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, 1997       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 $5,633,000.

As of December 31, 1997,  1,578,705 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, 1997.

                    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.

                         1997 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 and Supplementary Data.......................   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,
1997,  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  $61,012,000.  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 2.88%. The average initial firm term of contractual  payments
from loans was 46 months and the weighted average interest was 16.34%.

         The  Partnership  has  acquired  siginificant  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,

                                        3

<PAGE>

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
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, 1997, 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,  1997,  the  Partnership  owns  equipment  and has
outstanding  loans to borrowers with an aggregate  original cost of $47,649,000.
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,
1997:
                                                              Percentage of
     Asset Types                       Cost of Assets(1)       Total Assets
-----------------------              --------------------     -------------
                                    (Amounts in Thousands)

Equipment:
Computer Hardware                        $   12,519                26%
Furniture and Fixtures                        5,735                12
Lab Test Equipment                            4,721                10
Leasehold Improvements                        3,519                 7
Commercial Equipment                          2,706                 6
Miscellaneous Equipment                       2,424                 5
Manufacturing Equipment                       1,176                 2
Communications Equipment                        781                 2
Software                                        791                 2
                                         ----------            -------

     Total Equipment                         34,372                72

Financing:
Financing to Emerging Growth Companies        9,793                21
Financing to Other Businesses                 3,484                 7
                                         ----------            ------

     Total Financing                         13,277                28
                                         ----------            ------

         Total Assets                    $   47,649               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 $29,038,000 at December 31, 1997.

                                        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.


                                     PART II


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.


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, 1997
              ------------------                   -----------------------

              Limited Partners                              1,624
              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)  became
effective with the Securities and Exchange Commission on October 9, 1993 and met
its minimum  investment  requirements  of  $1,200,000  on January 27, 1994.  The
Partnership  concluded  its  public  offering  on  October  6, 1996 and has sold
1,603,335  units of limited  partnership  interest,  resulting in total  capital
contributions of $32,067,000 as of December 31, 1997.

         The Partnership reported net income of $1,438,000 during the year ended
December  31, 1997,  as compared to net income of  $1,973,000  during 1996.  The
decreased net income during 1997, as compared to 1996,  resulted from a decrease
in  earnings  from  financing  leases  and  the   decline in  gain  on  sale  of
securities.

         Total revenues decreased by $855,000 during the year ended December 31,
1997,  as  compared  to the same period in 1996.  Earned  income from  financing
leases  decreased by  $1,139,000  during the year ended  December  31, 1997,  as
compared  to the same  period  in 1996.  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 $14
million at December 31, 1997, as compared to $21.8 million at December 31, 1996.
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, 1997,  compared to 1996,  is the decrease in gain on sale of
securities  of  $798,000.  The  gain on  sale  of  securities  of  $460,000  and
$1,258,000,  recognized  during  the years  ended  December  31,  1997 and 1996,
respectively,  was due to the  exercise and sale of stock  warrants  held by the
Partnership,  in which  $455,000 and $1,274,000 of proceeds was received for the
years ended December 31, 1997 and 1996,  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,  1997,  the  Partnership  had
remaining  investments  in stock  warrants  with  unrealized  gains of  $57,000,
compared to $228,000 at December 31, 1996.  These stock warrants contain certain
restrictions, but are generally exercisable within one year.

         The decrease in earned income from financing  leases for the year ended
December 31, 1997,  and the decrease in gain on sale of securities  for the year
ended December 31, 1997, were partially offset by an increase in interest income
from notes  receivable.  Interest  income  from notes  receivable  increased  by
$419,000 for the year ended  December  31, 1997,  compared to the same period in
the previous  year.  This  increase in interest  income is  attributable  to new
investments made during 1997.

         Total  expenses  decreased by $320,000 for the year ended  December 31,
1997, as compared to the same period in the prior year. The decrease in expenses
is primarily due to a decrease in interest  expense of $449,000  during the year
ended December 31, 1997, as compared 1996. The decrease in interest expense is a
result of a decline in the  Partnership's  outstanding  debt. As of December 31,
1997, the Partnership's outstanding notes payable balance is $4,015,000 compared
to $9,765,000 as of December 31, 1996.

         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

         During the public offering  stage,  which concluded on October 6, 1996,
the  Partnership's  primary source of liquidity came from capital  contributions
and borrowings. As another source of liquidity, the Partnership has entered into
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  $15,929,000  during  the year  ended  December  31,  1997,  as  compared  to
$13,462,000  during the same period in 1996.  This increase is reflective of the
increase in the Partnership's portfolio of leases and notes receivable.


                                        6

<PAGE>



         The  Partnership  received  capital  contributions  from  investors  of
$8,077,000 and incurred  organizational  and offering costs of $1,200,000 during
the year ended December 31, 1996.

         The  Partnership  combined these funds with proceeds from borrowings to
invest in equipment leases and notes receivable.  During the year ended December
31, 1997,  the  Partnership  invested $3.1 million in equipment  leases and $7.3
million in notes  receivable,  as compared  to  investments  of $8.5  million in
equipment  leases and $1.7 million in notes  receivable  (including its pro rata
interest in joint ventures) during the same period in 1996.

         As of December 31, 1997, the Partnership had acquired leased  equipment
with an aggregate  original cost of $45.3 million and invested  $15.7 million in
notes  receivable  (including  its pro  rata  interest  in joint  ventures),  as
compared to acquisitions of $42.3 million of leased equipment and investments of
$8.3  million in notes  receivable  (including  its pro rata  interest  in joint
ventures) at December 31, 1996.

         As of December 31, 1997, the Partnership  reported equipment being held
for lease with an original cost of $2,545,000  and a net book value of $246,000,
as  compared  to  equipment  being  held  for  lease  with an  original  cost of
$1,913,000  and a net book value of $674,000 at December 31,  1996.  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
$292,000 for the year ended December 31, 1997, compared to $766,000 for the same
period in the previous year. The net book value of the equipment sold during the
year  ended  December  31,  1997 was  $135,000,  compared  to  $717,000  for the
equipment sold in 1996.

         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, 1997, the Partnership had repaid  approximately $17.1 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, 1996, the Partnership had borrowed $3 million under this loan
agreement, approximately $1.9 million of which has been repaid.

         Payments of the  Partnership's  borrowings  discussed above are payable
monthly.  The  Partnership  made  payments of  principal  of  $5,750,000  on its
outstanding  debt  during the year ended  December  31,  1997,  as  compared  to
$5,729,000 during the year ended December 31, 1996.

         The cash  distributed  to partners  during the year ended  December 31,
1997 was $3,628,000,  as compared to $4,285,000  during the same period in 1996.
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 $3,483,000
and  $4,119,000 in cash  distributions  during the years ended December 31, 1997
and  1996,   respectively.   As  of  December  31,  1997,  the  cumulative  cash
distributions  to limited  partners was $10,133,000 as compared to $6,650,000 at
December 31,  1996.  respectively.  The General  Partner  received  $145,000 and
$166,000  during the years ended December 31, 1997 and 1996,  respectively.  The
Partnership plans to make distributions to partners during 1998 at the same rate
as the current distribution.

         On April 15, 1996,  the  Partnership  made a special  distribution,  in
addition  to the  regular  distribution,  to  partners of record as of March 31,
1996. The amount of this  distribution was  approximately  2.5% of the partners'
original  contribution.  This  special  distribution  was made as the  result of
proceeds received from the sale of marketable securities.

         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

                                        7

<PAGE>



made above. Limited Partners are cautioned that such forward-looking  statements
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 $19.05  per  limited
partnership unit at December 31, 1997.




                                        8

<PAGE>



          Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                  -------------------------------------------

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

                          YEAR ENDED DECEMBER 31, 1997
                          ----------------------------


                                        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, 1997,
and the related  statements of operations,  partners' capital and cash flows for
the year then ended.  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. The statements of operations, partners'
capital and cash flows of Phoenix  Leasing  American  Business Fund,  L.P. as of
December 31, 1996, were audited by other auditors whose report dated January 20,
1997, expressed an unqualified opinion on these statements.

We conducted our audit 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 audit provides 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, 1997, and the results of its operations
and its cash  flows  for the year  then  ended,  in  conformity  with  generally
accepted accounting principles.




San Francisco, California,                                   ARTHUR ANDERSEN LLP
  January 23, 1998


                                       10

<PAGE>



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


                                                               December 31, 1997
                                                               -----------------
ASSETS

Cash and cash equivalents                                          $   1,666

Accounts receivable (net of allowance for losses on
   accounts receivable of $194)                                          397

Notes receivable (net of allowance for losses on
   notes receivable of $315)                                           8,794

Net investment in financing leases (net of allowance
   for early terminations of $394)                                    13,966

Equipment on operating leases and held for lease (net
   of accumulated depreciation of $1,899)                                388

Capitalized acquisition fees (net of accumulated
 amortization of $1,487)                                                 942

Other assets                                                             399
                                                                   ---------

     Total Assets                                                  $  26,552
                                                                   =========

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

   Accounts payable and accrued expenses                           $   1,132

   Notes payable                                                       4,015
                                                                   ---------

     Total Liabilities                                                 5,147
                                                                   ---------
Partners' Capital:

   General Partner                                                        30

   Limited Partners, 2,500,000 units authorized, 1,603,335
     units issued and 1,578,705 units outstanding                     21,318

   Unrealized gain on marketable securities available for
     sale                                                                 57
                                                                   ---------

     Total Partners' Capital                                          21,405
                                                                   ---------

     Total Liabilities and Partners' Capital                       $  26,552
                                                                   =========

                     The accompanying notes are an integral
                            part of these statements.

                                       11

<PAGE>



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



                                                For the Years Ended December 31,
                                                    1997               1996
                                                    ----               ----
INCOME

   Earned income, financing leases                $ 2,698           $  3,837

   Interest income, notes receivable                1,215                796

   Rental income                                      962                262

   Gain on sale of securities                         460              1,258

   Other income                                       298                335
                                                  -------          ---------

     Total Income                                   5,633              6,488
                                                  -------          ---------

EXPENSES

   Depreciation and amortization                    1,238              1,340

   Amortization of acquisition fees                   585                497

   Lease related operating expenses                   165                149

   Management fees to General Partner                 367                345

   Reimbursed administrative costs to
     General Partner                                  383                403

   Interest expense                                   636              1,085

   Provision for losses on receivables                527                487

   General and administrative expenses                294                209
                                                  -------          ---------

     Total Expenses                                 4,195              4,515
                                                  -------          ---------

NET INCOME                                        $ 1,438          $   1,973
                                                  =======          =========

NET INCOME PER LIMITED PARTNERSHIP UNIT           $   .81          $    1.28
                                                  =======          =========

ALLOCATION OF NET INCOME:

   General Partner                                $   158          $     184

   Limited Partners                                 1,280              1,789
                                                  -------          ---------

                                                  $ 1,438          $   1,973
                                                  =======          =========


                          The accompanying notes are an
                       integral part of these statements.

                                       12

<PAGE>


<TABLE>

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



                                                 General
                                                 Partner's     Limited Partner's      Unrealized      Total
                                                  Amount      Units        Amount        Gains        Amount
                                                  -----     ----------------------       -----        ------
<S>                                           <C>           <C>         <C>          <C>          <C>
Balance, December 31, 1995                    $        3    1,197,927   $   19,316   $      998   $   20,317

Partners' contributions                             --        403,878        8,077         --          8,077

Syndication costs                                     (4)        --         (1,207)        --         (1,211)

Redemptions of capital                              --        (13,124)        (194)        --           (194)

Change for the year in unrealized gains on
   available-for-sale securities                    --           --           --           (770)        (770)

Distributions to partners ($2.94 per limited
   partnership unit)                                (166)        --         (4,119)        --         (4,285)

Net income                                           184         --          1,789         --          1,973
                                              ----------   ----------   ----------   ----------   ----------

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

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

Change for the year in unrealized gains on
   available-for-sale securities                    --           --           --           (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
                                              ==========   ==========   ==========   ==========   ==========


                                        The accompanying notes are an
                                      integral part of these statements
</TABLE>
                                                      13

<PAGE>

<TABLE>


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



                                                             For the Years Ended
                                                                December 31,
                                                              1997        1996
                                                              ----        ----
<S>                                                          <C>        <C>
Operating Activities:

   Net income                                               $ 1,438     $ 1,973

   Adjustments  to  reconcile  net  income  to
     net cash provided by operating activities:
       Depreciation and amortization                          1,238       1,340
       Amortization of acquisition fees                         585         497
       Gain on sale of equipment                               (157)        (49)
       Provision for early termination, financing
         leases                                                 249         354
       Provision for losses on notes receivable                 166          97
       Provision for losses on accounts receivable              112          36
       Equity in earnings from joint venture, net               (27)        (39)
       Gain on sale of securities                              (460)     (1,258)
       Increase in accounts receivable                         (185)        (69)
       Increase (decrease) in accounts payable and
         accrued expenses                                       (94)        120
       Decrease in other assets                                 174         130
                                                            -------     -------
   Net cash provided by operating activities                  3,039       3,132
                                                            -------     -------

Investing Activities:

   Principal payments, financing leases                       9,883       8,387
   Principal payments, notes receivable                       3,007       1,943
   Distributions from joint ventures                             83          86
   Proceeds from sale of equipment                              292         766
   Proceeds from sale of securities                             455       1,274
   Investment in financing leases                            (3,069)     (8,488)
   Investment in notes receivable                            (7,324)     (1,720)
   Investment in securities                                    --           (16)
   Payment of acquisition fees                                 (315)       (656)
                                                            -------     -------

   Net cash provided by investing activities                  3,012       1,576
                                                            -------     -------

Financing Activities:

   Proceeds from notes payable                                 --         1,000
   Payments of principal, notes payable                      (5,750)     (5,729)
   Partners' contributions                                     --         8,077
   Syndication costs                                           --        (1,200)
   Distributions to partners                                 (3,628)     (4,285)
   Redemptions of capital                                      (141)       (194)
                                                            -------     -------

   Net cash used by financing activities                     (9,519)     (2,331)
                                                            -------     -------

Increase (decrease) in cash and cash equivalents             (3,468)      2,377

Cash and cash equivalents, beginning of period                5,134       2,757
                                                            -------     -------

Cash and cash equivalents, end of period                    $ 1,666     $ 5,134
                                                            =======     =======

Supplemental Cash Flow Information:

   Cash paid for interest expense                           $   588     $ 1,037


                          The accompanying notes are an
                       integral part of these statements.
</TABLE>
                                       14

<PAGE>



                  PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1997


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  distributions  that it receives  from the  Partnership.
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,  has
contracted with or employs certain persons who will receive certain compensation
for  wholesaling  activities  performed in  connection  with the offering of the
units through broker-dealers.

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

                                       15

<PAGE>



                                                   1997             1996
                                                   ----             ----
                                                   (Amounts in Thousands)

  Management fees                                $     367      $     345
  Acquisition fees                                     416            408
  Wholesaling activities in connection
    with the offering of units                         -              162
  Cash distributions                                   145            166
                                                 ---------      ---------

                                                 $     928      $   1,081
                                                 =========      =========

         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 $21,000 and $26,000  during the years ended  December 31,
1997 and 1996,  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

                                       16

<PAGE>



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
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 $39,000 and $271,000 ($.02 and $.19 per limited partnership unit) for
the years ended December 31, 1997 and 1996, 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 in a
separate component of partners' capital.

         Reclassification.  Certain  1996  amounts  have  been  reclassified  to
conform to the 1997 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.


Note 3.     Accounts Receivable.

       Accounts receivable consist of the following at December 31:

                                                                   1997
                                                                   ----
                                                          (Amounts in Thousands)
       Lease payments                                          $     357
       General Partner and Affiliates                                 89
       Interest                                                       15
       Property tax                                                  130
                                                               ---------
                                                                     591
       Less:  allowance for losses on accounts receivable           (194)
                                                               ---------

            Total                                              $     397
                                                               =========


Note 4.     Notes Receivable.

       Notes receivable consist of the following at December 31:

                                                                   1997
                                                                   ----
                                                          (Amounts in Thousands)

       Notes receivable  from emerging  growth
        companies with stated interest ranging
        from 13% to 23% per annum, receivable in
        installments ranging from 36 to 49 months,
        collateralized by the equipment financed.              $   6,136


                                       17

<PAGE>

       Notes receivable from other businesses
         with stated interest ranging from
         14% to 17% per annum, receivable
         in installments rangingfrom 48 to
         85 months, collateralized by the
         equipment financed.                                        2,973
                                                               ----------
                                                                    9,109
       Less:  allowance for losses on notes receivable               (315)
                                                               ----------

          Total                                                $    8,794
                                                               ==========

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

                                                          (Amounts in Thousands)

         1998.............................................     $    3,862
         1999.............................................          3,268
         2000.............................................          2,817
         2001.............................................          1,233
         2002.............................................            462
         Thereafter.......................................            110
                                                               ----------

         Total minimum payments to be received............         11,752
         Impaired notes receivable........................            --
         Less:  unearned interest.........................         (2,643)
         Less:  allowance for losses......................           (315)
                                                               ----------

         Net investment in notes receivable...............     $    8,794
                                                               ==========

         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, 1997 there were no notes that were  considered  to be
impaired.  The average  recorded  investment in impaired  loans during the years
ended  December  31,  1997 and 1996  were  approximately  $40,000  and  $23,000,
respectively.  The  Partnership  recognized  interest income of $0 and $8,000 on
impaired  notes  receivable  during the years ended  December 31, 1997 and 1996,
respectively.

         The activity in the allowance for losses on notes receivable during the
year ended December 31, is as follows:

                                                                  1997
                                                                  ----
                                                          (Amounts in Thousands)
         Beginning balance                                     $      241
              Provision for losses                                    128
              Write downs                                             (54)
                                                               ----------
         Ending balance                                        $      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.


                                       18

<PAGE>



         The net  investment  in financing  leases  consists of the following at
December 31:

                                                        1997
                                                        ----
                                               (Amounts in Thousands)
      Minimum lease payments to be received          $  16,922
      Less: unearned income                             (2,562)
              allowance for early terminations            (394)
                                                     ----------

      Net investment in financing leases             $  13,966
                                                     =========

      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)

         1998.....................................   $    8,437      $   506
         1999.....................................        5,395          272
         2000.....................................        2,148           88
         2001.....................................          716           73
         2002.....................................          226           67
                                                     ----------      -------

              Total                                  $   16,922      $ 1,006
                                                     ==========      =======

         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, 1997 was $246,000.


Note 6.     Accounts Payable and Accrued Expenses.

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

                                                         1997
                                                (Amounts in Thousands)

         Equipment lease operations                  $      437
         Security deposits                                  362
         General Partner and Affiliates                     236
         Other                                               97
                                                     ----------

                 Total                               $    1,132
                                                     ==========


Note 7.     Notes Payable.

         Notes payable consist of the following at December 31:

                                                         1997
                                                         ----
                                                (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.                            $    4,015
                                                     ==========


                                       19

<PAGE>



         Principal payments due for the years ended December 31, are as follows:

                                                        (Amounts in Thousands)

         1998    .........................................     $  2,890
         1999    .........................................        1,104
         2000    .........................................           21
                                                               --------

                 Total....................................     $  4,015
                                                               ========

         Interest on the notes payable is tied to various indexes.  The weighted
average  interest rate for these notes is 8.27% at December 31, 1997.  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, 1997:

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

Assets             $  26,552              $  24,205              $   2,347
Liabilities            5,147                  4,702                    445

         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:

                                                                   1997
                                                                   ----
                                                          (Amounts in Thousands)

 Net income for financial reporting purposes                    $  1,438

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

 Net income for federal income tax purposes                     $  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 1,582,654  and 1,399,791 for the years
ended December 31, 1997 and 1996,  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  adminstrative  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 $541,000 and $537,000
at December 31, 1997 and 1996, 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 1998, cash  distributions  of $36,000 and $412,000 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 60, 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 47, 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 36, 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 43, 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.

         CYNTHIA E. PARKS, age 42, is Senior Vice President, General Counsel and
Secretary  of PLA III.  Prior to joining PLI in 1984,  she was with GATX Leasing
Corporation,  and had  previously  been  Corporate  Counsel for Stone  Financial
Companies,  and an  Assistant  Vice  President  of the  Bank  of  America,  Bank
Amerilease Group. She has a bachelor's  degree from Santa Clara University,  and
earned her J.D. from the University of San Francisco School of Law.

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

                                       22

<PAGE>



         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
              Phoenix Leasing Cash Distribution Fund III and
              Phoenix Leasing Income Fund VII

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 1997, all such
required  reports  were filed on a timely  basis,  except for  reports on Form 3
(Initial  Statement of Beneficial  Ownership of Securities) filed late by Howard
Solovei and Cynthia E. Parks,  each an executive  officer of the General Partner
(or any corporate general partner of the General Partner) of the Registrant.  No
units of limited partnership interest are held by such executive officers.

Certain Legal Proceedings.

         On October 28, 1997 a Class Action  Complaint was filed against Phoenix
Leasing  Incorporated,  Phoenix  Leasing  Associates,  II and III L.P.,  Phoenix
Securities  Inc.  and  Phoenix  American   Incorporated   (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  seeks  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.  The  Companies  received  an  extension  of  time to  answer  the
Complaint  and formal  discovery  has not  commenced.  The  Companies  intend to
vigorously defend the Complaint.

<TABLE>

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.


       (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>
Phoenix Leasing
  Associates III L.P.        General Partner             $  782(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.

                                       23

<PAGE>



         (b) The General Partner or its affiliates owns the equity securities of
the Registrant set forth in the following table:


           (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, 1997                        11
              Statements of Operations for the year ended
                December 31, 1997 and 1996                                 12
              Statements of Partners' Capital for the year
                ended December 31, 1997 and 1996                           13
              Statements of Cash Flows for the year ended
                December 31, 1997 and 1996                                 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,
          1997.

(c)      Exhibits

         21.  Additional Exhibits

              a) Balance Sheets of Phoenix Leasing Associates III, Inc. E21 1-4
                 Balance Sheets of Phoenix Leasing Associates III L.P   E21 5-8

         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, 1998           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, 1998
---------------------   of Phoenix Leasing Associates III, Inc.   --------------
(Gus Constantin)


/S/ GARY W. MARTINEZ    Senior Vice President and a Director of   March 24, 1998
---------------------   Phoenix Leasing Associates III, Inc.      --------------
(Gary W. Martinez)

                        Chief Financial Officer,                  March 24, 1998
/S/ HOWARD SOLOVEI      Treasurer and a Director of               --------------
---------------------   Phoenix Leasing Associates III, Inc.
(Howard Solovei)


/S/ BRYANT J. TONG      Senior Vice President,                    March 24, 1998
---------------------   Financial Operations of                   --------------
(Bryant J. Tong)        (Principal Accounting Officer)
                        Phoenix Leasing Associates III, Inc.




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