Exhibit 21




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
Phoenix Leasing Associates, Inc.:

        We have audited the accompanying  consolidated balance sheets of Phoenix
Leasing  Associates,  Inc. (a Nevada corporation) and subsidiary as of September
30, 2000 and 1999.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

        We conducted our audits in accordance with auditing standards  generally
accepted in the United States.  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 balance sheets referred to above present fairly, in
all material  respects,  the financial  position of Phoenix Leasing  Associates,
Inc.  and  subsidiary  as of September  30, 2000 and 1999,  in  conformity  with
accounting principles generally accepted in the United States.



                                                                 ARTHUR ANDERSEN

San Francisco, California,
December 1, 2000

                                   Page 1 of 9


<PAGE>

                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                            September 30,
                                                          2000          1999
                                                          ----          ----

Cash ...............................................  $       135   $     3,594
Due from Phoenix Leasing Incorporated ..............    2,826,785     2,364,588
Due from Phoenix Income Fund, L.P. .................        2,126        19,451
                                                      -----------   -----------

         Total Assets ..............................  $ 2,829,046   $ 2,387,633
                                                      ===========   ===========



                      LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:

     Accounts payable and accrued expenses .........  $     4,550   $     4,270
     Deficit investment in Phoenix Income Fund, L.P.          600           121
                                                      -----------   -----------

         Total Liabilities .........................        5,150         4,391
                                                      -----------   -----------

Minority Interest in Consolidated Subsidiary .......        6,214         6,214
                                                      -----------   -----------


Shareholder's Equity:

     Common stock, without par value, 100 shares
       authorized and outstanding ..................    4,382,225     4,382,225
     Retained earnings .............................    2,817,582     2,376,928
     Less:
       Note receivable from affiliate ..............   (4,382,125)   (4,382,125)
                                                      -----------   -----------

         Total Shareholder's Equity ................    2,817,682     2,377,028
                                                      -----------   -----------

         Total Liabilities and Shareholder's Equity   $ 2,829,046   $ 2,387,633
                                                      ===========   ===========

      The accompanying notes are an integral part of these balance sheets.

                                       2
<PAGE>


                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           NOTES TO THE BALANCE SHEET

                               September 30, 2000


Note 1.  Organization:

         Phoenix  Leasing  Associates,  Inc.  (the Company) was formed under the
laws of Nevada on September 13, 1989.  The Company is a wholly owned  subsidiary
of Phoenix Leasing Incorporated (PLI), a California corporation.

         As of  September  30, 2000 and 1999,  the  Company has a 50%  ownership
interest in Phoenix  Leasing  Associates  L.P.  (PLALP),  a  California  limited
partnership.  This ownership interest is subject to change upon agreement of the
partners. The Company is the general partner of PLALP, which was formed to serve
as the general  partner in Phoenix  Income  Fund,  L.P.  (PIFLP),  a  California
limited   partnership.   The  limited  partner  of  PLALP  is  Lease  Management
Associates,  Inc., a Nevada corporation controlled by an officer of the Company,
who also owns the parent of PLI. Profits and losses  attributable to acquisition
fees  paid to  PLALP by PIFLP  are  allocated  in  proportion  to the  partners'
ownership interests.  All other profits and losses of PLALP are allocated to the
Company.  Distributions to the partners are made in accordance with the terms of
the partnership agreement.

Note 2.  Principles of Consolidation:

         The  consolidated  balance  sheets as of  September  30, 2000 and 1999,
include the accounts of the Company and its  subsidiary,  PLALP,  over which the
Company exerts significant control and influence.  All significant  intercompany
accounts and transactions  have been eliminated in  consolidation.  The minority
interest represents the limited partner's interest in PLALP.

         The Company records its investments in PIFLP under the equity method of
accounting.  As general  partner,  the Company has  complete  authority  in, and
responsibility   for,  the  overall   management   of  PIFLP,   which   includes
responsibility  for  supervising  PIFLP's  acquisition,   leasing,   remarketing
activities and its sale of equipment.

Note 3.  Use of Estimates:

         The  preparation  of  consolidated  balance  sheets 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 consolidated
balance sheets. Actual results could differ from those estimates.

Note 4.  Notes Receivable from Affiliate:

         PLI, the sole shareholder in the Company,  as of September 30, 2000 and
1999, has issued demand  promissory  notes to the Company  totaling  $4,382,125.
There are no restrictions  or covenants  associated with these notes which would
preclude the Company from receiving the principal or interest  amounts under the
terms of the notes. The notes bear interest at a rate equal to the lesser of 10%
or the prime rate plus 1%, as determined by Citibank,  N.A., New York, New York.
Interest is payable by PLI on the first  business day of each calendar  quarter.
The principal amounts are due and payable upon demand by the Company.


                                       3
<PAGE>

                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           NOTES TO THE BALANCE SHEET

                               September 30, 2000

Note 5.  Income Taxes:

         Effective  July 1, 1998, the Company and all its  subsidiaries  adopted
treatment as an "S"  Corporation  pursuant to the Federal Income Tax Regulations
for tax reporting  purposes.  Federal and state income tax  regulations  provide
that  taxes  on  the  income  or  loss  of the  Company  are  reportable  on the
shareholder's individual return.

Note 6.  Compensation and Fees:

         The  Company  receives  acquisition  fees equal to four  percent of the
purchase  price of assets  acquired or financed by PIFLP in connection  with the
analysis,  selection and acquisition or financing of assets,  and the continuing
analysis of the overall  portfolio of PIFLP's assets,  and management fees equal
to three  and one half  percent  of PIFLP  gross  revenues  in  connection  with
managing the operations of PIFLP. In addition,  the Company receives an interest
in PIFLP's  profits,  losses and  distributions.  Management  fees of $2,126 and
$19,451 as of  September  30, 2000 and 1999,  respectively,  are included in Due
from Phoenix Income Fund, L.P. on the consolidated balance sheets.

Note 7.  Related Parties:

         The Company has entered  into an agreement  with PLI,  whereby PLI will
provide  management  services to PLALP in  connection  with the  operations  and
administration  of PIFLP. In consideration for the services and activities to be
performed  by PLI  pursuant to this  agreement,  the Company pays PLI fees in an
amount equal to: three and one half percent of PIFLP's cumulative gross revenues
plus the lesser of four percent of the purchase  price of equipment  acquired by
and  financing  provided  to  businesses  by  PIFLP  or  100%  of the  net  cash
attributable to the  acquisition  fee which has been  distributed to the Company
plus 100% of all other net cash from  operations of PLALP.  Management fees paid
to PLI equal $13,612 and $103,643 for the twelve months ended September 30, 2000
and 1999, respectively.

Note 8.  Commitments and Contingencies:

        On October 28, 1997, a Class Action  Complaint was filed against Phoenix
Leasing  Incorporated,  Phoenix  Leasing  Associates,  II and III  LP.,  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 sought  declaratory and other relief  including  accounting,
receivership,  imposition of a 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 "Berger  Action").  Plaintiffs  then dismissed the remaining
claims in  Sacramento  Superior  Court and re-filed  them in a separate  lawsuit
making similar allegations (the "Ash Action").


                                       4
<PAGE>
                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           NOTES TO THE BALANCE SHEET

                               September 30, 2000


Note 8.  Commitments and Contingencies (continued):

         The Ash  complaint  includes six causes of action:  breach of fiduciary
duty,  constructive  fraud,  judicial  dissolution of Cash Distribution Fund IV,
judicial  dissolution  of Cash  Distribution  Fund V,  accounting and alter ego.
Defendants  recently  answered the complaint and  discovery has  commenced.  The
plaintiffs'   depositions  have  been  taken,   and  plaintiffs   recently  took
depositions of defendants.

         The Berger  complaint  relates to  alleged  misrepresentations  made in
connection  with the  offering  of Cash  Distribution  Fund V.  Defendants  have
answered the complaint and discovery has commenced.  A class has been certified.
The  plaintiffs'  depositions  have been taken,  and  plaintiffs  recently  took
depositions of defendants.

         On August 28, 2000, the Ash and Berger actions were  consolidated  (the
"Consolidated  Action")  pursuant to  stipulation  by both  parties.  Plaintiffs
recently  served a first  request for  production  in the  Consolidated  Action;
defendants responded to the first request for production on November 27, 2000.

         The Companies intend to vigorously defend the Consolidated Action.


                                       5
<PAGE>







                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
Phoenix Leasing Associates L.P.:

         We have  audited the  accompanying  balance  sheets of Phoenix  Leasing
Associates L.P. (a California limited  partnership) as of September 30, 2000 and
1999. 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 audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States.  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 balance sheets referred to above present fairly, in
all material respects, the financial position of Phoenix Leasing Associates L.P.
as of September  30, 2000 and 1999,  in conformity  with  accounting  principles
generally accepted in the United States.





San Francisco, California,
December 1, 2000


                                       6
<PAGE>

                         PHOENIX LEASING ASSOCIATES L.P.

                                 BALANCE SHEETS

                                     ASSETS

                                                                 September 30,
                                                                2000       1999
                                                                ----       ----

Cash .....................................................    $   100    $   616
Due from Phoenix Income Fund, L.P. .......................      2,126     19,451
Due from General Partner .................................      7,853       --
                                                              -------    -------

         Total Assets ....................................    $10,079    $20,067



                       LIABILITIES AND PARTNERS' CAPITAL


Liabilities:

     Accounts payable and accrued expenses ...............    $ 2,275    $ 2,135
     Deficit investment in Phoenix Income Fund, L.P. .....        600        121
     Due to General Partner ..............................       --       10,607
                                                              -------    -------

         Total Liabilities ...............................      2,875     12,863
                                                              -------    -------



Partners' Capital:

     General partner (99 partnership units) ..............        990        990
     Limited partner (99 partnership units) ..............      6,214      6,214
                                                              -------    -------

         Total Partners' Capital .........................      7,204      7,204
                                                              -------    -------

         Total Liabilities and Partners' Capital .........    $10,079    $20,067
                                                              =======    =======


      The accompanying notes are an integral part of these balance sheets.

                                       7
<PAGE>


                         PHOENIX LEASING ASSOCIATES L.P.

                           NOTES TO THE BALANCE SHEETS

                               September 30, 2000


Note 1.  Organization and Partnership Matters:

         Phoenix Leasing Associates L.P., a California limited  partnership (the
Partnership),  was formed under the laws of the State of  California  on October
13, 1989. The  Partnership is the general  partner of Phoenix Income Fund,  L.P.
(PIFLP), a California limited partnership,  which was formed on October 1, 1990,
to invest in capital  equipment of various types and to lease such  equipment to
third parties on either a long-term or short-term  basis. The general partner of
the Partnership is Phoenix Leasing Associates,  Inc. (PLA), a Nevada corporation
and wholly owned subsidiary of Phoenix Leasing  Incorporated (PLI), a California
corporation.  The  limited  partner  of  the  Partnership  is  Lease  Management
Associates, Inc., a Nevada corporation controlled by an officer of PLA, who also
owns the ultimate parent of PLA.

         The Partnership records its investment in PIFLP under the equity method
of accounting.  As general partner,  the Partnership has complete  authority in,
and  responsibility  for,  the  overall  management  of  PIFLP,  which  includes
responsibility for supervising  PIFLP's  acquisition,  leasing,  remarketing and
sale of equipment.

Note 2.  Income Taxes:

         The Partnership is not subject to federal and state income taxes on its
income.  Federal and state income tax regulations  provide that items of income,
gain,  loss  and  deductions,  credits  and  tax  preference  items  of  limited
partnerships  are  reportable  by the  individual  partners in their  respective
income tax returns.  Accordingly,  no liability for such taxes has been recorded
on the Partnership's balance sheets.

Note 3.  Use of Estimates:

         The  preparation  of  balance  sheets,  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  balance
sheets. Actual results could differ from those estimates.

Note 4.  Compensation and Fees:

         The  Partnership  receives an acquisition  fee equal to four percent of
the purchase  price of assets  acquired or financed by PIFLP in connection  with
the  analysis,  selection  and  acquisition  or  financing  of  assets,  and the
continuing  analysis of the overall portfolio of PIFLP's assets,  and management
fees equal to three and one half percent of PIFLP's gross revenues in connection
with managing the operations of PIFLP. In addition,  the Partnership receives an
interest in PIFLP's profits, losses and distributions. Management fees of $2,126
and $19,451 as of September 30, 2000 and 1999, respectively, are included in Due
from Phoenix Income Fund, L.P. on the balance sheets.

Note 5.  Allocation of Profits, Losses and Distributions:

         Profits  and  losses  attributable  to  acquisition  fees  paid  to the
Partnership  by PIFLP are  allocated  to the  partners  in  proportion  to their
ownership  interests.  All  other  profits  and  losses  are  allocated  to PLA.
Distributions  are  made  in  accordance  with  the  terms  of  the  partnership
agreement.


                                       8
<PAGE>
                         PHOENIX LEASING ASSOCIATES L.P.

                           NOTES TO THE BALANCE SHEETS

                               September 30, 2000


Note 6.  Related Parties:

         PLA has entered  into an  agreement  with PLI whereby PLI will  provide
management  services to the  Partnership  in connection  with the operations and
administration  of PIFLP. In consideration for the services and activities to be
performed by PLI pursuant to this agreement, PLA shall pay PLI fees in an amount
equal to: three and one half percent of PIFLP's  cumulative  gross revenues plus
the lesser of four  percent of the purchase  price of equipment  acquired by and
financing  provided to businesses by PIFLP or 100% of the net cash  attributable
to the acquisition fee which has been  distributed to PLA plus 100% of all other
net cash from operations of the  Partnership.  Management fees paid to PLI equal
$13,612 and $103,643 for the twelve  months ended  September  30, 2000 and 1999,
respectively.

Note 7. Commitments and Contingencies:

         On October 28, 1997, a Class Action Complaint was filed against Phoenix
Leasing  Incorporated,  Phoenix  Leasing  Associates,  II and III  LP.,  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 sought  declaratory and other relief  including  accounting,
receivership,  imposition of a 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 "Berger  Action").  Plaintiffs  then dismissed the remaining
claims in  Sacramento  Superior  Court and re-filed  them in a separate  lawsuit
making similar allegations (the "Ash Action").

         The Ash  complaint  includes six causes of action:  breach of fiduciary
duty,  constructive  fraud,  judicial  dissolution of Cash Distribution Fund IV,
judicial  dissolution  of Cash  Distribution  Fund V,  accounting and alter ego.
Defendants  recently  answered the complaint and  discovery has  commenced.  The
plaintiffs'   depositions  have  been  taken,   and  plaintiffs   recently  took
depositions of defendants.

         The Berger  complaint  relates to  alleged  misrepresentations  made in
connection  with the  offering  of Cash  Distribution  Fund V.  Defendants  have
answered the complaint and discovery has commenced.  A class has been certified.
The  plaintiffs'  depositions  have been taken,  and  plaintiffs  recently  took
depositions of defendants.

         On August 28, 2000, the Ash and Berger actions were  consolidated  (the
"Consolidated  Action")  pursuant to  stipulation  by both  parties.  Plaintiffs
recently  served a first  request for  production  in the  Consolidated  Action;
defendants responded to the first request for production on November 27, 2000.

         The Companies intend to vigorously defend the Consolidated Action.

                                       9