downs for equipment impairment.



                  See accompanying independent auditors' report

                                      -26-

<PAGE>



Item 9.   Disagreements on Accounting and Financial Disclosures
          -----------------------------------------------------

None

Item 10.  Directors and Executive Officers of the Partnership
          ---------------------------------------------------

The  Partnership  has no officers and directors.  The General  Partners  jointly
manage  and   control  the  affairs  of  the   Partnership   and  have   general
responsibility and authority in all matters affecting its business.  Information
concerning  the directors and executive  officers of the General  Partners is as
follows:

                          CAI Equipment Leasing I Corp.

            Name                          Positions Held
            ----                          --------------

    John F. Olmstead        President and Director

    Dennis J. Lacey         Senior Vice President and Director

    Anthony M. DiPaolo      Senior Vice President, Principle Financial and Chief
                            Administrative Officer and Director

    Richard H. Abernethy    Vice President and Director

    John A. Reed            Vice President, Assistant Secretary and Director

    Joseph F. Bukofski      Vice President, Assistant Secretary and Director

    Robert A. Golden        Director

    Mick Myers              Director

    Ann Danielson           Assistant Vice President

    David J. Anderson       Chief Accounting Officer and Secretary

JOHN F. OLMSTEAD,  age 53 joined CAII as Vice President in December,  1988, is a
Senior  Vice  President  of CAI and CAII  and is head of  CAII's  Public  Equity
division.  He has served as Chairman of the Board for Neo-kam Industries,  Inc.,
Matchless Metal Polish Company, Inc. and ACL, Inc. for more than 5 years. He has
over 20 years of experience  holding various  positions of responsibility in the
leasing  industry.  Mr. Olmstead holds a Bachelor of Science degree from Indiana
University and a Juris Doctorate degree from Indiana Law School.

DENNIS J. LACEY,  age 44, joined CAI as Vice President,  Operations,  in October
1989.  Mr. Lacey was  appointed  Treasurer on January 1, 1991,  Chief  Financial
Officer on April 11, 1991, a director on July 19, 1991,  and President and Chief
Executive  Officer on September 6, 1991.  Prior to joining CAI, Mr. Lacey was an
audit partner for the public accounting firm of Coopers & Lybrand.  Mr. Lacey is
also a director and senior officer of CAII, CAI Equipment  Leasing I Corp.,  CAI
Equipment  Leasing II Corp.,  CAI  Equipment  Leasing III Corp.,  CAI  Equipment
Leasing IV Corp., CAI Equipment  Leasing V Corp., CAI Leasing Canada,  Ltd., CAI
Partners   Management   Company,   CAI   Securities   Corporation,   CAI   Lease
Securitization I Corp. and Capital Equipment Corporation  (collectively referred
to  herein as the "CAI  Affiliates"),  all of which  are  first- or  second-tier
wholly-owned subsidiaries of CAI.

                                      -27-

<PAGE>




Item 10.  Directors and Executive Officers of the Partnership, continued
          ---------------------------------------------------

ANTHONY M. DIPAOLO,  age 39, joined CAII in July 1990 as Assistant Treasurer and
is currently Senior Vice  President-Chief  Financial  Officer.  He also held the
positions   of   Senior   Vice    President-Controller    and   Assistant   Vice
President-Credit  Administration  for the Company.  Mr. DiPaolo has held similar
senior financial management positions with two public companies between 1986 and
June 1990, and prior to then was an audit manager for the public accounting firm
of  Coopers &  Lybrand.  Mr.  DiPaolo  holds a  Bachelor  of  Science  degree in
Accounting from the University of Denver.

RICHARD H. ABERNETHY,  age 43, joined CAII in April 1992 as Equipment  Valuation
Manager  and  currently  serves  as Vice  President  of  Asset  Management.  Mr.
Abernethy has thirteen years experience in the leasing industry, including prior
positions with Barclays  Leasing Inc.,  from November 1986 to February 1992, and
Budd Leasing  Corporation,  from January 1981 to November  1986.  Mr.  Abernethy
holds a Bachelor of Arts in Business Administration from the University of North
Carolina at Charlotte.

JOHN A. REED,  age 42,  joined  CAII in  January  1990 as the Tax  Director  and
Assistant Secretary.  Mr. Reed is currently the Vice President-Manager,  Capital
Markets Group and is  responsible  for  obtaining  off balance sheet  financing,
syndications and private  programs.  Prior to joining the Capital Markets Group,
Mr. Reed was Vice President of both Marketing Administration and Credit and Debt
Administration.  He spent seven and one half years with Coopers & Lybrand in the
Tax Department and served on CAII's tax consulting  engagement during that time.
Mr.  Reed holds a Bachelor  of Arts  degree in Social  Sciences  and  Masters of
Science in Accounting, from Colorado State University.

JOSEPH F. BUKOFSKI, age 43, joined CAII in June 1990 as a Financial Analyst. Mr.
Bukofski is currently the Vice President of Marketing and is responsible for all
lease  documentation  and management of transaction  structuring and processing.
Prior to joining the  Marketing  Department,  Mr.  Bukofski was  Assistant  Vice
President and Controller.  Prior to joining the Company, he was a geologist with
Barringer  Geoservices,  Inc. for eleven years. Mr. Bukofski holds a Bachelor of
Science degree in Secondary Education - Earth Science from Bloomsburg University
and a Masters of Science in Accounting from the University of Colorado.

ROBERT A. GOLDEN,  age 52, is Vice  President and the National  Sales Manager of
the Company.  Mr. Golden joined the Company in 1993 as a Branch Manager.  He was
promoted  to his  current  position  in  September  1994.  Prior to joining  the
Company, he was an Executive Vice President with the U.S. Funds Group, President
of BoCon Capital  Group and Vice  President  with  Ellco/GE  Capital for fifteen
years. Mr. Golden is an officer, but not a director, of CAII.

MICK MYERS, age 40, joined CAI in February 1992 as a Senior  Portfolio  Manager.
Currently he is Assistant Vice President of Asset Management. Mr. Myers has nine
years experience in the leasing industry.  Previously,  he has held the position
of Senior End of Lease  Negotiator  with  ELLCO/GE  Capital.  Mr.  Myers holds a
Bachelor of Science degree from the University of Wyoming.



                                      -28-

<PAGE>

Item 10.  Directors and Executive Officers of the Partnership, continued
          ---------------------------------------------------

ANN DANIELSON,  age 34, joined CAII in February 1990 and is currently  Assistant
Vice  President,  Assistant  Treasurer and is responsible for the Company's cash
management and collections functions. Prior to joining the Company, she was with
U.S.  West  financial  Services  and Coopers & Lybrand.  Ms.  Danielson  holds a
Bachelor of Arts Degree from the University of Northern Iowa.

DAVID J.  ANDERSON,  age 45,  joined CAII in August 1990 as Manager of Billing &
Collections and currently  serves as Assistant  Vice-President/Chief  Accounting
Officer. Prior to joining CAII, Mr. Anderson was Vice-  President/Controller for
Systems  Marketing,  Inc.,  from 1985 to 1990,  and  previous  to that worked in
several senior staff  positions at the Los Alamos  National  Laboratory and with
Ernst & Whinney. Mr. Anderson holds a Bachelor of Business Administration degree
in Accounting from the University of Wisconsin.

                     Northstar Equipment Leasing Income Inc.
                     ---------------------------------------

           Name                                 Positions Held
           ----                                 --------------

      Rocco F. Andriola                   Director

      Jeffrey C. Carter                   Director, President and CFO

      Robert Sternlieb                    Vice President

ROCCO F.  ANDRIOLA,  39,  is a  Managing  Director  of  Lehman  Brothers  in its
Diversified  Asset Group and has held such  position since October  1996.  Since
joining  Lehman in 1986,  Mr.  Andriola  has been  involved  in a wide  range of
restructuring  and asset management  activities  involving real estate and other
direct  investment  transactions.  From June 1991 through  September  1996,  Mr.
Andriola  held the  position of Senior Vice  President  in Lehman's  Diversified
Asset Group.  From June 1989 through May 1991, Mr. Andriola held the position of
First Vice President in Lehman's Capital  Preservation and Restructuring  Group.
From 1986 to 1989,  Mr.  Andriola  served as a Vice  President in the  Corporate
Transactions  Group of Shearson Lehman  Brothers' office of the general counsel.
Prior to joining Lehman, Mr. Andriola practiced  corporate and securities law at
Donovan Leisure Newton & Irvine in New York. Mr.  Andriola  received a B.A. from
Fordham University, a J.D. from New York University School of Law, and an LLM in
Corporate law from New York University's Graduate School of Law.

JEFFREY C.  CARTER,  52, is a Senior Vice  President  of Lehman  Brothers in the
Diversified  Asset Group.  Mr. Carter joined Lehman  Brothers in September 1988.
From  1972 to 1988,  Mr.  Carter  held  various  positions  with  Helmsley-Spear
Hospitality  Services,  Inc. and Stephen W. Brener  Associates,  Inc.  including
Director of  Consulting  Services at both firms.  From 1982  through  1987,  Mr.
Carter was President of Keystone  Hospitality  Services,  an  independent  hotel
consulting and brokerage  company.  Mr. Carter received his B.S. degree in Hotel
Administration  from  Cornell  University  and an M.B.A.  degree  from  Columbia
University.


                                      -29-

<PAGE>



Item 10.  Directors and Executive Officers of the Partnership, continued
          ---------------------------------------------------

ROBERT  STERNLIEB,  33, is an Assistant Vice President of Lehman Brothers and is
responsible  for asset  management  within  the  Diversified  Asset  Group.  Mr.
Sternlieb  joined Lehman  Brothers in April 1989 as an asset  manager.  From May
1986 to April 1989,  he was a systems  analyst at Drexel  Burnham  Lambert.  Mr.
Sternlieb received a B.S. degree in Finance from Lehigh University in 1986.


Item 11.  Executive Compensation
          ----------------------

No compensation was paid by the Partnership to the officers and directors of the
General Partners. See Item 13 of this Report, "Certain Relationships and Related
Transactions",  for a  description  of the  compensation  and  fees  paid to the
General Partners and their affiliates by the Partnership during 1997.


Item 12.  Security Ownership of Certain Beneficial Owners and Management
          --------------------------------------------------------------

(a)       As of the date hereof, no person is known by the Partnership to be the
          beneficial  owner of more than 5% of the Class A limited partner units
          of the Partnership.  The Partnership has no directors or officers, and
          neither the General  Partners  nor the Class B limited  partner of the
          Partnership owns any Class A limited partner units.

          CAII,  an  affiliate  of the CAI  General  Partner,  owns  100% of the
          Partnership's Class B limited partner interest.

          CAI Equipment  Leasing I Corp. and Northstar  Equipment Leasing Income
          Inc. own 100% of the Partnership's general partner interest.

          The  names  and  addresses  of the  General  Partners  and the Class B
          limited partner are as follows:

          CAI General Partner
          -------------------

          CAI Equipment Leasing I Corp.
          7175 West Jefferson Avenue
          Suite 4000
          Lakewood, Colorado 80235

          Northstar General Partner
          -------------------------

          Northstar Equipment Leasing Income Inc.
          c/o Lehman Brothers
          3 World Financial Center - 29th Floor
          New York, New York 10285

                                      -30-

<PAGE>



Item 12.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management,
          ----------------------------------------------------------------------
          continued

          Class B Limited Partner
          -----------------------

          Capital Associates International, Inc.
          7175 West Jefferson Avenue
          Suite 4000
          Lakewood, Colorado 80235

(b)       No directors  or officers of the CAI General  Partner,  the  Northstar
          General  Partner  or the  Class B  limited  partner  owned any Class A
          limited partner units as of February 1, 1998.

(c)       The Partnership  knows of no arrangements,  the operation of which may
          at a subsequent date result in a change in control of the Partnership.

Item 13.  Certain Relationships and Related Transactions
          ----------------------------------------------

The General Partners and their affiliates receive certain types of compensation,
fees or other distributions in connection with the operations of the Partnership
as discussed below:

Management Fee
--------------

The General  Partners  earn a monthly fee in an amount  equal to 2.675% of gross
rentals received by the Partnership (payable 2.0% to the CAI General Partner and
 .675% to the Northstar General Partner) as compensation for services rendered in
connection with the management of the Partnership's  equipment.  Management fees
earned by the General Partners totaled $27,064 during 1997.

Incentive Management Fee
------------------------

The General  Partners  earn a monthly fee equal to 5% of monthly  gross  rentals
from  re-leases  received  by the  Partnership  (payable  4% to the CAI  General
Partner and 1% to the Northstar General Partner) as compensation for negotiating
and consummating extensions,  renewals and re-leases of equipment and monitoring
the subsequent performance of lessees. Incentive management fees totaled $23,872
during 1997.

Disposition Fee
---------------

The CAI General  Partner earns a  subordinated  fee with respect to each sale of
equipment in an amount not to exceed the lesser of (a) 50% of the fee that would
be  charged  by an  unaffiliated  party or (b) 3% of the  gross  contract  price
relating to each sale of equipment.  The disposition fee has not and will not be
paid to the CAI General Partner until the Class A limited partners have received
cash distributions in an amount equal to their capital  contributions plus an 8%
annual,  cumulative  return  compounded  quarterly  on  their  adjusted  capital
contributions,  calculated  from the date that each  Class A limited  partner is
admitted to the  Partnership.  The  Partnership  has not accrued any disposition
fees since inception since it is anticipated  that the limited partners will not
receive distributions in the aforementioned amounts.

                                      -31-

<PAGE>



Item 13.  Certain Relationships and Related Transactions, continued
          ----------------------------------------------

Accountable General and Administrative Expenses
-----------------------------------------------

The General  Partners are entitled to  reimbursement of certain expenses paid on
behalf  of  the   Partnership   which  are  incurred  in  connection   with  the
Partnership's operations. Such reimbursable expenses amounted to $116,397 during
1997.

Additionally,   the  General   Partners   receive  3.5%  of   Partnership   cash
distributions  and are  allocated  certain  Partnership  net  income  and  gross
revenues (shared 2% to the CAI General Partner and 1.5% to the Northstar General
Partner)  relating  to  their  general  partner  interests  in the  Partnership.
Distributions  paid and net income  allocated  to the General  Partners  totaled
$96,771 and $96,771  respectively,  for 1997.  Distributions paid and net income
allocated  to  the  Class  B  limited   partner   were   $229,724  and  $56,788,
respectively, for 1997.

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
          ---------------------------------------------------------------

   (a)
   and
   (d)    The following documents are filed as part of this Report:

          1.  Financial Statements: (Incorporated by reference to Item 8 of this
              Report, "Financial Statements and Supplementary Data").

          2.  Financial Statement Schedule: (Incorporated by reference to Item 8
              of this Report, "Financial Statements and Supplementary Data").

   (b)    The Partnership did notfile any reports on Form 8-K during the quarter
          ended December 31, 1997.

   (c)    Exhibits required to be filed.

          Exhibit                             Exhibit
          Number                               Name
          -------                             -------

            4.1*     Amended  and  Restated  Agreement  of  Limited  Partnership
                     (incorporated by reference to Exhibit 2(a) contained in the
                     Partnership's Form 8-A Registration Statement, dated May 4,
                     1990, Commission File No. 0-18558)

            4.2*     Amendment  No. 1  to  Amended  and  Restated  Agreement  of
                     Limited  Partnership (incorporated  by reference to Exhibit
                     4(d)  contained  in  Post-Effective  Amendment No. 1 to the
                     Partnership's  Form S-1 Registration Statement dated May 8,
                     1989, Commission File No. 33-24022)

             *       Not filed herewith.  In  accordance with Rule 12b-32 of the
                     General Rules and Regulations under the Securities Exchange
                     Act of 1934, reference is made to the  document  previously
                     filed with the Commission.

                                      -32-


<PAGE>


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Partnership  has duly  caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated:  March 31, 1998                Northstar Income Fund-I, L.P.

                                      By:  CAI Equipment Leasing I Corp.

                                      By:  /s/John F. Olmstead
                                           -----------------------------
                                           John F. Olmstead
                                           President and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the general partner
of the Partnership and in the capacities indicated on March 31, 1998.

Signature                                      Title
---------                                      -----

/s/John F. Olmstead
-----------------------
John F. Olmstead            President and Director

/s/Dennis J. Lacey
-----------------------
Dennis J. Lacey             Senior Vice President and Director

/s/Anthony M. DiPaolo
-----------------------     Senior Vice President, Principle Financial and Chief
Anthony M. DiPaolo          Administrative Officer and Director

/s/Richard H. Abernethy
-----------------------
Richard H. Abernethy        Vice President and Director

/s/John A. Reed
-----------------------
John A. Reed                Vice President, Assistant Secretary and Director

/s/Joseph F. Bukofski
-----------------------
Joseph F. Bukofski          Vice President, Assistant Secretary and Director

/s/Robert A. Golden
-----------------------
Robert A. Golden            Director

/s/Mick Myers
-----------------------
Mick Myers                  Director

/s/Ann Danielson
-----------------------
Ann Danielson               Assistant Vice President

/s/David J. Anderson
-----------------------
David J. Anderson           Chief Accounting Officer and Secretary

                                      -32-