<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

                   ------------------------------------------

For Quarter Ended September 30, 1997
                  --------------------------------------------------------------


Commission file number 0-13563
                       ---------------------------------------------------------


                     DAMSON/BIRTCHER REALTY INCOME FUND - I
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                    Pennsylvania                         13-3264491
--------------------------------------------------------------------------------
            (State or other jurisdiction of            (I.R.S. Employer
             incorporation or organization)           Identification No.)


 27611 La Paz Road, P.O. Box A-1, Laguna Niguel, California    92677-0100
--------------------------------------------------------------------------------
          (Address of principal executive offices)             (Zip Code)


                                 (714) 643-7700
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


                                       N/A
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 12(g), 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve 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
                                        ---      ---


<PAGE>   2

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                          QUARTERLY REPORT ON FORM 10-Q
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997

                  ---------------------------------------------

                                      INDEX

<TABLE>
<CAPTION>

                                                                                    Page
                                                                                    ----
<S>               <C>                                                               <C>
PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Statement of Net Assets in Liquidation --
                  September 30, 1997 (Unaudited).................................... 3

                  Statement of Changes of Net Assets in Liquidation --
                  Three Months Ended September 30, 1997 (Unaudited)................. 4

                  Balance Sheet -
                  December 31, 1996................................................. 5

                  Statements of Operations (Unaudited) --
                  Three Months Ended March 31, 1997 and Three and Nine Months
                  Ended September 30, 1996.......................................... 6

                  Statement of Cash Flows (Unaudited) --
                  Nine Months Ended September 30, 1996.............................. 7

                  Notes to Financial Statements (Unaudited)......................... 8

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.....................12

PART II.          OTHER INFORMATION.................................................15
</TABLE>



                                        2

<PAGE>   3

                          PART I. FINANCIAL INFORMATION
                          -----------------------------

ITEM 1. FINANCIAL STATEMENTS
        --------------------

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                     STATEMENT OF NET ASSETS IN LIQUIDATION
                               SEPTEMBER 30, 1997
                                   (UNAUDITED)
                     --------------------------------------

<TABLE>

<S>                                                               <C>
ASSETS (Liquidation Basis):
---------------------------

Properties held for sale                                          $35,798,000

Cash and cash equivalents                                             486,000
Accounts receivable                                                   258,000
Other assets                                                          199,000
                                                                  -----------

    Total Assets                                                   36,741,000
                                                                  -----------
LIABILITIES (Liquidation Basis):
--------------------------------

Accounts payable and accrued liabilities                              987,000
Secured loan payable                                                2,782,000
Accrued expenses for liquidation                                      708,000
                                                                  -----------

    Total Liabilities                                               4,477,000
                                                                  -----------
Net Assets in Liquidation                                         $32,264,000
                                                                  ===========
</TABLE>


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

                                        3

<PAGE>   4

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
             FOR THE PERIOD FROM JULY 1, 1997 TO SEPTEMBER 30, 1997
                                   (UNAUDITED)
             ------------------------------------------------------

<TABLE>
<S>                                                                <C>

Net assets in liquidation at June 30, 1997                         $32,081,000

Increase (decrease) during period:
    Operating activities:
           Property operating income, net                              859,000
           Interest income                                               8,000
           General and administrative expenses                        (304,000)
           Interest expense on mortgage payable                        (63,000)
           Leasing commissions                                         (61,000)
                                                                   -----------
                                                                       439,000
                                                                   -----------

    Liquidating activities:
           Distribution to partners                                   (256,000)
                                                                   -----------
                                                                      (256,000)

Net increase in assets in liquidation                                  183,000
                                                                   -----------

Net assets in liquidation at September 30, 1997                    $32,264,000
                                                                   ===========
</TABLE>


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

                                        4

<PAGE>   5

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                                  BALANCE SHEET
                                DECEMBER 31, 1996
                      -------------------------------------

<TABLE>
<CAPTION>

<S>                                                              <C>
ASSETS

Properties held for sale (net of valuation                       $34,582,000
    allowance of $5,418,000)

Cash and cash equivalents                                            711,000
Accounts receivable (net of allowance for
    doubtful accounts of $46,000)                                     80,000
Accrued rent receivable                                              439,000
Prepaid expenses and other assets                                    670,000
                                                                 -----------
                                                                 $36,482,000
                                                                 ===========

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued liabilities                         $   937,000
Secured loan payable                                               2,932,000
                                                                 -----------
    Total liabilities                                              3,869,000
                                                                 -----------
Partners' capital (deficit):
    Limited Partners                                              33,104,000
    General Partner                                                 (491,000)
                                                                 -----------
                                                                  32,613,000

Commitments and contingencies
                                                                 -----------
                                                                 $36,482,000
                                                                 ===========
</TABLE>



Note: The balance sheet at December 31, 1996 has been prepared from the audited
      financial statements as of that date.


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


                                        5

<PAGE>   6

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      ------------------------------------

<TABLE>
<CAPTION>

                                   Three Months  Three Months    Nine Months
                                      Ended         Ended           Ended
                                     3/31/97       9/30/96         9/30/96
                                   -----------    -----------    -----------
<S>                                <C>            <C>            <C>
REVENUES

Rental income                      $ 1,479,000    $ 1,590,000    $ 4,737,000
Interest income                         10,000          4,000          6,000
                                   -----------    -----------    -----------

    Total revenues                   1,489,000      1,594,000      4,743,000
                                   -----------    -----------    -----------

EXPENSES

Operating expenses                     377,000        429,000      1,318,000
Real estate taxes                      201,000        230,000        568,000
Amortization                            70,000         56,000        140,000
General and administrative             369,000        230,000        708,000
Interest                                66,000         84,000        240,000
Adjustment to carrying value of
    real estate                             --        335,000      1,870,000
                                   -----------    -----------    -----------

    Total expenses                   1,083,000      1,364,000      4,844,000
                                   -----------    -----------    -----------

NET INCOME (LOSS)                  $   406,000    $   230,000    $  (101,000)
                                   ===========    ===========    ===========

NET INCOME (LOSS) ALLOCABLE TO:

    General Partner                $     4,000    $     2,000    $    (1,000)
                                   ===========    ===========    ===========

    Limited Partners               $   402,000    $   228,000    $  (100,000)
                                   ===========    ===========    ===========
</TABLE>


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

                                        6

<PAGE>   7

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                      ------------------------------------
<TABLE>
<CAPTION>

                                                            Nine Months
                                                              Ended
                                                             9/30/96
                                                           ------------
<S>                                                        <C>
Cash flows from operating activities:
    Net loss                                               $  (101,000)
Adjustments to reconcile net loss to
  net cash provided by operating
  activities:
  Amortization                                                 140,000
Adjustment to carrying value of real estate                  1,870,000
Changes in:
  Accounts receivable                                            4,000
  Prepaid expenses and other assets                            (44,000)
  Accrued rent receivable                                     (135,000)
  Accounts payable and accrued liabilities                    (221,000)
                                                           -----------
Net cash used in operating activities                        1,513,000

Cash flows from investing activities:
    Investments in real estate                              (1,907,000)
                                                           -----------
Net cash used in investing activities                       (1,907,000)

Cash flows from financing activities:
    Proceeds from secured loan payable                         700,000
    Secured loan payable                                      (137,000)
    Distributions                                             (255,000)
                                                           -----------
Net cash provided by financing activities                      308,000

Net decrease in cash and cash equivalents                      (86,000)

Cash and cash equivalents, beginning of period                 301,000
                                                           -----------
Cash and cash equivalents, end of period                   $   215,000
                                                           ===========
</TABLE>


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

                                        7

<PAGE>   8

                      DAMSON/BIRTCHER REALTY INCOME FUND-I

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

(1)      Accounting Policies

         The financial statements of Damson/Birtcher Realty Income Fund-I (the
         "Partnership") included herein have been prepared by the General
         Partner, without audit, pursuant to the rules and regulations of the
         Securities and Exchange Commission. These financial statements include
         all adjustments which are of a normal recurring nature and, in the
         opinion of the General Partner, are necessary for a fair presentation.
         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted, pursuant to the
         rules and regulations of the Securities and Exchange Commission. These
         financial statements should be read in conjunction with the financial
         statements and notes thereto included in the Partnership's annual
         report on Form 10-K for the year ended December 31, 1996.

         Liquidation Basis of Accounting

         On February 18, 1997, the Partnership mailed a Consent Solicitation to
         the Limited Partners which sought their consent to dissolve the
         Partnership and sell and liquidate all of its remaining properties as
         soon as practicable, consistent with selling the Partnership's
         properties to the best advantage under the circumstances. A majority in
         interest of the Limited Partners consented by March 14, 1997. As a
         result, the Partnership has adopted the liquidation basis of accounting
         as of March 31, 1997. The difference between the adoption of the
         liquidation basis of accounting as of March 14, 1997 and March 31, 1997
         was not material.

         Under the liquidation basis of accounting, assets are stated at their
         estimated net realizable values and liabilities are stated at their
         anticipated settlement amounts. The valuation of assets and liabilities
         necessarily requires many estimates and assumptions, and there are
         substantial uncertainties in carrying out the dissolution of the
         Partnership. The actual values upon dissolution and costs associated
         therewith could be higher or lower than the amounts recorded.

         The Partnership adopted the liquidation basis of accounting on March
         31, 1997. Comparison of results to prior years, therefore, is not
         practical. The Statement of Net Assets in Liquidation and Statement of
         Changes of Net Assets in Liquidation reflect the Partnership in the
         process of liquidation. Prior financial statements reflect the
         Partnership as a going concern.

         Earnings Per Unit

         The Partnership Agreement does not designate investment interests in
         units. All investment interests are calculated on a "percent of
         Partnership" basis, in part to accommodate original reduced rates on
         sales commissions for subscriptions in excess of certain specified
         amounts.

         A Limited Partner who was charged a reduced sales commission or no
         sales commission was credited with proportionately larger Invested
         Capital and therefore had a disproportionately greater interest in the
         capital and revenues of the Partnership than a Limited Partner who paid
         commissions at a higher


                                        8

<PAGE>   9

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)

(1)      Accounting Policies (Cont'd.)

         rate. As a result, the Partnership has no set unit value as all
         accounting, investor reporting and tax information is based upon each
         investor's relative percentage of Invested Capital. Accordingly,
         earnings or loss per unit is not presented in the accompanying
         financial statements.

         Carrying Value of Real Estate (Prior to adoption of Liquidation Basis
         of Accounting)

         In March 1995, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 121 "Accounting for the
         Impairment of Long-Lived Assets and for Long-Lived Assets to Be
         Disposed Of," ("FAS 121"). This Statement requires that if the General
         Partner believes factors are present that may indicate long-lived
         assets are impaired, the undiscounted cash flows, before debt service,
         related to the assets should be estimated. If these estimated cash
         flows are less than the carrying value of the asset, then impairment is
         deemed to exist. If impairment exists, the asset should be written down
         to the estimated fair value.

         Further, assets held for sale, including any unrecoverable accrued rent
         receivable or capitalized leasing commissions, were carried at the
         lower of carrying value or fair value less estimated selling costs. Any
         adjustment to carrying value was recorded as a valuation allowance
         against property held for sale. Each reporting period, the General
         Partner reviewed its estimates of fair value, which were decreased or
         increased up to the original carrying value. Finally, assets held for
         sale are no longer depreciated. The General Partner adopted FAS 121 at
         December 31, 1995 and the adoption did not have a material impact on
         the Partnership's operations or financial position, as prior to
         December 31, 1995, the Partnership had not had any properties held for
         sale.

         As noted above, as of December 31, 1995 the General Partner decided to
         account for the Partnership's properties as assets held for sale,
         instead of for investment. Assuming an average 12 month holding period,
         the General Partner compared the carrying value of each property to its
         appraised value as of January 1, 1996. If the carrying value of a
         property and certain related assets was greater than its appraised
         value, less selling costs, the General Partner reduced the carrying
         value of the property by the difference. Using this methodology, the
         General Partner determined that The Cornerstone, Ladera I Shopping
         Center, Terracentre, Arlington Executive Plaza and Washington Technical
         Center had carrying values greater than they had appraised values, and
         therefore reduced their carrying values by $1,600,000, $560,000,
         $590,000, $1,250,000 and $770,000 to $9,032,000, $6,234,000,
         $2,397,000, $2,740,000 and $2,612,000, respectively.

         Utilizing the same methodology, assuming a 12 month holding period, for
         the year ended December 31, 1996, the General Partner determined that
         The Cornerstone, Ladera-I Shopping Center and Oakpointe had carrying
         values greater than their respective appraised values. As a result, the
         carrying values were adjusted by $1,683,000, $398,000, and $253,000 to
         $8,960,000, $5,900,000, and $7,700,000, respectively. In addition,
         during 1996, the carrying values of Terracentre and Washington
         Technical Center were increased by $190,000 and


                                        9

<PAGE>   10

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)

(1)      Accounting Policies (Cont'd.)

         Carrying Value of Real Estate (Prior to adoption of Liquidation Basis
         of Accounting) (Cont'd.)

         $246,000 to their estimated fair values less selling costs of
         $2,900,000 and $3,020,000, respectively.

(2)      Transactions with Affiliates

         The Partnership has no employees and, accordingly, the General Partner
         and its affiliates perform services on behalf of the Partnership in
         connection with administering the affairs of the Partnership. The
         General Partner and affiliates are reimbursed for their general and
         administrative costs actually incurred and associated with services
         performed on behalf of the Partnership. For the three months ended
         September 30, 1997 and 1996, the Partnership incurred approximately
         $43,000 and $49,000, respectively, of such expenses. For the nine
         months there ended, such costs were $122,000 and $147,000,
         respectively.

         An affiliate of the General Partner provides property management
         services with respect to the Partnership's properties and receives a
         fee for such services not to exceed 3% of the gross receipts from the
         properties under management. Such fees amounted to approximately
         $42,000 and $46,000 for the three months ended September 30, 1997 and
         1996, respectively. For the nine months there ended, such fees were
         $123,000 and $135,000, respectively. In addition, an affiliate of the
         General Partner received $79,000 and $89,000 for the three months ended
         September 30, 1997 and 1996, respectively, as reimbursement of costs of
         on-site property management personnel and other reimbursable costs. For
         the nine months there ended, such costs were $236,000 and $284,000,
         respectively.

         As previously reported, on June 24, 1993, the Partnership completed its
         solicitation of written consents from its Limited Partners. A majority
         in interest of the Partnership's Limited Partners approved each of the
         proposals contained in the Information Statement dated May 5, 1993.
         Those proposals were implemented by the Partnership as contemplated by
         the Information Statement as amendments to the Partnership Agreement,
         and are reflected in these financial statements as such.

         The amended Partnership Agreement provides for the Partnership's
         payment to the General Partner of an annual asset management fee equal
         to .65% for 1997 and .75% for 1996 of the aggregate appraised value of
         the Partnership's properties as determined by independent appraisal
         undertaken in January of each year. Such fees for the three months
         ended September 30, 1997 and 1996, amounted to $61,000 and $76,000,
         respectively. For the nine months there ended, such fees were $184,000
         and $227,000, respectively.

         In addition, the amended Partnership Agreement provides for payment to
         the General Partner of a leasing fee for services rendered in
         connection with leasing space in a Partnership property after the
         expiration or termination of leases. Fees for leasing services for the
         three months ended September 30, 1997 and 1996,


                                       10

<PAGE>   11

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)

(2)      Transactions with Affiliates (Cont'd.)

         amounted to $16,000 and $5,000, respectively. For the nine months 
         there ended, such fees were $25,000 and $13,000, respectively.

(3)      Commitments and Contingencies

         Litigation

         The Partnership is not a party to any material pending legal
         proceedings other than ordinary routine litigation incidental to its
         business. It is the General Partner's belief that the outcome of these
         proceedings will not be material to the business or financial condition
         of the Partnership.

(4)      Accrued Expenses for Liquidation

         Accrued expenses for liquidation as of September 30, 1997, include
         estimates of costs to be incurred in carrying out the dissolution and
         liquidation of the Partnership. These costs include estimates of legal
         fees, accounting fees, tax preparation and filing fees, professional
         services, the general partner's liability insurance and the pre-payment
         penalty and remaining unamortized loan fees associated with the
         anticipated early retirement of the mortgage loan secured by the
         Certified Warehouse property. The actual costs could vary significantly
         from the related provisions due to the uncertainty related to the
         length of time required to complete the liquidation and dissolution and
         the complexities which may arise in disposing of the Partnership's
         remaining assets.


                                       11

<PAGE>   12

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         Liquidity and Capital Resources

         Since the completion of its acquisition program in September 1985, the
         Partnership has been primarily engaged in the operation of its
         properties. The Partnership's original objective had been to hold its
         properties as long-term investments. However, an Information Statement,
         dated May 5, 1993, mandated that the General Partner seek a vote of the
         Limited Partners no later than December 31, 1996, regarding prompt
         liquidation of the Partnership in the event that properties with
         appraised values as of January 1993 which constituted at least one half
         of the aggregate appraised values of all Partnership properties as of
         that date were not sold or under contract for sale by the end of 1996.
         Given the mandate of the May 5, 1993 Information Statement, as of
         December 31, 1995, the General Partner decided to account for the
         Partnership's properties as assets held for sale, instead of for
         investment. In a Consent Solicitation dated February 18, 1997, the
         Partnership solicited and received the consent of the Limited Partners
         on March 14, 1997 to dissolve the Partnership and sell and liquidate
         all of its remaining properties as soon as practicable, consistent with
         selling the Partnership's properties to the best advantage under the
         circumstances. The Partnership's properties were held for sale
         throughout 1996 and continue to be held for sale.

         Regular distributions through September 30, 1997 represent cash flow
         generated from operations of the Partnership's properties and interest
         earned on the temporary investment of working capital net of capital
         reserve requirements. In December 1996, the Partnership made a special
         distribution of $1,500,000, representing a portion of net proceeds from
         the sale of Arlington Executive Plaza. Future cash distributions will
         be made principally to the extent of cash flow attributable to
         operations and sales of the Partnership's properties and interest
         earned on the investment of capital reserves, after loan repayments,
         payment for capital improvements to the Partnership's properties and
         providing for capital reserves.

         Certain of the Partnership's properties are not fully leased. The
         Partnership is actively marketing the vacant space in these properties,
         subject to the competitive environment in each of the market areas. To
         the extent the Partnership is not successful in maintaining or
         increasing occupancy levels at these properties, the Partnership's
         future cash flow may be reduced.

         On July 30, 1993, the Partnership obtained a loan secured by a First
         Deed of Trust on the Certified Distribution Center in Salt Lake City,
         Utah. The loan, in the amount of $3,500,000, carries a fixed interest
         rate of 9% per annum over a 13-year fully amortizing term. The
         Partnership's first payment of $38,138.82 was paid on September 1,
         1993, with monthly installments due thereafter. Proceeds from that
         loan, along with $500,000 of Partnership cash reserves, were used to
         retire the Partnership's then existing debt of $4,000,000.

         In March 1996, the Partnership entered into a loan agreement pursuant
         to which it could borrow up to $1,500,000 (similar to a credit line
         arrangement), evidenced by a note secured by a first deed of trust and
         financing statement on the Ladera I Shopping Center in Albuquerque, New
         Mexico. Pursuant to the note and loan agreement, the Partnership
         borrowed $700,000 in March 1996. The


                                       12

<PAGE>   13

                      DAMSON/BIRTCHER REALTY INCOME FUND-I

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Cont'd.)

         Liquidity and Capital Resources (Cont'd.)

         net proceeds of the foregoing loan were used to fund a portion of the
         renovation and tenant improvements at The Cornerstone and tenant
         improvements at Oakpointe. The Partnership made interest only payments
         at the rate of 1% over prime (the loan rate was 9.25%) through November
         1996, when the entire balance was paid off utilizing a portion of the
         proceeds from the sale of Arlington Executive Plaza.

         The Partnership has the ability to borrow against this credit facility
         (up to $1,500,000) through March 31, 1999, should its cash requirements
         necessitate.

         Results of Operations for the Three Months Ended September 30, 1997

         Because the Partnership adopted the liquidation basis of accounting on
         March 31, 1997, a comparison of the results of operations is not
         practical. As the Partnership's assets (properties) are sold, the
         results of operations will be generated from a smaller asset base, and
         are therefore not comparable. The Partnership's operating results have
         been reflected on the Statement of Changes of Net Assets in Liquidation
         since March 31, 1997 (the date of adoption of the liquidation basis of
         accounting).

         For the three months ended September 30, 1997, the Partnership
         generated $859,000 of net operating income from operations of its
         properties. The slight decrease in net operating income for the three
         months ended September 30, 1997 when compared to the same period in
         1996 was primarily the result of the sale of Arlington Executive Plaza
         in November 1996 ($49,000), and an increase in property taxes at
         Oakpointe that resulted from a higher tax assessment in 1997
         ($114,000). These decreases were partially offset by higher rental
         income at Terracentre as a result of higher occupancy in 1997
         ($53,000)and an increase in operating expense recoveries at Oakpointe
         ($32,000).

         Interest income resulted from the temporary investment of Partnership
         working capital. For the three months ended September 30, 1997,
         interest income was approximately $8,000.

         General and administrative expenses for the three months ended
         September 30, 1997, include charges of $120,000 from the General
         Partner and its affiliates for services rendered in connection with
         administering the affairs of the Partnership and operating the
         Partnership's properties. Also included in general and administrative
         expenses for the three months ended September 30, 1997, are direct
         charges of $184,000, relating to audit fees, tax preparation fees,
         legal fees and professional services, liability insurance expenses,
         costs incurred in providing information to the Limited Partners and
         other miscellaneous costs.

         Accrued expenses for liquidation, as reflected in the Statement of Net
         Assets in Liquidation as of September 30, 1997, are not included in
         results of operations for the three month period ended March 31, 1997.
         The liquidation basis of accounting was adopted on March 31, 1997,
         therefore, it was not


                                       13

<PAGE>   14

                      DAMSON/BIRTCHER REALTY INCOME FUND-I



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Cont'd.)

         Liquidity and Capital Resources (Cont'd.)

         appropriate to include such adjustments in the results of operations
         for prior periods.

         Interest expense resulted from interest on the first deed of trust on
         Certified Distribution Center.


                                       14

<PAGE>   15

                      DAMSON/BIRTCHER REALTY INCOME FUND-I

                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         So far as is known to the General Partner, neither the Partnership nor
         its properties are subject to any material pending legal proceedings.

         On March 25, 1997, a limited partner named Bigelow/Diversified
         Secondary Partnership Fund 1990 filed a purported class action lawsuit
         in the Court of Common Pleas of Philadelphia County against
         Damson/Birtcher Partners, Birtcher Investors, Birtcher/Liquidity
         Properties, Birtcher Investments, L.F. Special Fund II, L.P., L.F.
         Special Fund I, L.P., Arthur Birtcher, Ronald Birtcher, Robert
         Anderson, Richard G. Wollack and Brent R. Donaldson alleging breach of
         fiduciary duty and breach of contract and seeking to enjoin the Consent
         Solicitation dated February 18, 1997. On April 18, 1997, the court
         denied the plaintiff's motion for a preliminary injunction. On June 10,
         1997, the court dismissed the plaintiff's complaint on the basis of
         lack of personal jurisdiction and forum non conveniens.
                                           --------------------

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits:

             27 - Financial Data Schedule

         (b) Reports on Form 8-K:

             None filed in quarter ended September 30, 1997.



                                       15

<PAGE>   16

                      DAMSON/BIRTCHER REALTY INCOME FUND-I

                                   SIGNATURES

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


                                   DAMSON/BIRTCHER REALTY INCOME FUND-I


By: DAMSON/BIRTCHER PARTNERS       By: BIRTCHER PARTNERS,
    (General Partner)                  a California general partnership

                                       By: BIRTCHER INVESTMENTS,
                                           a California general partnership,
                                           General Partner of Birtcher Partners

                                           By: BIRTCHER LIMITED,
                                               a California limited partnership,
                                               General Partner of Birtcher 
                                               Investments

                                               By: BREICORP,
                                                   a California corporation,
                                                   formerly known as Birtcher
                                                   Real Estate Inc., General
                                                   Partner of Birtcher Limited

Date: November 13, 1997                            By: /s/Robert M. Anderson
                                                       ---------------------
                                                       Robert M. Anderson
                                                       Executive Director
                                                       BREICORP

                                  By: LF Special Fund II, L.P.,
                                      a California limited partnership

                                      By: Liquidity Fund Asset Management, Inc.,
                                          a California corporation, General
                                          Partner of LF Special Fund II, L.P.

Date: November 13, 1997                   By: /s/ Brent R. Donaldson
                                              ----------------------
                                              Brent R. Donaldson
                                              President
                                              Liquidity Fund Asset Management, 
                                              Inc.


                                       16


<PAGE>   17

                                 EXHIBIT INDEX

                                                              SEQUENTIALLY
EXHIBIT                                                         NUMBERED
NUMBER           DESCRIPTION                                      PAGE
-------          -----------                                  ------------
  27             Financial Data Schedule