<PAGE>
                                                        Exhibit 21 - Page 1 of 9

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
Phoenix Leasing Incorporated:

We have audited the accompanying  consolidated balance sheets of Phoenix Leasing
Incorporated (a California corporation) and subsidiaries as of June 30, 1995 and
1994.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our  opinion,  the  consolidated  balance  sheets  referred to above  present
fairly,  in all material  respects,  the financial  position of Phoenix  Leasing
Incorporated  and  subsidiaries as of June 30, 1995 and 1994, in conformity with
generally accepted accounting principles.



San Francisco, California                                    ARTHUR ANDERSEN LLP
     September 8, 1995


<PAGE>


                                                        Exhibit 21 - Page 2 of 9

                  PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                              June 30,
                                                         1995          1994
                                                         ----          ----

Cash and cash equivalents                             $ 4,100,325  $ 5,880,532
Investments in marketable securities, at cost           7,298,771        2,923
Trade accounts receivable, net of allowance for
   doubtful accounts of $237,458 and $167,837 at
   June 30, 1995 and 1994, respectively                   913,437      748,958
Receivables from Phoenix Leasing Partnerships and
   other affiliates                                     3,975,262    5,806,921
Notes receivable from related party                     5,574,452    5,714,493
Equipment subject to lease                             17,044,686    2,118,116
Investments in Phoenix Leasing Partnerships             1,577,419      685,130
Property and equipment, net of accumulated
   depreciation and amortization of $10,457,763 and
   $9,698,164 at June 30, 1995 and 1994, respectively   7,669,302    7,771,869
Other assets                                            2,366,983    1,722,230
                                                      -----------  -----------
         Total Assets                                 $50,520,637  $30,451,172
                                                      ===========  ===========

                      LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:

Short-term lines of credit                            $      --    $   750,000
Warehouse line of credit                               17,644,012         --
Payables to affiliates                                  5,832,765    2,812,408
Accounts payable and accrued expenses                   2,829,490    2,261,982
Deferred revenue                                        1,059,736      869,638
Long-term debt                                            229,390      421,756
Deficit in investments in Phoenix Leasing
   Partnerships                                         1,164,445    1,806,110
                                                      -----------  -----------
         Total Liabilities                             28,759,838    8,921,894
                                                      -----------  -----------
Minority Interests in Consolidated Subsidiaries            37,639      161,072
                                                      -----------  -----------

Commitments and Contingencies (Note 12)

Shareholder's Equity:

Common stock, no par value, 30,000,000 shares
   authorized, 5,433,600 shares issued and
   outstanding at June 30, 1995 and 1994,
   respectively                                            20,369       20,369
Additional capital                                      5,508,800    5,508,800
Retained earnings                                      16,193,991   15,839,037
                                                      -----------  -----------
         Total Shareholder's Equity                    21,723,160   21,368,206
                                                      -----------  -----------
         Total Liabilities and Shareholder's Equity   $50,520,637  $30,451,172
                                                      ===========  ===========

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

<PAGE>


                                                        Exhibit 21 - Page 3 of 9

                 PHOENIX LEASING INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 1995


Note 1.  Summary of Significant Accounting Policies:

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

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

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

     Three of the consolidated  subsidiaries are California limited partnerships
(the  Partnerships)  which are general  partners of three of the Phoenix Leasing
Partnerships.  As of June 30,  1995,  the  Company  held a 50%  general  partner
ownership interest in two of the Partnerships and a 62.5% interest in the third.
Under the terms of the partnership  agreements,  profits and losses attributable
to acquisition fees paid to the Partnerships  from Phoenix Leasing  Partnerships
are allocated to the limited partner (the minority owner in the Partnerships) in
proportion to the limited partner's  ownership  interest.  All remaining profits
and losses are allocated to the Company.  Distributions to the partners are made
in accordance with the terms of the partnership  agreement.  The limited partner
of each of the  Partnerships  is Lease  Management  Associates,  Inc.,  a Nevada
corporation controlled by an officer of the Company, who is the owner of PAI.

     c. Management,  Acquisition and Incentive Fee Income - As of June 30, 1995,
the Company is the corporate  general partner in 17 actively  operating  limited
partnerships and manager of 13 actively  operating joint ventures,  all of which
own and lease equipment.  Nine of the partnership agreements provide for payment
of management fees based on partnership  revenues and acquisition  fees when the
partnerships' assets are acquired.  Seven of the limited partnership  agreements
provide for payment of  management  fees and  liquidation  fees (see  discussion
later in this footnote). One of the partnership agreements provides for a fee to
be paid to the Company based on a percentage of the equity proceeds  received by
the  partnership  and a  percentage  of net  income.  Most of the joint  venture
agreements  provide  for a payment of  management  fees  based on joint  venture
revenues.

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

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

     e.  Liquidation  Fee Income - The  Company  earns  liquidation  fees not to
exceed 15% of the net  contributed  capital  from seven of the  partnerships  in
consideration  for the services and activities  performed in connection with the
disposition of the  partnerships'  assets.  Management of the Company  concluded
that the total liquidation fees to be earned over the life of these partnerships
may not be fully realizable. Accordingly, the Company recognizes liquidation fee
income when the fees are paid by the partnerships.


<PAGE>


                                                        Exhibit 21 - Page 4 of 9

The Company  received and  recognized  $3,221,000  and $3,929,000 in liquidation
fees from  these  partnerships  during the years  ended June 30,  1995 and 1994,
respectively.

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

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

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

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

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

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

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

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

     k.  Reclassification  - Certain 1994  balances  have been  reclassified  to
conform to the 1995 presentation.

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

     Receivables from Phoenix Leasing  Partnerships and other affiliates consist
of the following:

                                                                 June 30,
                                                             1995        1994
                                                             ----        ----

    Management fees ...................................  $  330,158  $  846,027
    Acquisition fees ..................................     102,994     514,685
    Other receivables from Phoenix Leasing Partnerships   3,535,110   3,828,069
    Receivable from PAI ...............................        --       483,800
    Other receivables from corporate affiliates .......       7,000     134,340
                                                         -----------  ---------

                                                         $3,975,262  $5,806,921
                                                         ==========  ==========

Note 3.  Investments in Phoenix Leasing Partnerships:

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



<PAGE>


                                                        Exhibit 21 - Page 5 of 9

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

     The  activity in the  investments  in Phoenix  Leasing  Partnerships  is as
follows:

                                                      Year Ended June 30,
                                                      1995          1994
                                                      ----          ----

    Balance, beginning of year ............      $(1,120,980)   $  (945,797)

      Additional investments ..............          688,615           --
      Equity in earnings ..................        2,412,056      1,213,974
      Cash distributions ..................       (1,566,717)    (1,389,157)
                                                 -----------    -----------

    Balance, end of year ..................      $   412,974    $(1,120,980)
                                                 ===========    ===========

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

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

     The aggregate positive investment and aggregate deficit investment balances
are presented separately on the balance sheets as of June 30, 1995 and 1994.

     The partnerships  own and lease equipment.  All debt of the partnerships is
secured by the equipment and is without  recourse to the general  partners.  The
unaudited  financial  statements  of  the  partnerships  reflect  the  following
combined,  summarized  financial  information  as of June  30,  1995 and for the
twelve months then ended:

    Assets ...........................................          $215,090,000
    Liabilities ......................................            39,956,000
    Partners' Capital ................................           175,134,000
    Revenue ..........................................            62,093,000
    Net Income .......................................            18,280,000

Note 4.  Equipment Subject to Lease:

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

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

                                                          1995          1994
                                                          ----          ----

    Leverage leases .............................     $ 1,696,703    $1,990,343
    Investment in financing leases ..............      13,284,177          --
    Notes receivable ............................       2,063,806       127,773
                                                      -----------    ----------

                                                      $17,044,686    $2,118,116
                                                      ===========    ==========



<PAGE>


                                                        Exhibit 21 - Page 6 of 9

     Leverage Leases:

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

                                                      June 30,      June 30,
                                                        1995          1994

Rental receivable (net of principal and interest
     on the nonrecourse debt) ..................    $      --       $      --
Estimated residual value of leased assets ......      2,759,783       3,268,772
Less: Unearned and deferred income .............     (1,063,080)     (1,278,429)
                                                    -----------     -----------

Investment in leveraged leases .................      1,696,703       1,990,343
Less: Deferred taxes arising from
        leveraged leases .......................     (2,960,190)     (2,773,840)
                                                    -----------     -----------

Net investment in leveraged leases .............    $(1,263,487)    $  (783,497)
                                                    ===========     ===========

     Investment in Financing Leases:

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

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

                                                             June 30,
                                                               1995

    Minimum lease payments to be received ............     $ 17,731,628
    Less: unearned income ............................       (4,447,451)
                                                           ------------

    Net investment in financing leases ...............     $ 13,284,177
                                                           ============

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

    1996 .............................................     $ 4,478,150
    1997 .............................................       4,502,090
    1998 .............................................       4,422,824
    1999 .............................................       2,829,532
    2000 .............................................       1,475,565
    2001 and thereafter ..............................          23,467
                                                           -----------

        Total ........................................     $17,731,628
                                                           ===========

     Notes Receivable:

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

                                                        1995           1994
                                                        ----           ----

Notes  receivable  from  emerging  growth
and other  companies  with stated interest
ranging from 10% to 18% per annum receivable
in installments ranging from 36 to 60 months,
collateralized by the equipment financed ....         $2,063,806     $127,773
                                                      ==========     ========


Note 5.  Property and Equipment:

     Major classes of property and equipment are as follows:


<PAGE>


                                                        Exhibit 21 - Page 7 of 9

                                                             June 30,
                                                       1995             1994
                                                       ----             ----

    Land .........................................$  1,077,830     $  1,077,830
    Buildings ....................................   7,345,648        7,336,424
    Office furniture, fixtures and equipment .....   8,259,319        7,968,786
    Other ........................................     766,975          534,303
                                                  ------------     ------------

                                                    17,449,772       16,917,343
    Less accumulated depreciation and amortization (10,457,763)      (9,698,164)
    Inventory held for resale ....................     677,293          552,690
                                                  ------------     ------------

    Net Property and Equipment ...................$  7,669,302     $  7,771,869
                                                  ============     ============

     PAI owns its own  headquarters  building  in San  Rafael,  California.  The
Company paid  $7,749,476 to purchase the land and  construct  the building.  The
cost of construction  was paid for with a combination of $2,749,476 in cash from
the  Company's  operations  and a $5,000,000  advance  from PAI. The  $5,000,000
advance  is  included  as  a  reduction  in  receivable   from  Phoenix  Leasing
Partnerships  and other  affiliates.  PAI has  pledged  the market  value of the
building as security for a $5,000,000  Industrial Revenue Bond ("IDB") which PAI
has with the City of San Rafael, California. The principal of the IDB is payable
in a lump sum payment on October 1, 2004. The Company paid $206,798 and $156,129
in interest  payments related to the IDB during the year ended June 30, 1995 and
1994, respectively.

     As of June 30,  1995,  a portion  of the  Company's  headquarters  has been
leased to third parties. The remaining lease term is for 2 years and the minimum
lease payments receivable are as follows:

    1996 .............................................     $537,882
    1997 .............................................      362,901
                                                           --------

         Total .......................................     $900,783
                                                           ========


Note 6.  Investments in Marketable Securities:

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

     The  Company  holds  $7,000,000  face  value U.S.  Treasury  Notes with the
contractual maturities of these debt securities as of June 30, 1995 as follows:

                                                       Amortized     Estimated
                                                         Costs       Fair Value

    Due in one year or less .....................     $4,202,115     $4,214,051
    Due in one through five years ...............      3,096,656      3,142,908
                                                      ----------     ----------

    Total debt securities .......................     $7,298,771     $7,356,959
                                                      ==========     ==========


Note 7.  Short-Term and Warehouse Lines of Credit:

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



<PAGE>


                                                        Exhibit 21 - Page 8 of 9

     As of June 30, 1995, the Company, through PAI, had access to one short-term
line of credit totaling $2.5 million all of which was available for borrowing at
June 30,  1995.  Draw downs under this credit line are secured by the  Company's
receivable from Phoenix Leasing Partnerships.

     In  addition,  the Company has two secured  short-term  warehouse  lines of
credit totaling $35 million, which are used to provide interim financing for the
acquisition of equipment and the financing of notes  receivable.  As of June 30,
1995,  $17.6  million of these lines have been drawn down.  The draw downs under
these lines are  collateralized  by  investments  in financing  leases and notes
receivable  included in equipment subject to lease. The interest rate is tied to
the IBOR  (Eurodollar)  rate. The initial  commitment  period for these lines of
credit is 18 months and may be  extended to 36 months at the  discretion  of the
bank.  Principal  payments  are based on the  lesser of the  aggregate  payments
received  by the  Company on its leases and notes  receivable  or the  aggregate
principal  and  interest  amount  outstanding  on the payment date of the credit
line.

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

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

                                                         1995           1994
                                                         ----           ----

    Balance at June 30 .............................  $17,644,012    $  750,000
    Maximum amount outstanding .....................   17,644,012     2,500,000
    Average amount outstanding .....................    2,522,340     1,457,413
    Weighted average interest rate during the period          7.9%          6.2%


Note 8.       Long-Term Debt:

     Long-term debt consists of the following:

                                                                June 30,
                                                             1995      1994
                                                             ----      ----

    Mortgage  payable at varying  interest
      rates with an initial rate of 8.75%
      secured by a first deed of trust on
      real property with a cost of $250,000. 
      Note is amortized over 83 months with
      monthly payments of $559 with a final
      payment of $122,151 ............................     $160,944  $167,650

    Note payable at 9.75% secured by computer
      equipment with a cost of $668,994. Note
      is amortized over 46 months with monthly
      payments of $16,887 ............................       68,446   254,106
                                                           --------  --------

    Total long-term debt .............................     $229,390  $421,756
                                                           ========  ========

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

    1996 .............................................     $ 74,920
    1997 .............................................        6,706
    1998 .............................................        6,706
    1999 .............................................        6,706
    2000 .............................................        6,706
    2001 and thereafter ..............................      127,646
                                                           --------

        Total ........................................     $229,390
                                                           ========




<PAGE>


                                                        Exhibit 21 - Page 9 of 9
Note 9.  Profit Sharing Plan:

     The Company has a profit sharing plan covering  substantially all employees
who meet certain age and service requirements.  Contributions to the plan by the
Company are made at the discretion of the board of directors. The profit sharing
expense was  $600,000  and  $500,000 for the years ended June 30, 1995 and 1994,
respectively.

Note 10. Leased Facilities:

     The  Company  leases  office and  warehouse  space in various  parts of the
country and had annual rental expense of approximately $402,000 and $424,000 for
the years ended June 30, 1995 and 1994, respectively.

Note 11. Transactions with Related Parties:

     The Company provides an interest bearing line of credit totaling $6,000,000
to PAI's  controlling  shareholder  which is secured by common  stock of Phoenix
Precision Graphics,  Inc. (an unaffiliated Nevada  corporation).  As of June 30,
1995 and 1994,  $4,837,814  and $2,002,346 of this line of credit has been drawn
down and is included in notes receivable from related party. As of June 30, 1995
and 1994,  Phoenix  Precision  Graphics is in a start-up mode and has cumulative
losses of $5,959,708 and $3,129,240, respectively.

     The Company provided an interest bearing line of credit totaling $1,000,000
to PAI's  controlling  shareholder  which was secured by common stock of Phoenix
Communications  Incorporated and Phoenix Communications - LD, Inc. (unaffiliated
Nevada  corporations).  As of June 30, 1994, $858,133 of this line of credit had
been drawn down and is included in notes  receivable  from related  party.  This
note was paid in full on October 17, 1994.

     The Company  provided two interest  bearing  lines of credit each  totaling
$5,000,000 to PAI's  controlling  shareholder which were secured by common stock
of Phoenix Fiberlink  Incorporated and Phoenix Fiberlink II, Inc.  (unaffiliated
Nevada  corporations).  As of June 30, 1994, $2,854,014 of these lines of credit
had been drawn down and are included in notes  receivable  from  related  party.
These notes were paid in full on October 17, 1994.

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

     The  Company  earned a  management  fee from  affiliates  of  $678,947  and
$325,624  for the  years  ended  June 30,  1995  and  1994,  respectively.  This
management  fee is  included  in Fees  from  Phoenix  Leasing  Partnerships  and
affiliates.

     The Company paid an affiliate an asset  management  fee of  $1,026,714  and
$815,563 for the years ended June 30, 1995 and 1994,  respectively.  These asset
management  fees  are  included  in  equipment  lease  operations,  maintenance,
remarketing and administrative fees.

Note 12.      Commitments and Contingencies:

     The Company has entered into  agreements  which contain  specific  purchase
commitments.  The Company may satisfy these commitments by purchasing  equipment
for its own  account  or by  assigning  equipment  purchases  to its  affiliated
partnerships. At June 30, 1995 the Company anticipates being able to satisfy its
future  obligations  under the  agreements  and  intends  to assign  most of the
purchases under the agreements to its affiliated partnerships.

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

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