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, 1999 and June 30, 1998. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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, 1999 and June 30, 1998, in conformity
with generally accepted accounting principles.



San Francisco, California,                                   ARTHUR ANDERSEN LLP
December 28, 1999

                                   Page 1 of 9
<PAGE>

                PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                     September 30,    June 30,
                                                         1999           1998
                                                         ----           ----

Cash and cash equivalents                             $     3,594   $       366
Due from Phoenix Leasing Incorporated                   2,364,588     1,854,784
Due from Phoenix Income Fund, L.P.                         19,451        29,602
                                                      -----------   -----------

         Total Assets                                 $ 2,387,633   $ 1,884,752
                                                      ===========   ===========


                      LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:

     Accounts payable and accrued expenses            $     4,269   $       730
     Deficit investment in Phoenix Income Fund, L.P.          122             7
                                                      -----------   -----------

         Total Liabilities                                  4,391           737
                                                      -----------   -----------

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                                  2,376,928     1,877,701
     Less:
       Note receivable from affiliate                  (4,382,125)   (4,382,125)
                                                      ------------  -----------

         Total Shareholder's Equity                     2,377,028     1,877,801
                                                      -----------   -----------

         Total Liabilities and Shareholder's Equity   $ 2,387,633   $ 1,884,752
                                                      ===========   ===========



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

                                       2
<PAGE>


                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           NOTES TO THE BALANCE SHEETS

                               September 30, 1999


Note 1.       Organization:

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

         Effective July 1, 1998, the Company and all its subsidiary  changed its
fiscal year end from June 30 to September 30.

         As of September 30, 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, 1999 and June 30,
1998, 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, 1999 and
June 30,  1998,  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 SHEETS

                               September 30, 1999


Note 5.       Income Taxes:

         During the year ended June 30, 1999,  the Company's  income or loss for
tax reporting  purposes is included in the consolidated and combined tax returns
filed by Phoenix American  Incorporated (PAI), an affiliated Nevada corporation.
These returns are prepared on the accrual basis of accounting.  Under "Statement
of Financial  Accounting  Standards No. 109 - Accounting for Income Taxes",  the
Company  computes  taxes as if it was a stand alone  company.  The resulting tax
liability of $185,507 as of June 30, 1998 was  transferred  to PAI in accordance
with a Tax Sharing Agreement between the Company and PAI.

         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 $19,451 and
$29,602 as of September 30, 1999, and June 30, 1998  respectively,  are included
in Due from Phoenix Income Fund, L.P. on the Balance Sheet.


Note 7.       Related Parties:

         Phoenix Securities,  Inc., an affiliate of the Company,  received a fee
for  wholesaling  activities  performed in  connection  with the offering of the
limited partnership units of PIFLP.

         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  $103,643 and $438,140 for the twelve  months ended  September  30,
1999 and June 30,  1998,  respectively,  and $64,452 for the three  months ended
September 30, 1998.


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.


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

                           NOTES TO THE BALANCE SHEETS

                               September 30, 1999


Note 8.       Commitments and Contingencies (continued):

         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  refiled  them in a separate  lawsuit
making similar  allegations  (the "Ash Action"). That complaint was subsequently
transferred to Marin County as well.

         Plaintiffs  have amended the Berger Action twice.  Defendants  recently
answered the complaint.  Discovery has recently commenced.  The Companies intend
to vigorously defend the Complaint.

         Defendants have filed a demurrer to the Ash Complaint, which plaintiffs
amended three times.  Discovery has not yet commenced.  The Companies  intend to
vigorously defend the complaint.


                                       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, 1999 and
June  30,  1998.  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 generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the balance sheets referred to above present fairly, in
all material respects, the financial position of Phoenix Leasing Associates L.P.
as of  September  30,  1999 and June 30,  1998,  in  conformity  with  generally
accepted accounting principles.



San Francisco, California,                                   ARTHUR ANDERSEN LLP
December 28, 1999



                                       6
<PAGE>

                         PHOENIX LEASING ASSOCIATES L.P.

                                 BALANCE SHEETS

                                     ASSETS

                                                     September 30,    June 30,
                                                         1999           1998
                                                         ----           ----

Cash and cash equivalents                             $       616   $       298
Due from Phoenix Income Fund, L.P.                         19,451        29,602
                                                      -----------   -----------

         Total Assets                                 $    20,067   $    29,900
                                                      ===========   ===========


                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

     Accounts payable and accrued expenses            $     2,135   $       365
     Deficit investment in Phoenix Income Fund, L.P.          121             7
     Due to General Partner                                10,607        22,324
                                                       -----------  -----------

         Total Liabilities                                 12,863        22,696
                                                       -----------  -----------

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      $    20,067   $    29,900
                                                       ===========  ===========


      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, 1999


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.

         Effective  July 1, 1998,  the  Partnership  changed its fiscal year end
from June 30 to September 30.

         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
$19,451 and $29,602 as of September 30, 1999 and June 30, 1998, respectively are
included in Due from Phoenix Income Fund, L.P. on the balance sheet.


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>

Note 6.       Related Parties:

         Phoenix  Securities Inc., an affiliate of the  Partnership,  received a
fee for wholesaling  activities performed in connection with the offering of the
limited partnership units of PIFLP.

         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
$103,643 and $438,140 for the twelve  months ended  September  30, 1999 and June
30, 1998,  respectively,  and $64,452 for the three months ended  September  30,
1998.


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  refiled  them in a separate  lawsuit
making similar  allegations  (the"Ash Action").  That complaint was subsequently
transferred to Marin County as well.

         Plaintiffs  have amended the Berger Action twice.  Defendants  recently
answered the complaint.  Discovery has recently commenced.  The Companies intend
to vigorously defend the Complaint.

         Defendants have filed a demurrer to the Ash Complaint, which plaintiffs
amended three times.  Discovery has not yet commenced.  The Companies  intend to
vigorously defend the complaint.


                                       9