Exhibit 21 - Page 1 of 8















                    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 June 30, 1996 and 1995.  These
balance  sheets are the  responsibility  of the  Partnership's  management.  Our
responsibility  is to express an opinion on these  balance  sheets  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  balance  sheets are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in the balance  sheets.  An audit also  includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall  balance sheet  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 June 30, 1996 and 1995,  in conformity  with  generally  accepted  accounting
principles.


San Francisco, California                               ARTHUR ANDERSEN LLP
  September 4, 1996


<PAGE>


                                                        Exhibit 21 - Page 2 of 8

                         PHOENIX LEASING ASSOCIATES L.P.

                                 BALANCE SHEETS

                                     ASSET


                                                                 June 30,
                                                           ------------------
                                                             1996      1995
                                                           --------  --------

Cash and cash equivalents                                  $  1,182  $    471
Due from PIFLP                                               50,329    33,897
Due from General Partner                                       --     251,561
                                                           --------  --------
        Total Assets                                       $ 51,511  $285,929
                                                           ========  ========


                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

  Accounts payable and accrued expenses                    $  2,200  $  2,500
  Deficit investment in PIFLP                                 5,988   276,005
  Due to General Partner                                     36,120      --
                                                           --------  --------
        Total Liabilities                                    44,307   278,505
                                                           --------  --------

Commitments and Contingencies (Note 4)

Partners' Capital:

  General partner (99 partnership units)                        990       990
  Limited partner (99 partnership units)                      6,214     6,434
                                                           --------  --------
        Total Partners' Capital                               7,204     7,424
                                                           --------  --------

        Total Liabilities and Partners' Capital            $ 51,511  $285,929
                                                           ========  ========

                 The accompanying notes are an integral part of
                           these financial statements.

<PAGE>


                                                        Exhibit 21 - Page 3 of 8

                         PHOENIX LEASING ASSOCIATES L.P.

                           NOTES TO THE BALANCE SHEETS

                                  JUNE 30, 1996


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  Partnership's
fiscal year ends on June 30 of each year. 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 and control 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
$50,329 and $33,677 as of June 30, 1996 and 1995 and acquisition fees of $220 of
June 30, 1995 are included in Due from PIFLP.

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.

Note 6.    Related Parties:

    Phoenix  Securities,  Inc., an affiliate of the Partnership,  receives 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



<PAGE>


                                                        Exhibit 21 - Page 4 of 8

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
$980,161 and $904,105 for the year ended June 30, 1996 and 1995, respectively.


<PAGE>


                                                        Exhibit 21 - Page 5 of 8













                    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 June 30, 1996 and
1995. These consolidated  balance sheets are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
balance sheets 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 consolidated  balance sheets are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the  consolidated  balance sheets.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by management,  as well as evaluating  the overall  consolidated
balance  sheet  presentation.  We believe  that our audits  provide a reasonable
basis for our opinion.

In our  opinion,  the  consolidated  balance  sheets  referred to above  present
fairly,  in all material  respects,  the financial  position of Phoenix  Leasing
Associates, Inc. and Subsidiary as of June 30, 1996 and 1995, in conformity with
generally accepted accounting principles.


San Francisco, California                                ARTHUR ANDERSEN LLP
  September 4, 1996


<PAGE>


                                                        Exhibit 21 - Page 6 of 8

                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                              June 30,
                                                     --------------------------
                                                         1996           1995
                                                     -----------    -----------

Cash and cash equivalents                            $     1,317    $       757
Due from PLI                                           1,009,215        875,334
Due from PIFLP                                            50,329         33,897
                                                     -----------    -----------
        Total Assets                                 $ 1,060,860    $   909,988
                                                     ===========    ===========


                      LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:

  Accounts payable and accrued expenses              $     4,400    $     5,000
  Deficit investment in PIFLP                              5,988        276,005
                                                     -----------    -----------
        Total Liabilities                                 10,388        281,005
                                                     -----------    -----------

Minority Interest in Consolidated Subsidiary               6,214          6,434
                                                     -----------    -----------

Commitments and Contingencies (Note 6)

Shareholder's Equity:

  Common Stock, no par value, 100 shares
    authorized and outstanding                         4,382,225      4,382,225
  Retained earnings                                    1,044,159        622,449
  Less:
    Notes receivable from affiliate                   (4,382,125)    (4,382,125)
                                                     -----------    -----------

        Total Shareholder's Equity                     1,044,259        622,549
                                                     -----------    -----------

        Total Liabilities and Shareholder's Equity   $ 1,060,860    $   909,988
                                                     ===========    ===========


                 The accompanying notes are an integral part of
                           these financial statements.

<PAGE>


                                                        Exhibit 21 - Page 7 of 8

                 PHOENIX LEASING ASSOCIATES, INC. AND SUBSIDIARY

                    NOTES TO THE CONSOLIDATED BALANCE SHEETS

                                  JUNE 30, 1996


Note 1.    Organization:

    Phoenix Leasing  Associates,  Inc. (PLA) was formed under the laws of Nevada
on September 13, 1989.  PLA's fiscal year ends on June 30. PLA is a wholly owned
subsidiary of Phoenix Leasing Incorporated (PLI), a California corporation.

    As of June 30, 1996,  PLA 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. PLA 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 PLA,  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 PLA. Distributions to the partners are made in accordance
with the terms of the partnership  agreement.  PLA and its 50%-owned subsidiary,
PLALP, are hereinafter referred to as the Company.

Note 2.    Principles of Consolidation:

    The consolidated  financial statements as of June 30, 1996 and 1995, include
the accounts of PLA and its subsidiary, PLALP, over which PLA 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 and control 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 PLA, as of June 30, 1996 and 1995, has issued
demand promissory notes to PLA totaling $4,382,125. There are no restrictions or
covenants  associated  with these notes which would  preclude PLA 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.

Note 5.    Income Taxes:

    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.  In accordance with a Tax Sharing Agreement between
the Company and PAI, PAI has assumed all tax  liabilities  and benefits  arising
from the Company's income or loss.

    Effective  July  1,  1993,  the  Company  adopted  "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 provisions
of  $256,590  and  $150,163  as of June 30,  1996 and 1995,  respectively,  were
transferred to PAI.

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


<PAGE>


                                                        Exhibit 21 - Page 8 of 8

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 $50,329 and $33,677 as of
June 30,  1996 and 1995  and  acquisition  fees of $220 as of June 30,  1995 are
included in Due from PIFLP.

Note 7.    Related Parties:

    Phoenix  Securities,  Inc., an affiliate of the Company,  receives 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  $980,163  and  $904,105 for the year ended June 30, 1996 and 1995,
respectively.