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 June 30, 2002
                                         -------------

[ ]  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 [ ]  No [X]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of the latest practicable date: As of June 30, 2002, the issuer had
571,550  LLC  Units  issued  and  outstanding.


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


<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                                    INDEX TO
                         QUARTERLY REPORT ON FORM 10-QSB
                       FOR THE QUARTER ENDED JUNE 30, 2002


PART  I  -  FINANCIAL INFORMATION                                           PAGE

Item  1     Financial  Statements. . . . . . . . . . . . . . . . . . . . . .   1

            Accountants' Review Report

            Balance Sheet as of June 30, 2002 (unaudited)

            Statements of Operations for the three months ended June 30,
            2002 and the period from Inception (February 4, 2002) to
            June 30, 2002 (unaudited)

            Statement of Members' Equity for the period from Inception
            (February 4, 2002) to June 30, 2002 (unaudited)

            Statement of Cash Flows for the period from Inception
            (February 4, 2002) to June 30, 2002 (unaudited)

            Notes to the Financial Statements (unaudited)

Item 2      Management's Discussion and Analysis of Financial Condition
            and Results of Operations. . . . . . . . . . . . . . . . . . . .  17


PART II  -  OTHER  INFORMATION

Item  6     Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . .  21

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

CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23



<PAGE>


     [MOORE  STEPHENS  WURTH  FRAZER  AND  TORBET,  LLP  LETTERHEAD]





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

We  have  reviewed  the  accompanying  balance  sheet  of  Performance  Capital
Management,  LLC,  as of June 30, 2002; and the related statements of operations
for  the  period from inception (February 4, 2002) through June 30, 2002 and the
three  months ended June 30, 2002; and the related statements of members' equity
and cash flows for the period from inception (February 4, 2002) through June 30,
2002,  in  accordance  with  Statements  on  Standards for Accounting and Review
Services  issued by the American Institute of Certified Public Accountants.  All
information  included in these financial statements is the representation of the
management  of  Performance  Capital  Management,  LLC.

A  review  consists principally of inquiries of Company personnel and analytical
procedures applied to financial data.  It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which  is  the expression of an opinion regarding the financial statements taken
as  a  whole.  Accordingly,  we  do  not  express  such  an  opinion.

Based  on our review, we are not aware of any material modifications that should
be  made  to  the  accompanying  financial statements in order for them to be in
conformity  with  generally  accepted  accounting  principles.


/s/  Moore  Stephens  Wurth  Frazer  And  Torbet,  LLP

March  14,  2003
City  of  Industry,  California


                                        1
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                                  BALANCE SHEET
                               AS OF JUNE 30, 2002
                        (See Accountants' Review Report)
                        --------------------------------


                                     ASSETS
                                     ------

<S>                                                            <C>
  Cash and cash equivalents                                    $3,551,084
  Restricted cash                                                  21,368
  Purchased loan portfolios, net                                3,677,938
  Property and equipment, net                                     659,855
  Deposits                                                         52,517
  Prepaid expenses and other assets                                74,868
                                                               ----------

      Total assets                                             $8,037,630
                                                               ==========


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

LIABILITIES:
  Accounts payable                                             $  231,148
  Pre-petition claims                                             620,218
  Accrued liabilities                                             382,296
  Income taxes payable                                              5,895
                                                               ----------
    Total liabilities                                           1,239,557

COMMITMENTS AND CONTINGENCIES                                           -

MEMBERS' EQUITY                                                 6,798,073
                                                               ----------

      Total liabilities and members' equity                    $8,037,630
                                                               ==========
</TABLE>

         The accompanying notes are an integral part of this statement.


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

                              STATEMENTS OF OPERATIONS
                          (See Accountants' Review Report)
                          --------------------------------




                                           For the three months      From Inception
                                                  ended           (February 4, 2002) to
                                               June 30, 2002          June 30, 2002
                                          ----------------------  ---------------------

REVENUES:
<S>                                       <C>                     <C>
    Portfolio collections                 $           1,871,287   $          3,081,406
    Portfolio sales                                     864,769                925,612
                                          ----------------------  ---------------------
      Total revenues                                  2,736,056              4,007,018
    Less portfolio basis recovery                     1,377,856              2,277,443
                                          ----------------------  ---------------------

  NET REVENUES                                        1,358,200              1,729,575
                                          ----------------------  ---------------------

  OPERATING COSTS AND EXPENSES:
    Salaries and benefits                             1,039,355              1,837,332
    General and administrative                          467,866                851,878
    Depreciation                                         52,902                 87,289
                                          ----------------------  ---------------------
      Total operating costs and expenses              1,560,123              2,776,499
                                          ----------------------  ---------------------

  LOSS FROM OPERATIONS                                 (201,923)            (1,046,924)
                                          ----------------------  ---------------------
  OTHER INCOME (EXPENSE):
    Reorganization costs                                (30,863)               (84,461)
    Interest income                                       9,038                 34,295
    Other income                                          8,266                 21,168
                                          ----------------------  ---------------------
      Total other expense, net                          (13,559)               (28,998)
                                          ----------------------  ---------------------

  LOSS BEFORE INCOME TAX PROVISION                     (215,482)            (1,075,922)

  INCOME TAX PROVISION                                      752                  3,700
                                          ----------------------  ---------------------

  NET LOSS                                $            (216,234)  $         (1,079,622)
                                          ======================  =====================
</TABLE>

         The accompanying notes are an integral part of this statement.


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

                          STATEMENT OF MEMBERS' EQUITY
             FROM INCEPTION (FEBRUARY 4, 2002) THROUGH JUNE 30, 2002
                        (See Accountants' Review Report)
                        --------------------------------


                                                             Total
                            Unreturned     Accumulated     Members'
                              Capital        Deficit        Equity
                           -------------  -------------  -------------
<S>                        <C>            <C>            <C>
Balance, February 4, 2002  $ 38,116,880   $(18,239,185)  $ 19,877,695

Distribution to investors   (12,000,000)             -    (12,000,000)

Net loss                              -     (1,079,622)    (1,079,622)
                           -------------  -------------  -------------

Balance, June 30, 2002     $ 26,116,880   $(19,318,807)  $  6,798,073
                           =============  =============  =============
</TABLE>

         The accompanying notes are an integral part of this statement.


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

                             STATEMENT OF CASH FLOWS
             FROM INCEPTION (FEBRUARY 4, 2002) THROUGH JUNE 30, 2002
                        (See Accountants' Review Report)
                        --------------------------------

<S>                                                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                           $ (1,079,622)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
      Depreciation                                         87,289
      Decrease in other receivable                         91,059
      Increase in other current assets                    (29,868)
      Decrease in loan portfolios                       1,085,268
      Decrease in deposits                                 22,167
      Decrease in accounts payable                         (3,197)
      Decrease in pre-petition claims                    (264,056)
      Increase in accrued liabilities                     136,379
      Increase in income taxes payable                      5,895
                                                     -------------
          Net cash provided by operating activities        51,336

CASH FLOW FROM INVESTING ACTIVITIES:
  Additions to property and equipment                      (8,458)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distribution to investors                           (12,000,000)
                                                     -------------

NET CHANGE IN CASH AND CASH EQUIVALENTS               (11,957,122)

CASH AND CASH EQUIVALENTS                              15,529,574
                                                     -------------

CASH AND CASH EQUIVALENTS                            $  3,572,452
                                                     =============

SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION:

  Income taxes paid                                  $     11,720
                                                     =============

  Interest paid                                      $          -
                                                     =============
</TABLE>

         The accompanying notes are an integral part of this statement.

                                        5
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                       ----------------------------------

NOTE  1  -  ORGANIZATION  AND  DESCRIPTION  OF  BUSINESS

Performance  Capital  Management, LLC ("PCM LLC" or "the Company") is engaged in
the business of acquiring assets originated by federal and state banks and other
sources,  for  the  purpose  of  generating  income and cash flow from managing,
collecting,  or  selling  those  assets.  These assets consist of non-performing
credit  card  loan  portfolios  and  are  purchased  and  sold  as  portfolios
("portfolios").  Additionally,  some 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  general partner for the partnerships was Performance Development,
Inc.,  a  California  corporation  ("PDI").  PDI  was removed as general partner
during  bankruptcy.  The  assets  of  the  five  limited  partnerships consisted
primarily  of  non-performing  credit  card loans, as well as cash.  PCM LLC was
formed on January 14, 2002 and commenced operations upon the confirmation of its
Bankruptcy Reorganization Plan ("Reorganization Plan") on February 4, 2002.  The
entities  that  were  consolidated under the Reorganization Plan are as follows:

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

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

Performance  Asset  Management  Fund  III,  Ltd.,-  (PAMIII),  a  California
Limited  Partnership,  formed  in  1992.  Units  in  PAMIII  were  sold  in  a
private  placement   offering  pursuant  to  Regulation  D  promulgated  by  the
Securities  and  Exchange  Commission on a "best efforts"  basis.  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, pursuant to the provisions of
Section  3(A)(11)  of the  Securities  Act of 1933.  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,


                                        6
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

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

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

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.

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

At all times before the bankruptcy, Vincent Galewick was the sole or controlling
shareholder  of  PCM  INC and PDI which served as general partner of the limited
partnerships  (PAM,  PAMII,  PAMIII, PAMIV, and PAMV).  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.

In addition, PDI, former general partner of the limited partnerships, received a
management fee from the limited partnerships ranging from 2 to 2 1/2% of the net
asset  value  of  the loan portfolio on an annual basis and 10% of the amount of
any  distributions  to  the  limited  partners.

Numerous  issues  and claims were settled between the parties by the bankruptcy.
This  settlement  referred  to as "Intercompany Settlement" removed Mr. Galewick
from  any  further  role in the affairs of PCM INC and the limited partnerships,
transferred  to  the  Trustee  all claims of Mr. Galewick and others against the
limited  partners  and  controlling  interest  in  PCM INC thereby according the
limited  partners control over the entity which administered their assets.   The
Trustee  and  a  committee of equity security holders representing the PAM Funds
released  any  claims  of  the  debtor's  estate  against  Mr.  Galewick and Mr.
Galewick's  affiliates.  Inter-debtor  claims  were released and withdrawn.  Mr.
Galewick  received  consideration  from  the  bankruptcy  estates of the limited
partners.  As part of the settlement, PDI was removed as general partner and the
Trustee  resigned  as  Trustee  for  PDI,  thus  returning control of PDI to Mr.
Galewick.

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

Member's  Number of    Number of        Percentage
 Name     Investors  PCM LLC Units  Interest in PCM LLC
--------  ---------  -------------  -------------------

PAM             370         52,050                    9
PAMII           459         76,700                   14
PAMIII          595         99,900                   17
PAMIV          1153        285,950                   50
PAMV            327         56,950                   10
                     -------------  -------------------
  Totals                   571,550                  100
                     =============  ===================


                                        7
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

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

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

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

<TABLE>
<CAPTION>
<S>                             <C>        <C>       <C>       <C>       <C>       <C>       <C>
  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                                                                                       (1,079)
                                                                                             ---------

Members' Equity PCM, LLC
  at June 30, 2002                                                                           $  6,799
                                                                                             =========
</TABLE>

Performance  Asset  Management  Fund  III,  Ltd.  and  Performance  Asset
Management  Fund  IV,  Ltd., were reporting entities under the Securities Act of
1934.  PAM,  PAMII,  PAMV, and PCM INC were not reporting entities.  It has been
determined  that  Performance  Capital  Management, LLC is a "successor company"
under  rule 12g 3 of the Securities Act of 1934, and therefore is subject to the
reporting  requirements  of the Securities Act of 1934.  PCM LLC's LLC units are
not  publicly  traded  securities.  The  Reorganization  Plan  placed  certain
restrictions  on  the  transfer  of  members'  interests.


NOTE  2  -  BASIS  OF  PRESENTATION

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

The Company is a successor entity of six companies emerging from bankruptcy (see
Note  1).  The  accompanying  balance  sheet, statements of operations, members'
equity,  and cash flows includes balances and transactions beginning February 4,
2002  through  June  30,  2002.


                                        8
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  2  -  BASIS  OF  PRESENTATION  (CONTINUED)

Comparative  Statements
-----------------------

Management has elected not to present the accompanying financial statements on a
comparative  basis  because  several  entities  shared  operating  expenses  and
professional  fees  during  the duration of bankruptcy proceedings that were not
included in the final bankruptcy plan.  Further, current management did not take
control  of  the  operations  until  the  Reorganization  Plan  was confirmed on
February  4,  2002.  Current  management  is  not  capable  of  arriving  at the
estimates  for  many of the assertions contained in the financial statements for
prior  periods.  The  cost and effort to reconstruct these financial statements,
if  such  reconstruction  is  even  possible  would  outweigh  any  benefit that
investors  may  derive.  The estimates necessary to prepare prior year financial
statements  for  the  successor  entity  would be so significant that management
believes a comparative presentation would be misleading.  Prior period financial
information  is  available in the bankruptcy filings with Central District Court
of  California  Case  No.  SA  98-27040-RA.

Fresh  Start  Accounting
------------------------

Statement  of Position 90-7 issued by the American Institute of Certified Public
Accountants  ("SOP  90-7")  addresses accounting for companies in reorganization
under the bankruptcy code.  For certain entities, SOP 90-7 requires "fresh start
accounting"  which  records  a  revaluation  of  assets  to  fair  values and an
adjustment  of  liabilities  to  present  values.

SOP  90-7  also  requires the following procedures for entities that adopt fresh
start  accounting:

1.   The  reorganization value of the entity should be allocated to the entity's
     assets  following  FAS  141;
2.   Liabilities other than deferred taxes should be stated at present values of
     amounts  to  be  paid  using  current  interest  rates;
3.   Deferred  taxes  should  be presented in conformity with generally accepted
     accounting principles. Benefits realized from preconfirmation net operating
     loss  carryforwards should reduce reorganization value in excess of amounts
     allocable  to identifiable assets and other intangibles until exhausted and
     be  reported  as  a  direct  addition  to  paid-in  capital  thereafter;
4.   Changes  in  accounting  principles  that will be required for the emerging
     entity  within  the  twelve  months  following  the adoption of fresh start
     accounting  should be adopted at the same time fresh starting accounting is
     adopted.

SOP  90-7  also  requires  the  following  disclosure  in  the initial financial
statements  after  fresh  start  accounting  has  been  adopted:

1.   Adjustments to the historical amounts of individual assets and liabilities;
2.   The  amount  of  debt  forgiveness;
3.   The  amount  of  prior  retained  earnings  or  deficit  eliminated;  and
4.   Other  important  matters  in  determining  reorganization  value.

Management  reviewed  these  requirements  and  determined  that  fresh  start
accounting  was  not  applicable  because  assets  exceeded liabilities prior to
confirmation  of  the  plan  and  existing  limited partners retained a majority
interest  in  the  successor  entity.

For  entities  that do not meet the requirements for fresh start accounting, SOP
90-7  requires  that  liabilities  compromised by a confirmed bankruptcy plan be
stated  at  present  value  of amounts to be paid, using current interest rates.
Debt  forgiveness,  if  any,  should  be  reported  as  an  extraordinary  item.

As  part  of  the  Reorganization  Plan,  no  debt  forgiveness  existed and all
liabilities  subject to compromise are presented on the face of the accompanying
balance  sheet  as  pre-petition  claims  with  disclosures required by SOP 90-7
presented  in  Note  8.


                                        9
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  2  -  BASIS  OF  PRESENTATION  (CONTINUED)

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

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


NOTE  3  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

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

In  preparing  financial  statements  in  conformity  with accounting principles
generally  accepted  in  the United States of America, management is required to
make  estimates  and  assumptions that affect the reported amounts of assets and
liabilities,  the disclosure of contingent assets and liabilities at the date of
the  financial  statements  and  the  reported  amounts of revenues and expenses
during  the reporting period.  Actual results could differ from those estimates.

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

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

Purchased  loan  portfolios  consisted  primarily  of non-performing credit card
accounts.  For  substantially  all  of 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  there  respective  costs,  and  no  accretable yield is
recorded  on  the  accompanying  balance  sheet.

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

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

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

PCM LLC defines cash equivalents as cash, money market investments and overnight
deposits  with  original maturities of less than three months.  Cash equivalents
are  valued  at  cost,  which  approximates  market.  The Company maintains cash
balances  at  one  bank  in  amounts  which exceeded federally insured limits by
approximately $4.2 million as of June 30, 2002.  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.


                                       10
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  3  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Property  and  Equipment
------------------------

Property and equipment are carried at cost and depreciation is computed over the
estimated  useful  lives  of the assets ranging from 3 to 7 years.  PCM LLC uses
the  straight-line  method  of depreciation.  Property and equipment transferred
under  the reorganization plan were transferred at net book value.  Depreciation
is  computed  on  the  remaining  useful  life  at  the  time  of  transfer.

The  related  cost  and  accumulated depreciation of assets retired or otherwise
disposed  of  are  removed  from  the accounts and the resultant gain or loss is
reflected  in  earnings.  Maintenance  and  repairs are expensed currently while
major  betterments  are  capitalized.

Long-term  assets  of PCM LLC are reviewed annually as to whether their carrying
value  has  become  impaired.  Management considers assets to be impaired if the
carrying  value exceeds the future projected cash flows from related operations.
Management  also  re-evaluates  the periods of amortization to determine whether
subsequent  events  and circumstances warrant revised estimates of useful lives.
As  of  June  30, 2002, management expects these assets to be fully recoverable.

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

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

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

Proceeds  from  strategic  sales  of  purchased  loan portfolios are recorded as
revenue  when  received.

Income  Taxes
-------------

PCM LLC is treated as a partnership for Federal income tax purposes and does not
incur  Federal  income  taxes.  Instead, its earnings and losses are included in
the  personal  returns  of  its  members.

PCM  LLC  is  also  treated as a partnership for state income tax purposes.  The
State  of  California  imposes  an  annual  corporation filing fee and an annual
limited  liability  company  fee.


NOTE  4  -  RECENT  ACCOUNTING  PRONOUNCEMENTS

During June of 2001, the FASB issued Statement of Financial Accounting Standards
No.  141,  "Business  Combinations"  ("FAS  141")  and  Statement  of  Financial
Accounting  Standards  No.  142,  "Goodwill  and  Other Intangible Assets" ("FAS
142").

FAS  141  requires  use  of  the  purchase method of accounting for all business
combinations initiated after June 30, 2001, provides specific guidance on how to
identify  the  accounting  acquirer in a business combination, provides specific
criteria  for  recognizing  intangible  assets  apart from goodwill and requires
additional financial statement disclosures regarding business combinations.  FAS
141  will  impact  the  Company's  accounting  for  any  business


                                       11
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  4  -  RECENT  ACCOUNTING  PRONOUNCEMENTS  (CONTINUED)

combinations  it  may  enter into in the future. However, FAS 141's adoption did
not  have  an  impact  on  the  Company's  financial  condition  or  results  of
operations.

FAS  142 addresses the accounting for goodwill and other intangible assets after
their  initial  recognition.  FAS  142  changes  the accounting for goodwill and
other  intangible assets by replacing periodic amortization of the asset with an
annual  test  of impairment of goodwill at either the reporting segment level or
one  level  below,  providing  for  similar  accounting treatment for intangible
assets  deemed  to  have  an  indefinite  life. Assets with finite lives will be
amortized  over  their  useful  lives.  FAS  142  also  provides  for additional
financial  statement  disclosures about goodwill and intangible assets.  FAS 142
will  impact the Company's accounting for any business combinations it may enter
into  in  the future.  However, FAS 142's adoption did not have an impact on the
Company's  financial  condition  or  results  of  operations.

In  June  2001,  the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting for Asset Retirement Obligations" ("FAS 143").  FAS 143 changes
the  recorded  amount  of  liabilities  associated  with  asset  retirements and
requires the accretion of interest expense over the remaining life of the asset.
FAS  143  also  requires  additional  disclosure  regarding  asset  retirement
obligations.  This  Statement is effective for fiscal years beginning after June
15,  2002.  The  adoption  of  this  statement  did  not  have  an impact on the
Company's  financial  condition  or  results  of  operations.

In  August 2001, the FASB issued Statement of Financial Accounting Standards No.
144,  "Accounting  for  the  Impairment  or Disposal of Long-Lived Assets" ("FAS
144").  FAS  144  retains the existing requirements to recognize and measure the
impairment  of  long-lived  assets  to  be held and used or to be disposed of by
sale. However, FAS 144 changes the scope and certain measurement requirements of
existing  accounting guidance. FAS 144 also changes the requirements relating to
reporting  the  effects  of  a  disposal  or  discontinuation  of a segment of a
business.  This Statement is effective for fiscal years beginning after December
15,  2001.  The  adoption of this statement did not have a significant impact on
the  financial  condition  or  results  of  operations  of  the  Company.

In  April  2002, the FASB issued Statement of Financial Accounting Standards No.
145  "Rescission of Statements No. 4, 14 and 64, Amendment of FASB Statement No.
13 and Technical Corrections." ("FAS 145").  This Statement rescinds SFAS No. 4,
"Reporting  Gains  and  Losses from Extinguishment of Debt," and an amendment of
that  Statement,  SFAS  No.  64,  "Extinguishments  of  Debt  Made  to  Satisfy
Sinking-Fund  Requirements."  This  Statement  also  rescinds  SFAS  No.  44,
"Accounting for Intangible Assets of Motor Carriers." This Statement amends SFAS
No.  13,  "Accounting  for  Leases,"  to eliminate any inconsistency between the
required  accounting for sale-leaseback transactions and the required accounting
for  certain  lease modifications that have economic effects that are similar to
sale-leaseback  transactions.  FAS  145 also amends other existing authoritative
pronouncements  to  make  various  technical  corrections,  clarify meanings, or
describe  their  applicability  under  changed  conditions.  This  Statement  is
effective  for  fiscal years beginning after May 15, 2002.  The adoption of this
statement  is  not  expected  to  have  a  significant  impact  on the financial
condition  or  results  of  operations  of  the  Company.

In  June  2002,  the FASB issued Statement of Financial Accounting Standards No.
146,  "Accounting  for  Costs  Associated with Exit or Disposal Activities." The
standard  requires companies to recognize costs associated with exit or disposal
activities  when  they  are incurred rather than at the date of commitment to an
exit  or  disposal plan. Examples of costs covered by the standard include lease
termination  costs and certain employee severance costs that are associated with
restructuring, discontinued operations, plant closing, or other exit or disposal
activity.  Previous  accounting  guidance  was  provided by EITF Issue No. 94-3,
"Liability  Recognition  for  Certain  Costs,  Employee Termination Benefits and
Other  Costs  to  Exit  an  Activity  (including  Certain  Costs  Incurred  in a
Restructuring)."  SFAS  No.  146  replaces  EITF  94-3  and  is  to  be  applied
prospectively  to exit or disposal activities initiated after December 31, 2002.
The Company will comply with this pronouncement beginning in 2003.  The adoption
of  this statement is not expected to have a significant impact on the financial
condition  or  results  of  operations  of  the  Company.


                                       12
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  5  -  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 June 30 2002 are
as  follows.  The  carrying amount of cash and cash equivalents, restricted cash
and  liabilities  approximates the fair value.  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
June  30,  2002  was  20%.  The  estimated  fair  value  of  loan portfolios was
$13,200,000  at  June  30,  2002.


NOTE  6  -  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 June 30, 2002 totaled approximately $1.0 billion.

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

The  carrying amount of loans included in the accompanying balance sheet at June
30,  2002  is  as  follows:

Unrecovered cost balance,
  beginning of period             $    10,236,158
Valuation allowance,
  beginning of period                  (5,472,952)
                                  ----------------
Net balance, beginning of period        4,763,206
Net portfolio activity                 (1,085,268)
                                  ----------------
Net balance, end of period        $     3,677,938
                                  ================

The activity in the loan portfolios in the accompanying financial statements for
the  three  months ended June 30, 2002 and the period from inception to June 30,
2002  is  as  follows:


                                        Three months        From February 4,
                                           ended          2002 (Inception) to
                                       June 30, 2002        June 30, 2002
                                   ---------------------  ------------------

Purchased loan portfolios          $            492,125   $       1,192,175
Collections on loan portfolios               (1,871,287)         (3,081,406)
Sales of loan portfolios                       (864,769)           (925,612)
Revenue recognized on collections               524,431             873,782
Revenue recognized on sales                     833,769             855,793
                                   ---------------------  ------------------
Net portfolio activity             $           (885,731)  $      (1,085,268)
                                   =====================  ==================

The  valuation  allowance  related to the loan portfolios at June 30, 2002 is as
follows:

Valuation allowance, beginning of period  $     5,472,952
Change in valuation allowance                           -
                                          ---------------
Valuation allowance, end of period        $     5,472,952
                                          ===============


                                       13
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  7  -  PROPERTY  AND  EQUIPMENT

Property  and  equipment  at  June  30,  2002  is  as  follows:

Office furniture and equipment  $        245,088
Computer equipment                       465,074
Leasehold improvements                    36,982
                                ----------------
  Totals                                 747,144
Less accumulated depreciation             87,289
                                ----------------
  Property and equipment, net   $        659,855
                                ================

Depreciation  expense  for  the  three months ended June 30, 2002 and the period
from  inception  to  June 30, 2002 amounted to $52,902 and $87,289 respectively.


NOTE  8  -  PRE-PETITION  CLAIMS

Under  the  Reorganization  Plan,  PCM  LLC  is  required to pay certain allowed
pre-petition  claims  and professional fees totaling to approximately $1,400,000
of  which  $620,218  remains  outstanding as of June 30, 2002.  These claims are
summarized  as  follows:

Collection expense                $          3,548
Improvements                               176,310
Legal fees                                  26,445
Office supplies                              3,352
Other                                       50,897
Public relations                            76,986
Rent and real estate commissions            82,680
Reserve for claims                         200,000
                                  ----------------
   Total                          $        620,218
                                  ================


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  June  30,  2002  are  as  follows:

     Year ending
       June 30,
     -----------
          2003                     $293,000
          2004                      301,000
          2005                      309,000
          2006                      318,000
          2007                      134,000
     Thereafter                           -


                                       14
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  9  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

Lease  Commitments  (continued)
-------------------------------

Rental  expense  for  the  three  months ended June 30, 2002 and the period from
inception  to  June  30,  2002  was  $102,881  and  $197,950  respectively.

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

In  February  2001, a Consent Decree was entered in United States District Court
in  an  action  United States of America v. Performance Capital Management, Inc.
(One  of  the entities that formed Performance Capital Management, LLC, see Note
1).  Under the terms of the Consent Decree, PCM INC had a civil penalty pursuant
to  Section  621  (a)  of  the Fair Credit Reporting Act, 15 U.S.C. 1681s(a)  of
$2,000,000  waived.  The Consent Decree basically had PCM INC and its successors
agree  to  follow  the provisions of the Fair Credit Reporting Act.  The Consent
Decree  ordered,  among  other  specifics,  that  PCM  INC  and  its successors,
officers,  employees,  et  al,  are:  1.)enjoined from failing to report correct
delinquency  dates to consumer reporting agencies;  2.) enjoined from failing to
properly  investigate  consumer  disputes  and  verify,  correct  or  delete the
reporting of such information to consumer reporting agencies within the time set
forth  in  the  Fair Credit Reporting Act;   3.) enjoined from failing to report
accounts  as  "disputed"  to  consumer reporting agencies when consumers dispute
accounts either in writing, orally, or by electronic means; and 4) enjoined from
failing  to  comply  in  any  other  respect with the Fair Credit Reporting Act.

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

Contingencies
-------------

PCM  LLC is involved in various legal actions primarily arising from PCM INC and
the  partnerships Chapter 11 filing.  Many of these issues have been resolved by
settlement  agreements.  PCM LLC management has actively resolved these actions.
At  February 4, 2002, a provision was established of $200,000.  At June 30, 2002
the  balance  remaining  of  this provision is $200,000 which is included in the
pre-petition  claims  on  the  accompanying  balance  sheet.


NOTE  10  -  SUBSEQUENT  EVENTS

Claim
-----

In December 2002, a bankruptcy claim totaling approximately $170,000 was brought
to  the  attention  of the Company.  This claim was not on the final claims list
filed  with  the  court.  PCM  LLC's management does not believe that this claim
will be found to be valid by the court and has not accrued for it as of June 30,
2002.  Management  does not believe the ultimate outcome of this claim will have
a  material  adverse  affect  on  the  Company's  financial  position.

Purchase  Commitment
--------------------

In December 2002, the Company entered into an agreement that commits the Company
to  purchase  loan  portfolios.  The  initial  term of the agreement is 6 months
(December  2002 - May 2003) and the Company has the right to extend the term for
an  additional  6  months if it expresses the desire to do so by April 15, 2003.
Under  the  terms  of  the agreement the Company will pay 5% of the "Approximate
Current  Balance",  as  defined  in  the  agreement.  The  "Approximate  Current
Balances"  purchased in December 2002 and January, February, and March 2003 were
approximately  $2,274,000,  $2,326,000,  $1,151,100 and $1,395,100 respectively.
The  amounts  paid  for  these  purchases  were  $113,689, $116,297, $57,555 and
$69,756  respectively.  Under  the  terms  of  the


                                       15
<PAGE>
                       PERFORMANCE CAPITAL MANAGEMENT, LLC

                        NOTES TO THE FINANCIAL STATEMENTS
                        (See Accountants' Review Report)
                      -----------------------------------

NOTE  10  -  SUBSEQUENT  EVENTS  (CONTINUED)

Purchase  Commitment  (continued)
---------------------------------

agreement,  the  commitment  for  April  and May 2003 will be approximately $3.0
million  in "Approximate Current Balances", at a cost of approximately $150,000.


                                       16
<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,"  or  "anticipates" or the negative thereof or other variations thereon
or  comparable terminology, or by discussions of strategy that involve risks and
uncertainties.  The  safe  harbor  provisions  of  Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as  amended,  apply  to  forward-looking  statements made by Performance Capital
Management,  LLC.  You  should  not  place  undue  reliance  on  forward-looking
statements.  Forward-looking  statements  involve  risks  and uncertainties. The
actual  results  that  we achieve may differ materially from any forward-looking
statements due to such risks and uncertainties. These forward-looking statements
are  based  on  current expectations, and we assume no obligation to update this
information.  Readers  are  urged  to  carefully review and consider the various
disclosures  made  by  us in this report on Form 10-QSB and in our other reports
filed  with  the  Securities  and  Exchange  Commission  that  attempt to advise
interested  parties  of  the  risks  and  factors  that may affect our business.

The  following  discussion  and  analysis of our financial condition and plan of
operation  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 8-K
filed  on  April  2,  2003.

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, but we have also purchased
other  forms  of  indebtedness,  including automobile deficiencies and defaulted
judgments.  These  assets  are  typically  purchased  and  sold  as  portfolios.

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

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

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

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


                                       17
<PAGE>
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.

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

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

BASIS  OF  PRESENTATION

We present our financial statements based on our 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.  As  discussed  in  more detail in Note 2 to our
financial  statements,  we  do not present comparative financial information for
the  predecessor  entities  in  bankruptcy  because  we  believe  it  would  be
prohibitively  expensive,  if  not  impossible,  to  reconstruct  accurate
accrual-based  consolidated financial information for the six entities that were
in bankruptcy, and any financial statements developed for prior bankrupt periods
would  not  provide  meaningful  information  sufficient  to  justify  the cost.

CRITICAL  ACCOUNTING  ESTIMATES

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

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

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


                                       18
<PAGE>
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.

OPERATING  RESULTS

For the period from February 4, 2002 (inception) to June 30, 2002, we incurred a
net  loss  of  approximately  $1.1 million. We had cash flows from operations of
approximately  $51,000.

Revenue
-------

We  reported  gross  revenues in the amount of approximately $4.0 million during
the period from February 4, 2002 (inception) to June 30, 2002. After taking into
account  the  aggregate  cost  basis recovery of the portfolios we collected and
sold,  we  reported  net  revenues  in  the  amount  of $1.7 million. We derived
approximately  $874,000  of  our net revenues from approximately $3.1 million of
portfolio  collections.  We  expect our portfolio collections to increase in the
coming  year  because  we acquired a substantial amount of new portfolios toward
the  end  of 2002.  We expect these increased collections to result in increased
net  revenues,  but  we cannot predict the magnitude of this increase because we
cannot  precisely  predict the mix of our collections between our old portfolios
(which  generally  have  smaller  cost  basis  recovery,  if  any)  and  our new
portfolios  (which  "front-load" their cost basis recovery).  As a general rule,
it  takes about one year for us to recover the cost basis of a new portfolio, so
we do not expect new portfolios to begin making significant contributions to net
revenues  until the third and fourth quarters of 2003.  We derived approximately
$856,000  of  our  net  revenues from sales of portfolios. We sold a substantial
number  of old portfolios, some of whose collection lives, from our perspective,
had  run  their  course, and some to capitalize on market conditions. Having now
disposed of many of the old portfolios we no longer wanted to collect, we do not
expect  net revenues from portfolio sales to be as large in the coming year.  We
anticipate  having  more sales of portions of new portfolios in 2003 than we had
in 2002, but smaller net revenues from sales of portfolios due to the cost basis
recovery  associated  with  new  portfolio  sales.

During  the quarter ended June 30, 2002, we derived a substantial portion of our
net  revenues  from  sales  of  old  portfolios  with  low  cost  bases.

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

Our  general  and  administration  expenses  were approximately $852,000 for the
period  from  February  4,  2002  (inception) to June 30, 2002. Our salaries and
benefits  expenses  during that same period were approximately $1.8 million. Our
operating  expenses  may  increase  somewhat in 2003, but at this time we do not
expect  these  increases  to  be  substantial.

LIQUIDITY  AND  CAPITAL  RESOURCES

At  June  30,  2002,  we  had  approximately  $3.6  million  of  cash  and  cash
equivalents.  During the period ended June 30, 2002, we used approximately $12.0
million  for  a  distribution  to  our  members,  approximately $2.8 million for
operating  and  other  activities and approximately $1.2 million to purchase new
portfolios.  We  funded  these uses of cash principally through our opening cash
balance  of  approximately  $15.5 million at February 4, 2002, and approximately
$4.0  million  of  proceeds  from  collecting  and  selling  portfolios.

During  the  period  ended  June 30, 2002, we did not achieve results consistent
with  our  business plan: to recover the cost we pay for our portfolios, pay our
collecting  and  operating  costs and still have a profit.  Our cost recovery of
approximately  $2.3  million  plus  our  operating  and  other  expenses  of
approximately  $2.8  million exceeded our collections and sales of approximately
$4.0  million by approximately $1.1 million.  On a cash basis, our new portfolio


                                       19
<PAGE>
acquisitions  of  approximately  $1.2  million plus our cash operating and other
costs  of  approximately  $2.8  million  essentially equaled our collections and
sales  of  approximately  $4.0  million,  due principally to the sale of our old
portfolios.  During  the  latter  part  of  2002,  we  invested  heavily  in the
acquisition  of  new  portfolios.  We spent this money to acquire new portfolios
because  we  believe  it  is  important  to  our long-term success to constantly
reinvest  in  new  portfolios.

By  the end of 2002, we believe we achieved a better balance between new and old
portfolios  than  we had on emergence from bankruptcy.  In addition, we have put
in  place  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.  With these improvements
in  our  portfolio balance and with our new procedures in place, we believe that
in 2003 we will achieve results consistent with our business plan, at least on a
cash  basis.

Our  portfolios  provide our principal 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 June 30, 2002, increased $1.2 million to
$13.2  million  from  $12.0  million at February 4, 2002.  At the same time, the
cost basis of our portfolios decreased to approximately $3.7 million at June 30,
2002,  from approximately $4.8 million at February 4, 2002. Our estimate of fair
value  increased  despite this decline in cost basis because we believe recently
purchased  portfolios  will  provide  better  collection ratios than some of the
older portfolios we inherited from our PAM Fund predecessors. Our portfolio cost
basis  increased  slightly during the last two quarters of 2002 due to the large
magnitude  of  acquisitions  of new portfolios.  We believe portfolio cost basis
will  decline  in  early  2003  because  we  do  not expect the magnitude of new
portfolio acquisitions to be as large in 2003 as it was in 2002.  Due to factors
such as the fair value of a new portfolio being greater than its purchase price,
the availability of new portfolios, market pricing conditions for new portfolios
and  the  timing  of distributions to our members, we believe it is difficult to
assess  whether  the  fair  value  of  our  portfolios  will  also  decrease.

We used a discount rate of 20% to determine the fair values of our portfolios at
June  30, 2002, and February 4, 2002. 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%).

                                               June 30, 2002   February 4, 2002
                                               --------------  -----------------

  Higher collection risk (25% discount rate)   $ 12.3 million  $    11.2 million
  Assumed collection risk (20% discount rate)  $ 13.2 million  $    12.0 million
  Lower collection risk (15% discount rate)    $ 14.1 million  $    12.8 million

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

We plan to realize the difference between fair value and cost basis over time as
we  collect  our portfolios. We generally collect our portfolios over periods of
time  ranging  from  three  to seven years, with the bulk of a portfolio's yield
coming  in  the first three years we collect it. If we succeed in collecting our
portfolios  and  realize the difference between fair value and cost basis of our
portfolios,  we  will  recover the cost we paid for them, pay our collection and
operating  costs,  and  still  have excess cash. In the near term we plan to use
some  of  our  cash  collections  representing  cost  basis  recovery  to  make
distributions  to  our  members  and  interest  holders.  Ultimately  we plan to
generate excess cash and use some of it to make distributions to our members and
interest  holders. We anticipate making our first distribution (not counting the
initial  $12  million distribution made shortly after emergence from bankruptcy)
during  the  second  quarter  of 2003, based on cash collected through March 31,
2003.

In  the  near  term,  we  plan to reinvest some of our opening cash and our cash
collections representing cost basis recovery to acquire additional portfolios to
continue growing the fair value of our portfolios on a quarter to quarter basis.
Ultimately we plan to reinvest all of the cash representing cost basis recovery,
plus  a  portion  of  excess  cash,  to  acquire  additional  portfolios.

Our  Board  of  Directors  has  described  this  strategy  as  having two parts:


                                       20
<PAGE>
     -    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 and the timing of distributions to our members, we
may  not  achieve  increases  in  fair  value  each  quarter.

In  general,  we  expect  increases  in  portfolio  fair  value  to  result in a
corresponding  increase  in  the  cost  basis of our portfolios presented on our
balance  sheet.  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  do  not  have any lines of credit or other debt financing available to us at
this  time.  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  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.

RECENT  ACCOUNTING  PRONOUNCEMENTS

We  continue  to assess the effects of recently issued accounting standards. The
impact  of  all  recently  adopted  and  issued  accounting  standards  has been
disclosed  in  the  footnotes  to  our  unaudited  Financial Statements, Note 4.


                           PART II - OTHER INFORMATION

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  EXHIBITS

EXHIBIT
NUMBER    DESCRIPTION
--------  ----------------------------------------------------------------------
  99.1    Certification  of  Principal  Executive  Officer Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act  of  2002


  99.2    Certification  of  Principal  Financial  Officer Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act  of  2002


(b)  REPORTS  ON  FORM  8-K

No  reports  on Form 8-K were filed during the three months ended June 30, 2002.


                                       21
<PAGE>
                                   SIGNATURES

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

                                          PERFORMANCE CAPITAL MANAGEMENT, LLC


   April 24, 2003                         By:  /s/  David J. Caldwell
   --------------                             ------------------------------
       (Date)                                 Name: David J. Caldwell
                                              Its:  Chief Operations Officer


                                       22
<PAGE>
                                 CERTIFICATIONS


                  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
                         PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002


I,  David  J.  Caldwell,  certify  that:

1.  I  have reviewed this quarterly report on Form 10-QSB of Performance Capital
Management,  LLC;

2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;



   April 24, 2003                              /s/  David J. Caldwell
   --------------                             ------------------------------
       (Date)                                 David J. Caldwell
                                              Chief Operations Officer


                                       23
<PAGE>
                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
                         PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002


I,  Edward  M.  Rucker,  certify  that:

1.  I  have reviewed this quarterly report on Form 10-QSB of Performance Capital
Management,  LLC;

2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;



   April 24, 2003                              /s/  Edward  M.  Rucker
   --------------                             ------------------------------
       (Date)                                 Edward  M.  Rucker
                                              Accounting  Manager


                                       24
<PAGE>
                                  EXHIBIT INDEX

EXHIBIT
NUMBER    DESCRIPTION
--------  ----------------------------------------------------------------------
  99.1    Certification  of  Principal  Executive  Officer Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act  of  2002


  99.2    Certification  of  Principal  Financial  Officer Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act  of  2002


<PAGE>