UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                   FORM 10-QSB

[X]  QUARTERLY  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF  1934

                  For the quarterly period ended  March 31, 2004
                                                ------------------

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
     OF  1934

             For the transition period from__________ to __________

             Commission file number:   0 - 50235
                                     -----------------


                         PERFORMANCE CAPITAL MANAGEMENT, LLC
                         -----------------------------------
        (Exact name of small business issuer as specified in its charter)

                California                               03-0375751
       ------------------------------             --------------------------
       State or other jurisdiction of          (IRS Employer Identification No.)
       incorporation or organization


          222 South Harbor Blvd., Suite 400, Anaheim, California 92805
    ------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (714) 502-3780
                          ---------------------------
                          (Issuer's telephone number)


       --------------------------------------------------------------------
    (Former name, former address and former fiscal year, if changed since last
                                    report.)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that  the  issuer  was  required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check whether the issuer has filed documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [X] No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of  the latest practicable date: As of May 10, 2004, the issuer had
570,916  LLC  Units  issued  and  outstanding.


Transitional Small Business Disclosure Format (Check one):  Yes [ ] No [X]


<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                                    INDEX TO
                         QUARTERLY REPORT ON FORM 10-QSB
                      FOR THE QUARTER ENDED MARCH 31, 2004



PART I - FINANCIAL INFORMATION                                              PAGE

Item 1   Financial  Statements

         Independent Accountants' Review Report. . . . . . . . . . . . . . .  1

         Balance Sheets as of March 31, 2004 (unaudited)
         and December 31, 2003 (audited) . . . . . . . . . . . . . . . . . .  2

         Statements of Operations for the three months ended
         March 31, 2004 and 2003 (unaudited) . . . . . . . . . . . . . . . .  3

         Statements of Members' Equity for the three months ended
         March 31, 2004 and 2003 (unaudited) and the year ended December
         31, 2003 (audited). . . . . . . . . . . . . . . . . . . . . . . . .  4

         Statements of Cash Flows for the three months ended
         March 31, 2004 and 2003 (unaudited) . . . . . . . . . . . . . . . .  5

         Condensed Notes to the Financial Statements (unaudited) . . . . . .  6

Item 2   Management's  Discussion and Analysis of Financial Condition
         and Results of  Operations. . . . . . . . . . . . . . . . . . . . . 14

Item 3   Controls  and  Procedures . . . . . . . . . . . . . . . . . . . . . 20

PART II - OTHER INFORMATION

Item 1   Legal  Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 20

Item 2   Changes  in  Securities  and  Small  Business  Issuer  Purchases
         of Equity Securities. . . . . . . . . . . . . . . . . . . . . . . . 20

Item 6   Exhibits  and  Reports  on  Form  8-K . . . . . . . . . . . . . . . 20

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL  STATEMENTS



            [MOORE STEPHENS WURTH FRAZER AND TORBET, LLP LETTERHEAD]


INDEPENDENT ACCOUNTANTS' REVIEW REPORT
--------------------------------------



To the Board of Directors
Performance Capital Management, LLC
Anaheim, California

We  have  reviewed  the  accompanying  balance  sheet  of  Performance  Capital
Management, LLC, as of March 31, 2004, and the related statements of operations,
members'  equity  and  cash  flows for the three months ended March 31, 2004 and
2003,  in  accordance  with  Statements  on  Standards for Accounting and Review
Services  issued  by the American Institute of Certified Public Accountants. All
information  included in these financial statements is the representation of the
management  of  Performance  Capital  Management,  LLC.

A  review  of  interim  financial  information  consists principally of applying
analytical  procedures and making inquiries of persons responsible for financial
and  accounting  matters.  It  is  substantially  less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of  an  opinion  regarding  the financial statements taken as a
whole.  Accordingly,  we  do  not  express  such  an  opinion.

Based on our reviews, we are not aware of any material modifications that should
be  made  to the accompanying financial statements referred to above for them to
be  in  conformity  with  accounting principles generally accepted in the United
States  of  America.

We  have  previously  audited,  in  accordance with auditing standards generally
accepted  in  the  United  States  of  America, the balance sheet of Performance
Capital  Management,  LLC as of December 31, 2003, and the related statements of
operations,  members' equity and cash flows for the year ended December 31, 2003
(not  presented  herein); and in our report dated February 20, 2004 and April 9,
2004,  we expressed an unqualified opinion on those financial statements. In our
opinion,  the  information  set  forth  in  the accompanying balance sheet as of
December  31,  2003,  is fairly stated, in all material respects, in relation to
the  balance  sheet  from  which  it  has  been  derived.


/s/  Moore Stephens Wurth Frazer And Torbet, LLP


May 3, 2004
Orange, California


                                        1
<PAGE>
<TABLE>
<CAPTION>
                      PERFORMANCE CAPITAL MANAGEMENT, LLC

                                 BALANCE SHEETS
                   AS OF MARCH 31, 2004 AND DECEMBER 31, 2003

                                                 March 31,   December 31,
                                                   2004         2003
                                               (unaudited)    (audited)
                                               ------------  -----------
<S>                                            <C>           <C>
                                     ASSETS
                                     ------
  Cash and cash equivalents                    $  2,090,319  $ 1,007,949
  Restricted cash                                    21,461       21,448
  Other receivables                                  18,498       14,492
  Purchased loan portfolios, net                  1,575,265    2,081,496
  Property and equipment, net                       358,433      397,924
  Deposits                                           56,588       56,588
  Prepaid expenses and other assets                 195,277      135,738
                                               ------------  -----------


      Total assets                             $  4,315,841  $ 3,715,635
                                               ============  ===========



                        LIABILITIES AND MEMBERS' EQUITY
                        -------------------------------

LIABILITIES:

  Accounts payable                             $     67,943  $    68,735
  Accrued liabilities                               408,078      313,352
  Income taxes payable                               27,390       15,790
                                               ------------  -----------
      Total liabilities                             503,411      397,877

COMMITMENTS AND CONTINGENCIES                             -            -

MEMBERS' EQUITY                                   3,812,430    3,317,758
                                               ------------  -----------

        Total liabilities and members' equity  $  4,315,841  $ 3,715,635
                                               ============  ===========
</TABLE>


The accompanying notes are an integral part of these financial statements.
See Independent Accountants' Review Report.


                                        2
<PAGE>
<TABLE>
<CAPTION>
                      PERFORMANCE CAPITAL MANAGEMENT, LLC

                            STATEMENTS OF OPERATIONS

                                             March 31,     March 31,
                                                2004          2003
                                            (unaudited)   (unaudited)
                                            ------------  ------------
<S>                                         <C>           <C>
REVENUES:
  Portfolio collections                     $ 2,451,370   $ 2,639,618
  Portfolio sales                             1,782,064       345,961
                                            ------------  ------------
      Total revenues                          4,233,434     2,985,579
  Less portfolio basis recovery               1,826,227     1,578,966
                                            ------------  ------------

NET PORTFOLIO COLLECTION REVENUES             2,407,207     1,406,613
                                            ------------  ------------

OPERATING COSTS AND EXPENSES:
  Salaries and benefits                       1,114,460     1,120,108
  General and administrative                    577,370       545,693
  Depreciation                                   45,173        51,501
                                            ------------  ------------
      Total operating costs and expenses      1,737,003     1,717,302
                                            ------------  ------------

INCOME (LOSS) FROM OPERATIONS                   670,204      (310,689)
                                            ------------  ------------

OTHER INCOME (EXPENSE):
  Reorganization costs                           (8,837)      (23,523)
  Interest income                                 2,391         1,935
  Other income                                    7,017        10,584
                                            ------------  ------------
      Total other income (expense), net             571       (11,004)
                                            ------------  ------------

INCOME (LOSS) BEFORE INCOME TAX PROVISION       670,775      (321,693)

INCOME TAX PROVISION                             11,600         2,948
                                            ------------  ------------

NET INCOME (LOSS)                           $   659,175   $  (324,641)
                                            ============  ============

NET INCOME (LOSS) PER UNIT
  BASIC AND DILUTED                         $      1.15   $     (0.57)
                                            ============  ============
</TABLE>


The accompanying notes are an integral part of these financial statements.
See Independent Accountants' Review Report.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                PERFORMANCE CAPITAL MANAGEMENT, LLC

                                   STATEMENTS OF MEMBERS' EQUITY

                                                                                         Total
                                     Member    Unreturned   Abandoned    Accumulated    Members'
                                     Units      Capital      Capital       Deficit       Equity
                                    --------  ------------  ----------  -------------  -----------
<S>                                 <C>       <C>           <C>         <C>            <C>
Balance, December 31, 2002          571,550   $26,116,880   $           $(21,237,826)  $4,879,054

Net loss                                                                    (324,641)    (324,641)
                                    --------  ------------  ----------  -------------  -----------

Balance, March 31, 2003             571,550    26,116,880                (21,562,467)   4,554,413
                                    --------  ------------  ----------  -------------  -----------

Distributions to investors                       (471,977)                               (471,977)

Member units returned by investors     (634)      (31,926)      31,926

Net loss                                                                    (764,678)    (764,678)
                                    --------  ------------  ----------  -------------  -----------

Balance, December 31, 2003          570,916    25,612,977       31,926   (22,327,145)   3,317,758

Distributions to investors                       (164,503)                               (164,503)

Net income                                                                   659,175      659,175
                                    --------  ------------  ----------  -------------  -----------

Balance, March 31, 2004             570,916   $25,448,474   $   31,926  $(21,667,970)  $3,812,430
                                    ========  ============  ==========  =============  ===========
</TABLE>


The accompanying notes are an integral part of these financial statements.
See Independent Accountants' Review Report.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                PERFORMANCE CAPITAL MANAGEMENT, LLC

                                     STATEMENTS OF CASH FLOWS

                                                             For the three        For the three
                                                             months ended         months ended
                                                            March 31, 2004       March 31, 2003
                                                              (unaudited)         (unaudited)
                                                           ----------------  --------------------
<S>                                                        <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                        $        659,175   $          (324,641)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation                                                   45,173                51,501
    (Increase) decrease in assets:
      Other receivables                                              (4,006)                9,800
      Contract receivable                                                                (103,048)
      Prepaid expenses and other assets                             (59,539)              (28,537)
      Loan portfolios                                               506,231             1,229,015
    Increase (decrease) in liabilities:
      Accounts payable                                                 (792)               44,297
      Pre-petition claims                                                                 (32,052)
      Accrued liabilities                                            94,726                (9,950)
      Income taxes payable                                           11,600                 2,948
                                                           ----------------  --------------------
        Net cash provided by operating activities                 1,252,568               839,333

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                                (5,682)               (3,674)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to investors                                       (164,503)
                                                           ----------------  --------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                           1,082,383               835,659

CASH AND CASH EQUIVALENTS, beginning of period                    1,029,397               871,534
                                                           ----------------  --------------------
CASH AND CASH EQUIVALENTS, end of period                   $      2,111,780   $         1,707,193
                                                           =================  ====================
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION:

  Income taxes paid                                        $            800   $
                                                           =================  ====================
  Interest paid                                            $                  $
                                                           =================  ====================
</TABLE>


The accompanying notes are an integral part of these financial statements.
See Independent Accountants' Review Report.


                                        5
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Performance  Capital  Management, LLC ("PCM LLC" or "the Company") is engaged in
the business of acquiring assets originated by federal and state banks and other
sources,  for  the  purpose  of  generating  income and cash flow from managing,
collecting,  or  selling  those  assets.  These  assets  consist  primarily  of
non-performing  credit  card  loan  portfolios  and  are  purchased  and sold as
portfolios  ("portfolios").  Additionally,  some  of  the  loan  portfolios  are
assigned  to  third  party  agencies  for  collection.

Reorganization  Under  Bankruptcy
---------------------------------

PCM  LLC  was  formed  under  a  Chapter  11  Bankruptcy Reorganization Plan and
operating  agreement.  The  plan called for the consolidation of five California
limited  partnerships  and  a  California  corporation  into  the new California
limited  liability company. The five California limited partnerships were formed
for  the  purpose  of  acquiring  investments  in  or  direct  ownership  of
non-performing credit card loan portfolios from financial institutions and other
sources.  The  assets  of  the  five limited partnerships consisted primarily of
non-performing credit card loans, as well as cash. PCM LLC was formed on January
14,  2002  and  commenced  operations  upon  the  confirmation of its Bankruptcy
Reorganization  Plan  ("Reorganization  Plan") on February 4, 2002. The entities
that  were  consolidated  under  the  Reorganization  Plan  are  as  follows:

Performance  Asset  Management  Fund,  Ltd.,-  (PAM),  a  California  limited
partnership,  formed  in  1991.  Units  in  PAM were sold in a private placement
offering.  PAM  raised  $5,205,000  in  gross  proceeds  from  the  sale  of its
partnership  units.  PAM  was  not  subject to the reporting requirements of the
Securities  and  Exchange  Commission.

Performance  Asset  Management  Fund  II,  Ltd.,-  (PAMII), a California limited
partnership,  formed  in  1992.  Units in PAMII were sold in a private placement
offering.  PAMII  raised  $7,670,000  in  gross  proceeds  from  the sale of its
partnership  units.  PAMII  was not subject to the reporting requirements of the
Securities  and  Exchange  Commission.

Performance  Asset  Management  Fund  III, Ltd.,- (PAMIII), a California limited
partnership,  formed  in  1992. Units in PAMIII were sold in a private placement
offering.  PAMIII  raised  $9,990,000  in  gross  proceeds  from the sale of its
partnership  units.  PAMIII was a public limited partnership that was subject to
the  reporting  requirements  of  the  Securities  and  Exchange  Commission.

Performance  Asset  Management  Fund  IV,  Ltd., - (PAMIV), a California limited
partnership,  formed in 1992. Units in PAMIV were sold in an intrastate offering
to  residents of California. PAMIV raised $28,595,000 in gross proceeds from the
sale  of  its partnership units. PAMIV was a public limited partnership that was
subject to the reporting requirements of the Securities and Exchange Commission.

Performance  Asset  Management  Fund  V,  Ltd.,  -  (PAMV), a California limited
partnership,  formed  in  1994.  Units  in PAMV were sold in a private placement
offering.  PAMV  raised  $5,965,000  in  gross  proceeds  from  the  sale of its
partnership  units.  PAMV  was  not subject to the reporting requirements of the
Securities  and  Exchange  Commission.

Performance  Capital  Management,  Inc.  (PCM  INC),  a  California  corporation
incorporated  in  January  1993.  PCM  INC  identified  potential  portfolio
acquisitions,  performed  due  diligence in conjunction with potential portfolio
acquisitions,  acquired  portfolios, and through joint ventures with the limited
partnerships  (PAM,  PAMII, PAMIII, PAMIV, and PAMV) collected and sold acquired
portfolios.  The  limited  partnerships  (PAM,  PAMII,  PAMIII, PAMIV, and PAMV)
collectively  obtained  98.5% of the outstanding shares of PCM INC. The minority
interest  of  1.5%  was  effectively  eliminated  in  the  bankruptcy  plan.


See Independent Accountants' Review Report.


                                        6
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS, (CONTINUED)

Pre-Petition  Operations
------------------------

A  total of approximately $57,450,000 was raised over the period 1991 to 1994 by
selling  limited  partnership  interests in PAM, PAMII, PAMIII, PAMIV, and PAMV.
Approximately  $8.7  million  was  deducted  for  brokerage  and  organizational
expenses.  Approximately  $49 million was used to purchase non-performing credit
card  loan portfolios.  These portfolios were typically purchased by the limited
partnerships  from  PCM  INC.  PCM INC also collected the portfolios under joint
venture  agreements  between  itself  and  the  limited  partnerships.

In  the  normal  course  of  business,  loan  portfolios  would  be  purchased,
collections  would  be  made and in some cases the portfolios were sold. PCM INC
was  in  the  business  of  managing  these  loan  portfolios.

PCM INC generally charged a "mark-up" to the limited partnerships for portfolios
purchased for the limited partnerships. This markup averaged 35% above the price
PCM  INC  paid  for  the  portfolios  on  the  open  market.  PCM  INC  was also
contractually entitled to receive 45% of all monies collected on the portfolios.

The  following  is  a  summary  of the ownership interest of Performance Capital
Management,  LLC  pursuant  to  the  terms  of  the  Reorganization  Plan:

<TABLE>
<CAPTION>
Original
Fund's    Number of     Number of      Percentage
Name      Unit Holders  PCM LLC Units  Interest in PCM LLC
--------  ------------  -------------  -------------------
<S>       <C>           <C>            <C>

PAM                370         52,050                    9
PAMII              459         76,700                   13
PAMIII             595         99,900                   18
PAMIV             1553        285,950                   50
PAMV               327         56,950                   10
                        -------------  -------------------
    Totals                    571,550                  100
                        =============  ===================
</TABLE>


The  following  is  a  summary  of the ownership interest of Performance Capital
Management,  LLC  as  of  March  31,  2004:

<TABLE>
<CAPTION>
Original
Fund's    Number of      Percentage
Name      PCM LLC Units  Interest in PCM LLC
--------  -------------  -------------------
<S>       <C>            <C>

PAM              52,000                    9
PAMII            76,700                   13
PAMIII           99,900                   18
PAMIV           285,456                   50
PAMV             56,860                   10
--------  -------------  -------------------
Totals          570,916                  100
========  =============  ===================
</TABLE>


See Independent Accountants' Review Report.


                                        7
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS, (CONTINUED)

The  Reorganization  Plan  calls  for  distributions to be made first to the LLC
Members  to  the  extent  of  and  in  proportion  to  their  unreturned Capital
Contributions;  and  thereafter  to  the  LLC  Members  in  proportion  to their
respective  percentage  ownership  interest.

The  combination  of  the  Partnerships and PCM INC is summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                   PAM      PAMII     PAMIII    PAMIV      PAMV     PCM INC     Total
                                 ----------------------------------------------------------------------
<S>                              <C>       <C>       <C>       <C>       <C>       <C>        <C>
Sale of Limited
  Partnership Units              $ 5,205   $ 7,670   $ 9,990   $28,595   $ 5,965   $      -   $ 57,425

Distributions
  to Investors                    (3,704)   (4,137)   (3,719)   (6,920)     (829)         -    (19,309)
                                 ----------------------------------------------------------------------

Unreturned Capital                 1,501     3,533     6,271    21,675     5,136          -     38,116

Accumulated Deficit                 (288)   (1,333)   (2,424)   (9,330)   (2,561)    (2,302)   (18,238)
                                 ----------------------------------------------------------------------

Cash and Net Assets
  Transferred to PCM LLC         $ 1,213   $ 2,200   $ 3,847   $12,345   $ 2,575   $ (2,302)    19,878
                                 ===========================================================

2002 Distribution to Investors                                                                 (12,000)

Net Loss For The Year Ended
  December 31, 2002                                                                             (2,999)
                                                                                              ---------

Members' Equity PCM, LLC
  at December 31, 2002                                                                           4,879

2003 Distributions to Investors                                                                   (472)

Net Loss For The Year
  Ended December 31, 2003                                                                       (1,089)
                                                                                              ---------

Members' Equity PCM, LLC
  at December 31, 2003                                                                           3,318

2004 Distribution to Investors                                                                    (165)

Net Income For The Period
  Ended March 31, 2004                                                                             659
                                                                                              ---------

Members' Equity PCM, LLC
  at March 31, 2004                                                                           $  3,812
                                                                                              =========
</TABLE>


Performance  Asset  Management  Fund  III, Ltd. and Performance Asset Management
Fund  IV,  Ltd.,  were  reporting  entities under the Securities Exchange Act of
1934.  PAM,  PAMII,  PAMV,  and  PCM  INC  were  not reporting entities.  It was
determined  that  Performance  Capital  Management, LLC is a "successor company"
under  rule  12g-3  of  the


See Independent Accountants' Review Report.


                                        8
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS, (CONTINUED)

Securities  Exchange  Act  of  1934,  and  therefore is subject to the reporting
requirements  of  the  Securities Exchange Act of 1934.  PCM LLC's LLC units are
not  publicly  traded  securities.  The  Reorganization  Plan  placed  certain
restrictions  on  the  transfer  of  members'  interests.

NOTE 2 - BASIS OF PRESENTATION


Interim Condensed Financial Statements
--------------------------------------

These  interim condensed financial statements have been prepared using generally
accepted  accounting  principles  in  the  United  States. The interim financial
statements  include  all  adjustments,  consisting  solely  of  normal recurring
adjustments,  which  in management's opinion are necessary for fair presentation
of the financial results for interim periods. The financial statements have been
prepared  consistent  with  the  accounting  policies described in the Company's
annual  audited  financial  statements.  Reference  should  be  made  to  those
statements  included  with  the  Company's  annual  report filed on Form 10-KSB.

Reporting Entity
----------------

The Company is a successor entity of six companies emerging from bankruptcy (see
Note  1).  The  accompanying  balance sheets, statements of operations, members'
equity,  and  cash  flows  include balances and transactions since the emergence
from  bankruptcy.

Transfer of Assets to Successor Company
---------------------------------------

Assets  were  transferred  at  historical  carrying  values and liabilities were
assumed  as  required  by  the  bankruptcy  confirmation  plan.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates
----------------

In  preparing  financial  statements  in  conformity  with accounting principles
generally  accepted  in  the United States of America, management is required to
make  estimates  and  assumptions that affect the reported amounts of assets and
liabilities,  the 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.

Significant  estimates  have  been made by management with respect to the timing
and  amount  of  collection of future cash flows from non-performing credit card
loan  portfolios.  Among  other  things,  the estimated future cash flows of the
portfolios  are  used  to recognize impairment in the purchased loan portfolios.
Management  reviews  the  estimate  of  future collections, and it is reasonably
possible  that  these  estimates  may  change  based on actual results and other
factors.  A  change  could  be  material  to  the  financial  statements.

Purchased Loan Portfolios
-------------------------

Purchased  loan  portfolios  consisted  primarily  of non-performing credit card
accounts.  For  substantially all the Company's acquired portfolios, future cash
flows  cannot  be  reasonably  estimated  in order to record an accretable yield
consistently.  Therefore,  the  Company  utilizes  the  cost  recovery method as
required  by AICPA Practice Bulletin 6.  Application of the cost recovery method
requires  that any amounts received be applied first against the recorded amount
of  the  portfolios;  when  that amount has been reduced to zero, any additional
amounts  received  are  recognized  as  net  revenue.  Acquired  portfolios  are
initially  recorded  at  their  respective  costs,  and  no  accretable yield is
recorded  on  the  accompanying  balance  sheets.


See Independent Accountants' Review Report.


                                        9
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)


Purchased Loan Portfolios, (continued)
--------------------------------------

The Company provides a valuation allowance for acquired loan portfolios when the
present value of expected future cash flows do not exceed the carrying values of
the  portfolios.

Over the life of the portfolio, the Company's management continues to review the
carrying  values  of  each  loan  for  impairment.  If  the net present value of
estimated  future  cash  flows  falls  below  the  carrying value of the related
portfolio,  the valuation allowance is adjusted accordingly.  Adjustments to the
valuation  allowance  are recorded in the statement of operations as a provision
for  losses  on  loan  portfolios.

Cash and Cash Equivalents
-------------------------

PCM  LLC  defines  cash  equivalents  as  cash,  money  market  investments, and
overnight  deposits  with  original  maturities of less than three months.  Cash
equivalents  are  valued  at  cost,  which  approximates  market.   The  Company
maintains  cash  balances,  which  exceeded  federally  insured  limits  by
approximately $2,265,000 as of March 31, 2004.   The Company has not experienced
any  losses  in  such  accounts.  Management  believes  it is not exposed to any
significant  risks  on  cash  in  bank  accounts.

Revenue Recognition
-------------------

Revenue  is  accounted  for  using  the  cost  recovery  method of accounting in
accordance  with  Practice Bulletin No. 6, "Amortization of Discounts on Certain
Acquired Loans". Under the cost recovery method of accounting, all cash receipts
relating  to individual loan portfolios are applied first to recover the cost of
the portfolios, prior to recognizing any revenue. Cash receipts in excess of the
cost  of  purchased  loan  portfolios  are  then  recognized  as  net  revenue.

Loan portfolio sales occur after the initial portfolio analysis is performed and
the  loan  portfolio  is acquired.  Portfolios sold typically either do not meet
PCM  LLC's  targeted collection characteristics, are located in geographic areas
where PCM LLC is not licensed to collect or are sold for strategic reasons. Loan
portfolios  sold  are  valued  at  the  lower  of  cost  or  market.

Proceeds  from  strategic  sales of purchased loan portfolios in excess of their
cost  basis  are  recorded  as  net  revenue  when  received.

Members' Equity
---------------

Members'  equity  includes  voting  LLC units held by members and non-voting LLC
units  held  by  one  economic interest owner. As of March 31, 2004, PCM LLC had
547,194  voting LLC units (547,194 LLC units as of December 31, 2003) and 23,722
non-voting  LLC  units  (23,722  LLC  units  as of December 31, 2003). Abandoned
capital represents LLC units that are either voluntarily returned to the Company
by  a  member or LLC units that are redeemed and cancelled following a procedure
authorized  by  PCM  LLC's  plan of reorganization to eliminate the interests of
members  the  Company  has  not  been  able  to  locate.


See Independent Accountants' Review Report.


                                       10
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 4 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The  estimated  fair  value and the methods and assumptions used to estimate the
fair values of the financial instruments of the Company as of March 31, 2004 and
December  31,  2003  are  as  follows.  The  carrying  amount  of  cash and cash
equivalents, restricted cash and liabilities approximate their fair values.  The
fair  value  of  purchased  loan  portfolios was determined based on both market
pricing  and  discounted  expected cash flows.  The discount rate is based on an
acceptable rate of return adjusted for the risk inherent in the loan portfolios.
The discount rate utilized at March 31, 2004 and December 31, 2003 was 20%.  The
estimated fair value of loan portfolios was $15,200,000 and $15,300,000 at March
31,  2004  and  December  31,  2003,  respectively.

NOTE 5 - PURCHASED LOAN PORTFOLIOS

The Company acquires portfolios of non-performing credit card loans from federal
and  state  banks  and other sources.  These loans are acquired at a substantial
discount  from  the  actual  outstanding  balance.  The  aggregate  outstanding
contractual  loan  balances  at  March  31,  2004  and December 31, 2003 totaled
approximately  $692  million  and  $1.1  billion,  respectively.

The  Company  initially  records acquired loans at cost.  To the extent that the
cost  of  a particular loan portfolio exceeds the net present value of estimated
future  cash flows expected to be collected, a valuation allowance is recognized
in  the  amount  of  such  impairment.

The carrying amount of loans included in the accompanying balance sheets are as
follows:


<TABLE>
<CAPTION>
                                       As of            As of
                                   Mar. 31, 2004    Dec. 31, 2003
                                  ---------------  ---------------
<S>                               <C>              <C>
Unrecovered cost balance,
  beginning of period             $    7,619,515   $    9,517,146
Valuation allowance,
  beginning of period                 (5,538,019)      (5,472,952)
                                  ---------------  ---------------
Net balance, beginning of period       2,081,496        4,044,194
Net portfolio activity                  (506,231)      (1,962,698)
                                  ---------------  ---------------
Net balance, end of period        $    1,575,265   $    2,081,496
                                  ===============  ===============
</TABLE>


The  activity in the loan portfolios in the accompanying financial statements is
as  follows:

<TABLE>
<CAPTION>
                                    For the three    For the three
                                    months ended     months ended
                                    Mar. 31, 2004    Mar. 31, 2003
                                   ---------------  ---------------
<S>                                <C>              <C>
Purchased loan portfolios          $    1,319,996   $      349,951
Collections on loan portfolios         (2,451,370)      (2,639,618)
Sales of loan portfolios               (1,782,064)        (345,961)
Revenue recognized on collections       1,659,620        1,351,509
Revenue recognized on sales               747,587           55,104
                                   ---------------  ---------------
Net portfolio activity             $     (506,231)  $   (1,229,015)
                                   ===============  ===============
</TABLE>


See Independent Accountants' Review Report.


                                       11
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 5 - PURCHASED LOAN PORTFOLIOS, (CONTINUED)

The  valuation  allowance  related  to  the  loan  portfolios  had  a balance of
$5,538,019  at  March  31,  2004  and  December  31,  2003.

NOTE 6 - OTHER RECEIVABLES

Other receivables consist of collections on portfolios received by a third party
collection  agency.

NOTE 7 - PROPERTY AND EQUIPMENT

Property  and  equipment  is  as  follows:

<TABLE>
<CAPTION>
                                    As of           As of
                                Mar. 31, 2004   Dec. 31, 2003
                                --------------  --------------
<S>                             <C>             <C>
Office furniture and equipment  $      274,260  $      273,835
Computer equipment                     487,986         482,729
Leasehold improvements                  36,982          36,982
                                --------------  --------------
  Totals                               799,228         793,546
Less accumulated depreciation          440,795         395,622
                                --------------  --------------
  Property and equipment, net   $      358,433  $      397,924
                                ==============  ==============
</TABLE>

Depreciation expense for the three months ended March 31, 2004 and 2003 amounted
to  $45,173  and  $51,501,  respectively.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Lease Commitments
-----------------

The  Company  currently  leases  office  space  in  Anaheim,  California under a
non-cancelable  five  year  operating lease.  Under the lease agreement, PCM LLC
must  pay  a basic monthly rental charge plus a portion of the building's common
area  expenses.

Future minimum lease commitments as of March 31, 2004 are as follows:

<TABLE>
<CAPTION>
     Year ending
      March 31,
     -----------
<S>                        <C>
         2004              $307,000
         2005               316,000
         2006               214,000
      Thereafter               -
</TABLE>

Rental  expense  for  the three months ended March 31, 2004 and 2003 amounted to
approximately  $79,659  and  $77,581,  respectively.

Consent Decree - Fair Credit Reporting Act
------------------------------------------

In  February  2001, a Consent Decree was entered in United States District Court
in  an  action  United States of America v. Performance Capital Management, Inc.
(One  of  the  entities  that  formed  Performance  Capital Management, LLC, see


See Independent Accountants' Review Report.


                                       12
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOTE 8 - COMMITMENTS AND CONTINGENCIES, (CONTINUED)

Consent Decree - Fair Credit Reporting Act, (continued)
-------------------------------------------------------

Note  1).  Under  the  terms of the Consent Decree, PCM, INC had a civil penalty
pursuant to Section 621 (a) of the Fair Credit Reporting Act, 15 U.S.C. 1681s(a)
of  $2,000,000  waived.  The  Consent  Decree  basically  had  PCM  INC  and its
successors agree to follow the provisions of the Fair Credit Reporting Act.  The
Consent  Decree ordered, among other specifics, that PCM INC and its successors,
officers,  employees,  et  al,  are:  1) enjoined from failing to report correct
delinquency  dates  to consumer reporting agencies;  2) enjoined from failing to
properly  investigate  consumer  disputes  and  verify,  correct  or delete  the
reporting of such information to consumer reporting agencies within the time set
forth  in  the  Fair  Credit Reporting Act;   3) enjoined from failing to report
accounts  as  "disputed"  to  consumer reporting agencies when consumers dispute
accounts either in writing, orally, or by electronic means; and 4) enjoined from
failing to comply in any other respect with the Fair Credit Reporting Act.

The  Consent  Decree  provides  for access to the business for a period of three
years,  including  all  computerized  databases,  right  to inspect and copy all
relevant  documents  and  the  right  to  interview officers and employees.  The
Consent  Decree  expired  in  February  2004.

NOTE 9 - EARNINGS PER MEMBER UNIT

Basic  and diluted earnings per member unit are calculated based on the weighted
average  number  of  member  units  issued and outstanding 570,916 for the three
months  ended  March  31,  2004 and 571,550 for the three months ended March 31,
2003.

NOTE 10 - EMPLOYEE BENEFIT PLANS

The  Company  has  a  defined  contribution plan covering all eligible full-time
employees of Performance Capital Management (the Plan Sponsor) who are currently
employed  by  the Company and have completed six months of service from the time
of  enrollment.  The  Plan  was  established  by  the  Plan  Sponsor  to provide
retirement  income  for  its  employees  and is subject to the provisions of the
Employee Retirement Income Security Act of 1974 as amended (ERISA).

The  Plan  is  a  contributory  plan whereby participants may contribute up to a
maximum of 15% of pre-tax annual compensation.  Participants may also contribute
amounts  representing  distributions  from  other  qualified  defined benefit or
contribution plans. The Plan Sponsor does not make matching contributions.

NOTE 11 - OTHER EVENTS

The Company is conducting extensive negotiations with Varde Investment Partners,
L.P.  ("Varde"),  a  well-known  participant in the debt collection industry, to
augment its purchasing capacity using capital provided by Varde. The Company has
not yet concluded its negotiation with Varde and reached a definitive agreement,
and  it  is  possible that the Company may not reach a definitive agreement with
Varde.


See Independent Accountants' Review Report.


                                       13
<PAGE>
ITEM  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

Except  for  the  historical information presented in this document, the matters
discussed  in this Form 10-QSB, and specifically in "Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations,"  or otherwise
incorporated  by  reference  into  this  document  contain  "forward-looking
statements" (as such term is defined in the Private Securities Litigation Reform
Act  of  1995). These statements can be identified by the use of forward-looking
terminology  such  as  "believes," "plans," "expects," "may," "will," "intends,"
"should,"  "plan,"  or "anticipates" or the negative thereof or other variations
thereon  or  comparable  terminology, or by discussions of strategy that involve
risks  and  uncertainties.  The  safe  harbor  provisions  of Section 21E of the
Securities  Exchange  Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended, apply to forward-looking statements made by Performance
Capital  Management, LLC. You should not place undue reliance on forward-looking
statements.  Forward-looking  statements  involve  risks  and uncertainties. The
actual  results  that  we achieve may differ materially from any forward-looking
statements due to such risks and uncertainties. These forward-looking statements
are  based  on  current expectations, and we assume no obligation to update this
information.  Readers  are  urged  to  carefully review and consider the various
disclosures  made  by  us in this report on Form 10-QSB and in our other reports
filed  with  the  Securities  and  Exchange  Commission  that  attempt to advise
interested parties of the risks and factors that may affect our business.

The  following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the unaudited financial statements
and  accompanying  notes and the other financial information appearing elsewhere
in  this  report and with the financial information contained in our Form 10-KSB
filed with the Securities and Exchange Commission on April 14, 2004.

OVERVIEW

We  acquire  assets  originated  by  federal  and  state  banking  and  savings
institutions,  loan  agencies,  and other sources, for the purpose of generating
income  and  cash flow from collecting or selling those assets. Typically, these
assets  consist of charged-off credit card contracts. These assets are typically
purchased  and  sold  as  portfolios.

Before  purchasing  a portfolio, we conduct due diligence to assess the value of
the  portfolio.  We  try to purchase portfolios at a substantial discount to the
actual amount of money that they will ultimately produce, so that we can recover
the  cost  we  pay for the portfolio, pay our collection and operating costs and
still  have  a  profit.  We  record our portfolios at cost based on the purchase
price.  We  reduce  the cost bases of our portfolios on a portfolio-by-portfolio
basis based on collections, sales of some or all of the portfolio and impairment
of  net  realizable  value.

We  frequently sell certain portions of portfolios we purchase, such as accounts
from  particular states where we do not collect, and then collect the balance of
the  portfolio.  We do not generally purchase loan portfolios solely with a view
to  their resale, and for this reason we generally do not show portfolios on our
balance  sheet  as  "held for investment". From time to time we sell some of our
portfolios  either to capitalize on market conditions, to dispose of a portfolio
that  is not performing or to dispose of a portfolio whose collection life, from
our  perspective, has run its course. When we engage in these sales, we continue
collecting  the  portfolio  right  up  until  the  closing  of  the  sale.

We  refer  to the discounted present value of the actual amount of money that we
believe  a  portfolio  will  ultimately  produce  as  the  "fair  value"  of the
portfolio.  If we conduct our business successfully, the aggregate fair value of
our  portfolios should be substantially greater than the aggregate cost basis of
our  portfolios  presented  on  our  balance  sheet. We must make assumptions to
determine fair value, the most significant of which are the magnitude and timing
of  future  collections  and  the discount rate used to determine present value.
Because  of  the  inherent uncertainty associated with predicting future events,
our  determinations  of  fair  value  at  any  particular point in time are only
estimates,  and  actual  fair value could ultimately vary significantly from our
estimate.

We  earn revenues from collecting our portfolios and from selling our portfolios
or  portions  of  our  portfolios. We recognize gross revenue when we collect an
account and when we sell a portfolio or a portion of it. On our income statement
we  reduce  our  gross  revenues by the cost basis recovery of our portfolios to
arrive  at  net  revenue.  For  collections,  we  reduce  the  cost basis of the
portfolio  dollar-for-dollar  until  we have completely recovered the cost basis


                                       14
<PAGE>
of  the portfolio. When we sell a portfolio or a portion of it, to the extent of
remaining  cost  basis  for  the  portfolio,  we  reduce  the  cost basis of the
portfolio  by  a  percentage  of  the  original  portfolio  cost.

Our  net  revenues  from  portfolio collections may vary from quarter to quarter
because  the  number  and  magnitude of portfolios where we are still recovering
costs  may  vary, and because the return rates of portfolios whose costs we have
already  recovered  in full may vary. Similarly, our net revenues from portfolio
sales  may vary from quarter to quarter depending on the number and magnitude of
portfolios  (or  portions)  we  decide to sell and the market values of the sold
portfolios  (or  portions)  relative  to  their  cost  bases.

Our  operating  costs  and expenses consist principally of salaries and benefits
and  general  and  administrative  expenses.  Fluctuations  in  our salaries and
benefits  correspond  roughly  to fluctuations in our headcount. Our general and
administrative  expenses  include non-salaried collection costs, telephone, rent
and  professional  expenses.  Fluctuations  in  telephone  and  collection costs
generally  correspond  to  the  volume of accounts we are attempting to collect.
Professional  expenses  tend  to  vary based on specific issues we must resolve.

BASIS  OF  PRESENTATION

We  present  our  financial  statements based on our February 4, 2002, emergence
from bankruptcy being treated as the inception of our business. In our emergence
from bankruptcy, we succeeded to the assets and liabilities of six entities that
were  in  bankruptcy.  The  equity  owners  of  these  entities  approved  a
reorganization  plan  under  which  the  owners  of these six entities agreed to
receive  ownership interests in Performance Capital Management, LLC, in exchange
for  their  ownership  interests  in  the  predecessor  entities.

CRITICAL  ACCOUNTING  ESTIMATES

We  present investments in portfolios on our balance sheet at the lower of cost,
market,  or  estimated  net  realizable value. As discussed above, we reduce the
cost basis of a portfolio on a proportionate basis when we sell a portion of the
portfolio,  and  we treat amounts collected on a portfolio as a reduction to the
carrying  basis  of  the  portfolio  on  an  individual portfolio basis. When we
present financial statements we assess the estimated net realizable value of our
portfolios  on  a  portfolio-by-portfolio  basis, and we reduce the value of any
portfolio  that  has  suffered  impairment  because  its  cost basis exceeds its
estimated  net  realizable  value.  Estimated  net  realizable  value represents
management's  estimates,  based  upon  present  plans  and  intentions,  of  the
discounted  present  value  of  future  collections. We must make assumptions to
determine  estimated net realizable value, the most significant of which are the
magnitude  and  timing  of  future  collections  and  the  discount rate used to
determine  present  value.  Once we write down a particular portfolio, we do not
increase it in subsequent periods if our plans and intentions or our assumptions
change.

We  present  the fair value of our portfolios only in the notes to our financial
statements,  not  in  the  basic  financial  statements  themselves. In order to
understand  our  financial  statements  the  reader must understand the concepts
involved  in estimation of the fair value of our portfolios, as discussed in the
section  above  entitled  "Overview".  Because  of  the  inherent  uncertainty
associated  with  predicting  future events, our determinations of fair value at
any  particular  point  in  time are only estimates, and actual fair value could
ultimately  vary  significantly  from  our  estimate.

When  we  collect  an  account  in  a portfolio, we reduce the cost basis of the
portfolio dollar-for-dollar until we have completely recovered the cost basis of
the  portfolio. We believe this method of accounting for the amortization of the
purchase  price  of  our  portfolios is conservative and minimizes the effect of
estimation  on  our  results  of  operations.  This  policy  has  the  effect of
"front-loading"  expenses,  however,  and  may  result  in a portfolio initially
showing  no  net  revenue for a period of time and then showing only net revenue
once  we  have  recovered its entire cost basis. Although this accounting policy
may  be  criticized  for  not  matching  portfolio  cost  basis  to revenue on a
proportionate basis over the life of the portfolio, we believe a policy grounded
in  conservatism  is  preferable  to  a  policy  of  attempting  to estimate the
appropriate  matching percentages, due to the distressed nature of the portfolio
assets and the lack of assurance that projected collections will actually occur.

When  we  sell  a  portfolio or a portion of it, to the extent of remaining cost
basis  for  the  portfolio,  we  reduce  the  cost  basis  of the portfolio by a
percentage of the original portfolio cost. Our policy does not take into account
whether the portion of the portfolio we are selling may be more or less valuable
than  the remaining accounts that comprise the portfolio. We believe our policy,
which  is  grounded  in  this  objective  measure  for  cost  basis recovery, is
preferable  to  a


                                       15
<PAGE>
policy  that  would  attempt  to estimate whether a portion of a portfolio being
sold  is  more  or  less  valuable than the remaining accounts that comprise the
portfolio,  because our policy minimizes the effect of estimation on our results
of  operations.

OPERATING RESULTS

Comparison of Results for the Quarters Ended March 31, 2004, and 2003

The  following  discussion  compares our results for the quarter ended March 31,
2004,  to  the  quarter ended March 31, 2003. We had net income of approximately
$659,000  for  the  quarter  ended  March 31, 2004, as compared to a net loss of
approximately  $325,000  for  the  quarter  ended  March 31, 2003. Our operating
activities  provided  cash  of  approximately  $1.3 million in the quarter ended
March  31,  2004, as compared to providing cash of approximately $839,000 in the
quarter  ended  March  31,  2003.

Revenue
-------

Our  net  revenues increased to approximately $2.4 million for the quarter ended
March  31, 2004, from approximately $1.4 million for the quarter ended March 31,
2003.  The  following  table  presents  a  comparison  of  the components of our
revenues  for  the  quarter ended March 31, 2004, to the quarter ended March 31,
2003,  as  well  as  presenting net revenue as a percentage of the corresponding
total  revenue  (approximate  amounts  due  to  rounding):

<TABLE>
<CAPTION>
                                 Total                  Collections                  Sales
                        ------------------------  ------------------------  ------------------------
                         March 31,    March 31,    March 31,    March 31,    March 31,    March 31,
                           2004         2003         2004         2003         2004         2003
                        -----------  -----------  -----------  -----------  -----------  -----------
                             ($in millions)            ($in millions)            ($in millions)
<S>                     <C>          <C>          <C>          <C>          <C>          <C>
Total revenues          $      4.2   $      3.0   $      2.4   $      2.6   $      1.8   $      0.4
Less basis recovery           (1.8)        (1.6)        (0.8)        (1.3)        (1.0)        (0.3)
                        -----------  -----------  -----------  -----------  -----------  -----------
Net revenues            $      2.4   $      1.4   $      1.6   $      1.3   $      0.8   $      0.1
                        ===========  ===========  ===========  ===========  ===========  ===========
Net revenue percentage        56.9%        47.1%        67.7%        51.2%        42.0%        15.9%
</TABLE>

Portfolio collections continue to provide most of our total revenues.  Our total
revenues  from  portfolio collections remained stable, but we showed substantial
improvement  in  net revenues from portfolio collections.  Our net revenues from
portfolio  collections  (as well as the corresponding percentage of net revenues
to total revenues) increased principally due to maintaining collection trends on
our older portfolios with low or fully-amortized cost bases while simultaneously
exploiting  portfolios  purchased  during  the  second  half  of  2002.  We have
completely  recovered  the  cost  basis of most of these portfolios purchased in
2002,  resulting  in collections of these portfolios generating net revenue.  We
expect  our  2002  portfolios  to  continue  generating net revenues. During the
quarter  ended  March  31,  2004,  we acquired approximately $1.3 million of new
portfolios.  The  cost  basis  recovery  associated  with  collecting these 2004
portfolios,  combined  with  others  that  we acquired in 2003, could offset the
increase in net revenue percentage we would otherwise expect our 2002 portfolios
to  generate.

Both  our total and net revenues from portfolio sales showed dramatic increases.
As  part  of our program to emphasize efforts to continue to collect some of our
older  portfolios,  we identified a substantial number of older portfolios whose
collection  lives,  from  our perspective, have run their course.  We identified
these  portfolios  as candidates for sale and were able to sell a number of them
in the first quarter of 2004 on terms we considered acceptable. We may engage in
further  sales  if  we  believe  market  conditions  are acceptable. We continue
collection  efforts  for certain accounts in these portfolios right up until the
point  of sale. We also anticipate continuing to sell portions of newly acquired
portfolios  from  time to time, but we do not expect to generate substantial net
revenues  from  these  sales.

Our  net  income of approximately $659,000 for the quarter ended March 31, 2004,
is essentially due to the approximately $748,000 of net revenues we derived from
portfolio  sales.  Without this large volume of sales, we would have essentially
had  a break-even quarter. Although we still have some portfolios identified for
sale,  we  do not expect future portfolio sales to be of the same magnitude that
we  experienced  this  quarter.


                                       16
<PAGE>
Operating Expenses
------------------

Our  total  operating  costs  and  expenses  remained  relatively  stable  at
approximately  $1.7  million  for each of the quarters ended March 31, 2004, and
2003.  Our  ratio of operating costs and expenses to total revenues decreased to
41.0%  for  quarter  ended  March 31, 2004, from approximately 57.5% for quarter
ended  March 31, 2003.  The improvement in 2004 from 2003 was due principally to
the  dramatic  increase in revenues from portfolio sales in 2004.  Because these
portfolio  sales  result  in  substantial  revenues  without  any  corresponding
collection  effort, they have the effect of artificially lowering the 2004 ratio
of  operating costs and expenses to total revenues.  Without the large portfolio
sales,  our  ratio  of operating costs and expenses to total revenues would have
fluctuated  somewhat,  but  probably  not  more  than three to five percent. Our
general  and administration expenses increased to approximately $577,000 for the
quarter  ended March 31, 2004, from approximately $546,000 for the quarter ended
March 31, 2003. Our salaries and benefits expenses remained relatively stable at
approximately  $1.1  million  for each of the quarters ended March 31, 2004, and
2003. Our headcount has remained relatively stable, although we still experience
significant  employee  turnover among our collectors. Our operating expenses may
increase  somewhat in 2004 if we increase the volume of accounts we collect, but
we  expect  increases  in  total revenues to accompany any material increases in
variable  costs  associated  with  our  collection  efforts.

LIQUIDITY  AND  CAPITAL  RESOURCES

Our  cash and cash equivalents increased approximately $1.1 million in the first
quarter  of  2004  to a balance of approximately $2.1 million at March 31, 2004.
During  the  quarter  ended  March 31, 2004, our portfolio collections and sales
generated  approximately  $4.2  million  of cash, and we used approximately $1.7
million  for  operating  and  other  activities,  approximately  $1.3 million to
purchase  new  portfolios  and  approximately $165,000 for distributions to unit
holders.

During  the  quarter  ended March 31, 2004, we continued making progress toward,
but  did  not achieve results consistent with, our business plan: to recover the
cost we pay for our portfolios, pay our collecting and operating costs and still
have a profit. Excluding the results from the large volume of portfolio sales in
the  first  quarter  of  2004, our cost basis recovery of approximately $792,000
plus our operating and other expenses of approximately $1.7 million exceeded our
total  revenues  from collections of approximately $2.4 million by approximately
$77,000. We received approximately $1.8 million in cash during the quarter ended
March  31,  2004,  from  sales  of  portfolios.  We  used some of these funds to
purchase  approximately  $1.3  million  of  new  portfolios  during the quarter.
Approximately  $518,000  included  in  these  purchases  and sales consists of a
portfolio  that  we  purchased and then immediately resold. On a cash basis, our
$1.1  million  increase  in  cash  was  due  to  our  collections  and  sales of
approximately  $4.2  million  exceeding  the  sum  of  (a)  our  new  portfolio
acquisitions of approximately $1.3 million plus (b) our cash operating and other
costs  of  approximately  $1.7  million  plus (c) distributions of approximately
$165,000.

During  the  fourth  quarter  of  2003,  we  used  some  of the cash reserves we
accumulated  during  the  first  three quarters of 2003 to acquire approximately
$1.1  million of new portfolios. We believe that market conditions for acquiring
new  portfolios  improved  during  the  fourth quarter of 2003 and have remained
favorable  during  the  first  quarter  of  2004.  Due  in  large  part  to  our
substantial portfolio sales in the first quarter of 2004, we increased portfolio
acquisitions in the first quarter to approximately $1.3 million, and at the same
time  increased  our  cash  balance  by  approximately $1.1 million.  Whether we
continue  to  acquire  portfolios  at  the  pace  of  the last two quarters will
continue to depend on our assessment of market conditions, as well as the amount
of liquid cash and other financial resources available to us.

We  believe  we  continue  to  improve  the  balance  between  our  new  and old
portfolios.  In  addition,  we  believe  that  our procedures to ensure that our
collectors  continue  to focus collection efforts on older portfolios that still
have  returns  to yield, rather than focusing just on the most recently acquired
portfolios,  continue  to  show  results.  By  monitoring  the  results of calls
originated  through  our dialer, we have identified portfolios that require more
cost  to collect than others. Particularly where we have worked to collect these
portfolios  over an extended period of time, we have identified these portfolios
as  candidates  for  sale  if we are able to sell them at reasonable prices.  We
sold  a number of these portfolios in the first quarter of 2004. We believe this
process  of  constantly evaluating portfolio returns against costs of collection
should  continue  to  improve  the  balance  between our new and old portfolios.

Our  portfolios  provide our principal long-term source of liquidity. Over time,
we  expect to convert our portfolios to cash in an amount that equals or exceeds
the  cost basis of our portfolios. In addition, some portfolios whose cost bases


                                       17
<PAGE>
we  have  completely  recovered  will  continue to return collections to us. Our
estimate  of  the  fair  value  of  our  portfolios at March 31, 2004, decreased
approximately  $100,000  to approximately $15.2 million from approximately $15.3
million at December 31, 2003. At the same time, the cost basis of our portfolios
decreased  to  approximately  $1.6 million at March 31, 2004, from approximately
$2.1  million  at  December  31,  2003.

In general, we expect increases in the cost basis of our portfolios presented on
our  balance sheet to accompany increases in portfolio fair value. The magnitude
and timing of our collections could cause cost basis to decline in some quarters
when  fair  value  actually increases, however, because we "front-load" our cost
basis recovery instead of matching portfolio cost basis recovery to revenue on a
proportionate  basis  over  the  life  of the portfolio. Our purchasing patterns
could  reinforce  this  divergence. A decrease in the magnitude of new portfolio
acquisitions  (i.e.,  failing  to  reinvest all of cash collections representing
cost  basis  recovery)  may  still  result  in a fair value increase because new
portfolios generally have a fair value that exceeds their purchase price.

In the first quarter of 2004, however, both the cost basis of our portfolios and
their  fair  value  decreased.  Our portfolio sales of $1.8 million (with a cost
basis  of  approximately  $1.0 million) played a significant role in the overall
decrease  in  the  cost  basis  of  our portfolios.  Fair value declined in part
because  we  replaced  these  sold  portfolios  with  only  $1.3  million of new
portfolios.  We  believe  the  fair value of our portfolios will increase in the
near  term  as  we  continue  to  acquire  new portfolios and our sales of older
portfolios  decrease.  We believe our portfolio cost basis will also increase in
the  near  term  because  of  reinvesting  cash  proceeds  from  sales  of older
portfolios  into  the purchase of new portfolios and because we anticipate being
able  to  borrow  funds to acquire new portfolios. Long-term growth in portfolio
cost  basis  will  depend  on whether market conditions continue to permit us to
purchase portfolios at reasonable prices and on our financial resources.

We used a discount rate of 20% to determine the fair values of our portfolios at
March  31,  2004,  and  December  31,  2003.  The  following  table  sets  forth
alternative  estimates  of  fair  value if we assessed collection risk as higher
(using a discount rate of 25%) or lower (using a discount rate of 15%).

<TABLE>
<CAPTION>
                                             March 31, 2004   December 31, 2003
                                             ---------------  ------------------
<S>                                          <C>              <C>

Higher collection risk (25% discount rate)   $  14.1 million  $     14.3 million
Assumed collection risk (20% discount rate)  $  15.2 million  $     15.3 million
Lower collection risk (15% discount rate)    $  16.3 million  $     16.6 million
</TABLE>

Our  estimates of fair values also would change if we revised our projections of
the  magnitude  and  timing  of  future  collections.  Because  of  the inherent
uncertainty associated with predicting future events, our determinations of fair
value  at any particular point in time are only estimates, and actual fair value
could  ultimately  vary  significantly  from  our  estimate.

We plan to realize the difference between fair value and cost basis over time as
we  collect  our portfolios. We generally collect our portfolios over periods of
time  ranging  from  three  to seven years, with the bulk of a portfolio's yield
coming  in  the first three years we collect it. If we succeed in collecting our
portfolios  and  realize the difference between fair value and cost basis of our
portfolios,  we  will  recover the cost we paid for them, pay our collection and
operating  costs,  and  still  have  excess  cash.

In  the  near term we plan to use some of our cash collections representing cost
basis  recovery  to  make  distributions  to  our  members and interest holders.
Ultimately  we  plan  to generate cash in excess of our collection and operating
costs  and  our  cost  basis recovery and to use some of the excess cash to make
distributions  to  our members and interest holders. Beginning in April 2003, we
began  making  quarterly distributions. During 2003, we made three distributions
totaling  approximately  $472,000.  We made distributions totaling approximately
$327,000  in  January  and  April  of  2004.

In  the near term, we plan to reinvest some of our cash collections representing
cost  basis  recovery  to  acquire additional portfolios to continue growing the
fair  value of our portfolios on a quarter to quarter basis.  Ultimately we plan
to  reinvest all of the cash representing cost basis recovery, plus a portion of
excess  cash,  to  acquire  additional  portfolios.  During the first quarter of
2004, we reinvested approximately $1.3 million of the approximately $1.8 million
we  received  from  portfolio  sales  to  acquire  new  portfolios.


                                       18
<PAGE>
Our Board of Directors has described this strategy as having two parts:

     -    Provide  an  annuity  without impairing the value of the business; and

     -    Grow  the  business  to  increase  the  annuity.

Due  to  factors  such  as  the  availability  of new portfolios, market pricing
conditions for new portfolios, large sales of older portfolios and the timing of
distributions  to  our  members, we may not achieve increases in fair value each
quarter.

We  do  not  have any lines of credit or other debt financing available to us at
this time. At this time we do not use credit arrangements to acquire portfolios.
We  have,  however,  conducted  extensive  negotiations  with  Varde  Investment
Partners,  L.P.  ("Varde"),  a  well-known  participant  in  the debt collection
industry, to augment our purchasing capacity using capital provided by Varde. We
have  not  yet  concluded  our  negotiation  with Varde and reached a definitive
agreement,  and it is possible that we may not reach a definitive agreement with
Varde.  Due to the material effect that concluding an agreement with Varde could
have  on our business prospects, however, we are providing the following summary
of  some  of  the  key  business  points  we  have  negotiated  with  Varde:

     -    The facility would provide up to $25 million of capital (counting each
          dollar  loaned  on  a  cumulative  basis)  over  a  five-year  term.
     -    Varde  would not be under any obligation to make a loan to us if Varde
          does  not  approve  of  the portfolio(s) we propose to acquire and the
          terms  of  the  acquisition.
     -    Varde  would have the right to participate in any proposed acquisition
          of  a  portfolio  by  us  pursuant  to  a  right  of  first  refusal.
     -    We  would  have  to  agree  with  Varde on the terms for each specific
          advance  under the loan facility, including such material terms as (a)
          the  relative  sizes of our participation and Varde's in supplying the
          purchase  price; (b) the amount of servicing fees we would receive for
          collecting  the  portfolio;  (c)  the  rates  of  return  on the funds
          advanced  by  Varde  and  us;  and (d) the split of any excess profits
          after  repayment of the purchase price (plus interest) to Varde and us
          and  payment  of  collection  expenses.

If  we  conclude  an agreement with Varde, it is unlikely that we will ever have
outstanding  indebtedness  of  the  full $25 million at any one time, due to the
cumulative nature of the facility.  There can be no assurance that we will reach
a  final  agreement with Varde, although we believe we will be able to negotiate
the  remaining  open  issues  to  the  mutual  satisfaction  of both parties. In
addition,  even  if  we  reach  a  final  agreement  with Varde, there can be no
assurance  that Varde will advance any money under the facility, because in each
instance  Varde  must  approve of the portfolio(s) we propose to acquire and the
terms  of  the  acquisition.

We do not have any plans to raise equity capital. Based on our cash position and
current  financial  resources,  and  assuming  our operating results continue to
increase  at  projected levels, we believe we have adequate capital resources to
continue  our  business  as  presently  conducted for the foreseeable future. To
maximize the return on our infrastructure, we are also considering whether there
might  be  ways,  such as concluding and accessing the Varde credit facility, to
increase  the  volume  of  accounts  we service other than through new portfolio
acquisitions  using  only  our  cash  resources.

We  believe  our current collection infrastructure could handle a greater volume
of  accounts. We have finite cash resources available for portfolio acquisition,
so  we  are  actively  seeking  ways  to  deploy our infrastructure resources to
collect  more  accounts.  Strategies  to  leverage our collection infrastructure
include  borrowing money to acquire additional portfolios or collecting accounts
for third parties. Both of these strategies would require us to share collection
proceeds with a third party, as opposed to retaining 100% of collection proceeds
from  portfolios  that  we own due to portfolio acquisitions using only our cash
resources.  Our  negotiation with Varde is the most important initiative we have
undertaken  to  leverage  our infrastructure resources. As discussed previously,
there  can  be  no  assurance  that  we will reach a final agreement with Varde,
although  we  believe  we will be able to negotiate the remaining open issues to
the  mutual  satisfaction of both parties. In addition, even if we reach a final
agreement  with  Varde,  there  can  be no assurance that Varde will advance any
money  under  the  facility,  because in each instance Varde must approve of the
portfolio(s)  we  propose  to acquire and the terms of the acquisition. The only
definitive  understanding  we have reached at this time is a limited third-party
collection  program  instituted  in  late  2003.


                                       19
<PAGE>
We  do not have any contractual commitments to make capital expenditures, and we
have not budgeted any capital expenditures for the coming year. We may from time
to  time  acquire  capital  assets  on  an as needed basis. Our most significant
capital  assets  are  our  dialer  and  our  telephone  switch,  which we do not
anticipate  having  to  replace  within  the  next  year.

ITEM 3. CONTROLS AND PROCEDURES

In  accordance  with  the  Exchange Act, we carried out an evaluation, under the
supervision  and  with  the  participation  of  management,  including our Chief
Operations  Officer  and  Accounting  Manager,  of  the  effectiveness  of  our
disclosure  controls  and procedures as of the end of the period covered by this
report.  Based  on  this evaluation, our Chief Operations Officer and Accounting
Manager  concluded that our disclosure controls and procedures were effective as
of  March 31, 2004, to provide reasonable assurance that information required to
be  disclosed  in  our  reports  filed  or  submitted  under the Exchange Act is
recorded,  processed,  summarized and reported within the time periods specified
in  the  Securities  and  Exchange  Commission's  rules  and  forms.

There  has been no change in our internal controls over financial reporting that
occurred  during  the  three  months  ended  March 31, 2004, that has materially
affected,  or  is  reasonably likely to materially affect, our internal controls
over  financial  reporting.


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously disclosed in our periodic filings with the Securities and Exchange
Commission,  the  Consent  Decree  entered in February 2001 in the United States
District  Court  for  the  Central  District  of California, provided that for a
period  of  three  years,  which  ended  in  February  2004,  the  Federal Trade
Commission  had  access  to our business, all of our computerized databases, the
right to inspect and copy all relevant documents, and the right to interview our
officers  and  employees.

ITEM  2. CHANGES  IN  SECURITIES  AND SMALL BUSINESS  ISSUER PURCHASES OF EQUITY
SECURITIES

We have not purchased any LLC Units from our members since February 4, 2002, our
inception.  We commenced a procedure authorized by our plan of reorganization to
eliminate  the  interests  of  members  we have not been able to locate. Through
delivery  to  last known addresses and public advertising in certain newspapers,
we  will  attempt  to  notify  approximately  42  people  or  entities listed as
investors in the PAM Funds that they will no longer be members if we do not hear
from  them  in  six  months.  At  this time we believe these investors represent
ownership of approximately 7,154 LLC Units, approximately $307,000 of unreturned
capital  and  approximately  $152,000  of  uncashed  distribution  checks.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

<TABLE>
<CAPTION>
Exhibit
Number   Description
----------------------------------------------------------------------------------------------------------
<S>      <C>
  2.1    Joint Chapter 11 Plan of Reorganization Proposed by Chapter 11 Trustee and the Official Committee
         of Equity Security Holders effective February 4, 2002 (1)

  2.2    First Amended Disclosure Statement Describing Joint Chapter 11 Plan Proposed by Chapter 11
         Trustee and the Official Committee of Equity Security Holders approved on October 12, 2001 (1)

  3.1    Performance Capital Management, LLC Articles of Organization (1)


                                       20
<PAGE>
  3.2    Operating Agreement for Performance Capital Management, LLC (1)

  3.3    First Amendment to Operating Agreement for Performance Capital Management, LLC (1)

  3.4    Second Amendment to Operating Agreement for Performance Capital Management, LLC (2)

  4.1    Specimen Performance Capital Management, LLC Unit Certificate (1)

  4.2    Specimen Performance Capital Management, LLC Economic Interest Unit Certificate (1)

  4.3    Provisions in the Operating Agreement for Performance Capital Management, LLC pertaining to the
         rights of LLC Unit holders (see Exhibits 3.2 and 3.3) (1)

  31.1   Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)

  31.2   Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)

  32.1   Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C.
         Sec. 1350 *
</TABLE>



*  The  certifications  filed  under  Exhibit  32.1  are  not deemed "filed" for
purposes  of Section 18 of the Securities Exchange Act of 1934 and are not to be
incorporated by reference into any filing of Performance Capital Management, LLC
under  the  Securities  Exchange  Act  of  1933,  as  amended, or the Securities
Exchange  Act  of 1934, as amended, whether made before or after the date hereof
irrespective of any general incorporation by reference language contained in any
such  filing,  except  to  the  extent  that Performance Capital Management, LLC
specifically  incorporates  it  by  reference.

(1)  Filed  on  April  2,  2003  as  an  exhibit to our report on Form 8-K dated
February  4,  2002  and  incorporated  herein  by  reference.

(2)  Filed  on  November 14, 2003 as an exhibit to our report on Form 10-QSB for
the  period  ended  September  30,  2003  and  incorporated herein by reference.

(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the three months ended March 31, 2004.



                                       21
<PAGE>
                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        PERFORMANCE CAPITAL MANAGEMENT, LLC



    May 14, 2004                   By:  /s/  David J. Caldwell
------------------                     -----------------------------------
       (Date)                           Name: David J. Caldwell
                                         Its: Chief Operations Officer


                                       22
<PAGE>
<TABLE>
<CAPTION>
                                             EXHIBIT INDEX

Exhibit
Number   Description
---------------------------------------------------------------------------------------------------------------
<S>      <C>
  2.1    Joint Chapter 11 Plan of Reorganization Proposed by Chapter 11 Trustee and the Official Committee
         of Equity Security Holders effective February 4, 2002 (1)

  2.2    First Amended Disclosure Statement Describing Joint Chapter 11 Plan Proposed by Chapter 11
         Trustee and the Official Committee of Equity Security Holders approved on October 12, 2001 (1)

  3.1    Performance Capital Management, LLC Articles of Organization (1)

  3.2    Operating Agreement for Performance Capital Management, LLC (1)

  3.3    First Amendment to Operating Agreement for Performance Capital Management, LLC (1)

  3.4    Second Amendment to Operating Agreement for Performance Capital Management, LLC (2)

  4.1    Specimen Performance Capital Management, LLC Unit Certificate (1)

  4.2    Specimen Performance Capital Management, LLC Economic Interest Unit Certificate (1)

  4.3    Provisions in the Operating Agreement for Performance Capital Management, LLC pertaining to the
         rights of LLC Unit holders (see Exhibits 3.2 and 3.3) (1)

  31.1   Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)

  31.2   Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)

  32.1   Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Sec.
         1350 *
</TABLE>


*  The  certifications  filed  under  Exhibit  32.1  are  not deemed "filed" for
purposes  of Section 18 of the Securities Exchange Act of 1934 and are not to be
incorporated by reference into any filing of Performance Capital Management, LLC
under  the  Securities  Exchange  Act  of  1933,  as  amended, or the Securities
Exchange  Act  of 1934, as amended, whether made before or after the date hereof
irrespective of any general incorporation by reference language contained in any
such  filing,  except  to  the  extent  that Performance Capital Management, LLC
specifically  incorporates  it  by  reference.

(1)  Filed  on  April  2,  2003  as  an  exhibit to our report on Form 8-K dated
February  4,  2002  and  incorporated  herein  by  reference.

(2)  Filed  on  November 14, 2003 as an exhibit to our report on Form 10-QSB for
the  period  ended  September  30,  2003  and  incorporated herein by reference.


<PAGE>