<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-Q
                        Quarterly Report Under Section 13
                           or 15 (d) of the Securities
                              Exchange Act of 1934

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




For the Quarter Ended
  September 30, 2001                             Commission File Number  0-18650
---------------------                            -------------------------------


                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


   Delaware                                                   36-3639399
----------------                                    ----------------------------
 State or other                                      IRS Employer Identification
 jurisdiction of                                                Number
 incorporation or
 organization

1300 E. Woodfield Road, Suite 312                    Schaumburg, Illinois 60173
---------------------------------                    ---------------------------
 Address of principal                                    City, State, Zip Code
 executive offices

Registrant's telephone number:                              (847) 240-6200
                                                     ---------------------------




         Indicate by check mark whether the Registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities Exchange
         Act of 1934 during the preceding 12 months (or for such shorter period
         that the Registrant was required to file such reports), and (2) has
         been subject to such filing requirements for the past 90 days.



                                   (1)  Yes  x   No
                                            ---     ---

                                   (2)  Yes  x   No
                                            ---     ---

<PAGE>
                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001


PART I - FINANCIAL INFORMATION

Item 1.

  Index to Financial Statements

    Balance Sheets

      September 30, 2001 (unaudited)                                       3

      December 31, 2000                                                    4

    Statements of Expenses (unaudited)

      For the three months ended September 30, 2001                        5

    Statements of Revenue and Expenses (unaudited)

      For the three months ended September 30, 2000                        6

      For the nine months ended September 30, 2001                         7

      For the nine months ended September 30, 2000                         8

    Statements of Changes in Partners' Equity

      For the nine months ended September 30, 2001
         (unaudited)                                                       9

    Statements of Cash Flows (unaudited)

      For the nine months ended September 30, 2001                        10

      For the nine months ended September 30, 2000                        11

    Notes to Financial Statements (unaudited)                        12 - 14

Item 2.

  Management's Discussion and Analysis of
    Financial Condition and Results of Operations                    15 - 17

Item 3.

  Quantitative and Qualitative Disclosures about
    Market Risk                                                           17

PART II - OTHER INFORMATION

Items 1-6.                                                                18



                                       2
<PAGE>
                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                                 BALANCE SHEETS
                               September 30, 2001
                                   (Unaudited)


                                        Liquidating    Continuing
                                          Limited        Limited
                                         Partners       Partners        Total
                                        ----------     ----------     ----------

ASSETS

Cash and cash equivalents               $  774,737     $2,898,291     $3,673,028
                                        ----------     ----------     ----------

                                        $  774,737     $2,898,291     $3,673,028
                                        ==========     ==========     ==========

LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued
  expenses                              $      136     $    4,798     $    4,934
Accrued dissolution expenses               143,855        502,970        646,825
Accrued indemnity obligations              133,418        466,482        599,900
                                        ----------     ----------     ----------

    Total liabilities                      277,409        974,250      1,251,659

Total partners' equity                     497,328      1,924,041      2,421,369
                                        ----------     ----------     ----------

                                        $  774,737     $2,898,291     $3,673,028
                                        ==========     ==========     ==========



                 See accompanying notes to financial statements

                                        3
<PAGE>

                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                                 BALANCE SHEETS
                                December 31, 2000



                                        Liquidating    Continuing
                                          Limited        Limited
                                         Partners       Partners        Total
                                        ----------     ----------     ----------

ASSETS

Cash and cash equivalents               $  218,307     $  952,556     $1,170,863
Residual lease balances                          -              -              -
Diverted assets, net                       114,958        401,940        516,898
Other assets, net                                -              -              -
                                        ----------     ----------     ----------

                                        $  333,265     $1,354,496     $1,687,761
                                        ==========     ==========     ==========

LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued
  expenses                              $      248     $    5,199     $    5,447
Lessee rental deposits                         289          1,010          1,299
Accrued dissolution expenses                83,178        290,822        374,000
                                        ----------     ----------     ----------

    Total liabilities                       83,715        297,031        380,746

Total partners' equity                     249,550      1,057,465      1,307,015
                                        ----------     ----------     ----------

                                        $  333,265     $1,354,496     $1,687,761
                                        ==========     ==========     ==========


                 See accompanying notes to financial statements

                                        4
<PAGE>

                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                             STATEMENTS OF EXPENSES
                  For the three months ended September 30, 2001
                                   (Unaudited)


                                         Liquidating   Continuing
                                           Limited       Limited
                                          Partners      Partners      Total
                                         ----------    ----------   ----------

Expenses:
  Provision for dissolution
    expenses                               $ 81,448     $284,775     $366,223
  Provision for indemnity
    obligations                             133,418      466,482      599,900
                                           --------     --------     --------

Net loss                                   $214,866     $751,257     $966,123
                                           ========     ========     ========

Net loss - General Partner                 $  2,149     $  7,512     $  9,661
                                           ========     ========     ========

Net loss - Limited Partners                $212,717     $743,745     $956,462
                                           ========     ========     ========

Net loss per limited
   partnership unit                        $   4.78     $   4.78
                                           ========     ========

Weighted average number of limited
   partnership units outstanding             44,468      155,509
                                           ========     ========


                 See accompanying notes to financial statements

                                        5
<PAGE>

                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                       STATEMENTS OF REVENUE AND EXPENSES
                  For the three months ended September 30, 2000
                                   (Unaudited)


                                        Liquidating    Continuing
                                          Limited        Limited
                                         Partners       Partners        Total
                                        ----------     ----------     ----------

Revenue:
  Lease income                          $     579      $   2,274      $   2,853
  Interest income                             337         16,146         16,483
                                        ---------      ---------      ---------

                                              916         18,420         19,336
                                        ---------      ---------      ---------

Expenses:
  General Partner's expense
    reimbursement                          27,939         97,685        125,624
  Professional fees                         2,715         10,703         13,418
  Other operating expenses                    959          3,354          4,313
  Credit for lease losses                    (443)        (1,547)        (1,990)
                                        ---------      ---------      ---------

                                           31,170        110,195        141,365
                                        ---------      ---------      ---------

Net loss                                $ (30,254)     $ (91,775)     $(122,029)
                                        =========      =========      =========

Net loss - General Partner              $    (302)     $    (918)     $  (1,220)
                                        =========      =========      =========

Net loss - Limited Partners             $ (29,952)     $ (90,857)     $(120,809)
                                        =========      =========      =========

Net loss per limited
   partnership unit                     $   (0.67)     $   (0.58)
                                        =========      =========

Weighted average number of limited
   partnership units outstanding           44,468        155,509
                                        =========      =========



                 See accompanying notes to financial statements

                                        6
<PAGE>

                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                       STATEMENTS OF REVENUE AND EXPENSES
                  For the nine months ended September 30, 2001
                                   (Unaudited)


                                        Liquidating    Continuing
                                          Limited        Limited
                                         Partners       Partners        Total
                                        ----------     ----------     ----------

Revenue:
  Lease income                          $        -     $      243     $      243
  Interest income                            1,843          6,447          8,290
  Gain on sale of Diverted assets          537,961      1,880,927      2,418,888
                                        ----------     ----------     ----------

                                           539,804      1,887,617      2,427,421
                                        ----------     ----------     ----------

Expenses:
  General Partner's expense
    reimbursement                           69,063        241,470        310,533
  Professional fees                          5,168         18,070         23,238
  Other operating expenses                   2,929         10,244         13,173
  Provision for dissolution
    expenses                                81,448        284,775        366,223
  Provision for indemnity
    obligations                            133,418        466,482        599,900
                                        ----------     ----------     ----------

                                           292,026      1,021,041      1,313,067
                                        ----------     ----------     ----------

Net income                              $  247,778     $  866,576     $1,114,354
                                        ==========     ==========     ==========

Net income - General Partner            $    2,478     $    8,666     $   11,144
                                        ==========     ==========     ==========

Net income - Limited Partners           $  245,300     $  857,910     $1,103,210
                                        ==========     ==========     ==========

Net income per limited
   partnership unit                     $     5.52     $     5.52
                                        ==========     ==========

Weighted average number of limited
   partnership units outstanding            44,468        155,509
                                        ==========     ==========



                 See accompanying notes to financial statements

                                        7
<PAGE>
                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                       STATEMENTS OF REVENUE AND EXPENSES
                  For the nine months ended September 30, 2000
                                   (Unaudited)


                                        Liquidating    Continuing
                                          Limited        Limited
                                         Partners       Partners        Total
                                        ----------     ----------     ----------
Revenue:
  Lease income                          $   3,480      $  13,555      $  17,035
  Interest income                           8,266         74,335         82,601
                                        ---------      ---------      ---------

                                           11,746         87,890         99,636
                                        ---------      ---------      ---------

Expenses:
  General Partner's expense
    reimbursement                         178,594        624,306        802,900
  Professional fees                        13,255         52,577         65,832
  Other operating expenses                  8,201         29,242         37,443
  Provision (credit) for lease
    losses                                 (5,566)         5,769            203
                                        ---------      ---------      ---------

                                          194,484        711,894        906,378
                                        ---------      ---------      ---------

Net loss                                $(182,738)     $(624,004)     $(806,742)
                                        =========      =========      =========

Net loss - General Partner              $  (1,827)     $  (6,240)     $  (8,067)
                                        =========      =========      =========

Net loss - Limited Partners             $(180,911)     $(617,764)     $(798,675)
                                        =========      =========      =========

Net loss per limited
   partnership unit                     $   (4.07)     $   (3.97)
                                        =========      =========

Weighted average number of limited
   partnership units outstanding           44,468        155,509
                                        =========      =========



                 See accompanying notes to financial statements


                                        8
<PAGE>
                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                     Liquidating        Continuing
                                    General            Limited           Limited            Total
                                   Partner's          Partner's         Partner's         Partner's
                                     Equity             Equity            Equity            Equity
                                   ----------         ----------        ----------        ----------
<S>                                <C>                <C>               <C>               <C>
Balance, December 31, 2000*        $        -         $  249,550        $1,057,465        $1,307,015

  Net income                           11,144            245,300           857,910         1,114,354
  Allocation of General
    Partner's Equity                  (11,144)             2,478             8,666                 -
                                   ----------         ----------        ----------        ----------

Balance, September 30, 2001        $        -         $  497,328        $1,924,041        $2,421,369
                                   ==========         ==========        ==========        ==========
</TABLE>


*  Balances are net of $60,907 and $309,489 of General Partner's Equity
   previously allocated to Liquidating and Continuing Limited Partners' Equity.









                 See accompanying notes to financial statements

                                        9
<PAGE>
                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                            STATEMENTS OF CASH FLOWS
                  For the nine months ended September 30, 2001
                                   (Unaudited)


<TABLE>
<CAPTION>
                                           Liquidating      Continuing
                                            Limited           Limited
                                            Partners         Partners           Total
                                           -----------      -----------      -----------
<S>                                        <C>              <C>              <C>
Cash flows from operating activities:
  Net income                               $   247,778      $   866,576      $ 1,114,354
  Adjustments to reconcile net income
    to net cash used in operating
    activities:
    Gain on sale of Diverted assets           (537,961)      (1,880,927)      (2,418,888)
    Provision for dissolution
      expenses                                  81,448          284,775          366,223
    Provision for indemnity
      obligations                              133,418          466,482          599,900
    Changes in assets and liabilities:
      Accounts payable and
        accrued expenses                          (112)            (401)            (513)
      Accrued dissolution expenses             (20,771)         (72,627)         (93,398)
      Lessee rental deposits                      (289)          (1,010)          (1,299)
                                           -----------      -----------      -----------
                                               (96,489)        (337,132)        (433,621)
                                           -----------      -----------      -----------

Cash flows from investing activities:
  Proceeds from sale of Diverted
    assets                                     652,919        2,282,867        2,935,786
                                           -----------      -----------      -----------

Net increase in cash and
  cash equivalents                             556,430        1,945,735        2,502,165
Cash and cash equivalents:
  Beginning of year                            218,307          952,556        1,170,863
                                           -----------      -----------      -----------
  End of third quarter                     $   774,737      $ 2,898,291      $ 3,673,028
                                           ===========      ===========      ===========
</TABLE>



                 See accompanying notes to financial statements

                                       10
<PAGE>

                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                            STATEMENTS OF CASH FLOWS
                  For the nine months ended September 30, 2000
                                   (Unaudited)


<TABLE>
<CAPTION>
                                           Liquidating      Continuing
                                             Limited          Limited
                                            Partners         Partners           Total
                                           -----------      -----------      -----------
<S>                                        <C>              <C>              <C>
Cash flows from operating activities:
  Net loss                                 $  (182,738)     $  (624,004)     $  (806,742)
  Adjustments to reconcile net loss
    to net cash used in operating
    activities:
    Provision (credit) for lease
        losses                                  (5,566)           5,769              203
    Changes in assets and liabilities:
      Accounts payable and
        accrued expenses                        (1,628)          (8,153)          (9,781)
      Lessee rental deposits                         -          (14,377)         (14,377)
                                           -----------      -----------      -----------
                                              (189,932)        (640,765)        (830,697)
                                           -----------      -----------      -----------

Cash flows from investing activities:
  Principal collections on leases                5,566           43,250           48,816
  Distribution of Diverted assets               61,369          214,571          275,940
                                           -----------      -----------      -----------
                                                66,935          257,821          324,756
                                           -----------      -----------      -----------

Cash flows from financing activities:
  Distributions to Limited Partners           (189,940)        (990,734)      (1,180,674)
                                           -----------      -----------      -----------

Net decrease in cash and
  cash equivalents                            (312,937)      (1,373,678)      (1,686,615)
Cash and cash equivalents:
  Beginning of year                            570,937        2,458,123        3,029,060
                                           -----------      -----------      -----------
  End of third quarter                     $   258,000      $ 1,084,445      $ 1,342,445
                                           ===========      ===========      ===========
</TABLE>



                 See accompanying notes to financial statements

                                       11
<PAGE>
                   DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001
                                   (Unaudited)



NOTE 1 - ORGANIZATION AND FINAL TERMINATION OF THE PARTNERSHIP:

Datronic Equipment Income Fund XVIII, LP, a Delaware Limited Partnership (the
"Partnership"), was formed on April 12, 1989 for the purpose of acquiring and
leasing equipment. See Notes 4, 7, and 10 to the Partnership's financial
statements included in the 2000 Form 10-K for a discussion of the alleged
diversion of Partnership assets in 1991 and 1992 and the subsequent litigation
and settlement, change in general partner, new classes of limited partners
established and amendments to the Partnership Agreement that occurred.

Since April 12, 1995, the Partnership has been in its Liquidating Phase, which
means that it ceased investing in new leases and began the orderly liquidation
of its assets. The general partner expects the Partnership to complete the total
liquidation of its assets by the end of 2001 and to complete all final
termination and dissolution activities during the first half of 2002.

NOTE 2 - BASIS OF FINANCIAL STATEMENTS:

Effective July 1, 2001, the Partnership commenced activities necessary for the
final liquidation, termination, and dissolution of the Partnership. All future
expenditures pertaining to this process, net of any expected recoveries of
miscellaneous assets or other receipts, have been accrued for and will be
charged to this accrual as they are incurred (see Notes 4 and 5 below).
Accordingly, the accompanying balance sheets as of September 30, 2001 reflect
the estimated liquidating value of the Partnership and Partners' Equity
represents the estimated amount of net assets available for distribution to the
Limited Partners. In addition, the accompanying Statements of Expenses for the
three months ended September 30, 2001 reflect only the additional provisions
required to complete the liquidation, termination, and dissolution process. The
accompanying financial statements should be read in conjunction with the
Partnership's financial statements included in the 2000 Form 10-K. The financial
information furnished herein is unaudited but in the opinion of Management
includes all adjustments necessary for a fair presentation of financial
condition and results of operations.

NOTE 3 - GAIN ON SALE OF DIVERTED ASSETS:

The Partnership's gain on sale of Diverted Assets of $2,418,888 represents its
share of the June 30, 2001 cash balance of DRC Partnership Fund Inc. (Fund Inc.)
in excess of its book value thereof. On June 12, 2001, the Southwick Office
Centre was sold for



                                       12
<PAGE>

$15 million. After payment of sales commissions and other closing costs of
$456,654, net proceeds of $14,543,346 were received by Fund Inc. for the benefit
of the Partnerships. In addition, Fund Inc. held $1,415,485 of cash previously
generated by the operations of the Southwick Office Centre. The Partnership's
interest in these amounts is $2,935,786 (18.4%) and is included in "Cash and
cash equivalents" at September 30, 2001. The Partnership's book value of
Diverted Assets was $516,898.

NOTE 4 - ACCRUED DISSOLUTION EXPENSES

At December 31, 2000, the Partnership accrued $374,000 ($1.84 million for all
Datronic Partnerships) to provide for all expenses pertaining to the
Partnership's termination and dissolution. The general partner estimated that
this process would be completed by December 31, 2001. During the third quarter
2001, an additional $366,000 provision ($1.49 million for all Datronic
Partnerships) was recorded. This provision was necessary because of the
additional time required to terminate and dissolve the Partnership resulting
from the claims filed by Edmund J. Lopinski, Jr. (see Note 6). The general
partner now expects that all termination and dissolution activities will be
completed during the first half of 2002.

NOTE 5 - ACCRUED INDEMNITY OBLIGATIONS

During the third quarter 2001, the Partnership recorded a $600,000 provision for
indemnity obligations ($2.5 million for all Datronic Partnerships). This amount
represents the general partner's estimate of the Partnership's continuing
obligation to indemnify the general partner, its officers, directors, and
employees (collectively "indemnitees"). The general partner is obligated to
indemnify its directors, officers and employees and is entitled to reimbursement
for all its expenses, including its indemnification obligation, from the
Partnerships. Furthermore, under the terms of the Limited Partnership Agreement,
as amended, (subject to various terms therein) the Partnership, and any receiver
or trustee appointed to administer the business or assets of the Partnership,
will indemnify and pay all judgments and claims against the General Partner and
any of its Affiliates, and save the same harmless from any liability, loss or
damage incurred by them or by the Partnership by reason of any act performed or
omitted to be performed by them that was determined in good faith by the General
Partner to have been in the best interest of the Partnership in connection with
the activities of the Partnership or in dealing with third parties on behalf of
the Partnership, including costs and attorneys' fees and any amounts expended in
the investigation or settlement of any claims of liability, loss or damage,
provided





                                       13
<PAGE>

that such act or omission does not constitute fraud, negligence, breach of
fiduciary duty or misconduct. The indemnity obligation provides for any
currently uninsured, unasserted claims that may be asserted after the
Partnership is terminated and dissolved. The general partner determined that the
cost of maintaining ongoing accounting and investor records during the ten years
for which the indemnity obligation will exist would exceed the Partnership's
obligation. Therefore, the general partner has caused the Partnership to
relinquish any claim it might have to any future residual cash. If there is no
residual cash and claims still exist, the indemnitees will be personally
responsible for any shortfall. In the event that the total amount funded is not
needed, any residual balance will be donated to charity.

NOTE 6 - LITIGATION:

During May of 2001, Edmund J. Lopinski, Jr., acting as his own attorney and who
is presently incarcerated at the Marion Federal Correctional Institution in
Marion, Illinois, filed several motions with the Federal District Court for the
Northern District of Illinois claiming that all proceeds received from the sale
of the Southwick office building in excess of the unsatisfied civil judgment
entered against him (approximately $10 million) belonged to him. During the
third quarter 2001, the court found Mr. Lopinski's claim to be without merit and
issued an order permitting the distribution of the net proceeds to the
Partnership's investors.




                                       14
<PAGE>

PART I

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

The following discussion and analysis of liquidity and capital resources covers
material changes in the Partnership's financial condition from December 31, 2000
through September 30, 2001. The discussion and analysis of results of operations
is for the nine month period ended September 30, 2001 as compared to the
corresponding period in 2000. Any capitalized term not defined herein has been
defined or discussed in the Partnership's 2000 Form 10-K.

Liquidity and Capital Resources

At September 30, 2001, the Partnership's sole source of liquidity was its cash
and cash equivalents totaling $3.67 million. After payment of the following
items, the Partnership will distribute all of its remaining cash to its Limited
Partners.

-  Accrued dissolution expenses -  $647,000
-  Accrued indemnity obligations - $600,000
-  All other remaining known liabilities of the Partnership.

The general partner expects the distribution to Limited Partners will occur in
mid-December 2001.

During the nine months ended September 30, 2001, Partnership cash and cash
equivalents increased by $2.50 million. This net increase was due to proceeds of
$2.94 million received from the sale of the Southwick office building (see
below), partially offset by cash used to pay (i) $340,000 of operating expenses
incurred through June 30, 2001 and (ii) $93,000 of dissolution expenses. Since
July 1, 2001, the activities undertaken by the Partnership and its general
partner have pertained to the termination and dissolution process. Accordingly,
all expenses incurred since then have been characterized as dissolution expenses
and, as such, have been (and will continue to be) charged against the accrual
for dissolution expenses that was originally established as of December 31,
2000.

On June 12, 2001, the general partner closed the sale of the Southwick Office
Centre, which represented the last remaining Diverted Asset, for $15 million.
After payment of sales commissions and other closing costs, the net proceeds for
all Partnerships was approximately $14.5 million. The Partnership's 18.4% share
of the net proceeds and an additional $1.4 million held by DRC Partnership Fund,
Inc. ($2.94 million) is included in the Partnership's September 30, 2001 balance
sheet as "Cash and cash equivalents".




                                       15
<PAGE>

As of September 30, 2001, the general partner expects to utilize an additional
$647,000 of cash to terminate and dissolve the Partnership. Termination and
dissolution activities include liquidation of all remaining liabilities (see
above), calculation and distribution of the final cash distribution to the
Limited Partners, preparation of final state and federal tax returns,
preparation and mailing of final K-1s, filing of final state and federal
regulatory documents, closing of all bank accounts, and completion of all other
tasks as are necessary to conclude the Partnership's affairs. The expenses
associated with these activities have been fully provided for in "Accrued
dissolution expenses" shown in the Partnership's September 30, 2001 balance
sheet. This accrual was originally established as of December 31, 2000 in the
amount of $374,000. During the third quarter, an additional $366,000 provision
was recorded because of the additional time that will be necessary to complete
the termination and dissolution process. The additional time is the result of a
claim that was made against the net proceeds from the Southwick Office Centre
sale (see Note 6) that prevented the general partner from undertaking various
dissolution activities until the claim was resolved in the third quarter 2001.

The general partner is obligated to indemnify its directors, officers and
employees and is entitled to reimbursement for all its expenses, including its
indemnification obligation, from the Partnerships. Furthermore, under the terms
of the Limited Partnership Agreement, as amended, (subject to various terms
therein) the Partnership, and any receiver or trustee appointed to administer
the business or assets of the Partnership, will indemnify and pay all judgments
and claims against the General Partner and any of its Affiliates, and save the
same harmless from any liability, loss or damage incurred by them or by the
Partnership by reason of any act performed or omitted to be performed by them
that was determined in good faith by the General Partner to have been in the
best interest of the Partnership in connection with the activities of the
Partnership or in dealing with third parties on behalf of the Partnership,
including costs and attorneys' fees and any amounts expended in the
investigation or settlement of any claims of liability, loss or damage, provided
that such act or omission does not constitute fraud, negligence, breach of
fiduciary duty or misconduct.

Since this obligation continues after the Partnership is terminated and
dissolved, a separate indemnification fund will be established. This fund will
be used for indemnification of any currently uninsured, unasserted claims that
may be asserted after the Partnership has been terminated and dissolved. The
general partner estimates that the Partnership's obligation totals $600,000.
Previously, the general partner estimated that this obligation could



                                       16
<PAGE>

be as much as $784,000, thus allowing an additional $184,000 to be available for
the final distribution to the Limited Partners. The general partner has also
determined that the cost of maintaining ongoing accounting and investor records
during the ten years for which the indemnity obligation will exist would exceed
the Partnership's obligation. Therefore, the general partner has caused the
Partnership to relinquish any claim it might have to any future residual cash.
If there is no residual cash and claims still exist, the indemnitees will be
personally responsible for any shortfall. In the event that the total amount
funded is not needed, any residual balance will be donated to charity.

Results of Operations

The Partnership had a net loss of $966,000 and net income of $1.11 million,
respectively, for the three and nine months ended September 30, 2001. This
compares to net losses of $122,000 and $807,000, respectively, for the three and
nine months ended September 30, 2000. The increase in net losses between the
three-month periods is due to the third-quarter 2001 provisions for dissolution
expenses and indemnity obligations (totaling $966,000) which exceeded the
$141,000 of net operating expenses that were incurred in the third-quarter of
2000. Because all activities subsequent to June 30, 2001 pertain to the
termination and dissolution process, all related expenses have been charged
against the balance sheet accrual. Accordingly, no operating expenses appear in
the third-quarter 2001 Statement of Revenues and Expenses.

Favorable factors that resulted in a change from a net loss to net income for
the nine-month periods were the $2.42 million gain on the June 2001 sale of the
Southwick office building and decreased operating expenses. Operating expenses
for the nine-month periods decreased by $559,000 because no operating expenses
were recorded after June 30, 2001 and those incurred through June 30, 2001
reflected the favorable effects of staff reductions and other savings related to
decreased activity. Partially offsetting these favorable factors during the
nine-month periods were the $966,000 of aggregate provisions for dissolution
expenses and indemnity obligations described above.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for in this disclosure is not applicable to the
Registrant.



                                       17
<PAGE>


PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 2000 Form 10-K, for a discussion of material legal proceedings involving the
Partnership.

Reference is made to Part I, Item 1, Note 6 for a discussion of claims made by
Edmund J. Lopinski.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

None.




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<PAGE>

                                   SIGNATURES



Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized, on the 14th day of November 2001.





            DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
            Registrant





       By:  /s/DONALD D. TORISKY
            ----------------------------
            Donald D. Torisky
            Chairman and Chief Executive Officer,
            Lease Resolution Corporation
            General Partner of
            Datronic Equipment Income Fund XVIII, L.P.



       By:  /s/JEFFREY T. MCREYNOLDS
            ----------------------------
            Jeffrey T. McReynolds
            Vice President and Chief Financial Officer,
            (and Principal Accounting Officer)
            Lease Resolution Corporation
            General Partner of
            Datronic Equipment Income Fund XVIII, L.P.










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