--------------------------------------------------------------------------------

                                  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, 2005
                                                 --------------------


[ ]     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  April 15, 2005, the issuer had
563,926  LLC  Units  issued  and  outstanding.


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


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

                                                    INDEX TO
                                         QUARTERLY REPORT ON FORM 10-QSB
                                      FOR THE QUARTER ENDED MARCH 31, 2005


PART I - FINANCIAL INFORMATION                                                                              PAGE
<S>                                                                                                         <C>

Item 1    Consolidated Financial Statements

          Review Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . .   1

          Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004 (audited) . . .   2

          Consolidated Statements of Operations for the quarters ended March 31, 2005 and 2004 (unaudited) .   3

          Consolidated Statements of Members' Equity for the quarters ended March 31, 2005 and 2004
          (unaudited) and the year ended December 31, 2004 (audited) . . . . . . . . . . . . . . . . . . . .   4

          Consolidated Statements of Cash Flows for the quarters ended March 31, 2005 and 2004 (unaudited) .   5

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

Item 2    Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . .  15

Item 3    Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

PART II - OTHER INFORMATION

Item 2    Changes in Securities and Small Business Issuer Purchases of Equity Securities . . . . . . . . . .  22

Item 6    Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
</TABLE>


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS



            [MOORE STEPHENS WURTH FRAZER AND TORBET, LLP LETTERHEAD]


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------



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

We  have  reviewed  the  accompanying  consolidated balance sheet of Performance
Capital  Management,  LLC  as  of  March  31, 2005, and the related consolidated
statements  of operations, members' equity and cash flows for the quarters ended
March  31,  2005  and  2004.  All  information  included  in  these consolidated
financial  statements  is  the  representation  of the management of Performance
Capital  Management,  LLC.

We  conducted  our review in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  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 conducted in accordance with the
standards  of  the  Public  Company Accounting Oversight Board, 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 consolidated financial statements referred to above
for them to be in conformity with U.S. generally accepted accounting principles.

We  have  previously  audited,  in  accordance  with the standards of the Public
Company  Accounting  Oversight  Board  (United States), the consolidated balance
sheet  of  Performance  Capital Management, LLC as of December 31, 2004, and the
related  consolidated  statements  of operations, members' equity and cash flows
for  the  year ended December 31, 2004 (not presented herein); and in our report
dated  March  9, 2005, we expressed an unqualified opinion on those consolidated
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying  consolidated  balance  sheet  as  of  December 31, 2004, 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 9, 2005
Orange, California


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

                           CONSOLIDATED BALANCE SHEETS
                   AS OF MARCH 31, 2005 AND DECEMBER 31, 2004


                                               March 31,     December 31,
                                                 2005           2004
                                             (unaudited)     (audited)
                                             ------------  --------------
<S>                                          <C>           <C>
                       ASSETS
                       ------
Cash and cash equivalents                    $  1,369,052  $    1,920,155
Restricted cash                                   406,432         122,205
Other receivables                                 334,684          31,494
Purchased loan portfolios, net                  3,881,738       2,991,642
Property and equipment, net                       214,971         254,808
Deposits                                           57,746          56,588
Prepaid expenses and other assets                 166,252          86,063
                                             ------------  --------------


      Total assets                           $  6,430,875  $    5,462,955
                                             ============  ==============


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

LIABILITIES:
  Accounts payable                           $    134,581  $       59,275
  Accrued liabilities                             376,439         373,924
  Accrued interest                                 30,653           8,075
  Notes payable                                 2,798,336       1,417,043
  Income taxes payable                             31,890          18,290
                                             ------------  --------------
    Total liabilities                           3,371,899       1,876,607

COMMITMENTS AND CONTINGENCIES                           -               -

MEMBERS' EQUITY                                 3,058,976       3,586,348
                                             ------------  --------------

      Total liabilities and members' equity  $  6,430,875  $    5,462,955
                                             ============  ==============


The accompanying notes are an integral part of these consolidated financial statements.
See Review Report of Independent Registered Public Accounting Firm.
</TABLE>


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

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                             For the Quarter    For the Quarter
                                                  Ended              Ended
                                                March 31,          March 31,
                                                  2005               2004
                                               (unaudited)        (unaudited)
                                            -----------------  -----------------
<S>                                         <C>                <C>
REVENUES:
  Portfolio collections                     $      3,188,207   $      2,451,370
  Portfolio sales                                          -          1,782,064
                                            -----------------  -----------------
    Total revenues                                 3,188,207          4,233,434
  Less portfolio basis recovery                    1,560,131          1,826,227
                                            -----------------  -----------------

NET REVENUES                                       1,628,076          2,407,207
                                            -----------------  -----------------

OPERATING COSTS AND EXPENSES:
  Salaries and benefits                            1,117,716          1,114,460
  General and administrative                         761,087            577,370
  Depreciation                                        42,833             45,173
                                            -----------------  -----------------
    Total operating costs and expenses             1,921,636          1,737,003
                                            -----------------  -----------------

INCOME (LOSS) FROM OPERATIONS                       (293,560)           670,204
                                            -----------------  -----------------

OTHER INCOME (EXPENSE):
  Interest Expense                                   (56,457)                 -
  Reorganization costs                                  (190)            (8,837)
  Interest income                                      3,395              2,391
  Other income                                         1,669              7,017
                                            -----------------  -----------------
    Total other income (expense), net                (51,583)               571
                                            -----------------  -----------------

INCOME (LOSS) BEFORE INCOME TAX PROVISION           (345,143)           670,775

INCOME TAX PROVISION                                  17,600             11,600
                                            -----------------  -----------------

NET INCOME (LOSS)                           $       (362,743)  $        659,175
                                            =================  =================

NET INCOME (LOSS) PER UNIT
  BASIC AND DILUTED                         $           (.64)  $           1.15
                                            =================  =================


The accompanying notes are an integral part of these consolidated financial statements.
See Review Report of Independent Registered Public Accounting Firm.
</TABLE>


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

                             CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

                                                                                           Total
                                     Member    Unreturned    Abandoned    Accumulated    Members'
                                     Units      Capital       Capital       Deficit       Equity
                                    --------  ------------  -----------  -------------  -----------
<S>                                 <C>       <C>           <C>          <C>            <C>
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

Distributions to investors                       (509,069)                                (509,069)

Distributions forfeited                           151,555                                  151,555

Cancellation of investors units      (7,055)     (457,318)     457,318

Net income                                                                    131,432      131,432
                                    --------  ------------  -----------  -------------  -----------
Balance, December 31, 2004          563,861    24,633,642      489,244    (21,536,538)   3,586,348

Reinstatement of Units to Investor       65         3,503       (3,503)

Distributions to investors                       (164,629)                                (164,629)

Net loss                                                                     (362,743)    (362,743)
                                    --------  ------------  -----------  -------------  -----------

Balance, March 31, 2005             563,926   $24,472,516   $  485,741   $(21,899,281)  $3,058,976
                                    ========  ============  ===========  =============  ===========


The accompanying notes are an integral part of these consolidated financial statements.
See Review Report of Independent Registered Public Accounting Firm.
</TABLE>


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

                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               For the Quarter    For the Quarter
                                                                    Ended              Ended
                                                               March 31, 2005     March 31, 2004
                                                                 (unaudited)        (unaudited)
                                                              -----------------  -----------------
<S>                                                           <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                           $       (362,743)  $        659,175
  Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
     Depreciation                                                       42,833             45,173
   (Increase) decrease in assets:
     Other receivables                                                (303,190)            (4,006)
     Prepaid expenses and other assets                                 (81,347)           (59,539)
     Loan portfolios                                                  (890,096)           506,231
   Increase (decrease) in liabilities:
     Accounts payable                                                   75,306               (792)
     Accrued liabilities                                                 2,515             94,726
     Accrued interest                                                   22,578                  -
     Income taxes payable                                               13,600             11,600
                                                              -----------------  -----------------
         Net cash provided by (used in) operating activities        (1,480,544)         1,252,568
                                                              -----------------  -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                                   (2,996)            (5,682)
                                                              -----------------  -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Loan proceeds from borrowing                                     1,718,614                  -
    Repayment of loans                                                (337,321)                 -
    Distributions to investors                                        (164,629)          (164,503)
                                                              -----------------  -----------------
         Net cash provided by (used in) financing activities         1,216,664           (164,503)
                                                              -----------------  -----------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                               (266,876)         1,082,383

CASH AND CASH EQUIVALENTS, beginning of period                       2,042,360          1,029,397
                                                              -----------------  -----------------

CASH AND CASH EQUIVALENTS, end of period                      $      1,775,484   $      2,111,780
                                                              =================  =================

SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION:

  Income taxes paid                                           $          4,000   $            800
                                                              =================  =================

  Interest paid                                               $         33,881   $              -
                                                              =================  =================


The accompanying notes are an integral part of these consolidated financial statements.
See Review Report of Independent Registered Public Accounting Firm.
</TABLE>


                                        5
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Performance Capital Management, LLC ("PCM LLC") and its wholly-owned subsidiary,
Matterhorn  Financial  Services, LLC ("Matterhorn") (collectively the "Company",
unless  stated  otherwise)  are  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. In late December 1998, these
six  entities  voluntarily  filed  bankruptcy  petitions,  which  were  later
consolidated into one case. 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 Review Report of Independent Registered Public Accounting Firm.


                                        6
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED 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 PCM LLC pursuant to the
terms  of  the  Reorganization  Plan:

<TABLE>
<CAPTION>
Original       Number of      Number of        Percentage
Fund's 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,  2005:

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

PAM                 51,565                    9
PAMII               76,101                   14
PAMIII              97,759                   17
PAMIV              281,980                   50
PAMV                56,521                   10
             -------------  -------------------
Totals             563,926                  100
             =============  ===================
</TABLE>


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.


See Review Report of Independent Registered Public Accounting Firm.


                                        7
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1  -  ORGANIZATION  AND  DESCRIPTION  OF  BUSINESS  (CONTINUED)

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

2004 Distributions to Investors                                                                   (509)

Distributions forfeited                                                                            152

Net Income For The Period
  Ended December 31, 2004                                                                          131
                                                                                              ---------

Members' Equity PCM, LLC                                                                         3,586
  at December 31, 2004

2005 Distribution to Investors                                                                    (165)

Net Loss For The Period
  Ended March 31, 2005                                                                            (362)

Members' Equity PCM, LLC                                                                      ---------
  at March 31, 2005                                                                           $  3,059
                                                                                              =========
</TABLE>


See Review Report of Independent Registered Public Accounting Firm.


                                        8
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)

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  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.

On  August  2,  2004, an order of the United States Bankruptcy Court was entered
closing  the  Chapter  11 case. The order acts as a discharge and termination of
any  and all liabilities and debts of, and claims against, PCM INC, PAM, PAM II,
PAM  III,  PAM IV and PAM V that arose at any time before the confirmation order
became  effective  on  February  4,  2002.

Wholly-owned  Subsidiary
------------------------

In July, 2004, the Company completed a credit facility (effective June 10, 2004)
with  Varde  Investment  Partners,  L.P.  ("Varde"),  a  participant in the debt
collection  industry,  to  augment  portfolio  purchasing capacity using capital
provided  by  Varde.  To implement the agreement, PCM LLC created a wholly-owned
subsidiary,  Matterhorn.  The facility provides for up to $25 million of capital
(counting each dollar loaned on a cumulative basis) over a five-year term. Varde
is not under any obligation to make a loan to Matterhorn and Varde must agree on
the  terms for each specific advance under the loan facility. Under the terms of
the  facility,  Varde  will  receive  both interest and a residual amount of any
profits  on  the portfolios acquired with a loan. Portfolios purchased using the
facility  will  be  owned by PCM LLC's subsidiary, Matterhorn. Varde has a first
priority  security  interest  in  Matterhorn's  assets securing repayment of its
loans.

NOTE 2 - BASIS OF PRESENTATION

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

These  interim  condensed  consolidated  financial statements have been prepared
using generally accepted accounting principles in the United States. The interim
consolidated  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 consolidated
financial  statements have been prepared consistent with the accounting policies
described  in  the  Company's  annual audited consolidated financial statements.
Reference  should be made to those statements included with the Company's annual
report  filed  on  Form  10-KSB.

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

PCM  LLC  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.  Matterhorn  was consolidated in the financial statements as a
wholly-owned subsidiary starting in the third quarter of 2004.

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

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


See Review Report of Independent Registered Public Accounting Firm.


                                        9
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company provides a valuation allowance for acquired loan portfolios when the
present  value  of  a portfolio's expected future cash flows does not exceed the
carrying  value  of  the  portfolio.

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.

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

The  Company  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 $1.6
million as of March 31, 2005. 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.

Restricted  cash  consists  principally  of  cash  held  in a segregated account
pursuant  to  the  Company's  credit  facility with Varde. The Company and Varde
settle  the  status  of  these  funds  on a monthly basis pursuant to the credit
facility.  The  proportion  of  the  restricted  cash  ultimately  disbursed  by
Matterhorn to Varde and PCM LLC depends upon a variety of factors, including the
portfolios  from which the cash was collected, the size of servicing fees on the
portfolios  that  generated  the  cash,  and the priority of payments due on the
portfolios  that  generated  the  cash.


See Review Report of Independent Registered Public Accounting Firm.


                                       10
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 net 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. Portions of portfolios sold typically do not
meet the Company's targeted collection characteristics. Loan portfolios sold are
valued at the lower of cost or market.

Proceeds from strategic sales of purchased loan portfolios 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, 2005, PCM LLC had
540,204  voting LLC units (540,139 LLC units as of December 31, 2004) and 23,722
non-voting  LLC  units  (23,722  LLC  units  as of December 31, 2004). 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. At December 31, 2004, the
Company  cancelled  7,055  member  units and took back approximately $152,000 of
related  unclaimed  distributions  under  the  procedure  authorized  in  the
reorganization  plan.  The $152,000 of unclaimed distributions was treated as an
addition  to  Members'  Equity. The total amount of abandoned unreturned capital
relating  to  the  7,055  member units was $457,318. During the first quarter of
2005,  a member with 65 units was reinstated. These 65 units had been considered
returned  voluntarily  with  the  634  member  units surrendered in 2003. It was
determined that this was done in error.

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, 2005 and
December  31,  2004  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, 2005 and December 31, 2004 was 20%. The
estimated  fair  value of loan portfolios was $21.6 million and $19.2 million at
March  31,  2005  and  December  31,  2004,  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,  2005  and December 31, 2004 totaled
approximately  $699  million  and  $641  million,  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.


See Review Report of Independent Registered Public Accounting Firm.


                                       11
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS

NOTE  5  -  PURCHASED  LOAN  PORTFOLIOS  (CONTINUED)

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

<TABLE>
<CAPTION>
                                       As of            As of
                                   Mar. 31, 2005    Dec. 31, 2004
                                  ---------------  ---------------
<S>                               <C>              <C>
Unrecovered cost balance,
  beginning of period             $    3,003,642   $    7,619,515
Valuation allowance,
  beginning of period                    (12,000)      (5,538,019)
                                  ---------------  ---------------
Net balance, beginning of period       2,991,642        2,081,496
Net portfolio activity                   890,096          910,146
                                  ---------------  ---------------
Net balance, end of period        $    3,881,738   $    2,991,642
                                  ===============  ===============
</TABLE>


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

<TABLE>
<CAPTION>
                                    For the Quarter    For the Quarter
                                         Ended              Ended
                                     Mar. 31, 2005      Mar. 31, 2004
                                   -----------------  -----------------
<S>                                <C>                <C>
Purchased loan portfolios, net     $      2,450,227   $      1,319,996
Collections on loan portfolios           (3,188,207)        (2,451,370)
Sales of loan portfolios                          -         (1,782,064)
Revenue recognized on collections         1,628,076          1,659,620
Revenue recognized on sales                       -            747,587
                                   -----------------  -----------------
Net portfolio activity             $        890,096   $       (506,231)
                                   =================  =================
</TABLE>


The  valuation allowance related to the loan portfolios had a balance of $12,000
at  March  31,  2005  and  December  31,  2004.

NOTE  6  -  OTHER  RECEIVABLES

Other  receivables  consist of collections on portfolios received by third party
collection  agencies  and  funds  due  from a portfolio seller for the return of
certain contractually ineligible accounts improperly included by the seller in a
portfolio  purchased  by  Matterhorn.

NOTE  7  -  PROPERTY  AND  EQUIPMENT

Property and equipment is as follows:

<TABLE>
<CAPTION>
                                    As of           As of
                                Mar. 31, 2005   Dec. 31, 2004
                                --------------  --------------
<S>                             <C>             <C>
Office furniture and equipment  $      284,171  $      284,171
Computer equipment                     497,219         494,223
Leasehold improvements                  36,982          36,982
                                --------------  --------------
  Totals                               818,372         815,376
Less accumulated depreciation          603,401         560,568
                                --------------  --------------
  Property and equipment, net   $      214,971  $      254,808
                                ==============  ==============
</TABLE>


Depreciation  expense for the quarters ended March 31, 2005 and 2004 amounted to
$42,833  and  $45,173,  respectively.


See Review Report of Independent Registered Public Accounting Firm.


                                       12
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS

NOTE  8  -  NOTES  PAYABLE

The  Company has entered into an agreement for a credit facility with Varde that
provides  for  up  to  $25  million of capital (counting each dollar loaned on a
cumulative  basis) over a five-year term ending in July 2009. At March 31, 2005,
PCM  LLC's  wholly-owned  subsidiary  Matterhorn owed approximately $2.8 million
under  the  facility in connection with its purchase of certain charged-off loan
portfolios.  The  total  amount borrowed through March 31, 2005 is approximately
$3.4  million.  Each  advance has minimum payment threshold points. Each advance
has  a  term of two years and bears interest at the rate of 12% per annum. These
obligations  are  scheduled to be paid in full on dates ranging from August 2006
to February 2007, with principal payments of approximately $606,000 due in 2005,
$1.5  million  due  in 2006, and $739,000 due in 2007. Once all funds (including
those  invested  by  the Company) invested in a portfolio financed by Varde have
been  repaid  (with interest) and all servicing costs have been paid, Varde will
begin to receive a residual interest in collections of that portfolio. Depending
on the performance of the portfolio, these residual interests may never be paid,
they  may  begin being paid a significant time later than Varde's loan is repaid
(i.e., after the funds invested by the Company are repaid with interest), or, in
circumstances  where  the  portfolio  performs extremely well, the loan could be
repaid  early and Varde could conceivably begin to receive its residual interest
on  or  before  the date that the loan obligation was originally scheduled to be
paid  in full. Varde has a first priority security interest in all the assets of
Matterhorn,  securing  repayment  of  its  loans  and  payment  of  its residual
interest.  PCM  LLC,  our  parent  operating  company, has guarantied certain of
Matterhorn's  operational  obligations  under  the loan documents. The amount of
remaining  available  credit  under  the  facility  at  March  31,  2005  was
approximately  $21.6 million. The assets of Matterhorn that provide security for
Varde's  loan  were carried at a cost of approximately $3.2 million at March 31,
2005.

NOTE  9  -  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, 2005 are as follows:

Year ending
  March 31,
-----------
2006          316,000
2007          214,000
Thereafter          -

Rental  expense  for  the  quarter  ended  March  31,  2005 and 2004 amounted to
approximately $81,597 and $79,659, respectively.  The Company is obligated under
a five year  equipment lease, expiring in 2009, for minimum  payments of  $4,800
per  year.

NOTE 10 - 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, 563,926 for the quarter
ended  March  31,  2005  and  570,916  for  the  quarter  ended  March 31, 2004.


See Review Report of Independent Registered Public Accounting Firm.


                                       13
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE  CONSOLIDATED FINANCIAL STATEMENTS

NOTE  11  -  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 a percentage
of  pre-tax annual compensation as outlined in the Plan agreement and as limited
by  Federal  statute.  Participants  may  also  contribute  amounts representing
distributions  from  other  qualified defined benefit or contribution plans. The
Plan Sponsor does not make matching contributions.

NOTE  12  -  SUBSEQUENT  EVENTS

On  April  28,  2005,  Matterhorn  borrowed approximately $2.3 million under the
Varde  credit  facility  in  connection  with our purchase of a charged-off loan
portfolio.  This obligation has a two year term expiring in April 2007 and bears
interest  at  a  rate  of  12%  per  annum.


See Review Report of Independent Registered Public Accounting Firm.


                                       14
<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 due to their inherent uncertainty. 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  March  31,  2005.


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.  We purchase portfolios using our own cash
resources and funds borrowed from a third party.

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 portfolios, repay funds borrowed to purchase portfolios, pay
our  collection  and  operating  costs  and still have a profit. We believe that
market  conditions  currently  make  it  difficult,  although not impossible, to
purchase  portfolios  at  prices  that  will  permit  us  to  accomplish  these
objectives.  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, in many instances
to  retain those accounts that best fit our collection profile and to reduce our
purchase  commitment  by reselling the others. We then collect those accounts we
retain  as  a  distinct  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  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 statement of
operations  we  reduce  our  total  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  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.


                                       15
<PAGE>
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.

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.

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.

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, repay the loans used to
purchase  them,  pay  our  collection and operating costs, and still have excess
cash.

Our  statement  of  operations  generally  will  report  proportionately low net
revenues  in  periods  that  have  substantial collections of recently purchased
portfolios,  due  to  the "front-loaded" cost basis recovery associated with new
portfolios. As a result, during times of rapid growth in our portfolio purchases
(and probably for several quarters thereafter), our statement of operations will
likely  show  a net loss. As purchases slow and more collections come from older
portfolios  whose  cost  bases  have been completely recovered, our statement of
operations will begin to report net income, assuming our portfolios perform over
time  as  anticipated  and  we  collect  them  in  an  efficient manner. For the
foreseeable  future,  we  intend  to  continue  seeking  new large dollar-volume
portfolio purchases using our loan facility with Varde Investment Partners, L.P.
("Varde").

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. Our consolidated
financial  statements  include  the  accounts  of  our parent operating company,
Performance  Capital  Management,  LLC,  and  its  wholly-owned  special purpose
subsidiary  Matterhorn  Financial  Services  LLC, a California limited liability
company  ("Matterhorn").  All significant intercompany balances and transactions
have been eliminated.


                                       16
<PAGE>
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. We believe a policy grounded in
conservatism  is  preferable  to  a policy of attempting to match portfolio cost
basis to revenue on a proportionate basis over the life of the portfolio, 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  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.

As  discussed  in  greater detail below, our credit facility with Varde provides
for  up  to  $25 million of capital (counting each dollar loaned on a cumulative
basis)  over  a  five-year  term  ending in July 2009. The facility provides for
Varde  to  receive  a residual interest in portfolio collections after all funds
invested  in  the  portfolio  have been repaid (with interest) and all servicing
costs  have  been  paid. We do not record a liability for this residual interest
due  to  the distressed nature of the portfolio assets and the lack of assurance
that  collections  sufficient  to  result  in a liability to Varde will actually
occur.

For ease of presentation in the following discussions of "Operating Results" and
"Liquidity  and  Capital  Resources",  we  round  amounts  less than one million
dollars  to  the  nearest  thousand dollars and amounts greater than one million
dollars  to  the  nearest  hundred  thousand  dollars.


OPERATING  RESULTS

COMPARISON OF RESULTS FOR THE QUARTERS ENDED MARCH 31, 2005 AND 2004

The  following  discussion  compares our results for the quarter ended March 31,
2005,  to  the  quarter ended March 31, 2004. We had a net loss of approximately
$363,000  for  the  quarter  ended  March 31, 2005, as compared to net income of
approximately  $659,000  for  the  quarter  ended  March 31, 2004. Our operating
activities  used  cash  of $1.5  million in the quarter ended March 31, 2005, as
compared to providing cash of $1.3 million in the quarter ended March 31, 2004.


                                       17
<PAGE>
Revenue
-------

Our net revenues decreased to $1.6 million for the quarter ended March 31, 2005,
from  $2.4  million  for  the  quarter ended March 31, 2004. The following table
presents  a  comparison  of the components of our revenues for the quarter ended
March  31,  2005, to the quarter ended March 31, 2004, as well as presenting net
revenue  as a percentage of the corresponding total revenue (approximate amounts
due to rounding):

<TABLE>
<CAPTION>
                                Total                   Collections                 Sales
                        ------------------------  ------------------------  -----------------------
                            For the Quarter           For the Quarter           For the Quarter
                            Ended March 31,           Ended March 31,           Ended March 31,
                           2005         2004         2005         2004         2005        2004
                        -----------  -----------  -----------  -----------  ----------  -----------
                            ($in millions)             ($in millions)            ($in millions)
<S>                     <C>          <C>          <C>          <C>          <C>         <C>
Total revenues          $      3.2   $      4.2   $      3.2   $      2.4   $      ---  $      1.8
Less basis recovery           (1.6)        (1.8)        (1.6)        (0.8)         ---        (1.0)
                        -----------  -----------  -----------  -----------  ----------  -----------
Net revenues            $      1.6   $      2.4   $      1.6   $      1.6   $      ---  $      0.8
                        ===========  ===========  ===========  ===========  ==========  ===========
Net revenue percentage        51.1%        56.9%        51.1%        67.7          N/A        42.0%
</TABLE>

Portfolio  collections  provided  all of our revenues in the quarter ended March
31, 2005 and most of our total revenues in the quarter ended March 31, 2004. Our
total  revenues  from  portfolio  collections  increased  substantially  due  to
collections  from  recently  purchased  portfolios  and  increased efficiency in
collection  procedures for both recently purchased and older portfolios. Our net
revenues from portfolio collections stayed about the same, but the percentage of
net revenues to total revenues declined significantly. These results reflect the
fact  that  recently purchased portfolios (which provide no net revenues because
of  front-loaded  cost  basis  recovery)  provided  a substantial portion of our
increased  total  collection  revenues. During 2004, we acquired $5.3 million of
new portfolios (net of portions of portfolios we promptly resold).  In the first
quarter  of  2005  we acquired $2.5 million of new portfolios, net of returns of
contractually  ineligible  accounts  improperly  included  in previous portfolio
acquisitions.  We  have  seen  our total revenue from collections increase as we
begin  to  exploit  the  large purchases we made in 2004 and  continue making in
2005.  We  expect  to  continue  to  have  strong total collection revenue as we
collect  these  recent  portfolio  purchases. The cost basis recovery associated
with collecting these 2004 portfolios, combined with the portfolios that we have
already  acquired  in 2005 and additional portfolios we plan to acquire in 2005,
could  continue  to  offset  the  increase  in  net  revenue percentage we would
otherwise  expect  our  2002  and  2003  portfolios  (whose  cost  bases we have
completely  recovered)  to  generate and actually result in a further decline in
our  net  revenue  percentage.

Both  our total and net revenues from portfolio sales showed dramatic decreases.
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. No similar sales
were  made  in  the  first quarter of 2005. 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 loss of $363,000 for the first quarter 2005 is primarily attributable to
the  large  increase  in  portfolio  cost  basis  recovery  resulting  from  the
collection  of  recently purchased portfolios and to the lack of older portfolio
sales during the quarter. Our net income of $659,000 for the quarter ended March
31,  2004,  was  essentially due to the $748,000 of net revenues we derived from
older  portfolio  sales.  Without  this  large  volume  of  sales, we would have
essentially  had  a  break-even  quarter  in  the  first quarter 2004.

Operating  Expenses
-------------------

Our total operating costs and expenses increased to $1.9 million for the quarter
ended  March  31,  2005, from $1.7 million for the quarter ended March 31, 2004.
Our  ratio  of  operating  costs and expenses to total revenues from collections
(i.e., excluding the


                                       18
<PAGE>
effect  of  portfolio  sales),  a measure of collection efficiency, decreased to
60.3%  for  the  quarter  ended March 31, 2005, from 70.9% for the quarter ended
March  31, 2004. We accomplished this efficiency improvement by increasing total
collection  revenues  while  leveraging  the  fixed  costs  of  our  existing
infrastructure  and  by  decreasing  the variable costs required to collect each
dollar  of  revenue. We plan to continue improving this efficiency measure, both
by  continuing  to  increase  total revenues (while holding infrastructure costs
down) and by continuing to reduce variable costs required to collect each dollar
of  revenue. We intend to continue monitoring the magnitude of the change in the
margin  by  which  our  total collection revenues exceed our operating costs and
expenses relative to the principal and interest we pay to Varde under the credit
facility  to  ensure that the Varde facility provides additional liquidity to us
and does not become the source of a cash crunch.

Our  general  and  administration expenses increased to $761,000 for the quarter
ended  March  31, 2005, from $577,000 for the quarter ended March 31, 2004. This
increase  was  due  primarily  to  an  increase  in  utilization  of third party
collection  agencies,  an  increase  in other collection expenses related to the
increased  volume  of collections made possible by the increase in new portfolio
purchases,  and  an  increase in legal and accounting expenses. Our salaries and
benefits  expenses  remained  relatively stable at $1.1 million for the quarters
ended  March  31,  2005  and 2004. Our headcount has remained relatively stable,
although we still experience significant employee turnover among our collectors.
We expect our operating expenses to increase somewhat in 2005 as we increase the
volume  of  accounts  we  collect,  but we expect increases in total revenues to
outpace any material increases in costs associated with our collection efforts.

LIQUIDITY  AND  CAPITAL  RESOURCES

Our cash and cash equivalents decreased $267,000 in the first quarter of 2005 to
a  balance of $1.8 million at March 31, 2005. During the quarter ended March 31,
2005, our portfolio collections generated $3.2 million of cash, we borrowed $1.7
million,  and  we  used  $1.9  million  for operating and other activities, $2.5
million  to purchase new portfolios (net of returns), $165,000 for distributions
to  unit  holders  and  $337,000  to  repay  loans  payable.

The  large  cost  basis  recovery associated with the recent rapid growth in our
portfolios has made it difficult to achieve results consistent with our business
plan:  to  recover  the  cost we pay for our portfolios, repay funds borrowed to
purchase  portfolios,  pay  our  collecting and operating costs and still have a
profit.  Our  cost  basis  recovery of $1.6 million plus our operating and other
expenses  of  $1.9  million exceeded our total revenues from collections of $3.2
million  by  $274,000.  We used some of the revenue and borrowed $1.7 million to
purchase  approximately  $2.5  million of new portfolios (net of returns) during
the  quarter.  On a cash basis, our $267,000 decrease in cash was due to the sum
of our cash expenses of $1.9 million, total portfolio purchases of $2.7 million,
loan  repayments  of $337,000 and distributions of $165,000 exceeding the sum of
our cash collections of $3.2 million and borrowings of $1.7 million.

During  2004  and the beginning of 2005, we believe we have continued 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. We have used
our  dialer  to ensure that our collectors continue to focus on portfolios other
than  those  we  have most recently acquired. By monitoring the results of calls
originated  through our dialer, we identified portfolios that required more cost
to  collect  than  others.  Particularly  where  we  had worked to collect these
portfolios  over  an  extended  period  of  time, we determined that some of our
portfolios'  collection lives had run their course from our perspective. We sold
a number of older portfolios identified by this process in 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.
Current  plans  for  2005  do  not  call for the sale of a large number of older
portfolios,  but  we may engage in further sales if we believe market conditions
are  acceptable.

During  2004,  we  simultaneously  addressed two objectives: (1) to increase the
volume  of  portfolios  available  for  collection  in  order  to  capitalize on
infrastructure  capacity  and (2) to improve cash liquidity. Of the $7.4 million
of  portfolios  we  purchased  in  2004, we retained $5.3 million to collect (we
promptly  resold  the  other $2.1 million). During the first quarter of 2005, we
purchased  $2.5  million of portfolios (net of returns). These purchases enabled
us  to reverse a trend in 2003 of steadily declining portfolio cost basis, which
had resulted from our difficulty in finding portfolios available for purchase at
prices  we  considered  reasonable.  Because of the improvement in the volume of
portfolios  available  for  collection, we expect to add collection personnel to
capitalize  on  our  infrastructure capacity,


                                       19
<PAGE>
with  increased  total  revenues  from  collections  outpacing  increased  costs
associated  with added headcount and increased collection activity. We purchased
approximately  $3.0  million of additional portfolios during April 2005. Whether
we  continue  to acquire portfolios at the pace of the first four months of 2005
will  depend  on  our  assessment of market conditions, as well as the amount of
liquid cash and other financial resources available to us.

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
we  have  completely  recovered  will  continue to return collections to us. Our
estimate  of  the fair value of our portfolios at March 31, 2005, increased $2.4
million  to  $21.6  million from $19.2 million at December 31, 2004. At the same
time,  the  cost  basis of our portfolios increased to $3.9 million at March 31,
2005,  from  $3.0  million  at  December  31,  2004.

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.

Our estimate of fair value and our portfolio cost basis increased due in part to
the  large  portfolio  purchases  we  made in 2004 and 2005, and fair value also
increased  because  we believe recently purchased portfolios will provide better
collection  ratios  than  some of the older portfolios we inherited from our PAM
Fund  predecessors,  because  newly  acquired  portfolios  generally  provide an
increase  in  fair  value  substantially greater than the increase in cost basis
recorded  on  our  balance sheet and because improved collection procedures have
extended  the  collection  lives of some of our older portfolios. We believe the
fair  value  of  our portfolios will continue to increase in the near term as we
acquire  new  portfolios. We believe our portfolio cost basis will also increase
in  the  near  term  because  we  can  use  the Varde credit facility as well as
reinvest  some  cash  proceeds  from  collections  into  the  purchase  of  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,  2005,  and  December  31,  2004.  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, 2005   December 31, 2004
                                             ---------------  ------------------
<S>                                          <C>              <C>
Higher collection risk (25% discount rate)   $  20.1 million  $     17.9 million
Assumed collection risk (20% discount rate)  $  21.6 million  $     19.2 million
Lower collection risk (15% discount rate)    $  23.4 million  $     20.8 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.

In  the near term, we plan to reinvest some of our cash collections representing
cost  basis recovery to acquire additional portfolios and use the Varde facility
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.


                                       20
<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,  the  timing  of  loan repayments and residual
interest  payments  to Varde, and the timing of distributions to our members, we
may  not  achieve  increases  in  fair  value  each  quarter.

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  2004,  we  made  distributions
totaling $674,000. We made distributions of $165,000 in each of January 2005 and
April  2005  relating  to  quarters  ended December 31, 2004 and March 31, 2005,
respectively.

Our  agreement  with  Varde provides us with a source of capital to purchase new
portfolios.  The  agreement provides up to $25 million of capital (counting each
dollar  loaned on a cumulative basis) over a five-year term. It is unlikely that
we  will  ever have outstanding indebtedness approaching the full $25 million at
any  one  time, due to the cumulative nature of the facility. At March 31, 2005,
Matterhorn  owed $2.8 million under the facility in connection with purchases of
certain  charged-off  loan  portfolios.  Under  the credit facility, Varde has a
first  priority  security  interest  in  Matterhorn's  assets.  The  assets  of
Matterhorn that provide security for Varde's loan were carried at a cost of $3.2
million  at  March  31,  2005.  The loan advances have minimum payment threshold
points  with  terms of two years and bear interest at the rate of 12% per annum.
These  obligations are scheduled to be paid in full on dates ranging from August
2006  to February 2007. Once all funds (including those invested by us) invested
in  a  portfolio  financed  by  Varde  have  been repaid (with interest) and all
servicing  costs have been paid, Varde will begin to receive a residual interest
in collections of that portfolio. Depending on the performance of the portfolio,
these  residual  interests  may  never  be  paid,  they  may  begin being paid a
significant  time  later  than  Varde's  loan  is  repaid (i.e., after the funds
invested  by  us  are  repaid  with  interest),  or,  in circumstances where the
portfolio  performs  extremely  well,  the  loan could be repaid early and Varde
could  conceivably  begin to receive its residual interest on or before the date
that the loan obligation was originally scheduled to be paid in full.

The  amount  of  remaining available credit under the facility at March 31, 2005
was  $21.6  million.  Matterhorn has borrowed a total of $3.4 million, with $2.8
million  outstanding  at  March 31, 2005. Matterhorn borrowed an additional $2.3
million on April 28, 2005. There can be no assurance that Varde will advance any
new 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. We plan to continue
to  use  the  Varde credit facility to maximize the return on our infrastructure
and  to  continue  to  reduce  variable costs required to collect each dollar of
revenue.  We will continue to consider other alternatives to increase the volume
of  accounts we service other than through new portfolio acquisitions using only
our cash resources, however, if the economic returns to us seem reasonable.

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  our  Accounting  Manager,  of the effectiveness of our
disclosure  controls  and procedures as of the end of the period covered by this
report.  In  designing  and  evaluating  disclosure  controls  and  procedures,
management  recognized  that  any  controls  and  procedures, no matter how well
designed  and  operated,  can provide only reasonable assurance of achieving the
desired  control  objectives.  Further,  the


                                       21
<PAGE>
design  of  a  control  system  must  reflect  the  fact that there are resource
constraints.  Because  of  the  inherent  limitations in all control systems, no
evaluation  of  controls  can provide absolute assurance that all control issues
and  instances  of fraud, if any, may be detected. Based on this evaluation, our
Chief  Operations  Officer  and  our  Accounting  Manager  concluded  that  our
disclosure  controls  and  procedures  were  effective  as of March 31, 2005, 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. As noted below, however, we previously
identified  a  weakness  in  our disclosure controls and procedures that existed
during  the  period  ended  September  30,  2004.

During the process of evaluating and testing the effectiveness of our disclosure
controls  and  procedures  for  the  period ended September 30, 2004, management
identified  a  potential  deficiency  involving  the Company's failure to timely
disclose  an  event that was reportable under new Form 8-K Item 2.03. Disclosure
of  this  event  was included in our Form 10-QSB for the quarter ended September
30,  2004,  under  Part II, Item 5. Since identifying this potential deficiency,
management  has begun to monitor this potential deficiency in order to determine
whether any further mitigating controls are necessary. We filed a current report
on  Form  8-K  Item 2.03 one day late during the fourth quarter, on December 29,
2004,  for  a  closing under the Varde credit facility that occurred on December
21,  2004.  Our most recent closings under the Varde credit facility occurred on
February  25,  2005  and  April 28, 2005, and we timely filed current reports on
Form  8-K Item 2.03 on March 2, 2005 and April 29, 2005, respectively. We intend
to continue monitoring the reporting of closings under the Varde credit facility
to ensure that related filings are made on a timely basis.

There  has been no change in our internal controls over financial reporting that
occurred  during  the  first quarter of 2005 that has materially affected, or is
reasonably  likely  to  materially  affect, our internal controls over financial
reporting.


                           PART II - OTHER INFORMATION

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 concluded a procedure authorized by our plan of reorganization to
eliminate  the interests of members we have not been able to locate. At December
31,  2004,  the  Company  cancelled  7,055 LLC Units and took back approximately
$152,000  of  related  unclaimed distributions under the procedure authorized in
the  reorganization plan. The $152,000 of unclaimed distributions was treated as
an addition to Members' Equity. The total amount of abandoned unreturned capital
relating to the 7,055 LLC Units was $457,318. During the first quarter of 2005 a
member  with 65 LLC Units was reinstated. These 65 LLC Units had been considered
returned  voluntarily  with  the  634  LLC  Units  surrendered  in  2003. It was
determined  that  this  was  done  in  error.


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)


                                       22
<PAGE>
EXHIBIT
NUMBER   DESCRIPTION
------------------------------------------------------------------------------------------------------------
 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 *
<FN>
*  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.
</TABLE>

(b)  REPORTS  ON  FORM  8-K

On  March  2,  2005,  we  filed  a  report  on Form 8-K dated February 25, 2005,
containing  disclosure  under Item 2.03 pertaining to a material borrowing under
our  credit  facility  with  Varde.


                                       23
<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 13, 2005                         By:   /s/  David J. Caldwell
--------------                            --------------------------------------
    (Date)                                   Name:  David J. Caldwell
                                              Its:  Chief Operations Officer


                                       24
<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 *

<FN>
*  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.
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