<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, 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 JUNE 30, 1997
                    -----------------------------------------


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

Item 1.   Financial Statements

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

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

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

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

          Statement of Cash Flows (Unaudited) -
          Six Months Ended June 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
                                  JUNE 30, 1997
                                   (UNAUDITED)
                     --------------------------------------

<TABLE>
<CAPTION>

ASSETS (Liquidation Basis):
---------------------------
<S>                                                                  <C>        
Properties held for sale                                             $35,579,000

Cash and cash equivalents                                                729,000
Accounts receivable                                                      124,000
Other assets                                                             110,000
                                                                     -----------
    Total Assets                                                      36,542,000
                                                                     -----------
LIABILITIES (Liquidation Basis):
-------------------------------

Accounts payable and accrued liabilities                                 920,000
Secured loan payable                                                   2,833,000
Accrued expenses for liquidation                                         708,000
                                                                     -----------
    Total Liabilities                                                  4,461,000
                                                                     -----------
Net Assets in Liquidation                                            $32,081,000
                                                                     ===========
</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 APRIL 1, 1997 TO JUNE 30, 1997
                                   (UNAUDITED)
               --------------------------------------------------

<TABLE>

<S>                                                                <C>         
Net assets in liquidation at March 31, 1997                        $ 32,002,000

Increase (decrease) during period:
    Operating activities:
           Property operating income, net                               796,000
           Interest income                                                9,000
           General and administrative expenses                         (357,000)
           Interest expense on mortgage payable                         (64,000)
           Leasing commissions                                          (49,000)
                                                                   ------------
                                                                        335,000
                                                                   ------------
    Liquidating activities:
           Distribution to partners                                    (256,000)
                                                                   ------------
                                                                       (256,000)

Net increase in assets in liquidation                                    79,000
                                                                   ------------
Net assets in liquidation at June 30, 1997                         $ 32,081,000
                                                                   ============
</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>

<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     Six Months
                                     Ended             Ended           Ended
                                 March 31, 1997    June 30, 1996   June 30, 1996
                                 --------------    -------------   -------------
<S>                               <C>               <C>             <C>        
REVENUES

Rental income                     $ 1,479,000       $ 1,597,000     $ 3,146,000
Interest income                        10,000             2,000           3,000
                                  -----------       -----------     -----------
    Total revenues                  1,489,000         1,599,000       3,149,000
                                  -----------       -----------     -----------
EXPENSES

Operating expenses                    377,000           452,000         889,000
Real estate taxes                     201,000            88,000         338,000
Amortization                           70,000            44,000          84,000
General and administrative            369,000           244,000         478,000
Interest                               66,000            86,000         156,000
Adjustment to carrying value of
    real estate                             -           386,000       1,535,000
                                  -----------       -----------     -----------
    Total expenses                  1,083,000         1,300,000       3,480,000
                                  -----------       -----------     -----------
NET INCOME (LOSS)                 $   406,000       $   299,000     $  (331,000)
                                  ===========       ===========     ===========
NET INCOME (LOSS) ALLOCABLE TO:

    General Partner               $     4,000       $     3,000     $    (3,000)
                                  ===========       ===========     ===========
    Limited Partners              $   402,000       $   296,000     $  (328,000)
                                  ===========       ===========     ===========
</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>

                                                                    Six Months
                                                                       Ended
                                                                   June 30, 1996
                                                                   -------------
<S>                                                                 <C>         
Cash flows from operating activities:
    Net loss                                                        $  (331,000)
Adjustments to reconcile net loss to
  net cash provided by operating
  activities:
    Amortization                                                         84,000
Adjustment to carrying value of real estate                           1,535,000
Changes in:
    Accounts receivable                                                   5,000
    Prepaid expenses and other assets                                   (85,000)
    Accrued rent receivable                                             (40,000)
    Accounts payable and accrued liabilities                           (252,000)
                                                                    -----------
Net cash used in operating activities                                  (916,000)

Cash flows from investing activities:
    Investments in real estate                                       (1,572,000)
                                                                    -----------
Net cash used in investing activities                                (1,572,000)

Cash flows from financing activities:
    Proceeds from secured loan payable                                  700,000
    Secured loan payable                                                (90,000)
    Distributions                                                             -
                                                                    -----------
Net cash provided by financing activities                               610,000

Net decrease in cash and cash equivalents                               (46,000)

Cash and cash equivalents, beginning of period                          301,000
                                                                    -----------
Cash and cash equivalents, end of period                            $   255,000
                                                                    ===========
</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 June 30, 1997 and 1996, the
      Partnership incurred approximately $45,000 and $51,000, respectively, of
      such expenses. For the six months there ended, such costs were $79,000 and
      $98,000, 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 $40,000 and $45,000 for
      the three months ended June 30, 1997 and 1996, respectively. For the six
      months there ended, such fees were $81,000 and $89,000, respectively. In
      addition, an affiliate of the General Partner received $78,000 and
      $106,000 for the three months ended June 30, 1997 and 1996, respectively,
      as reimbursement of costs of on-site property management personnel and
      other reimbursable costs. For the six months there ended, such costs were
      $157,000 and $195,000, 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 June 30,
      1997 and 1996, amounted to $61,000 and $76,000, respectively. For the six
      months there ended, such fees were $122,000 and $151,000, 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, 1997 and 1996, amounted to $9,000 and $3,000, respectively.
      For the six months there ended, such fees were $9,000 and $8,000,
      respectively.

                                       10

<PAGE>   11


                      DAMSON/BIRTCHER REALTY INCOME FUND-I


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

(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 June 30, 1997, 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 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 June 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.)

      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 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 has the abilitiy to borrow
      against this credit facilty (up to $1,500,000) through March 3 1999,
      should its cash requirements necessitate.

      Results of Operations for the Three Months Ended June 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 June 30, 1997, the Partnership generated
      $796,000 of net operating income from operations of its properties. The
      decrease in net operating income for the three months ended June 30, 1997
      when compared to the same period in 1996 is primarily the result of the
      following: 1)the sale of Arlington Executive Plaza in November 1996
      ($113,000); 2) a tax adjustment that reduced property taxes in 1996 as a
      result of a tax appeal at Oakpointe ($71,000); and, 3) a decrease in
      rental income at The Cornerstone ($70,000) that resulted from lower
      occupancy in 1997.

      Interest income resulted from the temporary investment of Partnership
      working capital. For the three months ended June 30, 1997, interest income
      was approximately $9,000.

      General and administrative expenses for the three months ended June 30,
      1997, 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, 1997, are direct charges of $243,000, 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 June 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 appropriate to include such adjustments in the results of
      operations for prior periods.

                                       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.)

      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, 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

<TABLE>

<S>                                           <C> 
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 12, 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:    August 12, 1997                                   By:   /s/ BRENT R. DONALDSON
                                                                 -------------------------------------
                                                                 Brent R. Donaldson
                                                                 President
                                                                 Liquidity Fund Asset Management, Inc.
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