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    SEPTEMBER 30, 2006
                                            ------------------

[ ]  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  [ ]

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).
Yes  [ ] No  [X]

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  [ ]

As of November 1, 2006, the issuer had 564,125 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 SEPTEMBER 30, 2006


PART I - FINANCIAL INFORMATION                                                                 PAGE
<S>      <C>                                                                                   <C>
Item 1   Consolidated Financial Statements

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

         Consolidated Balance Sheets as of September 30, 2006 (unaudited) and
         December 31, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2

         Consolidated Statements of Operations for the quarters and nine months ended
         September 30, 2006 and 2005 (unaudited). . . . . . . . . . . . . . . . . . . . . . . .   3

         Consolidated Statements of Members' Equity for the nine months ended
         September 30, 2006 (unaudited) and the year ended December 31, 2005. . . . . . . . . .   4

         Consolidated Statements of Cash Flows for the nine months ended
         September 30, 2006 and 2005 (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.  17

Item 3   Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

PART II - OTHER INFORMATION

Item 6   Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   28

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
</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 September 30, 2006, and the related consolidated
statements of operations for the quarters and nine month periods ended September
30, 2006 and 2005, and members' equity and cash flows for the nine month periods
ended  September  30,  2006  and  2005.  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 accounting principles generally accepted in
the  United  States  of  America.

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, 2005, and the
related  consolidated  statements  of operations, members' equity and cash flows
for  the  year ended December 31, 2005 (not presented herein); and in our report
dated  March 20, 2006, 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, 2005, 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


November  9,  2006
Orange,  California


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

                           CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005


                                        September  30, 2006   December 31, 2005
                                            (unaudited)
                                       ---------------------  ------------------
                                     ASSETS
                                     ------
<S>                                    <C>                    <C>
  Cash and cash equivalents            $           1,179,528  $        1,810,677
  Restricted cash                                    555,830             380,352
  Other receivables                                  259,442              25,678
  Purchased loan portfolios, net                   6,287,499           8,446,724
  Property and equipment, net                        253,024             141,169
  Deposits                                           119,511              57,746
  Prepaid expenses and other assets                   83,235              90,843
                                       ---------------------  ------------------

     Total assets                      $           8,738,069  $       10,953,189
                                       =====================  ==================


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

LIABILITIES:
  Accounts payable                     $              67,097  $           78,644
  Accrued liabilities                                421,776             346,554
  Accrued interest                                    58,788              30,225
  Notes payable                                    5,878,753           7,336,505
  Income taxes payable                                27,580              27,580
                                       ---------------------  ------------------
     Total liabilities                             6,453,994           7,819,508

COMMITMENTS AND CONTINGENCIES                              -                   -

MEMBERS' EQUITY                                    2,284,075           3,133,681
                                       ---------------------  ------------------

     Total liabilities and members'
     equity                            $           8,738,069  $       10,953,189
                                       =====================  ==================
</TABLE>


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


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

                                       CONSOLIDATED STATEMENTS OF OPERATIONS


                                                    For the          For the       For the nine     For the nine
                                                 quarter ended    quarter ended    months ended     months ended
                                                 September 30,    September 30,    September 30,    September 30,
                                                     2006             2005             2006             2005
                                                  (unaudited)      (unaudited)      (unaudited)      (unaudited)
                                                --------------   --------------   --------------   ---------------
REVENUES:
<S>                                             <C>              <C>              <C>              <C>
  Portfolio collections                         $    3,222,036   $    3,384,709   $   10,459,125   $    9,993,896
  Portfolio sales                                       20,000           66,133        1,552,610          572,142
                                                --------------   --------------   --------------   ---------------
    Total revenues                                   3,242,036        3,450,842       12,011,735       10,566,038
  Less portfolio basis recovery                      1,691,488        1,457,947        6,216,356        4,729,367
                                                --------------   --------------   --------------   ---------------

NET REVENUES                                         1,550,548        1,992,895        5,795,379        5,836,671
                                                --------------   --------------   --------------   ---------------

OPERATING COSTS AND EXPENSES:
  Salaries and benefits                              1,021,897        1,020,669        3,214,974        3,171,233
  General and administrative                           695,382          704,041        2,205,027        2,258,360
  Depreciation                                          27,456           38,263           79,934          123,256
                                                --------------   --------------   --------------   ---------------
    Total operating costs and expenses               1,744,735        1,762,973        5,499,935        5,552,849
                                                --------------   --------------   --------------   ---------------

INCOME (LOSS) FROM OPERATIONS                         (194,187)         229,922          295,444          283,822
                                                --------------   --------------   --------------   ---------------

OTHER INCOME (EXPENSE):
  Interest  expense and other financing costs         (219,178)        (113,637)        (629,439)        (285,230)
  Reorganization costs                                       -                -                -             (440)
  Interest income                                        5,508            4,553           12,101            9,544
  Other income                                               -            3,301                -            5,415
                                                --------------   --------------   --------------   ---------------
    Total other expense, net                          (213,670)        (105,783)        (617,338)        (270,711)
                                                --------------   --------------   --------------   ---------------

INCOME (LOSS) BEFORE INCOME TAX
  PROVISION                                           (407,857)         124,139         (321,894)          13,111

INCOME TAX PROVISION                                     2,790            5,790           29,180           23,390
                                                --------------   --------------   --------------   ---------------

NET INCOME (LOSS)                               $     (410,647)  $      118,349   $     (351,074)  $      (10,279)
                                                ==============   ==============   ==============   ===============

NET INCOME (LOSS) PER MEMBER
  UNIT - BASIC AND DILUTED                      $         (.73)  $          .21   $         (.62)  $         (.02)
                                                ==============   ==============   ==============   ===============
</TABLE>


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


                                       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, 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                      (494,338)                                (494,338)

Net loss                                                                     (10,279)     (10,279)

                                    -------  ------------  -----------  -------------  -----------
Balance, September 30, 2005         563,926   24,142,807      485,741    (21,546,817)   3,081,731

Distributions to investors                      (163,765)                                (163,765)

Net income                                                                   215,715      215,715

                                    -------  ------------  -----------  -------------  -----------
Balance, December 31, 2005          563,926   23,979,042      485,741    (21,331,102)   3,133,681

Reinstatement of units to investor      199       11,938      (11,938)                          -

Distributions to investors                      (498,532)                                (498,532)

Net loss                                                                    (351,074)    (351,074)

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

Balance, September 30, 2006         564,125  $23,492,448   $  473,803   $(21,682,176)  $2,284,075
                                    =======  ============  ===========  =============  ===========
</TABLE>


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


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

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                              For the nine months    For the nine months
                                                                     ended                  ended
                                                              September 30, 2006     September 30, 2005
                                                                  (unaudited)            (unaudited)
                                                             ---------------------  ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                          <C>                    <C>
  Net loss                                                   $           (351,074)  $            (10,279)
  Adjustments to reconcile net (loss) to net cash
    provided by (used in) operating activities:
      Depreciation                                                         79,934                123,256
    (Increase) decrease in assets:
      Other receivables                                                  (233,764)                (5,346)
      Prepaid expenses and other assets                                     7,608                 15,732
      Loan portfolios                                                   2,159,225             (1,270,895)
      Deposits                                                            (61,765)                     -
    Increase (decrease) in liabilities:
      Accounts payable                                                    (11,547)                (8,920)
      Accrued liabilities                                                  75,222                 31,917
      Accrued interest                                                     28,563                 27,048
      Income taxes payable                                                      -                  3,500
                                                             ---------------------  ---------------------
        Net cash provided by (used in) operating activities             1,692,402             (1,093,987)
                                                             ---------------------  ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                                    (191,789)               (28,030)
                                                             ---------------------  ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Loan proceeds from borrowing                                          2,379,418              3,975,022
  Repayment of loans                                                   (3,837,170)            (1,879,723)
  Distributions to investors                                             (498,532)              (494,338)
                                                             ---------------------  ---------------------
        Net cash (used in) provided by financing activities            (1,956,284)             1,600,961
                                                             ---------------------  ---------------------


NET CHANGE IN CASH AND CASH EQUIVALENTS                                  (455,671)               478,944

CASH AND CASH EQUIVALENTS, beginning of period                          2,191,029              2,042,360
                                                             ---------------------  ---------------------

CASH AND CASH EQUIVALENTS, end of period                     $          1,735,358   $          2,521,304
                                                             =====================  =====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  Income taxes paid                                          $             29,180   $             19,890
                                                             =====================  =====================

  Interest paid                                              $            510,314   $            258,182
                                                             =====================  =====================
</TABLE>


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


                                       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.


                                       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.

Reorganization Plan
-------------------

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  September  30,  2006:

<TABLE>
<CAPTION>
  Fund's      Number of        Percentage
   Name     PCM LLC Units  Interest in PCM LLC
----------  -------------  -------------------
<S>         <C>            <C>
PAM                51,565                    9
PAMII              76,101                   14
PAMIII             97,759                   17
PAMIV             282,179                   50
PAMV               56,521                   10
            -------------  -------------------
    Totals        564,125                  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. The combination of the Partnerships
and  PCM  INC  is  summarized  as  follows  (in  thousands):


                                       7
<PAGE>
<TABLE>
<CAPTION>
                            PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

                         CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)

                                     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
                                   ===========================================================

Cumulative Distributions For The
  Period February 4, 2002
  Through December 31, 2004                                                                      (13,146)

Cumulative Net Loss For The
  Period February 4, 2002
  Through December 31, 2004                                                                       (3,298)

Distributions Forfeited                                                                              152

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

2005 Distributions to Investors                                                                     (329)

Net Loss For The Six Months
  Ended June 30, 2005                                                                               (129)

Members' Equity PCM, LLC                                                                        ---------
  at June 30, 2005                                                                                 3,128

2005 Distributions to Investors                                                                     (329)

Net Income For The Six Months
  Ended December 31, 2005                                                                            334

Members' Equity PCM, LLC                                                                        ---------
  at December 31, 2005                                                                             3,133

2006 Distributions to Investors                                                                     (498)

Net Loss For The Nine Months
  Ended September 30, 2006                                                                          (351)

Members' Equity PCM, LLC                                                                        ---------
  at September 30, 2006                                                                         $  2,284
                                                                                                =========
</TABLE>


                                       8
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)

PAM  III and PAM IV were reporting entities under the Securities Exchange Act of
1934.  PAM,  PAMII,  PAMV,  and  PCM  INC  were  not  reporting entities. It was
determined  that  PCM  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 portion of any residual
collections  on  the  portfolios  acquired  with  a loan, after repayment of the
purchase price (plus interest) to Varde and the Company and payment of servicing
fees.  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.

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;


                                       9
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2  -  BASIS  OF  PRESENTATION  (CONTINUED)

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 start 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  were  presented on the face of the balance
sheet as pre-petition claims with disclosures required by SOP 90-7. These claims
have  been  paid  or  settled  by  December  31,  2003.

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

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

NOTE  3  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

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

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

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


                                       10
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

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 an acquired loan portfolio when
the  present  value  of  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 net present value of expected
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 $1.5
million  as of September 30, 2006. 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 is 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.

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. The Company 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  the  Company  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 September 30, 2006, management expects these assets to be
fully  recoverable.


                                       11
<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 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.  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
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.

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

Members'  equity  includes  voting  LLC units held by members and non-voting LLC
units held by one economic interest owner. As of September 30, 2006, PCM LLC had
540,403  voting LLC units (540,204 LLC units as of December 31, 2005) and 23,722
non-voting  LLC  units  (23,722  LLC  units  as of December 31, 2005). 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. In the first quarter of 2006,
199  units  of  previously  cancelled units were reinstated due to a beneficiary
heir  establishing  ownership.

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 September 30, 2006
and  December  31,  2005  are  as  follows. The carrying amount of cash and cash
equivalents,  restricted cash and liabilities approximate their fair values. The
total  and  retained  fair  values  of purchased loan portfolios were determined
based  on both market pricing and discounted expected cash flows. The total fair
value  of  the  Company's  portfolios  includes  fair  value attributable to the
residual  interests  of  third  parties in collections once all funds (including
funds  invested  by  the Company) invested in a portfolio have been repaid (with
interest) and all servicing fees have been paid.  The retained fair value of the
Company's  portfolios  excludes  fair  value  attributable  to  these  residual
interests.  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
September 30, 2006 and December 31, 2005 was 20%. The estimated total fair value
of  loan  portfolios  was $24.2 million and $28.0 million at September 30, 2006,
and  December  31,  2005, respectively, and the estimated retained fair value of
loan  portfolios  was $23.6 million and $27.5 million at September 30, 2006, and
December  31,  2005,  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 September 30, 2006 and December 31, 2005 totaled
approximately  $814  million  and  $749  million,  respectively.


                                       12
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - PURCHASED LOAN PORTFOLIOS (CONTINUED)

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

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

<TABLE>
<CAPTION>
                                       As of             As of
                                   Sept. 30, 2006    Dec. 31, 2005
                                  ----------------  ---------------
<S>                               <C>               <C>
Unrecovered cost balance,
  beginning of period             $     8,505,065   $    3,003,642
Valuation allowance,
  beginning of period                     (58,341)         (12,000)
                                  ----------------  ---------------
Net balance, beginning of period        8,446,724        2,991,642
Net portfolio activity                 (2,159,225)       5,455,082
                                  ----------------  ---------------
Net balance, end of period        $     6,287,499   $    8,446,724
                                  ================  ===============
</TABLE>

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

<TABLE>
<CAPTION>
                                       Quarter           Quarter         Nine Months       Nine Months
                                        Ended             Ended             Ended             Ended
                                    Sept. 30, 2006    Sept. 30, 2005    Sept. 30, 2006    Sept. 30, 2005
                                   ----------------  ----------------  ----------------  ----------------
<S>                                <C>               <C>               <C>               <C>
Purchased loan portfolios - net    $       367,388   $       247,597   $     4,057,131   $     6,000,262
Collections on loan portfolios          (3,222,036)       (3,384,709)      (10,459,125)       (9,993,896)

Sales of loan portfolios                   (20,000)          (66,133)       (1,552,610)         (572,142)
Revenue recognized on collections        1,530,548         1,926,762         5,243,651         5,500,154
Revenue recognized on sales                 20,000            66,133           551,728           382,858
Increase in valuation allowance
due to portfolio impairment                      -                 -                 -           (46,341)
                                   ----------------  ----------------  ----------------  ----------------
Net portfolio activity             $    (1,324,100)  $    (1,210,350)  $    (2,159,225)  $     1,270,895
                                   ================  ================  ================  ================
</TABLE>

The  valuation allowance related to the loan portfolios had a balance of $58,341
at  September  30,  2006  and  December  31,  2005.

In April 2006, the Company entered into a joint purchase of $2.8 million of loan
portfolios,  of which the Company's portion totaled $276,000. Only the Company's
portion  was  included in the accompanying financial statements. The Company has
assumed  the  normal risk associated with any portfolio purchase or sale for the
entire  transaction.

NOTE  6  -  OTHER  RECEIVABLES

Other  receivables  consist of collections on portfolios received by third party
collection  agencies  and  amounts  to be refunded to the Company for ineligible
accounts  purchased  in  recent  portfolio  acquisitions.


                                       13
<PAGE>

               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE  7  -  PROPERTY  AND  EQUIPMENT

Property  and  equipment  is  as  follows:

<TABLE>
<CAPTION>
                                                 As of             As of
                                          September 30, 2006   Dec. 31, 2005
                                          -------------------  --------------
<S>                                       <C>                  <C>
Office furniture and equipment            $           287,142  $      286,822
Computer equipment                                    604,940         525,427
Leasehold improvements                                 36,982          36,982
Construction in progress (new leasehold)              111,956               -
                                          -------------------  --------------
  Totals                                            1,041,020         849,231
Less accumulated depreciation                         787,996         708,062
                                          -------------------  --------------
  Property and equipment, net             $           253,024  $      141,169
                                          ===================  ==============
</TABLE>

Depreciation  expense  for  the  three  months ended September 30, 2006 and 2005
amounted  to  $27,456  and  $38,263, respectively.  Depreciation expense for the
nine  months ended September 30, 2006 and 2005 amounted to $79,834 and $123,256,
respectively.

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.  PCM LLC's
wholly-owned  subsidiary  Matterhorn  owed  approximately  $5.9 million and $7.3
million  at  September  30, 2006, and December 31, 2005, respectively, under the
facility in connection with its purchase of certain charged-off loan portfolios.
The  total  amount borrowed was approximately $12.6 million and $10.2 million at
September  30,  2006,  and  December  31,  2005, respectively.  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 April 2007 to June 2008, with the approximate
following  principal  payments  due:

<TABLE>
<CAPTION>
               Twelve months
                  ending
               September 30,
               -------------
<S>                           <C>
                   2007       $2.4 million
                   2008       $3.5 million
</TABLE>

Once  all  funds  (including  funds  invested  by  the  Company)  invested  in a
portfolio  financed  by Varde have been repaid (with interest) and all servicing
fees  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  was  approximately $12.4 million at September 30, 2006 and
$14.8  million  at  December  31,  2005.  The  assets of Matterhorn that provide
security  for  Varde's loan were carried at a cost of approximately $5.0 million
at  September  30,  2006.


                                       14
<PAGE>
               PERFORMANCE CAPITAL MANAGEMENT, LLC AND SUBSIDIARY

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE  9  -  COMMITMENTS  AND  CONTINGENCIES

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

The  Company  currently  leases  office  space  in  Anaheim,  California under a
non-cancelable  five  year  operating  lease  that expires on November 30, 2006.
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  under the Anaheim lease as of September 30,
2006  are  as  follows:

<TABLE>
<CAPTION>
     Twelve months
        ending
     September 30,
     -------------
<S>                           <C>
     2007                     $52,000
     Thereafter                     -
</TABLE>

Rental  expense  for the three months ended September 30, 2006 and 2005 amounted
to  $84,295  and $81,857, respectively. Rental expense for the nine months ended
September  30,  2006  and  2005 amounted to approximately $252,146 and $245,431,
respectively.  The  Company  has  decided not to execute its option to renew the
lease  on  its existing office space. The Company currently expects to hold over
the  current  Anaheim  lease  for  an  additional  minimum rent of approximately
$38,000. The Company is obligated under a five year equipment lease, expiring in
2009,  for  minimum  payments  of  $4,800  per  year.

On  July  17,  2006, the Company entered into an Office Lease Agreement to lease
office  space  in  Buena Park, California. The Company intends to use the leased
premises  as its principal executive offices and operating facility. The Company
believes that the lease agreement will provide adequate space for its operations
as  currently  conducted  and  as it expects to conduct them for the foreseeable
future.

The  term  of  the  lease  is 87 months and is expected to commence on or around
December  1,  2006,  and  will  expire  on February 28, 2014. The Company has an
option  to  renew  the  lease  for  one  additional  five-year  term at the then
prevailing  "fair  market  rental  rate"  at  the  end  of  the  term.

The  base  rent  will  increase  on  a  yearly basis throughout the term. Future
minimum  lease  commitments  under  the  Buena Park lease for the calendar years
ended  December  31,  will  be:

<TABLE>
<CAPTION>
                       Approximate Annual
             Year      Lease Commitments
          ----------  -------------------
<S>                   <C>
             2006     $            29,000
             2007     $           173,000
             2008     $           345,000
             2009     $           348,000
          Thereafter  $         1,496,000
</TABLE>

In  addition  to  the  base rent, the Company must pay its pro rata share of the
increase  in  operating  expenses, property taxes and property insurance for the
building above the total dollar amount of operating expenses, property taxes and
property  insurance  for  the  2006  base  calendar  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, 564,125 for the quarter
ended  September  30, 2006 and 563,926 for the quarter ended September 30, 2005.


                                       15
<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 November 10, 2006, PCM LLC commenced a Voluntary Sale Program offering to its
unit  holders  who  own  a total of 99 or fewer LLC units the option to sell all
(but  not  less than all) of their LLC units back to PCM LLC at a price of $4.75
per  unit. The Program will expire at 5:00 PM Eastern Time on December 22, 2006,
unless extended. Approximately 1,100 unit holders of PCM LLC's 2,500 record unit
holders  are  believed  by PCM LLC to own in aggregate 99 or fewer LLC units and
such unit holders beneficially own a total of approximately 78,000 LLC units out
of 564,125 LLC units outstanding. The potential outlay could total $370,000. The
amount  of  capital paid out to the unit holders is dependent upon the number of
LLC  units  repurchased  by  PCM  LLC.


                                       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,"  "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,  2006.


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.


                                       17
<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.


                                       18
<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
fees have been paid. We do not record a liability for contingent future payments
of  residual  interests due to the distressed nature of the portfolio assets and
the  lack of assurance that collections sufficient to result in a liability will
actually  occur.  When  such  payments  actually  occur,  we reflect them in our
statement  of  operations  as  other  financing  costs.

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.


                                       19
<PAGE>
OPERATING RESULTS

COMPARISON OF RESULTS FOR THE QUARTERS ENDED SEPTEMBER 30, 2006 AND 2005

The  following  discussion  compares our results for the quarter ended September
30, 2006, to the quarter ended September 30, 2005. We had a net loss of $411,000
for  the quarter ended September 30, 2006, as compared to net income of $118,000
for  the  quarter  ended  September  30,  2005.

Revenue
-------

Our  net  revenues decreased to $1.6 million for the quarter ended September 30,
2006,  from $2.0 million for the quarter ended September 30, 2005. The following
table  presents  a  comparison of the components of our revenues for the quarter
ended  September  30,  2006, to the quarter ended September 30, 2005, 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 Sept. 30,            Ended Sept. 30,            Ended Sept. 30,
                          2006         2005          2006          2005        2006        2005
                        ---------  ------------  -------------  -----------  --------  ------------
                             ($in millions)            ($in millions)           ($in millions)
<S>                     <C>        <C>           <C>            <C>          <C>       <C>
Total revenues          $    3.2   $       3.5   $        3.2   $      3.4   $      -  $       0.1
Less basis recovery         (1.7)         (1.5)          (1.7)        (1.5)         -         (0.0)
                        ---------  ------------  -------------  -----------  --------  ------------
Net revenues            $    1.6   $       2.0   $        1.5   $      1.9   $      -  $       0.1
                        =========  ============  =============  ===========  ========  ============
Net revenue percentage      47.8%         57.8%          47.5%        56.9%         -        100.0%
</TABLE>

Portfolio  collections  provided substantially all of our total revenues for the
quarter ended September 30, 2006 and 98.1% of our total revenues for the quarter
ended  September 30, 2005. Our total revenues from portfolio collections for the
quarter  ended  September  30,  2006  decreased  by $163,000 over the comparable
quarter  in  2005.  Our  net  revenues  from  portfolio collections decreased by
$396,000  and the percentage of net revenues to total revenues decreased 9.4% to
47.5%  for  the  quarter  ended September 30, 2006 from 56.9% in the prior year.
These results reflect the fact that recently purchased portfolios (which provide
no net revenues because of front-loaded cost basis recovery) continue to provide
a substantial portion of our total collection revenues. During 2005, we acquired
$11.5  million  of new portfolios (net of returns; $11.0 million after adjusting
for  a  January  2006  sale  of  a  $461,000 portion of a portfolio purchased in
December  2005).  During  the  nine months ended September 30, 2006, we acquired
$4.1 million of new portfolios (net of returns).  We have seen our total revenue
from  collections increase as we begin to exploit the large purchases we made in
2005  and  continued to make in 2006. We expect to continue to have strong total
collection revenue as we collect these recent portfolio purchases, but we do not
expect our total collection revenue increases in 2006 to be as large as our 2005
increases  were  in  comparison  to  2004.  The third quarter of 2006 collection
revenue  was  actually  down  from  the  quarter of the prior year but was up by
$466,000  for  the  nine months of 2006 compared to the same period in the prior
year. The cost basis recovery associated with collecting recently purchased 2005
portfolios,  combined  with the portfolios that we have already acquired in 2006
and  additional  portfolios we plan to acquire in 2006, could continue to offset
the  increase  in  net  revenue  percentage  we would otherwise expect our older
portfolios  (whose  cost  bases  we  have  completely recovered) to generate and
actually  result  in  a  further  decline  in  our  net  revenue  percentage.

The  quarters  ended September 30, 2005 and 2006, had portfolio sales revenue of
$66,000  and  $20,000,  respectively.  This  revenue consisted of adjustments to
reserve  accounts made in the second quarter of 2005 and in the first quarter of
2006.  We  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.

If  we  exclude  the effect of portfolio sales, our net loss of $431,000 for the
quarter  ended  September  30,  2006,  exceeded the comparable net income (i.e.,
excluding  the  effect  of  portfolio  sales)  of  $52,000 for the quarter ended
Septmeber  30,  2006.  As  long  as  we  succeed  at using the Varde facility to
increase  portfolio  purchases  on  a  year-to-year  basis, we do not expect our
collection activity to show net income, due to front-loaded cost basis recovery.
If  our  purchasing  patterns slow, we believe that our collection activity will
begin  to  show  net  income.  The  increase  in  our  net  loss


                                       20
<PAGE>
excluding  the  effect  of portfolio sales is essentially due to proportionately
greater  cost  basis  recovery  (i.e.,  the  decrease  in net revenue percentage
discussed  above)  and  to increased interest expense and other financing costs.

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

Our  total  operating  costs and expenses of $1.8 million was comparable for the
quarters  ended  September  30,  2006 and 2005. Our ratio of operating costs and
expenses  to  total  revenues  from  collections  (i.e., excluding the effect of
portfolio sales), a measure of collection efficiency, increased to 54.2% for the
quarter ended September 30, 2006, from 52.1% for the quarter ended September 30,
2005.  We  plan  to continue following our strategy of increasing total revenues
(while  holding  infrastructure costs down) and reducing variable costs required
to  collect  each  dollar of revenue, but we believe we may be nearing the point
where  it may not be possible to achieve further material decreases in the ratio
of  operating costs and expenses to total revenues from collections as reflected
by  the  increase  from  the  same  period  in  the  prior  year.

Our  interest  expense  and  other financing costs increased to $219,000 for the
quarter  ended  September 30, 2006 from $114,000 for the quarter ended September
30,  2005.  The  increase  from  the same quarter in the prior year reflects the
relatively  larger  portfolio  purchases that were made and financed in 2006. 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
result  in  loan  payments  that  will  deplete  our  cash balances. In order to
maintain  the  working  capital  necessary  to run our operations, we anticipate
maintaining  a careful balance between portfolios we purchase using our own cash
(where  collection  revenues  are  immediately  available  to  us  in  full) and
portfolios  we  purchase  using  the  Varde  credit  facility  (where  we  must
immediately  apply  a  substantial  portion  of  collections  to  debt service).

Our  general and administration expenses decreased by $9,000 to $695,000 for the
quarter  ended September 30, 2006, from $704,000 for the quarter ended September
30,  2005. Our salaries and benefits expenses remained relatively stable at $1.0
million  for  the  quarters ended September 30, 2006 and 2005. Our headcount has
remained  relatively  stable,  although we still experience significant employee
turnover among our collectors. Our operating expenses may increase in 2006 as we
increase  the  volume  of  accounts we collect, but we expect increases in total
revenues  to continue to outpace any material increases in costs associated with
our  collection  efforts.  Our ability to sustain revenue increases that outpace
cost  increases  depends  on  our ability to continue to identify and make large
dollar-volume  purchases  of  portfolios at prices we believe are reasonable. We
are experiencing a greater challenge in obtaining portfolio purchases at a price
that  we  can  make  a  reasonable  return.  We  are currently considering other
alternatives  such  as  third  party  collections  to  offset the effects of the
difficulty  in  obtaining  portfolios  at  reasonable  prices.

COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

The  following  discussion  compares  our  results  for  the  nine  months ended
September  30,  2006,  to the nine months ended September 30, 2005. We had a net
loss of $351,000 for the nine months ended September 30, 2006, compared to a net
1oss  of  $10,000  for  the  nine  months  ended  September  30,  2005.

Revenue
-------

Our  net  revenues  of  $5.8  million  were comparable for the nine months ended
September  30,  2006  and 2005. The following table presents a comparison of the
components  of  our  revenues  for  the nine months ended September 30, 2006 and
2005,  as  well  as  presenting net revenue as a percentage of the corresponding
total  revenue  (approximate  amounts  due  to  rounding):


                                       21
<PAGE>
<TABLE>
<CAPTION>
                                Total             Collections              Sales
                         -------------------  -------------------  -------------------
                             For the Nine         For the Nine          For the Nine
                             Months Ended         Months Ended          Months Ended
                              Sept., 30             Sept. 30,            Sept. 30,
                            2006      2005       2006      2005       2006      2005
                         ----------  -------  ----------  -------  ----------  -------
                            ($in millions)       ($in millions)       ($in millions)
<S>                      <C>         <C>      <C>         <C>      <C>         <C>
Total revenues           $    12.0   $ 10.6   $    10.5   $ 10.0   $     1.6   $  0.6
Less basis recovery           (6.2)    (4.7)       (5.2)    (4.5)       (1.0)    (0.2)
                         ----------  -------  ----------  -------  ----------  -------
Net revenues             $     5.8   $  5.8   $     5.2   $  5.5   $     0.6   $  0.4
                         ==========  =======  ==========  =======  ==========  =======
Net Revenue
Percentage                    48.3%    55.2%       50.1%    54.6%       35.5%    66.9%
</TABLE>

Portfolio  collections  provided 87.1% of our total revenues for the nine months
ended  September  30,  2006, and 94.5% of our total revenues for the nine months
ended  September  30,  2005.  Our  total  revenues  from  portfolio  collections
increased  by  $465,000 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
decreased  by  $210,000  and  the  percentage  of net revenues to total revenues
decreased  4.5% to 50.1% for the nine months ended September 30, 2006 from 54.6%
for  the  nine  months  ended September 30, 2005. These results reflect the fact
that  recently  purchased  portfolios  (which provide no net revenues because of
front-loaded  cost  basis recovery) continue to provide a substantial portion of
our  increased total collection revenues. During the nine months ended September
30,  2006,  we acquired $4.1 million of new portfolios (net of returns).  During
2005, we acquired $11.5 million of new portfolios (net of returns; $11.0 million
after  adjusting  for  a  January 2006 sale of a $461,000 portion of a portfolio
purchased  in  December  2005).  We have seen our total revenue from collections
increase  as  we begin to exploit the large purchases we made in 2005 and expect
to  continue  to  make  in  2006.  We  expect  to  continue to have strong total
collection revenue as we collect these recent portfolio purchases, but we do not
expect our total collection revenue increases in 2006 to be as large as our 2005
increases were in comparison to 2004.  As previously pointed out, total revenues
from  collections  in  the  third  quarter of 2006 were down from the comparable
period 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 recently purchased 2005 portfolios, combined with the portfolios
that  we  have  already  acquired  in  2006 and additional portfolios we plan to
acquire  in 2006 could continue to offset the increase in net revenue percentage
we  would  otherwise  expect  our  older  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 increases. As part
of  our  program  to  emphasize  efforts  to  continue  to collect and realize a
reasonable return on our portfolios, we identified one larger portfolio that was
not  performing  to  our  expectations.  We sold this portfolio for $1.1 million
with  Varde's  consent  in  the  first  quarter  of  2006 on terms we considered
acceptable. We also sold a $461,000 portion of a portfolio purchased in December
2005.  We  may  engage  in  further sales if we identify portfolios that are not
performing  to our expectations and 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.

Net  revenues  from  sales  of  $552,000 for the nine months ended September 30,
2006,  exceeded  net  revenues  from sales of $383,000 for the nine months ended
September  30,  2005, by $169,000.  If we exclude the effect of portfolio sales,
our  net  loss  for the nine months ended September 30, 2006, increases to a net
loss  of $903,000, and our net loss for the nine months ended September 30, 2005
widened  to  $393,000.  Our net loss excluding the effect of portfolio sales did
increase  substantially,  despite increased total revenues from collections, due
to  proportionately  greater  cost  basis  recovery  (i.e.,  the decrease in net
revenue  percentage discussed above) and to increased interest expense and other
financing  costs.

During the nine months ended September 30, 2006, we generated positive cash flow
from  operating activities of $1.7 million, enabling us to make distributions to
the  Company's  investors  and  pay  down  third  party  loans. Members' equity,
however,  decreased by $850,000 during the nine months ended September 30, 2006.
This  significant decline in members' equity is attributed to distributions made
to  investors  of  $499,000,  as  well  as  a  net  loss  from  operations  of


                                       22
<PAGE>
$351,000,  which  resulted  in  part  from the rising cost of portfolios and the
rising  interest  expenses  and other costs associated with the increased use of
financing  to  purchase  portfolios.

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

Our  total  operating  costs  and  expenses  remained  relatively stable at $5.5
million  for  the nine months ended September 30, 2006, compared to $5.6 million
for  the nine months ended September 30, 2005.  Our ratio of operating costs and
expenses  to  total  revenues  from  collections  (i.e., excluding the effect of
portfolio sales), a measure of collection efficiency, decreased to 52.6% for the
nine  months  ended  September  30,  2006,  from 55.6% for the nine months ended
September  30,  2005.  This  percentage does not include the effects of interest
expense  and  other financing costs increasing from $285,000 for the nine months
ended  September  30, 2005, to $629,000 for the same period in 2006. If interest
and  other  financing  costs  are  added to total operating cost and expenses to
calculate  the ratio of operating expenses to total revenue from collections the
percentages would be 58.6% for the nine months ended September 30, 2006 compared
to  58.4%  for  the  nine  months  ended September 30, 2005. We plan to continue
following  our  strategy  of  increasing  total  revenues  (while  holding
infrastructure  costs down) and reducing variable costs required to collect each
dollar  of  revenue, but we believe we may be nearing the point where it may not
be  possible  to  achieve  further  material decreases in the ratio of operating
costs  and  expenses  to  total  revenues  from collections. We believe that our
agreement  with  Varde has played, and will continue to play, a significant role
in  enabling us to increase the volume of accounts we have available to collect.

As  provided  above, our interest expense and other financing costs increased by
$344,000 to $629,000 in the nine months ended September 30, 2006, as compared to
$285,000  in  the  nine  months  ended September 30, 2005. 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 result in
loan  payments  that  will  deplete  our cash balances. In order to maintain the
working  capital  necessary  to  run our operations, we anticipate maintaining a
careful  balance  between  portfolios  we  purchase  using  our  own cash (where
collection  revenues  are immediately available to us in full) and portfolios we
purchase  using  the  Varde  credit  facility (where we must immediately apply a
substantial  portion  of  collections  to  debt  service).

Our  salaries  and  benefits  expenses have remained relatively constant at $3.2
million  for  the  nine  month  periods  ended  September 30, 2006 and 2005. Our
operating  expenses  remained  relatively  constant at $5.5 million for the nine
months  ended  September  30,  2006  and  2005.  This  occurred  while our total
collection revenues increased by $465,000 in the nine months ended September 30,
2006,  as  compared  to  the  same  nine  month  period  in  2005.


LIQUIDITY  AND  CAPITAL  RESOURCES

Our  cash  and  cash  equivalents decreased $456,000 in the first nine months of
2006  to a balance of $1.7 million at September 30, 2006. During the nine months
ended  September  30,  2006,  our  portfolio collections and sales generated $12
million of cash, we borrowed $2.4 million and we used $6.4 million for operating
and  other activities, $4.1 million to purchase new portfolios (net of returns),
$3.8  million  to  repay  loans, and $499,000 for distributions to unit holders.

The  large  cost  basis  recovery associated with the recent rapid growth in our
portfolios  has  made  it  difficult  to  generate  the profit called for in 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.  Excluding  the results from portfolio sales in the nine
months  ended  September  30, 2006, our cost basis recovery of $5.2 million plus
our  operating,  interest  and other expenses of $5.5 million exceeded our total
revenues  from  collections  of  $10.5  million. We generated sufficient cash to
repay  the  portion  of borrowed funds that came due in the first nine months of
2006. We believe these results reflect the steady progress we have made to focus
on  collecting  the  right  portfolios  in  an efficient manner.  We believe our
future  results  will  continue  to  reflect  this  progress,  although  the
"front-loading" of cost basis recovery from our recent large portfolio purchases
could  cause  our  statement  of  operations  to  show  a  net  loss.

During  2005  we believe we continued to improve the balance between our new and
old portfolios by purchasing the largest dollar amount of portfolios in one year
since  inception  ($11.5  million in 2005; $11.0 million after adjusting for the
January  2006  sale described above). We may not match that level of activity in
2006,  but  we  plan  to  continue


                                       23
<PAGE>
adding  new  portfolios  if  we can purchase them at reasonable prices.  We have
added  $4.1 million of portfolios (net of returns) thus far in 2006. The current
market  conditions  make it doubtful that we will continue to acquire portfolios
at  the  same  pace as in 2005.  We will continue to depend on our assessment of
market  conditions,  as  well  as  the amount of liquid cash and other financial
resources  available  to  us.

We  believe  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 identify portfolios that
require  more  cost  to collect than others. As a result of these procedures, we
identified  a larger portfolio that was not performing as well as we wanted, and
we  sold  it  during  the  first  quarter  of  2006.  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 2006 do not call for the sale of a large number of older portfolios or
underperforming  portfolios,  but  we  may engage in further sales if we believe
market  conditions  are  acceptable  or  portfolio  performance is not up to our
expectations.

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. The
total  fair  value  of  our  portfolios  includes fair value attributable to the
residual  interests  of  third  parties in collections once all funds (including
funds  invested  by us) invested in a portfolio have been repaid (with interest)
and  all  servicing  fees  have  been  paid.  The  retained  fair  value  of our
portfolios  excludes  fair  value attributable to these residual interests.  Our
estimate  of  the  total  fair  value  of  our portfolios at September 30, 2006,
decreased  $3.8  million to $24.2 million from $28 million at December 31, 2005.
At  the same time, the cost basis of our portfolios decreased to $6.3 million at
September 30, 2006, from $8.4 million at December 31, 2005.  Our estimate of the
retained  fair  value  of  our  portfolios at Septmeber 30, 2006, decreased $3.9
million  to  $23.6  million  from  $27.5  million  at  December  31,  2005.

Our  estimates  of  fair  value decreased due principally to our collections and
portfolio  sales  exceeding  the  fair  value  of  the $4.1 million of portfolio
purchases  (net of returns) made thus far in 2006. Our portfolio cost basis also
decreased,  due  principally  to  the  cost  basis  recovery associated with our
collections  and sales exceeding the $4.1 million of portfolio purchases (net of
returns)  made  thus  far  in 2006. Whether the fair value and cost basis of our
portfolios will resume the growth established in 2005 will depend on our ability
to find portfolios at a reasonable price in a very competitive market. If we can
find  reasonably priced portfolios, we believe our portfolio fair value and cost
basis  will  increase  in  the  near  term  because  we can use the Varde credit
facility as well as reinvest some cash proceeds from collections to purchase new
portfolios.  Long-term growth in portfolio fair value and 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
June  30, 2006 and December 31, 2005. The following table sets forth alternative
estimates  of  total  fair  value,  retained fair value, and the portion of fair
value  attributable to residual interests of third parties in collections, if we
assessed  collection  risk  as  higher  (using  a discount rate of 25%) or lower
(using  a  discount  rate  of  15%).

<TABLE>
<CAPTION>
                                                   Total               Retained            Fair Value of
                                                 Fair Value           Fair Value         Residual Interests
                                             -------------------  -------------------  ----------------------
                                              Sep 30     Dec 31    Sep 30     Dec 31    Sep 30      Dec 31
                                               2006       2005      2006       2005      2006        2005
                                             ---------  --------  ---------  --------  ---------  -----------
                                               ($in millions)        ($in millions)       ($in millions)
<S>                                          <C>        <C>       <C>        <C>       <C>        <C>
Higher collection risk (25% discount rate)   $    22.6  $   26.2  $    22.0  $   25.7  $     0.6  $       0.5
Assumed collection risk (20% discount rate)  $    24.2  $   28.0  $    23.6  $   27.5  $     0.6  $       0.5
Lower collection risk (15% discount rate)    $    26.2  $   30.3  $    25.5  $   29.7  $     0.7  $       0.6
</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


                                       24
<PAGE>
value  at any particular point in time are only estimates, and actual fair value
could  ultimately  vary  significantly  from  our  estimate.

We  do  not present the portion of fair value attributable to residual interests
of  third  parties  in  collections  as a liability in our financial statements,
although  it  does represent a contingent obligation to make payments to a third
party.  Because  we  will  receive  a  servicing  fee  and our share of residual
collections,  we  believe  collections of the specified portfolios will generate
funds  sufficient  to pay these residual interests to third parties as they come
due  and  cover  our  operating costs, with the potential for some profit on our
part.  If  our  collection  efficiency declines significantly, however, we might
have  to  use  some  of  our  own  capital  to  cover  operating  costs.

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.

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  2005,  we  made  distributions
totaling  $658,000.  We  made distributions of $166,000 in each of January 2006,
April  2006,  July 2006 and October 2006 relating to the quarters ended December
31,  2005,  March  31, 2006, June 30, 2006, and September 30, 2006 respectively.

During the nine months ended September 30, 2006, we generated positive cash flow
from  operating activities of $1.7 million, enabling us to make distributions to
the  Company's  investors  and  pay  down  third  party  loans. Members' equity,
however,  decreased by $850,000 during the nine months ended September 30, 2006.
This  significant decline in members' equity is attributed to distributions made
to  investors  of  $499,000,  as well as a net loss from operations of $351,000,
which  resulted  in  part  from  the  rising  cost  of portfolios and the rising
interest  expenses and other costs associated with increased use of financing to
purchase  portfolios.

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. We will never have
outstanding  indebtedness  approaching the full $25 million at any one time, due
to the cumulative nature of the facility. At September 30, 2006, Matterhorn owed
$5.9  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 $5.0 million at
September 30, 2006. 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 repaid in full on dates ranging from April 2007
to  June  2008.  Once  all  funds (including those invested by us) invested in a
portfolio  financed  by Varde have been repaid (with interest) and all servicing
fees  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 September 30, 2006
was  $12.4  million.


                                       25
<PAGE>
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 have continued a project begun in 2004 to obtain authority to collect in each
state  where  a  license,  exemption  or  other such registration is required to
collect  on  behalf  of  a  third party. We have made progress with this project
during  2006  and  will  consider  collecting  accounts  for  third parties on a
case-by-case  basis  as  such  opportunities  present  themselves.

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, such as the $80,000 of
computer  equipment  and  office furniture we acquired during the nine months of
2006.  Our  most  significant  capital  assets  are our dialer and our telephone
switch,  which  we  do  not  anticipate  having to replace within the next year.

We  timely exercised our option to renew the lease on our existing office space,
but  we could not reach agreement with our landlord on terms for the renewal. As
a  result,  we  continued  to  explore  other alternatives, which resulted in us
entering  into  a  new  lease  for office space on July 17, 2006 with LBA Realty
Fund-Holding  Co. II, LLC in Buena Park, California. The term of the lease is 87
months  and  is  expected  to  commence  on or around December 1, 2006, and will
expire  on  February  28,  2014.  We  have  an option to renew the lease for one
additional  five-year  term  at the then prevailing "fair market rental rate" at
the  end  of  the  term.  We  intend to use the leased premises as our principal
executive  offices  and  operating facility. We believe that the lease agreement
will  provide adequate space for our operations as currently conducted and as we
expect to conduct them for the foreseeable future. A breakout of the approximate
annual  lease  commitments  is contained in Note 9 to the Condensed Notes to the
Consolidated Financial Statements on page 15 of this Form 10-QSB. In addition to
the  base  rent,  the  Company  must  pay  its pro rata share of the increase in
operating expenses, property taxes and property insurance for the building above
the  total  dollar  amount  of  operating  expenses, property taxes and property
insurance  for  the  2006  base  calendar  year.

On November 10, 2006, we commenced a Voluntary Sale Program offering to our unit
holders  who  own  a  total of 99 or fewer units the option to sell all (but not
less  than  all)  of  their  units  back to us at a price of $4.75 per unit. The
Program  will  expire  at  5:00  PM  Eastern  Time  on December 22, 2006, unless
extended.  We  believe  that  approximately 1,100 unit holders out of a total of
2,500  record  unit  holders  own  in  aggregate 99 or fewer units and such unit
holders  beneficially  own  a total of approximately 78,000 units out of 564,125
units  outstanding.  The  potential  outlay  could total $370,000. The amount of
capital  paid  out  to the unit holders is dependent upon the number of units we
repurchase.


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 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  September  30,  2006,  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


                                       26
<PAGE>
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  monitored this potential deficiency to determine whether any further
mitigating  controls are necessary. On December 30, 2005, we had a closing under
the  Varde  credit  facility,  which  we disclosed in a Form 8-K under Item 2.03
dated December 30, 2005 and filed on February 1, 2006. The Form 8-K was filed 28
days  late.  We  closed this transaction on a tight time line to accommodate the
seller's  desire  to  consummate the transaction in 2005, and we then rebalanced
this  purchase  in  January  2006,  with  Varde's  consent,  by  transferring
approximately $750,000 of the portfolio to Performance Capital Management and by
selling  approximately  $461,000  of  the portfolio to a third party. During the
several  weeks  over  which  we  rebalanced  this  purchase,  we  overlooked our
obligation  to  file  the  required  Form  8-K.  We  have since filed all of our
required  reports  on  Form  8-K  on  a  timely  basis.

There  has been no change in our internal controls over financial reporting that
occurred  during  the  third quarter of 2006 that has materially affected, or is
reasonably  likely  to  materially  affect, our internal controls over financial
reporting.


                                       27
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 6.  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)

  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)

  3.5    Third Amendment to Operating Agreement for Performance Capital Management, LLC (3)

  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)

  10.1   Office Lease Agreement by and between LBA Realty Fund-Holding Co. II, LLC and Performance
         Capital Management, LLC dated July 17, 2006 *

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

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

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

*  Portions  of  this  exhibit  have  been omitted and filed separately with the
Securities  and  Exchange  Commision  pursuant  to  a  request  for confidential
treatment.

**  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.

(3)  Filed on August 14, 2006 as an exhibit to our report on Form 10-QSB for the
period  ended  June  30,  2006,  and  incorporated  herein  by  reference.


                                       28
<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


November 13, 2006                           By:  /s/ David J. Caldwell
-----------------                              --------------------------------
     (Date)                                      Name: David J. Caldwell
                                                 Its: Chief Operations Officer


                                       29
<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)

  3.5    Third Amendment to Operating Agreement for Performance Capital Management, LLC (3)

  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)

  10.1   Office Lease Agreement by and between LBA Realty Fund-Holding Co. II, LLC and Performance
         Capital Management, LLC dated July 17, 2006 *

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

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

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

*  Portions  of  this  exhibit  have  been omitted and filed separately with the
Securities  and  Exchanged  Commission  pursuant  to  a request for confidential
treatment.

**  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.

(3)  Filed on August 14, 2006 as an exhibit to our report on Form 10-QSB for the
period  ended  June  30,  2006,  and  incorporated  herein  by  reference.