UNITED STATES SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549

                                   -----------

                                   FORM 10-KSB

  X    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
-----  ACT OF 1934

For the fiscal year ended December 31, 1998       Commission File Number 0-25278


                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

          California                                     68-0293258
-------------------------------              ----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

2401 Kerner Boulevard, San Rafael, California            94901-5527
--------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:     (415) 485-4500
                                                        --------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities  registered  pursuant to Section  12(g) of the Act:  Units of Limited
Partnership Interest

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. _____________

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.

                       Yes     X                    No
                            -------                     -------  
                                             
The Registrant's revenue for its most recent fiscal year was $4,791,000.

As of December 31, 1998,  1,573,129 Units of Limited  Partnership  interest were
outstanding.  No  market  exists  for the  Units  of  Partnership  interest  and
therefore there exists no aggregate market value at December 31, 1998.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

Transitional Small Business Disclosure Format:

                       Yes                          No     X
                            -------                     -------


                                  Page 1 of 25
<PAGE>


                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.

                         1998 FORM 10-KSB ANNUAL REPORT


                                TABLE OF CONTENTS


                                                                            Page

                                     PART I

Item 1.     Business.......................................................... 3
Item 2.     Properties........................................................ 4
Item 3.     Legal Proceedings................................................. 5
Item 4.     Submission of Matters to a Vote of Security Holders............... 5


                                     PART II

Item 5.     Market for the Registrant's Securities and Related Security Holder
              Matters......................................................... 5
Item 6.     Management's Discussion and Analysis of Financial Condition and
              Results of Operations........................................... 6
Item 7.     Financial Statements.............................................. 9
Item 8.     Disagreements on Accounting and Financial Disclosure Matters......22


                                    PART III

Item 9.     Directors and Executive Officers of the Registrant................22
Item 10.    Executive Compensation............................................23
Item 11.    Security Ownership of Certain Beneficial Owners and Management....23
Item 12.    Certain Relationships and Related Transactions....................24


                                     PART IV

Item 13.    Exhibits, Financial Statement Schedules and Reports on Form 8-K...24


Signatures....................................................................25


                                       2
<PAGE>
                                     PART I

Item 1.       Business.
              --------

General Development of Business.

         Phoenix  Leasing  American  Business Fund,  L.P., a California  limited
partnership  (the  "Partnership"),  was  organized  on  December  3,  1992.  The
Partnership was registered  with the Securities and Exchange  Commission with an
effective  date of October  19,  1993 and shall  continue  to operate  until its
termination date unless dissolved sooner due to the sale of substantially all of
the assets of the Partnership or a vote of the Limited Partners. The Partnership
will terminate on December 31, 2007. The General Partner is a California limited
partnership,  Phoenix Leasing  Associates III L.P., the general partner of which
is Phoenix Leasing Associates III, Inc., a Nevada corporation and a wholly-owned
subsidiary  of Phoenix  Leasing  Incorporated,  a  California  corporation.  The
General Partner or its affiliates also is or has been a general partner in other
limited partnerships formed to invest in capital equipment and other assets.

         The  registration  was  for  2,500,000  units  of  limited  partnership
interest  at a price of $20 per  unit.  The  Partnership  completed  its  public
offering on October 6, 1996. The  Partnership  sold 1,603,335  units for a total
capitalization  of $32,066,700.  Of the proceeds  received through the offering,
the Partnership has incurred  $4,808,933 in organizational and offering expenses
for a net capitalization of $27.3 million.

         From the initial  formation  of the  Partnership  through  December 31,
1998,  the total  investments  in equipment  leases and  financing  transactions
(loans) including the Partnership's pro rata interest in an investment made by a
joint  venture,  approximate  $65,477,000.  The  average  initial  firm  term of
contractual  payments  from  equipment  subject to lease was 48 months,  and the
average  initial  net  monthly  payment  rate as a  percentage  of the  original
purchase price was 2.87%. The average initial firm term of contractual  payments
from loans was 48 months and the weighted average interest was 16.21%.

         The Partnership has acquired significant amounts of equipment or assets
with the net  offering  proceeds.  In  addition,  the  Partnership  has acquired
equipment  through  the  use  of  debt  financing,  however,  the  ratio  of the
outstanding debt to net capital  contributions  less any investment in Leveraged
Joint Ventures at the end of the  Partnership's  offering period will not exceed
four to five (80%).  The cash flow  generated by such  investments  in equipment
leases or financing  transactions  will be used to provide for debt service,  to
provide cash  distributions to the Partners and the remainder will be reinvested
in capital equipment or other assets.

         The Partnership  will maintain  working  capital  reserves in an amount
which  will  fluctuate  from  time to  time  depending  upon  the  needs  of the
Partnership,  but which  will be at least  one  percent  of the  gross  offering
proceeds during the Partnership's operational phase.


Narrative Description of Business.

         The   objectives   of  the   Partnership   are  to:  (1)  produce  cash
distributions on a continuing basis over the life of the Program through leasing
equipment and financing assets primarily to companies engaged in the development
of technologies  and other growth industry  businesses,  franchisees,  and other
third party lessees and customers;  (2) reinvest,  during the operating phase of
the Program (after payment of expenses, including debt service requirements, and
distributions to the Partners),  in additional  equipment and assets to increase
the  overall  size  of  the  portfolio;  and  (3)  commence  liquidation  of the
Partnership's  portfolio  of  investments  seven  years  after  the close of the
offering of units of limited partnership interests.

         To achieve  these  objectives  the  Partnership  has  invested and will
invest in various  types of capital  equipment  and other  assets,  and  provide
leasing and secured financing of the same to third parties on either a long-term
or short-term  basis.  The  Partnership has invested and will invest in, or have
collateral in, various types of assets including: (1) production, manufacturing,
fabrication and test equipment; (2) lab and medical equipment; (3) furniture and
fixtures;   (4)  personal  computers  and  workstations,   computer   peripheral
equipment, computer mainframes, CAE/CAD/CAM equipment, communications equipment,
office systems and computer software products;  (5) property management systems,
including  computer  reservations  systems,  and  phone  and  telecommunications
systems;  and (6)  various  types of  other  equipment,  furnishings,  fixtures,
leasehold  improvements  and  assets,  including  to a  limited  extent  certain
intangible assets.

         A substantial  portion of the net offering  proceeds of the Partnership
has been invested in equipment leases subject to full payout leases. Full payout
leases are leases under which the noncancellable  rental payments due during the

                                       3
<PAGE>

initial term of the lease are at least  sufficient to recover the purchase price
of the  equipment.  Operating  leases,  which  generally  have  terms of shorter
duration than full payout  leases,  are leases that will return to the lessor an
amount less than the purchase price of the equipment  from rental  payments over
the initial term of the lease. Upon the expiration of the initial lease term, it
is necessary to extend the lease term with the existing lessee, enter into a new
lease with another lessee or sell the equipment.

         Competition.  The Partnership  will be competing for equipment  leasing
and financing business with many well-established companies having substantially
greater financial  resources.  The types of businesses the Partnership  competes
with will be banks, finance companies, leasing companies and other institutional
or governmental  lenders.  Competitive  factors include  pricing,  technological
innovation, payment terms, collateral requirements and methods of financing. The
General Partner intends to concentrate the  Partnership's  activities in markets
in which the General Partner and its affiliates have developed an expertise.

Other.

         A brief  description of the type of assets in which the Partnership has
invested in through December 31, 1998, together with information  concerning the
uses of assets is set forth in Item 2.


Item 2.       Properties.
              ----------

         The  Partnership  is engaged in the  equipment  leasing  and  financing
industry and as such,  does not own or operate any  principal  plants,  mines or
real property. The primary assets held by the Partnership are its investments in
leases and loans to businesses located throughout the United States.

         As of  December  31,  1998,  the  Partnership  owns  equipment  and has
outstanding  loans to borrowers with an aggregate  original cost of $38,080,000.
The following  table  summarizes the type of equipment  owned or financed by the
Partnership, including its pro rata interest in a joint venture, at December 31,
1998:

                                                                 Percentage of
      Asset Types                           Cost of Assets(1)     Total Assets
      -----------                           -----------------    -------------
                                         (Amounts in Thousands)

Equipment:
Computer Hardware                              $ 7,211                19%
Furniture and Fixtures                           4,584                12
Lab Test Equipment                               3,135                 8
Leasehold Improvements                           2,980                 8
Commercial Equipment                             2,267                 6
Miscellaneous Equipment                          2,271                 6
Manufacturing Equipment                          1,004                 3
Communications Equipment                           690                 2
Software                                           794                 2
                                               -------               ---

     Total Equipment                            24,936                66

Financing:
Financing to Emerging Growth Companies           8,029                21
Financing to Other Businesses                    5,115                13
                                               -------               ---

     Total Financing                            13,144                34
                                               -------               ---

         Total Assets                          $38,080               100%
                                               =======               ===

(1)    These amounts include the  Partnership's pro rata interest in a financing
       joint  venture of $290,000 and cost of  equipment on financing  leases of
       $19,754,000 at December 31, 1998.

                                       4
<PAGE>



Item 3.       Legal Proceedings.
              -----------------

         The  Registrant is not a party to any pending legal  proceedings  which
would have a material adverse impact on its financial position.


Item 4.       Submission of Matters to a Vote of Security Holders.
              ---------------------------------------------------

         No matters were  submitted to a vote of Limited  Partners,  through the
solicitation of proxies or otherwise, during the fourth quarter.


                                     PART II

Item 5.       Market for the Registrant's Securities and Related Security Holder
              ------------------------------------------------------------------
              Matters.
              -------

         (a)  The Registrant's  limited  partnership  interests are not publicly
              traded.   There  is  no  market  for  the   Registrant's   limited
              partnership interests and it is unlikely that any will develop.

         (b)  Approximate number of equity security investments:

                                                    Number of Unit Holders
                     Title of Class                as of December 31, 1998
              ----------------------------         -----------------------

              Limited Partners                               1,622
              General Partner                                    1



                                       5
<PAGE>
Item 6.       Management's Discussion and Analysis of Financial Condition and
              ---------------------------------------------------------------
              Results of Operations.
              ---------------------

Results of Operations

         Phoenix Leasing American Business Fund, L.P. (the Partnership) reported
net income of $1,859,000 during the year ended December 31, 1998, as compared to
net income of $1,438,000 during 1997. The increase in net income during 1998, as
compared  to 1997,  resulted  from  decreases  in  expense  items in  excess  of
decreases in income items.

         Total revenues decreased by $842,000 during the year ended December 31,
1998,  as  compared  to the same period in 1997.  Earned  income from  financing
leases  decreased by  $1,015,000  during the year ended  December  31, 1998,  as
compared  to the same  period  in 1997.  The  decrease  in  earned  income  from
financing  leases is a result of a decline in the  Partnership's  investment  in
financing  leases.  The  Partnership's net investment in financing leases was $8
million at December 31,  1998,  as compared to $14 million at December 31, 1997.
The  investment in financing  leases,  as well as earned  income from  financing
leases,  will decrease over the lease term as the Partnership  amortizes  income
over the life of the lease using the  interest  method.  This  decrease  will be
offset  in part by a  continuous  investment  of the  excess  cash  flows of the
Partnership  in new  leasing  and  financing  transactions  over the life of the
Partnership.

         Another factor  contributing  to the decline in total revenues for year
ended  December 31, 1998,  compared to 1997,  is the decrease in gain on sale of
securities  of $456,000.  The gain on sale of securities of $4,000 and $460,000,
recognized during the years ended December 31, 1998 and 1997, respectively,  was
due to the exercise and sale of stock warrants held by the Partnership, in which
$10,000 and $455,000 of proceeds  was received for the years ended  December 31,
1998 and 1997, respectively.  The Partnership has been granted stock warrants as
part  of  its  lease  or  financing  agreements  with  certain  emerging  growth
companies. As of December 31, 1998, the Partnership had remaining investments in
stock  warrants  with  unrealized  gains of  $189,000,  compared  to  $57,000 at
December 31, 1997.  These stock warrants contain certain  restrictions,  but are
generally exercisable within one year.

         The decreases in earned income from  financing  leases and gain on sale
of securities for the year ended December 31, 1998, were partially  offset by an
increase in interest  income from notes  receivable,  rental  income and gain on
sale of equipment.

         Interest  income from notes  receivable  increased  by $220,000 for the
year ended December 31, 1998,  compared to the same period in the previous year.
This increase in interest income is attributable to new investments  made during
1997 and 1998.

         The increase in rental  income of $269,000 for the year ended  December
31,  1998,  compared  to the same  period in 1997,  is due to  financing  leases
reaching the end of their contractual term and being renewed on a month to month
basis as well as lessees of financing  leases  exercising  their option to renew
their lease for a fixed term in order to purchase the equipment. The increase in
rental income is also a result of settlements from defaulted leases.

         The Partnership experienced an increase in gain on sale of equipment of
$249,000 for the year ended  December  31, 1998,  compared to the same period in
1997.  The gain on sale of  equipment  during 1998 is a result of an increase in
sales  activity  of  the  Partnership's  equipment  portfolio.  Correspondingly,
proceeds  from  the sale of  equipment  also  increased.  The  Partnership  sold
equipment  with an aggregate  original  cost of $11.5 million for the year ended
December  31,  1998,  compared to $7.3  million for the same period in 1997.  At
December 31, 1998, the Partnership  owned  equipment with an aggregate  original
cost of $24.9  million,  as compared to the $34.4 million of equipment  owned at
December 31, 1997.

         Total expenses  decreased by $1,263,000 for the year ended December 31,
1998, as compared to the same period in the prior year. The decrease in expenses
is primarily  due to decreases in  depreciation  and  amortization  and interest
expense.  Depreciation  and amortization  decreased  $585,000 for the year ended
December 31, 1998, as compared to 1997,  due to the continued  sale of the lease
portfolio  as  well as an  increasing  portion  of the  equipment  owned  by the
Partnership  becoming  fully  depreciated.  The decrease in interest  expense of
$397,000  during the year ended December 31, 1998, as compared 1997, is a result
of a decline in the Partnership's outstanding debt. As of December 31, 1998, the
Partnership's  outstanding  notes  payable  balance is  $1,125,000  compared  to
$4,015,000 as of December 31, 1997.

                                       6
<PAGE>


         Inflation  affects the  Partnership  in relation to the current cost of
equipment  placed on lease and the residual  values  realized when the equipment
comes  off-lease and is sold.  During the last several years  inflation has been
low, thereby having very little impact upon the Partnership.

Liquidity and Capital Resources

         The  Partnership's  primary source of liquidity comes from  contractual
obligations with lessees and borrowers for fixed terms at fixed payment amounts.
The future  liquidity of the  Partnership  is dependent  upon the payment of the
Partnership's contractual obligations from its lessees and borrowers.

         The Partnership reported net cash from leasing and financing activities
of  $13,505,000  during  the year  ended  December  31,  1998,  as  compared  to
$15,929,000  during the same period in 1997.  This decrease is reflective of the
decrease in payments received from financing leases.

         During the year ended  December 31, 1998, the  Partnership  invested $2
million in finance leases and $2.4 million in notes  receivable,  as compared to
investments  of $3.1  million  in  finance  leases  and  $7.3  million  in notes
receivable during the same period in 1997.

         As of December 31, 1998, the Partnership  reported equipment being held
for lease with an original cost of $2,887,000  and a net book value of $166,000,
as  compared  to  equipment  being  held  for  lease  with an  original  cost of
$2,545,000  and a net book value of $246,000 at December 31,  1997.  The General
Partner,  on behalf of the  Partnership,  is actively engaged in the remarketing
and selling of the  Partnership's  equipment  as it comes  available.  Until new
leases or buyers of  equipment  can be found,  the  equipment  will  continue to
generate  depreciation  expense  without any  corresponding  rental income.  The
effect of this will be a  reduction  of the  Partnership  earnings  during  this
remarketing period.

         The  Partnership  received  proceeds  from  the  sale of  equipment  of
$583,000 for the year ended December 31, 1998, compared to $292,000 for the same
period in the previous year. The net book value of the equipment sold during the
year  ended  December  31,  1998 was  $177,000,  compared  to  $135,000  for the
equipment sold in 1997

         The  Partnership  negotiated  a $20 million  term line of credit from a
bank in November 1993 for the purchase of equipment and other  property  subject
to lease and is to be repaid in 49 equal monthly  installments  of principal and
interest  at a  variable  rate.  The $20  million  term line of credit was fully
utilized by the  Partnership  prior to its expiration date of November 30, 1995.
As of December 31, 1998, the Partnership had repaid  approximately $19.2 million
of this loan.

         The  Partnership  entered into a second line of credit in the amount of
$6 million on November 15, 1994 with another bank, which expired on December 31,
1996.  This credit line was for the  purchase of  equipment  and other  personal
property  assets subject to lease with interest tied to the lender's prime rate.
As of December 31, 1998, the Partnership had borrowed $3 million under this loan
agreement, approximately $2.6 million of which has been repaid.

         Payments of the  Partnership's  borrowings  discussed above are payable
monthly.  The  Partnership  made  payments of  principal  of  $2,889,000  on its
outstanding  debt  during the year ended  December  31,  1998,  as  compared  to
$5,750,000 during the year ended December 31, 1997.

         The cash  distributed  to partners  during the year ended  December 31,
1998 was $3,613,000,  as compared to $3,628,000  during the same period in 1997.
In accordance with the partnership agreement,  the limited partners are entitled
to 96% of the  cash  available  for  distribution  and the  General  Partner  is
entitled to four percent.  As a result, the limited partners received $3,468,000
and  $3,483,000 in cash  distributions  during the years ended December 31, 1998
and  1997,   respectively.   As  of  December  31,  1998,  the  cumulative  cash
distributions  to limited partners was $13,601,000 as compared to $10,133,000 at
December 31, 1997,  respectively.  The General Partner received  $145,000 during
the years ended December 31, 1998 and 1997. The Partnership  anticipates  making
distributions to partners during 1999 at a slightly higher rate than in 1998.

         The cash to be  generated  from  leasing and  financing  operations  is
anticipated to be sufficient to meet the  Partnership's  continuing  operational
expenses and debt service.

         Forward-looking statements in this report are made pursuant to the safe
harbor  provisions  of the  Private  Securities  Litigation  Reform Act of 1995.
Actual  results could differ from those  anticipated  by some of the  statements
made above. Limited Partners are cautioned that such forward-looking  statements

                                       7
<PAGE>

involve risks and uncertainties including without limitation the following:  (i)
the  Partnership's  plans are subject to change at any time at the discretion of
the General Partner of the Partnership,  (ii) future technological  developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services,  (iv) substantial  customer defaults or cancellations,  (v)
changes  in  business  conditions  and the  general  economy,  (vi)  changes  in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets.

         In  accordance  with  section  13.2(a)  of  the  amended  and  restated
agreement of limited  partnership,  the estimated  annual average Unit valuation
(unaudited)  is  estimated  by  the  General  Partner  to  be  $15  per  limited
partnership unit at December 31, 1998.

Impact of the Year 2000 Issue

         The General Partner has appointed  ReSource/Phoenix,  Inc. an affiliate
of the General Partner, to manage its Year 2000 project.

         Resource/Phoenix  has a Year  2000  project  plan in  place  and a "Y2K
Project Team" has been appointed. If the Year 2000 project is not completed in a
timely  manner,  the  Year  2000  issue  could  have a  material  impact  on the
Partnership's  operations.  The Y2K Project Team,  however,  has  identified Y2K
risks and issues and the  remediation  procedures  which need to be implemented.
The Y2K Project Team has budgeted for the necessary  changes,  built contingency
plans, and has progressed along the scheduled timelines.

         Installation  of any  remediation  changes to software  and hardware is
planned to be completed by June 30, 1999.

         Costs incurred by the Partnership  will be expensed as incurred and are
not currently anticipated to be material to the Partnership's financial position
or results of operations.

         The  Partnership's  customers  consist of lessees  and  borrowers.  The
Partnership  does  not have  exposure  to any  individual  customer  that  would
materially impact the Partnership  should the customer  experience a significant
Year 2000 problem.



                                       8
<PAGE>

                          Item 7. FINANCIAL STATEMENTS
                                  --------------------

                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
                  --------------------------------------------

                          YEAR ENDED DECEMBER 31, 1998
                          ----------------------------


                                       9
<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------

To the Partners of Phoenix Leasing American Business Fund, L.P.:

We have  audited the  accompanying  balance  sheet of Phoenix  Leasing  American
Business Fund, L.P. (a California limited  partnership) as of December 31, 1998,
and the related  statements of operations and  comprehensive  income,  partners'
capital and cash flows for the years  ended  December  31, 1998 and 1997.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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 financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  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 financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Phoenix  Leasing  American
Business  Fund,  L.P. as of December 31, 1998, and the results of its operations
and its cash flows for the years ended December 31, 1998 and 1997, in conformity
with generally accepted accounting principles.




San Francisco, California,                                   ARTHUR ANDERSEN LLP
  January 22, 1999


                                       10
<PAGE>


                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
                                  BALANCE SHEET
                 (Amounts in Thousands Except for Unit Amounts)


                                                               December 31, 1998
                                                               -----------------
ASSETS

Cash and cash equivalents                                           $ 4,536

Accounts receivable (net of allowance for losses on accounts
   receivable of $306)                                                  363

Notes receivable (net of allowance for losses on notes
   receivable of $602)                                                7,765

Net investment in financing leases (net of allowance for early
   terminations of $231)                                              7,898

Equipment on operating leases and held for lease (net of
   accumulated depreciation of $1,790)                                  166

Capitalized acquisition fees (net of accumulated amortization
   of $1,961)                                                           647

Other assets                                                            401
                                                                    -------

     Total Assets                                                   $21,776
                                                                    =======


LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

   Accounts payable and accrued expenses                            $   939

   Notes payable                                                      1,125
                                                                    -------

     Total Liabilities                                                2,064
                                                                    -------

Partners' Capital:

   General Partner                                                       47

   Limited Partners, 2,500,000 units authorized, 1,603,335 units
     issued and 1,573,129 units outstanding                          19,476

   Accumulated other comprehensive income                               189
                                                                    -------

     Total Partners' Capital                                         19,712
                                                                    -------

     Total Liabilities and Partners' Capital                        $21,776
                                                                    =======

        The accompanying notes are an integral part of these statements.

                                       11
<PAGE>


                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
               (Amounts in Thousands Except for Per Unit Amounts)



                                                For the Years Ended December 31,
                                                         1998     1997
                                                         ----     ----
INCOME

   Earned income, financing leases                     $ 1,683  $ 2,698
   Interest income, notes receivable                     1,435    1,215
   Rental income                                         1,074      805
   Gain on sale of equipment                               406      157
   Gain on sale of securities                                4      460
   Other income                                            189      298
                                                       -------  -------

     Total Income                                        4,791    5,633
                                                       -------  -------

EXPENSES

   Depreciation and amortization                           653    1,238
   Amortization of acquisition fees                        473      585
   Lease related operating expenses                         90      165
   Management fees to General Partner                      306      367
   Reimbursed administrative costs to General Partner      289      383
   Interest expense                                        239      636
   Provision for losses on receivables                     617      527
   General and administrative expenses                     265      294
                                                       -------  -------

     Total Expenses                                      2,932    4,195
                                                       -------  -------

NET INCOME                                               1,859    1,438

Other comprehensive income:
   Unrealized gains on securities:
     Unrealized holding gains arising during period        136      289
     Less:  reclassification adjustment for gains
       included in net income                               (4)    (460)
                                                       -------  -------

Other comprehensive income                                 132     (171)
                                                       -------  -------

COMPREHENSIVE INCOME                                   $ 1,991  $ 1,267
                                                       =======  =======


NET INCOME PER LIMITED PARTNERSHIP UNIT                $  1.08  $   .81
                                                       =======  =======

ALLOCATION OF NET INCOME:
   General Partner                                     $   162  $   158
   Limited Partners                                      1,697    1,280
                                                       -------  -------

                                                       $ 1,859  $ 1,438
                                                       =======  =======

        The accompanying notes are an integral part of these statements.

                                       12
<PAGE>


                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
                         STATEMENTS OF PARTNERS' CAPITAL
                 (Amounts in Thousands Except for Unit Amounts)
<TABLE>
<CAPTION>

                                                                                      Accumulated
                                               General                                  Other
                                               Partner's      Limited Partners'      Comprehensive   Total
                                                Amount        Units       Amount        Income       Amount
                                               ---------      ------------------     -------------   ------
<S>                                           <C>           <C>         <C>          <C>          <C>

Balance, December 31, 1996                    $       17    1,588,681   $   23,662   $      228   $   23,907

Redemptions of capital                              --         (9,976)        (141)        --           (141)

Other comprehensive income                          --           --           --           (171)        (171)

Distributions to partners ($2.20 per limited
   partnership unit)                                (145)        --         (3,483)        --         (3,628)

Net income                                           158         --          1,280         --          1,438
                                              ----------   ----------   ----------   ----------   ----------

Balance, December 31, 1997                            30    1,578,705       21,318           57       21,405

Redemptions of capital                              --         (5,576)         (71)        --            (71)

Other comprehensive income                          --           --           --            132          132

Distributions to partners ($2.20 per limited
   partnership unit)                                (145)        --         (3,468)        --         (3,613)

Net income                                           162         --          1,697         --          1,859
                                              ----------   ----------   ----------   ----------   ----------

Balance, December 31, 1998                    $       47    1,573,129   $   19,476   $      189   $   19,712
                                              ==========   ==========   ==========   ==========   ==========
<FN>
        The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
                                       13
<PAGE>

                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
                            STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)

                                                For the Years Ended December 31,
                                                       1998       1997
                                                       ----       ----
Operating Activities:

   Net income                                        $ 1,859     $ 1,438

   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                     653       1,238
       Amortization of acquisition fees                  473         585
       Gain on sale of equipment                        (406)       (157)
       Provision for early termination,
         financing leases                                157         249
       Provision for losses on notes receivable          287         166
       Provision for losses on accounts receivable       172         112
       Equity in earnings from joint venture, net        (17)        (27)
       Gain on sale of securities                         (4)       (460)
       Increase in accounts receivable                  (138)       (185)
       Decrease in accounts payable and accrued
         expenses                                        (96)        (94)
       Decrease in other assets                           26         174
                                                     -------     -------
   Net cash provided by operating activities           2,966       3,039
                                                     -------     -------

Investing Activities:

   Principal payments, financing leases                7,358       9,883
   Principal payments, notes receivable                3,181       3,007
   Distributions from joint ventures                      84          83
   Proceeds from sale of equipment                       583         292
   Proceeds from sale of securities                       10         455
   Investment in financing leases                     (2,025)     (3,069)
   Investment in notes receivable                     (2,439)     (7,324)
   Payment of acquisition fees                          (280)       (315)
                                                     -------     -------

   Net cash provided by investing activities           6,472       3,012
                                                     -------     -------

Financing Activities:

   Payments of principal, notes payable               (2,889)     (5,750)
   Distributions to partners                          (3,613)     (3,628)
   Redemptions of capital                                (66)       (141)
                                                     -------     -------

   Net cash used by financing activities              (6,568)     (9,519)
                                                     -------     -------

Increase (decrease) in cash and cash
  equivalents                                          2,870      (3,468)

Cash and cash equivalents, beginning of period         1,666       5,134
                                                     -------     -------

Cash and cash equivalents, end of period             $ 4,536     $ 1,666
                                                     =======     =======

Supplemental Cash Flow Information:

   Cash paid for interest expense                    $   223     $   588

        The accompanying notes are an integral part of these statements.

                                       14
<PAGE>

                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


Note 1.       Organization and Partnership Matters.
              ------------------------------------

         Phoenix  Leasing  American  Business Fund,  L.P., a California  limited
partnership  (the  "Partnership"),  was formed on December 3, 1992, to invest in
capital  equipment  of various  types and to lease such  equipment to or provide
financing to, on either a long-term or short-term  basis,  companies  engaged in
the   development  of  technologies   and  other  growth  industry   businesses,
franchisees,  and additional third party lessees and customers.  The Partnership
met minimum  investment  requirements  on January 27,  1994.  The  Partnership's
termination date is December 31, 2007.

         For financial reporting purposes, Partnership net income and net losses
will be allocated 99% to the Limited Partners and 1% to the General Partner.  In
addition, the General Partner will be allocated gross rental and interest income
in amounts equal to the excess,  if any, of the cumulative  distributions to the
General Partner over the cumulative  gross rental and interest income  allocated
to the General  Partner.  Syndication  costs will be allocated 1% to the General
Partner and 99% to the Limited Partners.

         The  General  Partner is  entitled  to receive 4% of all  distributions
until the Limited  Partners have  recovered the greater of 177% of their initial
capital  contributions  or 100% of their initial  capital  contributions  plus a
cumulative return of 11% per annum. Thereafter, the General Partner will receive
15% of all cash distributions.  From inception of the Partnership until December
31, 1999, the General  Partner's  interest in Cash Available for Distribution is
subordinated  in  any  calendar  quarter  until  the  Limited  Partners  receive
quarterly distributions equal to 2.75% of their capital contributions (i.e., 11%
per annum), prorated for any partial period.

         In the event the General  Partner has a deficit  balance in its capital
account  at the  time  of  Partnership  liquidation,  it  will  be  required  to
contribute the amount of such deficit to the Partnership.

         As compensation for management services, the General Partner receives a
fee, payable monthly,  subject to certain limitations,  in an amount equal to 2%
of the  Partnership's  gross revenues for the quarter from which such payment is
being made,  which  revenues  shall  include,  but are not  limited  to,  rental
receipts,  maintenance  fees,  proceeds  from the sale of equipment and interest
income.

         The General  Partner  will be  compensated  for  services  performed in
connection  with the  analysis  of  assets  available  to the  Partnership,  the
selection  of such  assets  and the  acquisition  thereof,  including  obtaining
lessees for the equipment,  negotiating and concluding  master lease  agreements
with certain lessees. As compensation for such acquisition services, the General
Partner will receive a fee equal to 4%, subject to certain  limitations,  of (a)
the purchase price of equipment  acquired by the Partnership or equipment leased
to  customers  by  manufacturers,  the  financing  for which is  provided by the
Partnership,   or  (b)  financing  provided  to  businesses  payable  upon  such
acquisition  or financing,  as the case may be.  Acquisition  fees are amortized
over the life of the assets principally on a straight-line basis.

         Phoenix  Securities,  Inc.,  an affiliate of the General  Partner,  had
contracted with or employed  certain persons who received  certain  compensation
for  wholesaling  activities  performed in  connection  with the offering of the
units through broker-dealers.

         A schedule of compensation  due and  distributions  made to the General
Partner for the years ended December 31, follows:

                                       15
<PAGE>
                                                       1998        1997
                                                       ----        ----
                                                    (Amounts in Thousands)

         Management fees                               $306        $367
         Acquisition fees                               178         416
         Cash distributions                             145         145
                                                       ----        ----

                                                       $629        $928
                                                       ====        ====

         Redemptions  of Limited  Partner  units will only be made to the extent
permitted by applicable laws and regulations,  the Partnership Agreement and if,
in the  opinion  of the  General  Partner,  it is in the  best  interest  of the
Partnership. In addition, redemptions will not be made if such redemptions would
cause the  Partnership to be categorized as a publicly  traded  partnership  for
federal income tax purposes.

         The  Partnership  will acquire such  limited  partnership  units for an
amount  equal to 85% of the  "accrual  basis  capital  account"  relating to the
redeemed units.  The  Partnership  will retain the remaining 15% of the "accrual
basis capital account" relating to the redeemed units.  Redemptions  retained by
the  Partnership  were $11,000 and $21,000  during the years ended  December 31,
1998 and 1997,  respectively.  "Accrual  basis  capital  account" is computed in
accordance  with the books and records  regularly  maintained by the Partnership
for financial reporting purposes, utilizing the accrual method of accounting.


Note 2.       Summary of Significant Accounting Policies.
              ------------------------------------------

         Cash and Cash Equivalents.  Cash and cash equivalents includes deposits
at banks,  investments in money market funds and other highly liquid  short-term
investments with original maturities of less than 90 days.

         Credit  and  Collateral.   The   Partnership's   activities  have  been
concentrated  in  the  equipment  leasing  and  financing  industry.   A  credit
evaluation  is performed  by the General  Partner for all leases and loans made,
with  the  collateral  requirements  determined  on a  case-by-case  basis.  The
Partnership's  loans are generally  secured by the equipment or assets  financed
and, in some cases,  other collateral of the borrower.  In the event of default,
the  Partnership  has the right to foreclose upon the collateral  used to secure
such loans.

         Notes  Receivable.  Notes  receivable  generally  are  stated  at their
outstanding unpaid principal balances, which includes accrued interest. Interest
income is accrued on the unpaid principal balance.

         Impaired Notes Receivable.  Generally,  notes receivable are classified
as impaired and the accrual of interest on such notes are discontinued  when the
contractual  payment of  principal  or  interest  has become 90 days past due or
management has serious doubts about further  collectibility  of the  contractual
payments,  even  though  the  loan  may  currently  be  performing.  When a note
receivable is classified as impaired,  income  recognition is discontinued.  Any
payments  received  subsequent  to the  placement of the note  receivable  on to
impaired  status  will  generally  be  applied  towards  the  reduction  of  the
outstanding  note  receivable  balance,  which may  include  previously  accrued
interest as well as principal.  Once the principal and accrued  interest balance
has been reduced to zero,  the  remaining  payments  will be applied to interest
income.  Generally,  notes  receivable  are restored to accrual  status when the
obligation is brought current,  has performed in accordance with the contractual
terms for a  reasonable  period of time and the ultimate  collectibility  of the
total contractual principal and interest is no longer in doubt.

         Allowance for Losses.  An allowance for losses is  established  through
provisions for losses charged  against  income.  Notes  receivable  deemed to be
uncollectible  are charged  against the  allowance  for losses,  and  subsequent
recoveries, if any, are credited to the allowance.

         Leasing  Operations.  The Partnership's  leasing  operations  currently
consist of financing and operating  leases.  The financing  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 at the end of the lease
term, over the cost of equipment  leased.  Unearned income is credited to income
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 consummating  new leases are capitalized and included in
the cost of equipment.  The Partnership  reviews its estimates of residual value
at least  annually.  If a decline  in value  has  occurred  which is other  than
temporary, a reduction in the investment is recognized currently.

         Under the  operating  method  of  accounting  for  leases,  the  leased

                                       16
<PAGE>
equipment  is recorded as an asset at cost and  depreciated  on a  straight-line
basis over the estimated useful life,  ranging up to three years.  Rental income
for the year is  determined  on the basis of rental  payments due for the period
under the terms of the lease.  Maintenance  and repairs of the leased  equipment
are charged to expense.

         The  Partnership's  policy  is  to  review  periodically  the  expected
economic life of its rental  equipment in order to determine the  probability of
recovering its  undepreciated  cost. Such reviews  address,  among other things,
recent and  anticipated  technological  developments  affecting high  technology
equipment and competitive factors within the high technology marketplace. Should
subsequent  reviews  of the  equipment  portfolio  indicate  that  rentals  plus
anticipated  sales proceeds will not exceed  expenses in any future period,  the
Partnership will revise its depreciation  policy as appropriate.  As a result of
such  periodic  reviews,  the  Partnership  recognized  additional  depreciation
expense of $30,000 and $39,000 ($.02 and $.02 per limited  partnership unit) for
the years ended December 31, 1998 and 1997, respectively.

         Portfolio  Valuation  Methodology.  The Partnership  uses the portfolio
method of accounting for the net realizable value of the Partnership's equipment
portfolio.

         Investment  in  Available-for-Sale   Securities.  The  Partnership  has
investments  in stock and stock  warrants  in  public  companies  that have been
determined to be available for sale. Available-for-sale securities are stated at
their fair market value,  with the unrealized gains and losses reported as other
comprehensive income.

         Reclassification.  Certain  1997  amounts  have  been  reclassified  to
conform to the 1998 presentation.

         Use of Estimates. The preparation of financial statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

         Comprehensive  Income.  As of January 1, 1998, the Partnership  adopted
Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income" (SFAS 130). This statement  establishes  standards for the reporting and
display of comprehensive income and its components in the financial  statements.
For the  Partnership,  comprehensive  income includes net income reported on the
statement of operations and changes in the fair value of its  available-for-sale
investments reported as a component of partners' capital.


Note 3.       Accounts Receivable.
              -------------------

         Accounts receivable consist of the following at December 31:

                                                                  1998
                                                                  ----
                                                         (Amounts in Thousands)

         Lease payments                                          $ 501
         General Partner and Affiliates                             45
         Interest                                                   13
         Property tax                                              110
                                                                 -----
                                                                   669
         Less:  allowance for losses on accounts receivable       (306)
                                                                 -----

              Total                                              $ 363
                                                                 =====

Note 4.       Notes Receivable.
              ----------------

         Notes receivable consist of the following at December 31:

                                                                   1998
                                                                   ----
                                                          (Amounts in Thousands)

         Notes receivable from emerging growth companies
           with stated interest ranging from 13% to 22%
           per annum, receivable in installments ranging
           from 36 to 49 months, collateralized by the
           equipment financed.                                   $ 4,365

                                       17
<PAGE>
         Notes receivable from other businesses with stated
           interest ranging from 13% to 17% per annum,
           receivable in installments ranging from 47 to 85
           months, collateralized by the equipment financed.       4,002
                                                                 -------
                                                                   8,367
         Less:  allowance for losses on notes receivable            (602)
                                                                 -------

           Total                                                 $ 7,765
                                                                 =======

         Minimum payments to be received on non-cancelable  notes receivable for
the years ended December 31, are as follows:
                                                         (Amounts in Thousands)

         1999 ...........................................     $  3,673
         2000 ...........................................        3,236
         2001 ...........................................        1,751
         2002 ...........................................          849
         Thereafter .....................................          582
                                                              --------

         Total minimum payments to be received ..........       10,091
         Impaired notes receivable ......................          365
         Less:  unearned interest .......................       (2,089)
         Less:  allowance for losses ....................         (602)
                                                              --------

         Net investment in notes receivable .............     $  7,765
                                                              ========

         Generally,  notes receivable are classified as impaired and the accrual
of  interest  on such notes are  discontinued  when the  contractual  payment of
principal  or  interest  has become 90 days past due or  management  has serious
doubts about further  collectibility of the contractual  payments.  Any payments
received  subsequent  to the  placement  of the note  receivable  on to impaired
status will generally be applied towards the reduction of the  outstanding  note
receivable  balance,  which may include  previously  accrued interest as well as
principal.  Once the principal and accrued  interest balance has been reduced to
zero, the remaining payments will be applied to interest income.

         At  December  31,  1998,  the  recorded  investment  in notes  that are
considered  to be impaired  was  $365,000  for which the related  allowance  for
losses is $180,000. The average recorded investment in impaired loans during the
years ended December 31, 1998 and 1997 were approximately  $285,000 and $40,000,
respectively.  The Partnership  recognized  interest income of $17,000 and $0 on
impaired  notes  receivable  during the years ended  December 31, 1998 and 1997,
respectively.

         The activity in the allowance for losses on notes receivable during the
year ended December 31, is as follows:
                                                       1998       1997
                                                       ----       ----
                                                   (Amounts in Thousands)
         Beginning balance                            $ 315      $ 241
              Provision for losses                      287        128
              Write downs                              --          (54)
                                                      -----      -----
         Ending balance                               $ 602      $ 315
                                                      =====      =====


Note 5.       Net Investment in Financing Leases and Equipment on Operating
              -------------------------------------------------------------
              Leases.
              ------

         Equipment on lease consists primarily of furniture,  fixtures, computer
hardware and other capital equipment.

         The  Partnership  has  entered  into  direct  lease  arrangements  with
franchised businesses,  companies engaged in the development of technologies and
other  growth  industry  businesses  such as the  semiconductor,  biotechnology,
medical  device,  software,  communications,  data  storage,  computer,  retail,
hospitality and others, located throughout the United States.  Generally,  it is
the responsibility of the lessee to provide maintenance on leased equipment. The
General Partner  administers the equipment  portfolio of leases acquired through
the direct leasing program. Administration includes the collection of rents from
the lessees and remarketing of the equipment.

         The net  investment  in financing  leases  consists of the following at
December 31:
                                       18
<PAGE>
                                                                 1998
                                                                 ----
                                                        (Amounts in Thousands)
         Minimum lease payments to be received                 $ 9,467
         Less: unearned income                                  (1,338)
               allowance for early terminations                   (231)
                                                               -------

         Net investment in financing leases                    $ 7,898
                                                               =======

         Minimum rentals to be received on noncancelable financing and operating
leases for the years ended December 31, are as follows:

                                                Financing      Operating
                                                ---------      ---------
                                                 (Amounts in Thousands)

         1999 .........................          $5,230          $  311
         2000 .........................           2,597              19
         2001 .........................           1,192            --
         2002 .........................             448            --
         2003 .........................            --              --
                                                 ------          ------

              Total ...................          $9,467          $  330
                                                 ======          ======

         Equipment held for lease  generally  consists of financing  leases that
have been placed into default. As a result, the leases have been reclassified to
equipment,  held at net  realizable  value  and  will be  depreciated  over  the
remaining  estimated  useful life of up to three years.  The General  Partner is
making  every  effort to pursue  remedies  that will  maximize  recovery  of the
Partnership's investment. The net carrying value of the equipment held for lease
at December 31, 1998 was $166,000.


Note 6.       Accounts Payable and Accrued Expenses.
              -------------------------------------


         Accounts  payable  and accrued  expenses  consist of the  following  at
December 31:

                                                                   1998
                                                                   ----
                                                          (Amounts in Thousands)

         Equipment lease operations                                $441
         Security deposits                                          398
         General Partner and Affiliates                              30
         Other                                                       65
                                                                   ----

                 Total                                             $934
                                                                   ====


Note 7.          Notes Payable.
                 -------------

         Notes payable consist of the following at December 31:

                                                                  1998
                                                                  ----
                                                         (Amounts in Thousands)

         Notes payable to banks, collateralized by all
           assets of the Partnership with variable rates
           of interest tied to the banks' base rate or
           IBOR rate, with payment terms of 48 months.           $1,125
                                                                 ======
                                       19
<PAGE>
         Principal payments due for the years ended December 31, are as follows:

                                                         (Amounts in Thousands)

         1999 ......................................             $1,104
         2000 ......................................                 21
         2001 ......................................               --
                                                                 ------

             Total .................................             $1,125
                                                                 ======

         Interest on the notes payable is tied to various indexes.  The weighted
average  interest rate for these notes is 7.96% at December 31, 1998.  The terms
of the Partnership's  outstanding notes payable contain,  among other covenants,
requirements for maintaining  certain  financial ratios and restrictions on cash
distributions to partners in the event of default.

         The amounts  borrowed under the loan  agreements are secured by any and
all assets of the  Partnership,  whether  now owned or  hereafter  acquired  and
regardless of whether such assets were acquired with funds borrowed  pursuant to
the loan agreement.  The loan agreements impose certain  restrictions  regarding
the  Partnership's  ability  to borrow  additional  funds  from  other  lenders,
including a restriction requiring  intercreditor  agreements with respect to any
such borrowings.  In this regard, the respective lenders under the Partnership's
loan  agreements  have  entered  into an  intercreditor  agreement  relating  to
borrowings by the Partnership under the loan agreements.


Note 8.       Income Taxes.
              ------------

         Federal  and state  income tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.

         The net differences  between the tax basis and the reported  amounts of
the Partnership's assets and liabilities are as follows at December 31, 1998:

                         Reported Amounts     Tax Basis       Net Difference
                         ----------------     ---------       --------------
                                        (Amounts in Thousands)

         Assets              $21,776           $20,745           $ 1,031
         Liabilities           2,064             1,818               246

         The  following  is a  reconciliation  between net income for  financial
reporting  purposes and net income for federal  income tax purposes for the year
ended December 31:

                                                         1998        1997
                                                         ----        ----
                                                      (Amounts in Thousands)

         Net income for financial reporting purposes    $ 1,859   $ 1,438

         Adjustments for tax purposes:
              Tax depreciation in excess of book         (4,286)   (5,564)
              Difference in rental income recognition     7,162     9,848
              Excess of book gain on sale of equipment
                over tax gain on sale of equipment       (2,221)   (2,498)
              Book valuation allowances not recognized
                for tax purposes                            595       431
              Other                                         (12)      (21)
                                                        -------   -------

         Net income for federal income tax purposes     $ 3,097   $ 3,634
                                                        =======   =======

                                       20
<PAGE>

Note 9.       Related Entities.
              ----------------

         Affiliates  of the  General  Partner  serve in the  capacity of general
partners  in other  partnerships,  all of which  are  engaged  in the  equipment
leasing and financing business.


Note 10.      Net Income and Distributions per Limited Partnership Unit.
              ---------------------------------------------------------

         Net income and distributions per limited partnership unit were based on
the Limited  Partner's  share of net income and  distributions  and the weighted
average  number of units  outstanding  of 1,576,194  and 1,582,654 for the years
ended December 31, 1998 and 1997,  respectively.  For the purposes of allocating
income (loss) to each individual Limited Partner, the Partnership  allocates net
income  (loss)  based  upon  each  respective   Limited  Partner's  net  capital
contributions.


Note 11.      Reimbursed Costs to the General Partner and Affiliates.
              ------------------------------------------------------

         The General Partner and affiliates incur certain  administrative  costs
such  as  data   processing,   investor   and   lessee   communications,   lease
administration,  accounting,  equipment storage and equipment  remarketing,  for
which it is  reimbursed  by the  Partnership.  These  expenses  incurred  by the
General  Partner and  affiliates are to be reimbursed at the lower of the actual
costs or an amount equal to 90% of the fair market value for such services.

         The reimbursed  costs to the General  Partner are $381,000 and $541,000
at December 31, 1998 and 1997, respectively.

         In  addition,  the General  Partner  receives a  management  fee and an
acquisition fee (see Note 1).


Note 12.      Fair Value of Financial Instruments.
              -----------------------------------

         The carrying  amounts  reported on the balance  sheet for cash and cash
equivalents,  available-for-sale  securities, notes receivable and notes payable
approximate the fair values.


 Note 13.     Subsequent Events.
              -----------------

         In January 1999, cash  distributions  of $36,000 and $411,000 were made
to the General and Limited Partners, respectively.



                                       21
<PAGE>
Item 8.       Disagreements on Accounting and Financial Disclosure Matters.
              ------------------------------------------------------------

         None.


                                    PART III

Item 9.       Directors and Executive Officers of the Registrant.
              --------------------------------------------------

         The  registrant  is  a  limited  partnership  and,  therefore,  has  no
executive  officers or  directors.  The  General  Partner of the  Registrant  is
Phoenix  Leasing  Associates  III L.P., a California  limited  partnership,  the
Corporate  General Partner of which is Phoenix  Leasing  Associates III, Inc., a
Nevada corporation and a wholly-owned subsidiary of Phoenix Leasing Incorporated
(PLI), a California corporation. The directors and executive officers of Phoenix
Leasing Associates III, Inc. (PLA) are as follows:

         GUS  CONSTANTIN,  age 61, is President,  and a Director of PLA III. Mr.
Constantin received a B.S. degree in Engineering from the University of Michigan
and a Master's Degree in Management Science from Columbia University.  From 1969
to 1972,  he  served  as  Director,  Computer  and  Technical  Equipment  of DCL
Incorporated  (formerly  Diebold Computer Leasing  Incorporated),  a corporation
formerly  listed on the  American  Stock  Exchange,  and as Vice  President  and
General  Manager of DCL Capital  Corporation,  a wholly-owned  subsidiary of DCL
Incorporated.  Mr.  Constantin  was actively  engaged in marketing  manufacturer
leasing  programs  to  computer  and  medical  equipment  manufacturers  and  in
directing DCL Incorporated's IBM System/370 marketing activities. Prior to 1969,
Mr.  Constantin was employed by IBM as a data  processing  systems  engineer for
four years.  Mr.  Constantin  is an  individual  general  partner in four active
partnerships and is an NASD registered principal.  Mr. Constantin is the founder
of PLI and the beneficial  owner of all of the common stock of Phoenix  American
Incorporated.

         GARY W.  MARTINEZ,  age 48, is Senior Vice  President and a Director of
PLA III.  He has been  associated  with PLI since  1976.  He  manages  the Asset
Management  Department,  which is  responsible  for  lease  and  loan  portfolio
management.  This includes credit analysis,  contract terms,  documentation  and
funding;  remittance application,  change processing and maintenance of customer
accounts; customer service, invoicing,  collection,  settlements and litigation;
negotiating  lease  renewals,  extensions,  sales and  buyouts;  and  management
information  reporting.  From 1973 to 1976, Mr. Martinez was a Loan Officer with
Crocker National Bank, San Francisco. Prior to 1973, he was an Area Manager with
Pennsylvania  Life Insurance  Company.  Mr. Martinez is a graduate of California
State University, Chico.

         HOWARD SOLOVEI, age 37, is the Chief Financial Officer, Treasurer and a
Director of PLA III. He has been  associated  with PLI since 1984.  Mr.  Solovei
oversees  the  Finance  Department.  He  is  responsible  for  the  structuring,
planning,  and monitoring of the  partnerships  sponsored by the General Partner
and its  affiliates,  as well as  maintaining  the  banking  relationships.  Mr.
Solovei graduated with a B.S. in Business  Administration from the University of
California, Berkeley.

         BRYANT J. TONG, age 44, is Senior Vice President,  Financial Operations
of PLA III.  He has been  with PLI  since  1982.  Mr.  Tong is  responsible  for
investor  services  and  overall  company  financial  operations.   He  is  also
responsible  for  the  technical  and  administrative  operations  of  the  cash
management,  corporate accounting,  partnership accounting,  accounting systems,
internal  controls and tax  departments,  in addition to Securities and Exchange
Commission and other regulatory agency reporting.  Prior to his association with
PLI, Mr. Tong was  Controller-Partnership  Accounting  with the Robert A. McNeil
Corporation for two years and was an auditor with Ernst & Whinney  (succeeded by
Ernst & Young) from 1977 through 1980. Mr. Tong holds a B.S. in Accounting  from
the University of California, Berkeley, and is a Certified Public Accountant.

         Neither the General  Partner nor any  Executive  Officer of the General
Partner has any family relationship with the others.

         Phoenix  Leasing   Incorporated  and  subsidiaries  and  the  executive
officers of the General  Partner  serve in a similar  capacity to the  following
affiliated limited partnerships:

              Phoenix Leasing Cash Distribution Fund V, L.P.
              Phoenix Income Fund, L.P.
              Phoenix High Tech/High Yield Fund
              Phoenix Leasing Cash Distribution Fund IV and
              Phoenix Leasing Cash Distribution Fund III

                                       22
<PAGE>
Disclosure Pursuant to Section 16, Item 405 of Regulation S-K:

         The General  Partner (and any corporate  general partner of the General
Partner) of the  Registrant,  and the executive  officers of the General Partner
(or any corporate  general  partner of the General  Partner) of the  Registrant,
file reports  pursuant to Section 16(a) of the Securities  Exchange Act of 1934,
as amended.  Based solely on the Registrant's review of the copies of such forms
received by the Registrant,  the Registrant believes that, during 1998, all such
required reports were filed on a timely basis.

Certain Legal Proceedings.

         On October 28, 1997, a Class Action  Complaint  (the  "Complaint")  was
filed against Phoenix Leasing Inc., Phoenix Leasing Associates, II and III L.P.,
Phoenix   Securities  Inc.  and  Phoenix  American  Inc.  (the  "Companies")  in
California  Superior Court for the County of Sacramento by eleven individuals on
behalf of investors in Phoenix Leasing Cash Distribution  Funds I through V (the
"Partnerships").  The  Companies  were served with the  Complaint on December 9,
1997. The Complaint sought  declaratory and other relief  including  accounting,
receivership,  imposition of  constructive  trust and judicial  dissolution  and
winding up of the Partnerships,  and damages based on fraud, breach of fiduciary
duty and  breach  of  contract  by the  Companies  as  general  partners  of the
Partnerships.

         Plaintiffs  severed  one cause of action  from the  Complaint,  a claim
related to the marketing and sale of CDF V, and  transferred  it to Marin County
Superior  Court (the "Marin  Action").  Plaintiffs  then dismissed the remaining
claims in  Sacramento  Superior  Court and re-filed  them in a separate  lawsuit
making similar allegations (the "Sacramento Action").

         Plaintiffs have amended the Marin Action twice. Defendants have not yet
answered the Complaint and may file a demurrer to dismiss the claims.  Discovery
has not commenced. The Companies intend to vigorously defend the Complaint.

         In February  1999,  plaintiffs  requested a transfer of the  Sacramento
Action  to  Marin  County.  The  Court  granted  that  request,  and the case is
currently  in  transit.  Defendants  have not yet  responded  to the  Complaint.
Discovery  has not  commenced.  The Companies  intend to  vigorously  defend the
Complaint.


Item 10.      Executive Compensation.
              ----------------------

         Set forth is the information  relating to all direct  remuneration paid
or accrued by the Registrant during the last year to the General Partner.

<TABLE>
<CAPTION>

      (A)                        (B)                                   (C)                                     (D)

                                                                  Cash and cash-                            Aggregate of
Name of Individual           Capacities in                        equivalent forms                        contingent forms
or persons in group          which served                         of remuneration                         of remuneration
-------------------          ------------       -----------------------------------------------------     ---------------
                                                           (C1)                        (C2)
                                                                              Securities or property
                                                Salaries, fees, directors'    insurance benefits or
                                                fees, commissions, and        reimbursement, personal
                                                bonuses                       benefits
                                                --------------------------    -----------------------
                                                               (Amounts in Thousands)
<S>                          <C>                         <C>                          <C>                      <C>
Phoenix Leasing
  Associates III L.P.        General Partner             $  484(1)                    $    0                   $    0
                                                          =====                        =====                    =====
<FN>
(1)  Consists of management and acquisition fees.
</FN>

</TABLE>


Item 11.      Security Ownership of Certain Beneficial Owners and Management.
              --------------------------------------------------------------

         (a)  No person  owns of record,  or is known by the  Registrant  to own
              beneficially,  more  than  five  percent  of any  class of  voting
              securities of the Registrant.
         (b)  The General Partner or its affiliates  owns the equity  securities
              of the Registrant set forth in the following table:

                                       23
<PAGE>

           (1)                        (2)                               (3)
    Title of Class          Amount Beneficially Owned           Percent of Class
    --------------          -------------------------           ----------------

General Partner Interest    Represents a 4% interest in                100%
                            the Registrant's profits and 
                            distributions, until the Limited
                            Partners have recovered their
                            capital contributions plus a
                            cumulative return of 11% per 
                            annum, compounded quarterly,
                            on the unrecovered portion 
                            thereof. Thereafter, the General
                            Partner will receive 15% interest
                            in the Registrant's profits and
                            distributions.

Limited Partner Interest    950 units                                  .06


Item 12.      Certain Relationships and Related Transactions.
              ----------------------------------------------

         None.


                                     PART IV

Item 13.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
              ----------------------------------------------------------------

                                                                       Page No.
                                                                       --------
(a)      1.   Financial Statements:

              Balance Sheet as of December 31, 1998                       11
              Statements of Operations and Comprehensive Income
                for the year ended December 31, 1998 and 1997             12
              Statements of Partners' Capital for the year 
                ended December 31, 1998 and 1997                          13
              Statements of Cash Flows for the year ended 
                December 31, 1998 and 1997                                14
              Notes to Financial Statements                             15 - 21

         All other schedules are omitted because they are not applicable, or not
required,  or because the  required  information  is  included in the  financial
statements or notes thereto.

(b)      Reports on Form 8-K:

         No reports on Form 8-K were filed for the quarter  ended  December  31,
         1998.

(c)      Exhibits

         21.  Additional Exhibits

              a) Balance Sheets of Phoenix Leasing Associates III, Inc. E21  1-5
                 Balance Sheets of Phoenix Leasing Associates III L.P.  E21  6-9

         27.  Financial Data Schedule


                                       24
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

                               PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.,
                               a California limited partnership
                                        (Registrant)

                               By: PHOENIX LEASING ASSOCIATES III L.P.,
                                   a California limited partnership,
                                   General Partner

                               By: PHOENIX LEASING ASSOCIATES III, INC.,
                                   a Nevada corporation,
                                   General Partner


Date: March 24, 1999           By: /S/  GUS CONSTANTIN
      --------------               -------------------------------
                                   Gus Constantin, President


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

      Signature                    Title                                Date
      ---------                    -----                                ----

/S/ GUS CONSTANTIN      President and a Director                  March 24, 1999
---------------------   of Phoenix Leasing Associates III, Inc.   --------------
(Gus Constantin)        


/S/ GARY W. MARTINEZ    Senior Vice President and a Director of   March 24, 1999
---------------------   Phoenix Leasing Associates III, Inc.      --------------
(Gary W. Martinez)                                          
                                                            
                        Chief Financial Officer,                  March 24, 1999
/S/ HOWARD SOLOVEI      Treasurer and a Director of               --------------
---------------------   Phoenix Leasing Associates III, Inc.                    
(Howard Solovei)                                                               
                                                                               
                                                                               
/S/ BRYANT J. TONG      Senior Vice President,                    March 24, 1999
---------------------   Financial Operations of                   --------------
(Bryant J. Tong)        (Principal Accounting Officer)                          
                        Phoenix Leasing Associates III, Inc.                    


                                       25