<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     --------------------------------------


For Quarter Ended           June 30, 1998
                 --------------------------------------------------------------


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)


                                 (949) 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 JUNE 30, 1998
                    ----------------------------------------

                                      INDEX
                                      -----



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

Item 1.           Financial Statements

                  Statements of Net Assets in Liquidation - June 30, 1998 (Unaudited)
                  and December 31, 1997 (Audited)......................................................     3

                  Statements of Changes of Net Assets in Liquidation -
                  Three Months Ended June 30, 1998 and 1997 and Six Months Ended
                  June 30, 1998(Unaudited).............................................................     4

                  Statement of Operations (Unaudited) -
                  Three Months Ended March 31, 1997....................................................     5

                  Statement of Cash Flows (Unaudited) -
                  Three Months Ended March 31, 1997....................................................     6

                  Notes to Financial Statements (Unaudited)............................................     7

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations........................................    11


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




                                       2
<PAGE>   3

                          PART I. FINANCIAL INFORMATION


ITEM 1.           FINANCIAL STATEMENTS


                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                     STATEMENTS OF NET ASSETS IN LIQUIDATION


<TABLE>
<CAPTION>
                                                      June 30,       December 31,
                                                        1998             1997
                                                    -----------      -----------
                                                    (unaudited)
<S>                                                 <C>              <C>        
ASSETS (Liquidation Basis):
---------------------------

Properties                                          $34,082,000      $36,090,000

Cash and cash equivalents                               162,000          461,000
Accounts receivable                                      81,000          100,000
Other assets                                            145,000           99,000
                                                    -----------      -----------

    Total Assets                                     34,470,000       36,750,000
                                                    -----------      -----------

LIABILITIES (Liquidation Basis):
--------------------------------

Accounts payable and accrued liabilities                877,000          945,000
Secured loan payable                                  2,622,000        2,730,000
Accrued expenses for liquidation                      1,049,000        1,049,000
                                                    -----------      -----------

    Total Liabilities                                 4,548,000        4,724,000
                                                    -----------      -----------

Net Assets in Liquidation                           $29,922,000      $32,026,000
                                                    ===========      ===========
</TABLE>



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




                                       3

<PAGE>   4

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
               STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)
               --------------------------------------------------



<TABLE>
<CAPTION>
                                              Three Months     Three Months       Six Months
                                                 Ended            Ended             Ended
                                             June 30, 1998    June 30, 1997      June 30, 1998
                                             ------------      ------------      ------------
<S>                                          <C>               <C>               <C>         
Net assets in liquidation at beginning
of period                                    $ 32,052,000      $ 32,002,000      $ 32,026,000
Increase (decrease) during period:
  Operating activities:
    Property operating income, net                911,000           796,000         1,592,000
    Interest income                                 1,000             9,000             6,000
    General and administrative expenses          (273,000)         (357,000)         (507,000)
    Interest expense on mortgage payable          (59,000)          (64,000)         (121,000)
    Leasing commissions                          (110,000)          (49,000)         (218,000)
                                             ------------      ------------      ------------

                                                  470,000           335,000           752,000
                                             ------------      ------------      ------------

Liquidating activities:
    Adjustment to the carrying value
     of properties in liquidation              (2,600,000)               --        (2,600,000)
    Distributions to partners                          --          (256,000)         (256,000)
                                             ------------      ------------      ------------

                                               (2,600,000)         (256,000)       (2,856,000)
                                             ------------      ------------      ------------

Net (decrease)increase in assets
 in liquidation                                (2,130,000)           79,000        (2,104,000)
                                             ------------      ------------      ------------

Net assets in liquidation at end
of period                                    $ 29,922,000      $ 32,081,000      $ 29,922,000
                                             ============      ============      ============
</TABLE>


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



                                        4

<PAGE>   5

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



<TABLE>
<CAPTION>
                                                                        For the
                                                                      Three Months
                                                                         Ended
                                                                        3/31/97
                                                                      ----------
<S>                                                                   <C>       
REVENUES

Rental income                                                         $1,479,000
Interest income                                                           10,000
                                                                      ----------

   Total revenues                                                      1,489,000
                                                                      ----------

EXPENSES

Operating expenses                                                       377,000
Real estate taxes                                                        201,000
Amortization                                                              70,000
General and administrative                                               369,000
Interest                                                                  66,000
                                                                      ----------

   Total expenses                                                      1,083,000
                                                                      ----------

NET INCOME                                                            $  406,000
                                                                      ==========

NET INCOME ALLOCABLE TO:

   General Partner                                                    $    4,000
                                                                      ==========

   Limited Partners                                                   $  402,000
                                                                      ==========
</TABLE>





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


                                       5


<PAGE>   6

                      DAMSON/BIRTCHER REALTY INCOME FUND-I
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                      ------------------------------------



<TABLE>
<CAPTION>
                                                                       For the
                                                                     Three Months
                                                                        Ended
                                                                    March 31, 1997
                                                                    --------------
<S>                                                                   <C>      
Cash flows from operating activities:
    Net income                                                        $ 406,000
Adjustments to reconcile net income to
  net cash provided by operating activities:
    Amortization                                                         70,000
Changes in:
    Accounts receivable                                                 (48,000)
    Prepaid expenses and other assets                                   112,000
    Accrued rent receivable                                               6,000
    Accounts payable and accrued liabilities                           (146,000)
                                                                      ---------
Net cash provided by operating activities                               400,000

Cash flows from investing activities:
    Investments in real estate                                          (34,000)
                                                                      ---------
Net cash used in investing activities                                   (34,000)

Cash flows from financing activities:
    Principal payments on secured loan payable                          (49,000)
    Distributions                                                      (255,000)
                                                                      ---------
Net cash used in financing activities                                  (304,000)

Net increase in cash and cash equivalents                                62,000

Cash and cash equivalents, beginning of period                          711,000
                                                                      ---------

Cash and cash equivalents, end of period                              $ 773,000
                                                                      =========
</TABLE>

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


                                       6


<PAGE>   7

                      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, 1997.

         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 adopted the liquidation basis of accounting as
         of March 31, 1997. The liquidation basis of accounting is appropriate
         when liquidation appears imminent, the Partnership can no longer be
         classified as a going concern and the net realizable values of the
         Partnership's assets are reasonably determinable. 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 of operations to prior years through
         March 31, 1997, therefore, is not practical. The Statements of Net
         Assets in Liquidation and Statements 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.

         On April 30, 1998, the General Partner accepted an offer to purchase
         all of the Partnership's properties for $39,140,000, subject to
         customary contingencies, including due diligence review by the
         purchaser and negotiation of a definitive Purchase and Sale Agreement
         (the "Purchase Offer"). At that time, the buyer anticipated closing
         the transaction in approximately 60-90 days.

         Since that time, the General Partner and buyer have been working to
         finalize a definitive Purchase and Sale Agreement, but have not yet


                                       7
<PAGE>   8

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


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

(1)      Accounting Policies (Cont'd.)

         Liquidation Basis of Accounting (Cont'd.)

         completed that negotiation. The most significant open issue is the
         purchase price, which in the Purchase Offer was based upon certain
         assumptions concerning existing occupancy, the lease-up of vacant space
         and the required capital expenditures to complete the lease-up.

         Several of the Partnership's properties, including The Cornerstone (76%
         leased), Certified Distribution Center (39% leased), Ladera-I Shopping
         Center (80% leased) and Oakpointe (91% leased) have not performed to
         expectations. As a consequence, the buyer has reduced its offer, based
         upon lower than expected revenue and the anticipated cost to
         reconfigure, build out and lease-up these properties. The parties are
         therefore likely to agree to a final purchase price between $33,000,000
         and $35,000,000 and are negotiating a formula to credit the Partnership
         should any space be leased before the final closing of the sale.

         The General Partner believes that the parties will reach agreement and
         currently anticipates finalization of a definitive Purchase and Sale
         Agreement by August 31, 1998. Once that is accomplished, the General
         Partner estimates that closing will take approximately 45-75 additional
         days. In the interim, the General Partner will be working to lease-up
         the vacant space.

         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 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.

(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 June
         30, 1998 and 1997, the Partnership incurred approximately $50,000 and
         $45,000, respectively. For the six months there ended, such expenses
         were $90,000 and $79,000, respectively.


                                       8
<PAGE>   9

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


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

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

         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
         $44,000 and $40,000 for the three months ended June 30, 1998 and 1997,
         respectively. For the six months there ended, these fees amounted to
         $85,000 and $81,000, respectively. In addition, an affiliate of the
         General Partner received $87,000 and $78,000 for the three months ended
         June 30, 1998 and 1997, respectively, as reimbursement of costs of
         on-site property management personnel and other reimbursable costs. For
         the six months there ended, such reimbursements were $161,000 and
         $157,000, 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 .55% for 1998 and .65% for 1997 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 June 30, 1998 and 1997, amounted to $52,000 and $61,000,
         respectively. For the six months there ended, these fees amounted to
         $105,000 and $122,000, 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 June 30, 1998 and 1997, amounted to $12,000 and
         $9,000, respectively. For the six months there ended, such fees were
         $35,000 and $9,000, respectively.

(3)      Commitments and Contingencies

         Litigation

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

(4)      Accrued Expenses for Liquidation

         Accrued expenses for liquidation as of June 30, 1998, 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, other professional
         services, the general partner's liability insurance and the pre-payment
         penalty associated with the anticipated early retirement of the
         mortgage loan secured by the Certified Distribution Center property.
         The actual costs could vary significantly from the related provisions
         due to the uncertainty related


                                       9
<PAGE>   10

                      DAMSON/BIRTCHER REALTY INCOME FUND-I


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

(4)      Accrued Expenses for Liquidation (Cont'd.)

         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.


                                       10
<PAGE>   11

                      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 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 1997 and
         continue to be held for sale.

         On April 30, 1998, the General Partner accepted an offer to purchase
         all of the Partnership's properties for $39,140,000, subject to
         customary contingencies, including due diligence review by the
         purchaser and negotiation of a definitive Purchase and Sale Agreement
         (the "Purchase Offer"). At that time, the buyer anticipated closing the
         transaction in approximately 60-90 days.

         Since that time, the General Partner and buyer have been working to
         finalize a definitive Purchase and Sale Agreement, but have not yet
         completed that negotiation. The most significant open issue is the
         purchase price, which in the Purchase Offer was based upon certain
         assumptions concerning existing occupancy, the lease-up of vacant space
         and the required capital expenditures to complete the lease-up.

         Several of the Partnership's properties, including The Cornerstone (76%
         leased), Certified Distribution Center (39% leased), Ladera-I Shopping
         Center (80% leased) and Oakpointe (91% leased) have not performed to
         expectations. As a consequence, the buyer has reduced its offer, based
         upon lower than expected revenue and the anticipated cost to
         reconfigure, build out and lease-up these properties. The parties are
         therefore likely to agree to a final purchase price between $33,000,000
         and $35,000,000 and are negotiating a formula to credit the Partnership
         should any space be leased before the final closing of the sale.

         The General Partner believes that the parties will reach agreement and
         currently anticipates finalization of a definitive Purchase and Sale
         Agreement by August 31, 1998. Once that is accomplished, the General
         Partner estimates that closing will take approximately 45-75 additional
         days. In the interim, the General Partner will be working to lease-up
         the vacant space.

         The prospective buyer (the "Purchaser") is Abbey Investments, Inc., an


                                       11
<PAGE>   12

                      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.)

         affiliate of The Abbey Company. The Abbey Company is a Southern
         California-based real estate operating company founded in 1990. The
         Purchaser is not affiliated in any way with the Partnership or the
         General Partner, or any of the General Partner's principals or
         affiliates.

         The Purchaser currently does not own or operate real property outside
         of Southern California. Therefore, it is seeking to negotiate a
         property management agreement with Birtcher to manage the properties
         after the closing.

         In contemplation of the proposed transaction, the General Partner has
         reduced the carrying value of properties in liquidation by $2,600,000
         at June 30, 1998. However, there can be no assurance that the proposed
         sale of the properties will be completed.

         Regular distributions through June 30, 1998 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.

         During 1998, the Partnership spent approximately $592,000 on tenant and
         capital improvements for The Cornerstone, Ladera, Terracentre and
         Certified Distribution Center. In addition, leasing commissions of
         approximately $218,000 were incurred for Certified Distribution Center,
         The Cornerstone, Terracentre and Washington Technical Center. These
         expenditures contributed to an overall reduction of the Partnership's
         cash reserves from $461,000 at the beginning of the year to $162,000 as
         of June 30, 1998. The Partnership has begun to replenish these
         reserves, but based upon currently budgeted revenues and expenses, it
         will not make a distribution of cash from operations to its limited
         partners this quarter.

         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.

         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 and a
         prepayment penalty of approximately $600,000 at current interest rates,
         if fully paid off after July 1, 1998.

         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 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


                                       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.)

         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 June 30, 1998

         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 June 30, 1998, the Partnership generated
         $911,000 of net operating income from operations of its properties. The
         increase in net operating income for the three months ended June 30,
         1998 when compared to the same period in 1997 was primarily
         attributable to an increase in rental income and the collection of an
         early lease termination fee at The Cornerstone ($241,000). The
         aforementioned increases were partially offset by a decrease in rental
         income at Certified Distribution Center ($131,000) that resulted from 
         lower occupancy in 1998.

         In September and November 1997, Certified Warehouse and Transfer
         Company, Inc. vacated Certified Distribution Center. Although the
         General Partner successfully completed negotiation of a 123,074 square
         foot lease with Quality Distribution effective March 1, 1998 at a rate
         greater than before, the remaining 189,115 square foot vacancy will
         have a negative impact on future distributions of cash from operations
         to the Limited Partners.

         Interest income resulted from the temporary investment of Partnership
         working capital. For the three months ended June 30, 1998, interest
         income was approximately $1,000.

         General and administrative expenses for the three months ended June 30,
         1998, include charges of $114,000 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 June 30, 1998, are direct charges of $159,000, 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.

         The decrease in general and administrative expenses for the three
         months ended June 30, 1998, as compared to the corresponding period in
         1997, was primarily attributable to the decrease in legal, professional
         services and mailing costs associated with the Partnership's
         solicitation of the Limited Partners consent for the liquidation of the
         Partnership in March 1997.


                                       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.)

         Results of Operations for the Three Months Ended June 30, 1998
         (Cont'd.)

         Accrued expenses for liquidation, as reflected in the Statements of Net
         Assets in Liquidation since March 31, 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 appropriate to include such adjustments in the
         results of operations for prior periods. Accrued expenses for
         liquidation as of June 30, 1998, includes 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
         associated with the anticipated early retirement of the mortgage loan
         secured by the Certified Distribution Center 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.

         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 June 30, 1998.



                                       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:  August 10, 1998                            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:    August 10, 1998                  By: /s/ Brent R. Donaldson
                                              -------------------------
                                              Brent R. Donaldson
                                              President
                                              Liquidity Fund Asset 
                                              Management, Inc.


                                       16
<PAGE>   17

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number          Description
------          -----------
<C>             <S>
  27            Financial Data Schedule
</TABLE>