U.S. SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, DC 20549

                           FORM 10-KSB\A

(Mark One)
[X]   Annual Report under Section 13 or 15(d) of The Securities
Exchange Act of 1934
      for the Fiscal Year Ended December 31, 1996
[   ] Transition Report under Section 13 or 15(d) of The
Securities Exchange Act of 1934
      for the Transition Period fromto

                      PMC INTERNATIONAL, INC.
-------------------------------------------------------------------
          (Name of Small Business Issuer in its Charter)

            COLORADO                           84-0627374
----------------------------------  ---------------------------------
    (State of Incorporation)        (IRS Employer Identification No.)
                                                 

  555 17th Street, 14th Floor,                   80202
        Denver, Colorado
----------------------------------  ---------------------------------
 (Address of Principal Executive               (Zip Code)
            Offices)

Issuer's telephone number: (303) 292-1177
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:

                      Common Stock, $0.01 par value
                       --------------------------
                           (Title of Class)

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  registrant  was
required to file such  reports),  and (2) has been  subject to such
filing requirements for the past 90 days. Yes [X]   No
[  ]

Check if there is no disclosure  of  delinquent  filers in response
to Item  405 of  Regulation  S-B  contained  in this  form,  and no
disclosure   will  be  contained,   to  the  best  of  registrant's
knowledge,   in   definitive   proxy  or   information   statements
incorporated  by  reference  in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [   ]

The  Issuer's  revenues  for  the  most  recent  fiscal  year  were
$10,086,881.
The   aggregate   market   value  of  the  voting   stock  held  by
non-affiliates  of the registrant,  8,687,787 shares based upon the
average bid and asked  prices of the  Registrant's  Common Stock on
March 25,  1997,  as quoted in the  National  Quotation  Bureau was
$21,176,480.81.

As of March 25,  1997,  the  Registrant  had  14,522,614  shares of
common stock issued and outstanding.

Documents Incorporated by Reference:  NONE

Transitional Small Business Disclosure Format:  Yes       No  [X]

Page 1 of 42 pages
Exhibit Index begins on page 21


<PAGE>

                            FORM 10-KSB

                   YEAR ENDED DECEMBER 31, 1996

Introduction

PMC  International,   Inc.  (the  "Company"  or  the  "Registrant")
hereby  amends its Annual  Report on Form 10-KSB for the year ended
December 31, 1996 by deleting  its  responses to Items 1, 6, 7, and
10 contained in its original  filing and  replacing  such  sections
with the following:

ITEM 1:    BUSINESS

Industry Overview
The  financial  services  industry  has  been  one of  the  fastest
growing  sectors in recent  years.  As the  industry  has grown,  a
substantial  shift from commission and  transaction-based  products
to advisory and  fee-based  products has occurred.  Evidenced  most
clearly in the  popularity  of mutual  funds,  consumer  demand for
investment  advice and services in  connection  with managed  asset
products  has  increased  enormously  over the past 10  years.  The
mutual fund industry has grown from 1,528 funds  encompassing  $495
billion  of  assets  in  1985  to  5,761  funds  encompassing  $2.8
trillion  of assets in 1995.  Increasingly,  investors  are looking
for  expertise  to  assist  them  in  understanding  the  range  of
investment   products  that  are  currently   marketed.   As  such,
managed  account  programs,  such  as  asset  allocation  and  wrap
accounts  which assist  investors in  developing  and  implementing
appropriate  investment  strategies,  have grown  significantly  to
service  this  segment of the  marketplace.  Wrap  programs,  which
offer   a    highly-personalized,    fee-based   (as   opposed   to
commission-based)  platform for  financial  management,  have grown
to more than $100 billion in assets at year-end 1995.

In recent years,  there have been two  principal  objectives in the
development  and marketing of asset  allocation  and wrap programs.
First,  to  improve  customer  service,   programs  were  developed
offering  asset  allocation  and   professional   money  management
services  that  would  better  position  a  customer's  investment
portfolio.   Asset  allocation  is  a  significant  determinant  of
successful  long-term  investment  performance.   In  addition,  by
consolidating   the   numerous   investment   services,   costs  of
portfolio   management   can  often  be  reduced  as   compared  to
purchasing   individual   services  in   traditional   a  la  carte
fashion.  The second reason for  developing  these  programs was to
shift customer assets from dormant custody  accounts,  which traded
periodically and without  predictability,  into predictable revenue
producing  assets for the  sponsoring  firm. In developing a "trust
building"  product,  wrap program  sponsors  provide the  following
four  basic   functions   for  a  customer  in  addition  to  money
management,   brokerage   and  custody   services:   (i)   customer
evaluation,   (ii)   asset   allocation   and   investment   policy
development,    (iii)   investment    management   evaluation   and
selection, and (iv) quarterly monitoring and reporting services.

As wrap  programs  have  grown in size and  popularity,  investment
portfolio   managers   (those  that  manage   individual   accounts
consisting  of stocks and bonds) and mutual fund  distributors  are
increasing   their   involvement   within  these  programs.   These
programs  give  money  managers  and  mutual  funds the  ability to
market  themselves  and  participate  in  distribution  channels of
financial   planners,   which  in  turn   provide   them  with  the
opportunity  to  increase  their  assets  under  management.   With
attention   rapidly   shifting  to   long-term   asset   allocation
strategies,    consultant   wrap   assets,    assets   managed   by
professional  money  managers,  have grown from $60 billion in 1993
to $80 billion in 1994 to $110  billion in 1995,  while mutual fund
wrap  assets  have grown from $8 billion in 1993 to $12  billion in
1994 to $19  billion  in  1995.  In  1988,  assets  in  these  wrap
programs were estimated at less than $2 billion.

Background of the Company

Founded  in  1986,  the  Company  is  an  independent   sponsor  of
privately   managed   accounts  and  asset   allocation   and  wrap
programs.  The  majority  of the  Company's  revenues  are  derived
from its  individually  managed  wrap  program,  which the  Company
created  and  has  administered  since  1987.  In  addition  to its
traditional  wrap  program,  since 1994 the Company has invested in
developing  a range of related  technology-based  services  and has
added  staff to develop and support  the  Company's  new  products.
The  Company's   products  and  services  are  designed  to  assist
professional  financial  consultants  in their  efforts  to  market
high quality,  fully  diversified  portfolio  management  products.
Through  the use of  technology,  the Company  assists  third-party
financial   advisors  such  as  banks,   insurance   companies  and
brokerage  firms  (collectively,   "Institutional   Channels")  and
independent   financial   planners   ("Independent   Channels")  in
allocating  and  diversifying  a  customer's  investment  portfolio
across  multiple  asset  classes  and  investments.  In  respect to
Institutional   Channels,   the  Company's  products  allow  for  a
repeatable  sales process which helps increase  sales  productivity
while  ensuring   compliance  with  the   Institutional   Channels'
corporate and regulatory policies.

The  Company  has a staff of  approximately  73  people,  including
more than 30  professionals,  and conducts  business in a number of
countries.  The  Company  owns three  subsidiaries:  (i)  Portfolio
Management  Consultants,  Inc., an investment advisory firm that is
registered  with the  Commission  and is  registered or exempt from
such  registration  in  all  U.S.  jurisdictions;   (ii)  Portfolio
Brokerage  Services,  Inc.,  a  broker/dealer  registered  with the
NASD and all U.S.  jurisdictions;  and (iii)  Portfolio  Technology
Services,   Inc.,  which  specializes  in  developing   proprietary
software for use in the financial services industry.

Products and Services

Portfolio Management Consultants, Inc.
Portfolio  Management  Consultants,  Inc.  ("PMC"),  a wholly owned
subsidiary  of  the  Company,   currently  has  four  discrete  but
vertically  integrated  product lines.  Each product offered by PMC
is  designed  to  assist  professional   financial  consultants  in
various  aspects  of  their  business.  The four  services  are (i)
Private Wealth Management(TM), PMC's individually managed asset and
wrap  account  program, (ii) Allocation Manager(TM),  a mutual fund
asset  allocation  program  available both on paper and through the
Company's  proprietary  software  that provides  comprehensive  and
detailed investment  suitability analysis,  recommended  allocation
of assets,  portfolio  modeling and rebalancing,  and comprehensive
portfolio  performance  reporting,  (iii) Managed Account Reporting
Services,   a  portfolio  accounting  and  reporting  service  that
operates   as  a   service  bureau,   and  (iv)  Style  Manager,  a
discretionary  money  management  program,  using style index funds
and  mutual   funds,   that  offers  equity  style   rotation.   In
addition,   PMC  provides   consulting  services  to  Institutional
Channels and high net worth customers.

Private Wealth Management(TM)
Private  Wealth Management(TM), PMC's  multi-manager  institutional
wrap   program,   has  historically   been  PMC's  largest  revenue
producer.   Targeted   toward   customers   with   high  net  worth
(typically  having a portfolio  larger  than one million  dollars),
Private   Wealth   Management(TM)  assists  financial  planners  in
assembling a  custom-selected  team of professional  money managers
which   precisely   matches  an  individual   investor's   personal
investment goals, risk tolerance, and objectives.

Each  portion of an  individual's portfolio  (allocated  into asset
classes  such  as  equity,   fixed  income  and  cash,   and  asset
sub-classes  such as value,  growth,  large  cap,  small  cap,  and
emerging   markets)   is   managed   by   a   carefully    selected
institutional  money  management  firm  that has been  chosen  from
PMC's  list of  recommended  managers  as best  suited  to match an
investor's  investment  philosophy  within a  specific  discipline.
An  important  and  proprietary  component  of the  Private  Wealth
Management(TM) program involves the  basis  of  selection  of these
money  managers.  PMC currently  recommends a number of independent
money  managers for its Private Wealth Management(TM) multi-manager
program,   representing  a  diverse  range  of   philosophies   and
styles.  These  managers are chosen based  largely on  quantitative
analysis    emphasizing     return-based,     multi-factor    style
benchmarking.  High  correlation  to benchmark  indices,  supported
by positive alpha,  are necessary to meet the "Preferred"  standard
for   manager   recommendations.   Also   considered   in   manager
evaluations are historical  performance,  investment philosophy and
style,  disciplines,  employee turnover,  rate of growth,  accounts
gained  or  lost,  and  industry  reputation.  To  help a  customer
choose and understand  investment  options,  PMC provides  detailed
profiles   on  money   managers   in  the   context  of  style  and
methodology   to  achieve   maximum   investment   diversification.
Additionally,  PMC will  provide  guidance  on the  termination  of
existing  managers  and the  rebalancing  of the customer's assets.
The Company considers periodic portfolio  rebalancing  decisions to
be an extremely  important  determinant  of long-term  performance.
Thus,  several   rebalancing   options  are  offered  within  PMC's
private account programs.

Private  Wealth Management(TM) is marketed under both the PMC label
and  private  labels.   Institutional   Channels   currently  using
private-label  versions  of Private Wealth  Management(TM)  include
Chase  Investment  Services  Corp  ("CISC"),   National   Financial  
Correspondent  Services  ("NFCS"), the wholly-owned   brokerage and
securities   clearing   subsidiary   of  Fidelity   Management  and  
Research, Israel  Discount Bank of New York   and   Republic   Bank
of  New  York.   Additionally,   PMC   distributes  Private  Wealth 
Management(TM) under its own name through thirty financial planning
broker-dealers   and  investment   advisors representing  more than 
10,000  registered  sales  professionals.    To support  the  sales  
process,     the   Company    employs   a   staff   of   marketing  
representatives.   The  Company  has  a  joint  marketing agreement
with  Schwab   Institutional  Management   ("Schwab"), pursuant  to 
which a  specialized  version  of the Private Wealth Management(TM)   
program  is marketed to independent investment advisors who utilize 
the services  of Schwab.  Currently, PMC is servicing Institutional  
Channels in the  United States,  Canada  and seven  Latin  American  
countries  with  many  institutional  money  managers participating 
in the Company's wrap programs.

Allocation Manager(TM)
Allocation  Manager(TM), introduced in late 1995 and as an operating
product  during  the  third  quarter  of 1996,  is a  Windows-based
software   program.   The   program  is  designed  to  aid  in  the
solicitation,   sale,  and  servicing  of  mutual  funds,  variable
annuities,   offshore  investments  and  other  selected  financial
products.  A  highly-flexible  program  based upon theories of mass
customization, Allocation  Manager(TM) has the capability  of being
tailored  for  use  by  specific  financial  distribution  channels
having  their own  proprietary  product mix.  This product  assists
in guiding a wide range of  investors  through the complex  process
of choosing an appropriate combination of mutual funds.

Allocation Manager(TM) was  built  with  the   intention  of  being
customized  by PMC's  existing  and  prospective  clients,  many of
whom  have  proprietary  families  of  mutual  funds.  As a result,
Allocation Manager(TM) supports a broad range of financial products
and  programs,   both   domestically  and  globally,   and  can  be
customized  to  the  individual   requirements   of   Institutional
Channels.

A version  of  Allocation  Manager(TM), called  Fund Counselor, is
being  marketed by NFCS.  Under the Fund  Counselor  program,  NFCS
will provide  brokerage,  clearing and custodial  services and will
make the  program  available  to its more than 225 bank,  insurance
and  financial  planning   broker/dealers.   In  addition,  PMC  is
currently  pursuing similar  relationships  with other  substantial
distributors  and  securities  clearing  firms and will  market the
Allocation Manager(TM) platform within the Schwab system.

Based  upon  (i)  the  substantial   growth  in  the  mutual  funds
industry  over the last 15 years,  (ii)  investor  trends in mutual
fund  investment  and   (iii) industry   expectations,   management
believes  PMC's existing  expertise  and  operations  will permit a
smooth  integration of this new program with existing  products and
services  offered by the Company while  expanding and  diversifying
the   distribution   channels  for  such   products  and  services.
Because the program also provides educational  tutorials,  training
modules  and dynamic portfolio modeling, Allocation  Manager(TM) is
much  more  than  simply  a  "front-end"  sales  tool.  It  can  be
positioned as a technology  sale with licensing  revenues to PTS or
it can be positioned,  subject to applicable  regulatory guidelines
and restrictions,  as an investment  management tool,  allowing PMC
to receive asset-based pricing.

Managed Account Reporting Services
Management  believes  that as a result  of the  growth  within  the
fee-based  financial  advisory  segment  of the  industry  over the
past  ten  years,  many  institutions  have  been  seeking  ways to
improve  their  reporting   capabilities.   The  Company's  Managed
Account   Reporting   Service   ("MARS")   is  used  by   financial
professionals   in  providing   customers  with  the   increasingly
important  value-added services of portfolio  performance reporting
and cost-based tax  accounting.  Essentially a service  bureau/data
processing   service,   MARS  leverages  a  PMC  core   competency,
allowing  PMC to  sell,  on a stand  alone  basis,  its  attractive
monthly and quarterly reports.

MARS  provides  detailed  statements  that  include   comprehensive
management   reporting,   account   reconciliation  and  cost-based
accounting  on a  full-accrual  basis.  In  addition,  PMC provides
full   color,   quarterly   performance   reports   detailing   the
investor's   objectives   and   performance   of  each   investment
strategy,  money  manager  or mutual  fund,  as well as the  entire
portfolio.

During 1996 PMC entered into an agreement  with National  Financial
Services  Corporation,  an  affiliate  of Fidelity  Management  and
Research  ("NFSC"),  to manage  NFSC's  newly  created  performance
reporting  service  called MAPS Tool Box  ("MAPS").  MAPS  provides
NFSC's  correspondents  with  access  to  high  quality,  quarterly
performance  reports  and tax lot,  cost  basis and  fully  accrued
account  statements.  This  service is  targeted  at high net worth
investors managed by financial  planners and financial  consultants
who use the  securities  clearing  services  of NFSC.  MARS is also
being  marketed  within  the Schwab  system to the many  investment
advisors that use Schwab's custodial services.

Style Manager  Asset Management Products
Style  Manager  is  a  family  of  discretionary  asset  management
products which  recommend  strategies for the periodic  rebalancing
of both  institutional  and  retail  investor  portfolios.  Through
the use of Style  Manager ,  clients  portfolios  are  periodically
rebalanced  through  the  rotation  of U.S.  equity  styles  (i.e.,
growth   and   value   companies   and   large,   mid   and   small
capitalization   companies),   with  the   intention  of  capturing
superior   performance   that  results  from  taking  advantage  of
certain   cyclical  sector   inefficiencies   in  the  U.S.  equity
markets.  Recommended  shifts in equity  allocations  are  designed
to move  assets  away  from  under-performing  sectors  into  those
likely  to  perform  best.   Although   Style  Manager   recommends
shifts  within  the U.S.  equity  markets,  it does  not  recommend
shifts  between  macro  asset  classes  such as  stocks,  bonds and
cash,  thus the program is not a market timing  program as the term
is generally  used.  Currently,  three Style Manager  versions have
been developed.

Portfolio Brokerage Services, Inc.
Portfolio  Brokerage   Services,   Inc.  ("PBS"),  a  wholly  owned
subsidiary of the Company,  is registered as a  broker/dealer  with
the NASD  and in all  U.S.  jurisdictions.  PBS  executes  security
transactions  for  certain  of  PMC's  privately  managed  account
programs  on  behalf  of  its  customers  through  the   customer's
custodian bank on a delivery vs.  payment  basis.  A  self-clearing
broker/dealer,   substantially  all  trading  activity  of  PBS  is
unsolicited  and initiated by the  independent  money managers used
in PMC's  Private  Wealth Management(TM) program. Managers make all
buy  and  sell  decisions  and  place  most  orders  with  PBS  for
execution.   PBS   executes   substantially   all  trades   through
third-party  market  makers.  All  transactions  are effected on an
agency basis.

Portfolio Technology Services, Inc.
Portfolio  Technology  Services,   Inc.  ("PTS"),  a  wholly  owned
subsidiary  of the Company,  is a technology  company  dedicated to
assisting  the  Company in  providing  innovative  products  to the
financial  services  industry.  PTS leverages the product knowledge
of PMC to design and build  integrated  product  solutions  to meet
the  challenge  of  consolidating  products and pricing in multiple
segments  of  the  financial  services  industry.  As  its  primary
contribution   to  the  Company,   PTS  has   developed  the  sales
workstation    platform   used   for   Allocation Manager(TM)   and
communication   interfaces  to  multiple  custodial  systems.   PTS
licenses  its  technology  and provides  customization  services in
support  of  the  Company's  relationship  with  its  Institutional
Channels.  The Company  estimates  that it has spent  approximately
$520,000 for research and  development  activities  in its last two
fiscal  years.   Customers   bear  the  cost  of  such   activities
directly  when  software  is   customized   for  their   particular
requirements.  Payments by customers  for this  purpose  during the
last two fiscal years approximated $90,000.


<PAGE>


Significant Relationships

Most of the  Company's  gross  revenues are  generated by fees from
the  Company's  Private  Wealth Management(TM) investment  advisory
programs.  The  programs  are  marketed  and sold by  Institutional
Channels and  Independent  Channels either under the Company's name
or  under  the  "private  label"  of such  channel.  The  Company's
private-label  relationship  with CISC accounted for  approximately
18% of the  Company's  gross  revenues  during 1996.  CISC recently
restructured its business,  which  restructuring has materially and
adversely   affected   the  gross   revenues   derived   from  that
relationship  during  1996.  While  the  Company  has no  reason to
believe that its current  investment  advisory  relationships  will
not continue to generate  revenues for the Company  consistent with
prior years,  other than that with CISC as discussed  above,  there
can be no  assurance  that  such  will be the  case.  Assets  under
management  for CISC and  related  revenues  have  remained  stable
since completion of the CISC restructuring.

Pursuant  to a joint  marketing  agreement  between the Company and
Schwab,  a specialized version of the Private Wealth  Management(TM)
program is being  marketed  as an  optional  additional  service to
independent  registered  investment  advisors  ("RIAs") who utilize
the  services  of Schwab.  Schwab  provides  custody  and  clearing
services   for   independent   RIAs.   With   respect   to   Schwab
Institutional  Management's  RIA customers who determine to use the
Company's  products and  services,  Schwab will provide  brokerage,
custody and  securities  clearing  services  while PMC will provide
asset  allocation,   money  manager  due  diligence,   monthly  and
quarterly reporting, sales support and training.

The Company targets other means of  distribution,  and has executed
selling   agreements  with  new  Institutional   Channels  for  its
products.   Examples  of  the  new   relationships   include   MONY
Securities  Corporation  ("MONY")  and Farwest  Advisory  Services,
Inc., the investment  advisory  affiliate of Investment  Centers of
America  ("Farwest"). MONY will use Allocation Manager(TM)  to sell
its proprietary fund family,  The Enterprise  Funds,  while Farwest
will  market PMC's  "off-the-shelf"  program to sell  mutual  funds
selected by PMC.

Competition

In offering  services  through its  Institutional  and  Independent
Channels,  the  Company  competes  with other firms that offer wrap
and  managed  account  programs.  These  distribution  channels  in
turn  compete with banks,  insurance  companies,  large  securities
brokers  and  other  financial  institutions  which  offer  wrap or
managed  account  programs  to the  public.  The  Company  believes
that  firms  compete  in this  market  primarily  on the  basis  of
service,  since the wrap fees  charged  by others  are  similar  to
those  charged  by the  Company.  While  a  number  of  firms  each
provide a portion of the services  provided by the Company  through
its  Institutional  Channels,  the Company  believes it is one of a
few firms  offering  integrated  services to customers.  Firms that
compete with the Company in providing  services to its  Independent
Channels and Institutional  Channels have more financial  resources
and  greater  recognition  in  the  financial  community  than  the
Company.  Competitors  may  reduce  the  fees  charged  for wrap or
managed  account  programs or pursue other  competitive  strategies
that could have an adverse impact on the Company.

The  Company's   success  is  in  large  part  a  function  of  the
Independent  Channels and Institutional  Channels through which its
services  are  offered to others.  There are many  alternatives  to
wrap programs  that are being  offered to the public,  such as life
cycle funds,  asset  allocation  funds,  portfolio  strategies  and
third-party  asset  allocation  services,  and these  services  are
competitive  with  those  offered  by  the  Company.  As  financial
institutions   continue   to  grow   and   build   in-house   asset
administration  service capabilities,  some will be able to provide
these   services   internally   rather   than   using   outsourcing
providers.  Competitors  may  succeed in  developing  products  and
services that are more  effective  than those that have been or may
be  developed  by  the  Company  and  may  also  prove  to be  more
successful  than the  Company  in  developing  these  products  and
marketing  these  services  to  third-party  asset  managers.   The
Company  does not offer its  products  online  because its does not
believe the nature of its  products  and  services  are  compatible
with that method of distribution.

Government Regulation

The  Company's   business  falls  entirely  within  the  securities
industry,  an industry  which is heavily  regulated  by the federal
and  state  governments.   New  regulatory  changes  affecting  the
securities   industry   could   adversely   affect  the   Company's
business.   In   addition,   as  an   investment   adviser   and  a
broker/dealer,   the   Company's   subsidiaries   are   subject  to
regulation  by  the  Commission,  the  NASD  and  state  regulatory
agencies.   Consequently,  the  Company  could  become  subject  to
restrictions  or sanctions  from the  Commission,  the NASD or such
state  regulatory  agencies.   It  is  impossible  to  predict  the
direction  future  regulations  will  take  or the  effect  of such
regulations on the Company's business.

Corporate History

Acquisition of Schield Management Company
In September 1993 Portfolio  Management  Consultants,  Inc. ("PMC")
merged with  Schield  Management  Company  ("Schield"),  a publicly
traded  market  timing  firm,   in  a  share   exchange.   In  that
transaction,  all operating  assets of Schield were divested  prior
to the  merger  and it was  treated  as a  reverse  acquisition  of
Schield by PMC.  Schield's  name was changed to PMC  International,
Inc.  and PMC  became a wholly  owned  subsidiary  of the  Company,
with  PMC's  shareholders  receiving  shares in the  publicly  held
company.

SEC Investigation and Settlement
During  November  1993,  the  staff  of  the  Commission  began  an
examination  of PMC and in January 1994,  the  Commission  issued a
"Formal Order of  Investigation."  In April 1994,  the staff of the
Commission made a formal  enforcement  recommendation  against PMC,
its  President  Mr.  Kenneth  S.  Phillips  and  its  former  Chief
Executive  Officer,  Mr.  Marc  Geman.  Mr.  Geman  terminated  his
association  with the  Company  to pursue  other  interests  at the
closing of the initial  Bedford  Loan (as  hereinafter  defined) in
July 1995.  The  recommendation  alleged that PMC and such officers
had  violated  anti-fraud  provisions  of the  Securities  Act, the
Exchange  Act and the  Investment  Adviser's Act of 1940,  and the
record keeping requirements of the Exchange Act.

Over the course of the  following  two years the Company  committed
significant  resources  to  its  defense  and  the  defense  of its
officers.  The case addressed  issues  associated with  disclosures
and standards of "best  execution"  in advisory and wrap  programs.
The  investigation  adversely  affected the  Company's new business
development  activities  during the period,  as very few firms were
willing  to  develop   relationships  with  the  Company  while  an
enforcement recommendation was pending.

On June 27,  1996,  PMC and Mr.  Phillips  announced  that they had
reached a settlement  agreement  with the  Commission.  Pursuant to
the settlement agreement,  PMC and Mr. Phillips,  without admitting
or denying the  Commission's  allegations,  consented  to an Order
whereby PMC agreed to engage a compliance  executive  and to refund
net principal  trading profits together with  prejudgment  interest
thereon,   in  an  amount  to  be  determined  by  an   independent
accountant.   The  net  trading   profits  were  determined  to  be
$457,000,  plus  $146,000 of interest  through the date of payment.
The refund  process was  completed in May 1997.  In  addition,  Mr.
Phillips agreed to a censure and payment of a $25,000 fine.

On  June  27,  1996,  administrative  proceedings  were  instituted
against  Mr.  Geman,  as  an  individual,   by  the  Commission  in
connection  with the above described  investigation.  A hearing was
held  before  an  administrative  law  judge on  November  5 and 6,
1996.  As of March  15,  1997,  the  Company  was not  aware of any
ruling in the matter.

Bedford
In July 1995, the Company  entered into a transaction  with Bedford
pursuant to which  Bedford  loaned $1.2  million to the Company and
received  an option to loan up to an  additional  $1.8  million  to
the  Company  for a  specified  period  of  time  and  pursuant  to
certain  call  provisions.  Each dollar  loaned  carried a ten-year
warrant to  purchase  one share of the Common  Stock at an exercise
price of $1.00 per  share.  In  connection  with this  funding  and
the  related   shareholder  and  investment   agreements,   Bedford
received  certain rights  including,  but not limited to, the right
to  elect  two  of the  Company's  five  directors,  the  right  to
receive  options that mirrored  certain  issuances or option grants
by the  Company,  and a  security  interest  in all  assets  of the
Company and its  subsidiaries.  Contemporaneously  with the closing
of the  July  1995  transaction  with  the  Company,  Bedford  also
purchased 1.0 million  shares of Common Stock from Mr.  Geman,  the
former  chief  executive  officer of the  Company who was a subject
of the  investigation  by the  staff  of  the  Commission.  Between
July  1995  and July  1996,  the  Company  obtained  the full  $3.0
million  financing  from  Bedford and certain  assignees of Bedford
(the "Bedford Loans").

In addition,  the Company  granted to Bedford  certain other rights
in  connection  with  future  debt  and  equity   financings  which
included a right of first  negotiation  regarding  future fundings,
a  30-day  exclusive  negotiation  period,  and a  right  of  first
refusal to match  unsolicited  offers for  financing.  The  Company
also  agreed to pay a  $100,000  annual  monitoring  fee to Nevcorp
Inc.,   which  is  owned  by  J.W.  Nevil  Thomas,   who  has  been
designated  by  Bedford  to  serve  on  the   Company's   Board  of
Directors.

The  Company's   relationship  with  Bedford  was  restructured  in
December 1996.  See "December 1996 Restructuring."

December 1995 and June 1996 Offerings
In December  1995 and January 1996,  the Company  issued a total of
482.5  units  through  a  private   offering  (the  "December  1995
Offering"),  with each unit consisting of a convertible  promissory
note with a  principal  amount of $1,000 and a warrant to  purchase
1,000  shares of  common  stock at an  exercise  price of $1.00 per
share.  During June 1996 the Company  issued an additional  1,017.5
units through another  private  offering (the "June 1996 Offering")
under  substantially  the same terms.  These private offerings were
issued primarily to employees,  business  associates and affiliates
of  the  Company  or  Bedford.  The  purchasers  of  units  in  the
December  1995  and  June  1996  Offerings  received   registration
rights with  respect to the shares of Common Stock  underlying  the
warrants.

Phillips & Andrus, LLC; KP3, LLC
Phillips  & Andrus,  LLC,  a  Colorado  limited  liability  company
("P&A"),  was  formed in July 1995 to acquire  1,643,845  shares of
Common  Stock from Mr.  Geman in  exchange  for a  promissory  note
issued to Mr.  Geman in the amount of  $2,015,000.  The  promissory
note  was  secured  by  the  Common  Stock   acquired.   While  Mr.
Phillips,  President  and Chief  Executive  Officer of the Company,
and David L.  Andrus,  Executive  Vice  President  of the  Company,
were  the  members  of  P&A,  substantially  all of the  membership
interests  in P&A  were  owned by Mr.  Phillips.  The  Company  and
Messrs.  Phillips  and  Andrus  believed  that it  would  be in the
Company's  interest that Mr. Geman's  involvement  with the Company
and direct  ownership  interest in Common Stock be  eliminated.  In
October 1996,  affiliates  of Bedford  loaned P&A funds to make the
initial  interest  payments  on the  note  owed  to  Mr. Geman.  In
December 1996,  after  notifying its  shareholders  of the proposal
to do so, the  Company  loaned a total of  $250,000 to P&A to repay
principal  owed  under  the  promissory  note to  Mr. Geman.  These
loans  permitted P&A to avoid defaults  under the  promissory  note
owed to Mr. Geman.

In  January  1997  P&A  was  liquidated  and  the  assets  of  P&A,
consisting   of  the  1,643,945   shares  of  Common  Stock,   were
transferred,  subject  to  certain  liabilities,  to  KP3,  LLC,  a
Colorado  limited  company  ("KP3"),  the  members of which are Mr.
Phillips  and a  custodian  for Mr.  Phillips'  son.  Mr.  Phillips
owns  substantially  all  of  the  membership   interests  in  KP3.
Bedford and certain of its affiliates  have an option,  exercisable
through  July 26,  2000,  to acquire a total of  335,000  shares of
Common  Stock  currently  owned  by KP3 for an  aggregate  purchase
price  of  $410,637.85,  increasing  at a  rate  of  9%  per  annum
subsequent to July 27, 1995.

November 1996 Bridge Loan
In November  1996,  the Company  borrowed  $250,000 (the  "November
1996  Bridge  Loan")  to  fund  its  working  capital  requirements
pending   closing  of  the  December   1996  Offering  (as  defined
below).  Half  of  the  loan  was  provided  by  Keefe,  Bruyette &
Woods,  Inc.   ("KBW"),   placement  agent  in  the  December  1996
Offering,  and the balance by certain  members of management of the
Company  and  a  subsidiary  of  Bedford.   The  lenders   received
five-year  warrants to purchase an  aggregate  of 25,000  shares of
Common  Stock.  The warrants  have an exercise  price of $1.625 per
share.  The lenders  received  registration  rights with respect to
the Common Stock to be issued upon  exercise of the  warrants.  The
November  1996  Bridge  Loan was repaid in  December  1996 from the
proceeds of the December-1996 Offering.

December 1996 Offering
In December  1996 the  Company  completed  a private  placement  of
5,177,000-shares  of Common  Stock at a price of  $2.125  per share
(the  "December 1996  Offering").  A portion of the proceeds of the
December  1996  Offering  were used (i) to repay  interest  due and
owing  on the  promissory  notes  issued  in  connection  with  the
December  1995 and June 1996  Offerings,  including  the notes held
by the father and  brother of Mr.  Phillips,  the  Company's  Chief
Executive  Officer,   Mr.  Andrus,  the  Company's  Executive  Vice
President,  and certain  employees  of the  Company,  (ii) to repay
interest  due and owing under the Bedford  Loans,  (iii) to repay a
portion of the  principal  on the  Bedford  Loans and (iv) to repay
the  November  1996  Bridge Loan  (including  the notes held by Mr.
Phillips,  Mr.  Andrus and certain  other  members of the Company's
management).

December 1996 Restructuring
Simultaneous  with the closing of the December 1996  Offering,  the
Company  completed  a  restructuring  of  its  debt  and a  partial
restructuring    of   its   outstanding    Preferred   Stock.   The
restructuring   involved   (i)  the  payment  of  all   outstanding
interest on the Bedford  Loans,  the  repayment  to Bedford and its
assignees of  $1,976,250  of  outstanding  principal on the Bedford
Loans,  the  exercise by Bedford and its  assignees  of warrants to
purchase  1,023,750  shares of Common  Stock  and the  delivery  by
Bedford  and its  assignees  of  canceled  promissory  notes in the
amount of $1,023,750 in  satisfaction  of the exercise price of the
warrants,  the  cancellation  of the remaining  warrants to Bedford
and its  assignees,  and the issuance to Bedford and its  assignees
of new  warrants to purchase up to 150,000  shares of Common  Stock
at an  exercise  price of $2.125 per share;  (ii) the  issuance  of
1,500,000  shares of Common  Stock upon the  exercise  of  warrants
issued  to  investors  in  connection  with the  Company's  private
placement of  promissory  notes and  warrants in the  December 1995
and June  1996  Offerings,  the  delivery  of  canceled  promissory
notes  in  the   aggregate   principal   amount  of  $1,500,000  in
satisfaction  of the exercise price of such  warrants,  the payment
by the Company of all  outstanding  interest  due and owing on such
notes as of the  exercise  date and the  issuance to the holders of
such  warrants of new warrants to purchase up to 150,000  shares of
Common  Stock;  (iii) the  repayment  of the  November  1996 Bridge
Loan,  and (iv) the  conversion  of  173,120  shares  of  Preferred
Stock  into  238,043  shares  of  Common  Stock,   resulting  in  a
reduction in the Company's  cumulative  dividend  obligation to the
holders of Preferred  Stock from  $583,576 as of September 30, 1996
to  $322,700  as  of  December  31,   1996.   The   conversion   of
additional   shares  of  Preferred  Stock  into  Common  Stock  was
effected in January  1997.  The new warrants  issued by the Company
to  Bedford  and  others  pursuant  to  clauses  (i) and  (ii)  are
referred to hereafter as the "New Warrants."

The New Warrants are  exercisable  over a period of five years,  at
an  exercise  price of $2.125 per share.  Registration  rights were
granted  with  respect  to  the  Common  Stock  received  upon  the
exercise  of the  old  warrants  and the  shares  of  Common  Stock
underlying the New Warrants.  The New Warrants  contain  adjustment
provisions  relating  to the  exercise  price  per  share  and  the
number of shares of Common  Stock to be issued upon their  exercise
in the event of  issuances  of  additional  shares of Common  Stock
(including  through the issuance of options,  rights or warrants to
purchase  Common  Stock  or  securities   convertible  into  Common
Stock)  by the  Company  at a price  below  market  price,  certain
extraordinary  dividends  and  distributions  on the Common  Stock,
stock splits or other  reclassifications  of the outstanding shares
of Common Stock, and any merger,  consolidation  or  reorganization
involving   the   Company   or  a  transfer   by  the   Company  of
substantially all of its assets or properties.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS.

The  following  discussion  provides  information  that the Company
believes is  relevant to an  assessment  and  understanding  of its
results of operations.  It should be read in  conjunction  with the
Financial  Statements and Notes  included  elsewhere  herein.  This
discussion   contains  "forward  looking   statements"  within  the
meaning  of  the  federal  securities  laws,  including  statements
regarding  opportunities  for growth from  expanded use of existing
distribution  channels and  expanded  use by existing  distribution
channels  of  the  Company's  products  and  services  and  similar
expressions  concerning  matters  that  are not  historical  facts.
These  statements  are  subject  to risks  and  uncertainties  that
could cause results to differ  materially  from those  expressed in
the statements.

General

The  Company   develops,   markets,   and   manages   sophisticated
investment  management  products and services.  Not a money manager
itself,  the Company  provides  products and services to facilitate
the selection and/or  monitoring of unaffiliated  money managers or
mutual funds for customers of the Company's  distribution  channels
depending upon the size,  sophistication  and  requirements of such
customers.    The   Company's   products   and   services   address
investment   suitability  and  diversification,   asset  allocation
recommendations,     portfolio     modeling    and     rebalancing,
comprehensive   accounting  and  portfolio  performance  reporting.
The  Company's  revenues are realized  primarily  from fees charged
to  clients  based  on a  percentage  of  managed  assets  and to a
lesser extent from  consulting fees for certain  advisory  services
and  licensing  fees from its  software  products.  Fees based upon
managed  assets  typically  range  from 20 to 250 basis  points per
year,  based upon a number of  factors  such as the size of account
and  scope  of  services   provided.   At  the  present  time,  the
principal  factors  affecting  the  Company's  revenues are whether
the Company  adds or loses  clients for its  investment  management
services,  the performance of equity and fixed income markets,  and
the type and size of  accounts  managed by the  Company and related
differences in fees charged.

Results of Operations

1996 Compared to 1995
Revenues.   Investment   management   fees  for  1996  were   $9.63
million,  compared  to $8.63  million  in  1995.  The  increase  of
$1 million  or 12% for  1996  over  1995  was due  primarily  to an
increase  in  assets  under  management.  Trading  income  for 1996
decreased  approximately  52% from  $94,948  in 1995 to  $44,787 in
1996,  primarily  because the Company  stopped  receiving  payments
for order flow in 1996.  Other  income  (which  consists  primarily
of 12b-1  fees and  interest  income)  decreased  approximately  8%
from  $444,643 in 1995 to $407,102 in 1996,  primarily  because the
principal  balance of the Company's note  receivable  decreased and
a lower  portion  of  managed  assets  were  held as cash  balances
(thereby resulting in lower 12b-1 fees).

Investment Manager and Other Fees
Investment  manager and other fees  increased  $0.44 million  or 9%
from  $5.14  million  in  1995  to  $5.58  million  in  1996.   The
increase  was  due   primarily  to  an  increase  in  assets  under
management.

Salaries and Benefits; General and Administrative
Salaries and  benefits  increased  nearly  $0.97  million to nearly
$3.49  million for 1996 from $2.52  million for 1995.  The increase
was  due   primarily  to  the   increased   staffing   requirements
associated  with  the  development,  release  and  support  of  the
Company's   new   products.   At  December  31,  1996  the  Company
employed    approximately    53   employees   as   compared    with
approximately  43 employees  at December  31,  1995.  New staff was
added in the areas of marketing,  sales,  software  programming and
systems  support.  General  and  administrative  expense  increased
$282,114  to  $1,176,775  for 1996  from  $894,661  for  1995.  The
increase was due primarily to costs related to increased staffing.

Advertising and Promotion
Advertising and promotion  expense  increased  $200,664 to $830,140
for 1996 from  $629,476 for 1995.  The  increase was due  primarily
to increased  costs  associated with the  development,  release and
support of the Company's new products,  including  increased  costs
in  such   areas   as   telecommunications,   printing,   reference
materials  and   publications.   The  Company  also  increased  its
expenses  for  marketing   seminars  and   conventions,   incurring
approximately  $306,000 in such  expenses  during 1996  compared to
$113,000 during the same period in 1995.

Software Development Costs
Software  development  costs increased $75,592 to $132,392 for 1996
from  $56,800  for  1995.  These  costs  related  primarily  to the
Company's  implementation of a portfolio  accounting system and the
customization   and   maintenance  of  the  Company's   proprietary
software.  The  portfolio  accounting  system is not expected to be
fully  operational  until the third  quarter of 1997.  The  Company
anticipates  that  costs  paid to  outside  venders  for  portfolio
accounting  services  will  decrease  upon  implementation  of this
system and that costs for  software  development  for this  purpose
will  decrease  after  this  system  has  been   implemented.   The
Company will continue to incur software  development  costs for the
customization   and   maintenance  of  the  Company's   proprietary
products  and in  connection  with  the  amortization  of  software
development costs previously capitalized by the Company.

Settlement Expense
Settlement  expense  (which  represents  the  refund  of  principal
trading  profits and related  interest due in  connection  with the
settlement of an  investigation  of the Company by the  Commission)
decreased  $310,000 to $155,000  for 1996 from  $465,000  for 1995.
The Company will not incur any settlement expense in 1997.

Other Expense
Occupancy and  equipment  costs  increased  $0.52 million to nearly
$1.15  million for 1996 from $0.63  million for 1995.  The increase
was due  primarily  to the  increased  costs  associated  with  the
implementation  of a brokerage  trading  system,  the  purchase and
development of the portfolio  accounting  system  referred to above
and the  development,  release  and  support of the  Company's  new
products,  with approximately 55% of this increase  attributable to
the  addition  of  non-capitalized   hardware  and  software.   The
Company's  expenses also reflect increased  equipment leases and an
annual   adjustment  to  the  Company's  office  lease  for  common
operating   costs.   Clearing   charges  and  user  fees  increased
$46,724  to  $813,239  for  1996  from   $766,515  for  1995.   The
increase   resulted  from   increased   trading   activity  in  the
Company's  managed  assets.  Professional  fees increased  $278,226
to $763,086  for 1996 from  $484,860  for 1995.  The  increase  was
due  primarily to the  completion  and release of the Company's new
products,  the  development of new sales and marketing  agreements,
and the  regulatory  and compliance  issues  associated  with these
new  products and  relationships.  Legal and  accounting  fees were
also incurred in  connection  with  settlement of the  Commission's
investigation  of the Company,  ensuring  regulatory  compliance by
the Allocation Manager(TM) mutual fund software  program and in the
establishment  of complex  relationships  with several new clients.
The Company  expects  only  minimal  fees to be incurred in 1997 in
connection with the Commission's investigation of the Company.

Liquidity and Capital Resources

The  Company's  operating  losses  incurred  over the last  several
years  resulted  in the need for  significant  funding.  During the
first three  quarters of 1996,  the Company  borrowed an  aggregate
of  $1.8  million  from  Bedford  Capital   Financial   Corporation
("Bedford")  and  received  an  additional  $1.0  million  from the
private  placement of debt  securities.  These  financings  were in
addition to $1.2  million  borrowed by the Company  from Bedford in
July 1995 and  $482,500  received by the  Company  from the private
placement  of debt  securities  in late  1995 and  early  1996.  In
November  1996,  the  Company  borrowed an  additional  $250,000 as
bridge  financing to fund working  capital  shortfalls  through the
completion  of a  private  placement  of  Common  Stock.  The loans
from  Bedford,  the private  placements,  and the bridge  financing
each involved the issuance of warrants to purchase Common Stock.

Private Placement and Restructuring
In December  1996 the  Company  completed  a private  placement  of
5,177,000  shares of Common  Stock at a price of $2.125  per share.
Also in December 1996,  the Company  completed a  restructuring  of
its debt and a partial  restructuring of its outstanding  Preferred
Stock.   The   restructuring   involved  (i)  the  payment  of  all
outstanding  interest  on  the  Bedford  loans,  the  repayment  to
Bedford of  $1,976,250  of  outstanding  principal  on the  Bedford
loans,  the  exercise by Bedford of warrants to purchase  1,023,750
shares of Common  Stock and the  delivery  by Bedford  of  canceled
promissory  notes in the amount of  $1,023,750 in  satisfaction  of
the exercise price of the warrants,  the  cancellation of Bedford's
remaining  warrants,  and the  issuance to Bedford of new  warrants
to  purchase  up to 150,000  shares of Common  Stock at an exercise
price of $2.125 per share;  (ii) the issuance of  1,500,000  shares
of Common Stock upon the  exercise of warrants  issued to investors
in connection  with the Company's  private  placement of promissory
notes and  warrants  in  December  1995/January  1996 and  May/June
1996  and  the  delivery  of  canceled   promissory  notes  in  the
aggregate  principal  amount of $1,500,000 in  satisfaction  of the
exercise  price of such  warrants,  payment  by the  Company of all
interest  accrued on such notes as of the  exercise  date,  and the
issuance  of  new  warrants  to  purchase  an  aggregate  of  up to
150,000  shares  of  Common  Stock  to such  investors;  (iii)  the
repayment  of  the  November   1996  bridge  loan,   and  (iv)  the
conversion  of  173,120  shares of  Preferred  Stock  into  238,043
shares of Common  Stock,  resulting in a reduction in the Company's
cumulative  dividend  obligation to the holders of Preferred  Stock
from  $583,576  as  of  September  30,  1996,  to  $322,700  as  of
December  31,  1996.  The   conversion  of  additional   shares  of
Preferred Stock into Common Stock was effected in January 1997.

As a  result  of  the  private  placement  and  restructuring,  the
Company's   shareholders'   equity   increased  from  a  $3,773,535
deficit at September  30, 1996 to  $6,270,537  at December 31, 1996
and  cash   increased  from  $701,160  at  September  30,  1996  to
$6,499,000  at December  31,  1996.  The Company  anticipates  that
the  balance of the  proceeds  from the private  placement  will be
used  for  its  working  capital  requirements  for the  first  and
second  quarters  of 1997 and  thereafter  and for  future  capital
investments by the Company.

Most of the  Company's  ongoing  losses  and  additional  cash flow
requirements  relate to its  addition  of staff and  incurrence  of
capital   expenditures  in   anticipation   of   establishing   new
distribution  relationships.  The  Company  recognizes  that  there
generally is a  substantial  delay between when costs such as these
are incurred and when the related  revenues are  recognized.  While
there  can be no  assurance  such  will be the  case,  the  Company
anticipates  that its use of cash will  increase  marginally in the
second quarter before  decreasing in the third and fourth  quarters
of   1997  as  cash  is   received   from   any  new   distribution
relationships   that  are  established.   Future  cash  needs  will
depend  largely  upon  the  Company's  success  in  developing  new
customer  relationships  that result in  increased  assets  managed
using the Company's products and services.

Uses of Cash
In January 1997,  the Company  assisted  Kenneth S.  Phillips,  the
Company's  President and Chief Executive Officer,  by pledging cash
collateral  in the  amount of  $1,890,000  to a bank in  connection
with the  bank's  loan to KP3,  LLC,  a limited  liability  company
("KP3"),  the  members of which are Mr.  Phillips  and a  custodian
for Mr.  Phillips'  son.  The loan was made to KP3 for the  purpose
of  financing  payment  of the  deferred  portion  of the  purchase
price of 1,643,845  shares of the  Company's  Common Stock owned by
KP3 that were  purchased  from Mr. Marc Geman,  a former officer of
the Company,  at the time he terminated  his  association  with the
Company.  The  Company  agreed to provide  collateral  for the loan
for up to two years and to lend  funds to KP3 to  service  interest
payments  on the  loan  during  that  period.  In March  1997,  the
Company  lent  $32,000 to KP3 to service  interest  payments on the
loan.   The  total  amount  of  loans  and  pledges  of  collateral
authorized  may  not  exceed  $2.0  million.   The  pledge  by  the
Company of collateral for the loan  permitted the deferred  portion
of the purchase  price of the Company's  Common Stock to be paid to
Mr.  Geman,  thereby  eliminating  the  possibility  that Mr. Geman
could reacquire a substantial stock ownership in the Company.

In  January  1997,  the  Company  also  assisted   certain  of  its
employees,  including one of its officers,  by making loans to such
employees to refinance  certain loans  originally  obtained by such
employees   to  acquire   Common   Stock  of  the  Company  from  a
stockholder   in  a  private  sale.  The  purchase  was  originally
financed  through  a bank  loan  which  came  due on  December  31,
1996.   The   loans   by  the   Company   to  its   employees   are
collateralized  by the stock originally  acquired.  Of the $142,093
loaned, a total of $46,300 was made to an officer of the Company.

Capitalized Software Development Costs
The  Company  has  incurred   significant  costs  during  the  past
several years in  developing  internal  operational  systems and in
developing,  marketing and  supporting its  proprietary  Allocation
Manager(TM) investment advisory software  for  use by  professional
financial  consultants  and  expects  to have  continuing  costs in
1997 relating to the enhancement of Allocation Manager(TM). Most of
the costs  incurred to establish the  technological  feasibility of
Allocation Manager(TM) were borne by unrelated individuals prior to
the  product  being   introduced   to  the  Company.   The  Company
incurred  approximately  $50,000 in research and development  costs
relating to Allocation Manager(TM) that were  expensed in 1995. All
subsequent  costs  incurred  that  were  directly  related  to  the
development   of  the  software  were   capitalized.   The  Company
currently  intends to capitalize  all similar costs incurred in the
future.  Capitalized  costs are  amortized  over the economic  life
of the  software,  which  in this  case is three  years.  It is the
Company's  policy  to  amortize  and  evaluate   software  for  net
realizable  value  on  a  product-by-product  basis.  The  software
became  available  for sale during 1996,  and the Company  plans to
generate  revenues  from this product  primarily  from a continuing
fee based  upon  assets  under  management  of the end users of the
software  and,  to a lesser  extent,  license  fees,  customization
fees and annual  maintenance  fees. The  capitalization of computer
software  costs ceased when the product was  available  for general
release to  customers.  Subsequent  cost  incurred  to enhance  and
redesign  existing  software  products  are  capitalized  and  such
capitalization  ceases  when the  enhanced or  redesigned  products
are  released.  Costs  of  maintenance  and  customer  support  are
charged to expense  when the  related  revenue  is  recognized,  or
when those costs are incurred, whichever occurs first.

The  Company  has  also   capitalized  the  acquisition   costs  of
software  acquired  from  third  parties  in  connection  with  the
development   of   its   internal   systems.   See   "Results   of
Operations 1996 Compared to 1995 Software Development Costs."


Other Matters
In  seeking  to capture  greater  market  share,  the  Company  has
introduced   restructured  and  unbundled  pricing  which  in  some
instances  results in lower  pricing  for some of its  services  in
certain  of  its  distribution   channels.  The  Company  may  make
additional   adjustments  in  the  future.   As  a  result  of  the
restructured  pricing,  gross  revenues as a  percentage  of assets
under management may decrease.

The  Company  anticipates  that  it  will  continue  to  experience
operating   losses  until  such  time,   if  ever,   as  investment
management  fees from  managed  assets and  consulting  and license
fees  increase  sufficiently  to  cover  the  Company's  increasing
operating  expenses.   While  the  Company  believes  that  it  has
sufficient   capital   resources   to  meet  its  ongoing   funding
requirements,   until  its   products  and  services  can  generate
sufficient  revenues  to offset  costs,  there can be no  assurance
that the Company's  products and services will be successful,  that
they will generate  adequate revenue to meet the Company's  capital
needs or that the Company will become profitable in the future.

ITEM 7.  FINANCIAL STATEMENTS.

See the financial statements attached to this report which starts
at page F1.



<PAGE>

ITEM 10.    EXECUTIVE COMPENSATION

The following table provides certain summary information concerning
compensation  paid  by  the  Company  and  its  subsidiaries to the 
Company's  Chief  Executive  Officer  and  to  each  of  its  other 
executive officers at the end of 1996.

                     Summary Compensation Table

                                         Annual        Annual
                                     Compensation   Compensation
                                                      Options 
      Name and Principal     Fiscal    Salary        Granted(1)
      Position                Year

      Kenneth S. Phillips     1996     $252,000         50,000
      President, Chief        1995      228,124
      Executive Officer       1994      241,774

      David L. Andrus         1996     $240,000      1,050,000
      Executive Vice          1995       40,000
      President

      Vali Nasr               1996     $139,015         50,000
      Chief Financial         1995      126,475
      Officer & Treasurer     1994      128,262



      (1)  The shares of Common Stock to be received upon the
           exercise of all stock options granted during the period
           covered by the Table.

During  the  year  ended  December 31, 1996, the Company granted to
its Chief Executive Officer and the other executive officers listed
in  the  Summary  Compensation  Table options to acquire a total of 
1,150,000 shares of Common Stock as set forth in the following table.

Option Grants in
Last Fiscal Year
                                 Percentage
                                  of Total
                    Number of     Options
                     Shares      Granted to
      Name         Underlying    Employees     Exercise   Expiration
                     Options         in         Price       Date
                     Granted     Fiscal Year
                 

Kenneth S. Phillips      50,000      4.2%       $1.00     6/7/2001

David L. Andrus         800,000     87.5%       $1.5625      (1)
                        200,000                 $2.125    12/17/2002
                         50,000                 $1.00      6/7/2001

Vali Nasr                50,000      4.2%       $1.00      3/31/2001

_______________________

(1)  Options will expire 24 months after Mr. Andrus leaves the
     employ of the Company.


The  following  table  sets  forth certain information with respect
to  options  exercised  during  the year ended December 31, 1996 by
those officers listed in the Summary Compensation Table.

    Aggregated
    Option/SAR
Exercises in Last
 Fiscal Year and
 Fiscal Year End
Option/SAR Values
                                         Number of
                                         Securities     Value of
                   Shares                Underlying    Unexercised
     Name        Acquired    Value      Unexercised       Money
                    on      Realized    Options at FY   Options at
                 Exercise                   End          FY End
                                        Exercisable     Exercisable
                                         /Unexercisable  /Unexercisable
                    
Kenneth S. Phillips    0         0      20,000/30,000     $22,500/$33,750

David L. Andrus        0         0     295,000/755,000   $168,830/$513,750

Vali Nasr              0         0      50,000/0          $56,250/$0


Compensation of Directors

During  1996,  the  Company  did not pay its employee directors for
attending board  meetings.   Each of  the  three  outside directors
received a  $5,000  annual retainer and a $500 fee for each meeting
attended.    The Company reimburses all of its directors for travel
and  out-of-pocket  expenses in connection with their attendance at
meetings  of the  Board of Directors.  On June 7, 1996, each member
of the  Board  of  Directors was granted options to purchase 50,000
shares  of  Common  Stock  at an exercise price of $1.00 per share.
Such  options  expire  five  years  from the date of grant and vest
20%  at  such  time  as  the  average  bid  and offer price for the
Common   Stock   equals  $1.00,  $2.00,  $3.00,  $4.00  and  $5.00,
respectively, for twenty consecutive trading days.

Employment Agreements

The  Company  has  employment  agreements  with Mr.  Phillips,  its
President  and  Chief  Executive  Officer,   and  Mr.  Andrus,  its
Executive  Vice  President.  The  Agreement  with Mr.  Phillips  is
dated July 26,  1995,  and is for a three  year-term.  Either party
may  terminate  the  agreement  upon 90  days'  prior  notice.  The
agreement  provides for a minimum  salary of $240,000  ($300,000 if
the  Company has pre-tax  profits of at least  $1,000,000),  40% of
the  annual  bonus  pool  (equal  to 10% of the  Company's  pre-tax
profits),  a car  allowance,  and  participation  in the  Company's
other  benefit  plans.  If the  Company  terminates  the  agreement
without cause,  it will be obligated to make severance  payments to
Mr.  Phillips in an amount  equal to  two-years'  compensation.  In
addition,  the agreement  provides  that any option  granted to Mr.
Phillips  vest  immediately  upon his  death  or upon a  change  in
control of the Company.

The  Agreement  with Mr.  Andrus is dated  July 26,  1995,  and was
amended  in  December  1996.  It  provides  for a  three  year-term
ending  November  1998.  Either party may  terminate  the agreement
upon 90 days' prior notice.  The  agreement  provides for a minimum
salary of $240,000,  options to acquire  1,000,000 shares of Common
Stock,  and  participation  in the Company's  other benefit  plans.
If the Company  terminates the agreement  without cause, it will be
obligated  to make  severance  payments to Mr.  Andrus in an amount
up  to  one-year's   compensation.   In  addition,   the  agreement
provides that all options  granted to Mr.  Andrus vest  immediately
upon a change in control of the Company.


<PAGE>

                            SIGNATURES

Pursuant  to  the  requirements  of  Section  13  or  15(d)  of the
Securities  Exchange  Act  of  1934, the registrant has duly caused
this  amendment  number 1 to Form 10-KSB to be signed on its behalf
by the undersigned, thereunto duly authorized.



PMC INTERNATIONAL,  INC.


        By:  /s/____________________________
        Kenneth S. Phillips
        President, Chief Executive Officer


        By:  /s/____________________________
        Vali Nasr, Treasurer, Principal
        Financial and Accounting Officer

        Date:   October 31, 1997




<PAGE>

                          PMC INTERNATIONAL, INC.
                             AND SUBSIDIARIES

                                 CONTENTS


                 Financial statements for the years ended
                        December 31, 1996 and 1995

Independent Auditors'
  Report                                                    F-2

Consolidated Balance
  Sheets                                                    F-3

Consolidated Statements of
  Operations                                                F-4

Consolidated Statements of Changes in Shareholders' Equity
  (Deficit)                                                 F-5

Consolidated Statements of Cash
  Flows                                                     F-6 - F-7

Notes to Consolidated Financial
  Statements                                                F-8 - F-18


                                    F-1 of 18: Financial Statements Section

<PAGE>

                       INDEPENDENT AUDITORS' REPORT


To the Shareholders
PMC International, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheets  of PMC
International,  Inc. and its  subsidiaries  (the  "Company") as of December
31, 1996 and 1995, and the related  consolidated  statements of operations,
shareholders'  equity  (deficit),  and cash flows for the years then ended.
These  financial   statements  are  the  responsibility  of  the  Company's
management.   Our   responsibility  is  to  express  an  opinion  on  these
financial statements based on our audits.

We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those  standards  require  that we plan and  perform the audits
to obtain reasonable  assurance about whether the financial  statements are
free of  material  misstatement.  An audit  includes  examining,  on a test
basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also  includes  assessing the  accounting  principles
used and  significant  estimates made by management,  as well as evaluating
the overall financial  statement  presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of the
Company at December  31, 1996 and 1995,  and the results of its  operations
and its cash flows for the years then ended,  in conformity  with generally
accepted accounting principles.


SPICER, JEFFRIES & CO.
Denver, Colorado
March 1, 1997


                                    F-2 of 18: Financial Statements Section

<PAGE>

                          PMC INTERNATIONAL, INC.
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                        DECEMBER 31, 1996 AND 1995

                     ASSETS                           1996         1995
                     -----                          -------      --------

CASH AND CASH EQUIVALENTS (See Note 7)            $6,499,390   $  313,885

RECEIVABLES:
  Investment management fees                         145,714       39,733
  Other receivables (See Note 7)                     160,483       63,210

FURNITURE AND EQUIPMENT, at cost, net of
  accumulated depreciation of $689,227 and           936,234      688,233
  $355,231

SOFTWARE DEVELOPMENT COSTS, at cost, net of          
  accumulated amortization of $203,526 in 1996       511,123      419,617
  (Note 1)

PREPAID EXPENSES AND OTHER ASSETS                    340,006      220,605

LONG TERM NOTE RECEIVABLE (Note 2)                   570,494      897,167
                                                     =======      =======
                                                  $9,163,444   $2,642,450



LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
  Accounts payable                                 $ 839,095   $1,442,694
  Accrued expenses                                   535,520      707,897
  Other liabilities                                  730,909      571,389
  deferred revenue                                   552,868      411,347
  Notes payable (Note 6)                              14,694    1 647,470
  Obligations under capital leases (Note 7)          219,821       75,490
                                                   ---------     --------
      TOTAL  LIABILITIES                           2,892,907    4,856,287
                                                   ---------    ---------
 

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS' EQUITY (DEFICIT) (Note 3):
  Preferred stock - no par value - authorized 
    5,000,000 shares; issued and outstanding,                   
      175,897 and 349,017 shares                     439,742      872,543

  Common stock, $.01 par value - authorized,
    50,000,000 shares, issued and outstanding        365,876      276,716

  Additional paid-in capital                      16,132,256    3,302,749
  Deficit                                        (10,667,337)  (6,665,843)
                                                 -----------   ----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)               6,270,537   (2,213,837)
                                                 -----------   ----------
                                                  $9,163,444  $ 2,642,450

     

                                    F-3 of 18: Financial Statements Section
<PAGE>

                          PMC INTERNATIONAL, INC.
                             AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF OPERATIONS
                        DECEMBER 31, 1996 AND 1995

                                                      1996          1995   
REVENUE:
  Investment management fees (Note 1)             $9,634,992    $8,632,888
  Trading income                                      44,787        94,948
  Other income                                       407,102       444,643
                                                    --------      --------
       Total revenue                              10,086,881     9,172,479

EXPENSES:
  Investment manager and other fees                5,580,846     5,139,613
  Salaries and benefits                            3,487,811     2,524,936
  Clearing charges and user fees                     813,239       766,515
  Advertising and promotion                          830,140       629,476
  General and administrative                       1,176,775       894,661
  Software development costs                         132,392        56,800
  Occupancy and equipment costs                    1,149,084       630,833
  Professional fees                                  763,086       484,860
  Settlement expense                                 155,000       465,000
                                                  ----------     ---------
       Total expenses                             14,088,373    11,592,694

NET LOSS                                         $(4,001,492)  $(2,420,215)

NET LOSS PER COMMON SHARE (Note 1)                 $    (.71)   $     (.46)

WEIGHTED AVERAGE  NUMBER OF SHARES
  OUTSTANDING (Note 1)                             5,702,036      5,546,522



                                    F-4 of 18: Financial Statements Section

<PAGE>

                          PMC INTERNATIONAL, INC.
                             AND SUBSIDIARIES
<TABLE>

   CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                        DECEMBER 31, 1996 AND 1995

<CAPTION>
                                      Additional   Preferred                        Total
                      Common Stock       Paid-In     Stock                       Shareholders'
                    ---------------                 ------                          Equity
                     Shares   Amount     Capital    Shares   Amount     Deficit    (Deficit)
<S>              <C>         <C>      <C>         <C>       <C>       <C>           <C>
                 -------     ------   -------     ------    ------    --------      --------
BALANCES
  December 31,
  1994 as
  previously
  reported        $5,540,501 $276,564  $3,637,689 $349,017   $872,543  $(4,274,803)   $511,993
 
Adjustment for
  the 
  cumulative
  effect on
  prior years
  for the
  correction of
  an error                 -        -    (350,000)       -          -       29,173           -
  (Note 1)

BALANCES
  December 31,
  1994 as
  restated         5,540,501  276,564   3,287,689  349,017    872,543   (4,245,630)    191,166

Issuance of
  stock to 401K
  plan                15,212      152      15,060        -          -            -      15,212
  
Net loss                   -        -           -        -          -   (2,420,215) (2,443,555)
                     -------   ------     -------   ------     ------     --------    --------
BALANCES
  December 31,
  1995             5,555,713  276,716   3,302,749  349,017    872,543   (6,665,845) (2,213,837)



Stock options
  exercised            1,000       10       1,365        -          -            -      1,375

Notes payable
  converted to
  common stock     3,500,000   34,999   2,488,751        -          -            -  2,523,750
 
Preferred stock
  converted to
  common stock       238,043    2,381     430,420 (173,120)  (432,801)           -           -

Issuance of  
  stock            5,177,000   51,770  10,949,355        -          -            -  11,001,125

Less stock
  issuance costs           -        -  (1,040,384)       -          -            -  (1,040,384)

Net loss                   -        -           -        -          -   (4,001,492) (4,001,492)
                     =======   ======     =======   ======     ======     ========    ========
BALANCES
  December 31,
  1996           $14,471,756 $365,876 $16,132,256 $175,897   $439,742 $(10,667,337) $6,270,537
                     =======   ======     =======   ======     ======     ========    ========
</TABLE>

<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                        DECEMBER 31, 1996 AND 1995
                        INCREASE (DECREASE) IN CASH


                                                       1996          1995
                                                    ----------    ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                         $(4,001,492)  $(2,420,215)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
     Depreciation and amortization                     537,522       148,567
     Accretion of discount on note receivable          (67,181)      (69,053)
     Stock issued as compensation under 401K plan            -        15,212
     Changes in operating assets and liabilities
       Investment management fees receivable          (105,981)       32,085
       Other receivables                               (97,273)       22,196
       Prepaid expenses and other assets              (119,401)        9,509
       Accrued expenses                               (172,377)      103,805
       Accounts payable                               (597,029)      729,837
       Other liabilities                               159,520       464,399
       Deferred revenue                                141 521        37,346
                                                     ---------      --------
          net cash used in operating activities     (4,322,171)     (926,312)

CASH FLOWS FROM INVESTING ACTIVITIES: 
  Purchase of furniture and equipment                 (376,574)     (405,932)
   Reduction of long-term note receivable              393,854       338,067
   Reduction of secured demand note                          -       225,000
   Cost of software development                       (295,022)     (419,617)
                                                      --------      --------  
      Net cash used in investing activities           (277,742)     (262,482)
                                                    ----------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from notes payable                        3,125,000    1,925,000
   Principal payments on notes payable               (2,234,026)    (322,530)
   Principal payments on obligations under
     capital lease                                      (67,672)     (14,709)
   Principal payments on subordinated note
     payable                                                  -     (225,000)
  Sale of common stock, less offering costs           9,960,741            -
  Proceeds from  exercise of stock options                1,375            -   
                                                      ---------      -------
      Net cash provided by financing activities      10,785,418    1,362,761
                                                     ----------    ---------
NET INCREASE IN CASH                                  6,185,505      173,967
CASH, at beginning of year                              313,885      139,918
                                                     ----------     --------
CASH, at end of year                                 $6,499,390   $  313,885



                                    F-6 of 18: Financial Statements Section


<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOW
                        DECEMBER 31, 1996 AND 1995
                        INCREASE (DECREASE) IN CASH
                                (Continued)


                                                           1996        1995
                                                        ---------   ----------
SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:
   Cash paid for interest                              $  367,180  $    96,969
                                                       ==========   ==========


NONCASH INVESTING AND FINANCING ACTIVITIES:
  Purchase of equipment via capital lease obligation   $  205,433  $    90,199
                                                       ==========   ==========
  Conversion of preferred stock to common stock        $  432,801  $         -
                                                       ==========  ===========
  Loans payable converted to common stock              $1,500,000  $         -
                                                       ==========  ===========
  Conversion of notes payable to common stock          $2,523,750  $         -
                                                       ==========  ===========



                                    F-7 of 18: Financial Statements Section



<PAGE>

                          PMC INTERNATIONAL, INC.
                             AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995


NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

On September  23, 1993,  the  shareholders  of Schield  Management  Company
("Schield")  approved  an  exchange  of common  stock of Schield for all of
the  outstanding  common stock of Portfolio  Management  Consultants,  Inc.
("PMC")  and  a  name  change  from  Schield  to  PMC  International,  Inc.
("PMCI").  The share  exchange was  completed on September  30, 1993 and as
a result of this  transaction,  PMC is a wholly owned  subsidiary  of PMCI.
The  share  exchange  between  Schield  and PMC was  treated  as a  reverse
acquisition  and  accounted  for under the purchase  method of  accounting.
Under reverse acquisition  accounting,  PMC was considered the acquiror for
accounting and financial  reporting  purposes,  and acquired the assets and
assumed  the  liabilities  of  Schield.  The Schield  assets  acquired  and
liabilities  assumed were  recorded at their fair  values.  The cost of the
acquisition  of Schield  of  $1,741,018  was based on the  NASDAQ  publicly
traded  price  of  the  outstanding  Schield  common  stock  prior  to  the
announcement   of  the   transaction.   The  excess  of  the  cost  of  the
acquisition  over the fair value of the  assets  acquired  and  liabilities
assumed was recorded as goodwill.

Subsequently,   it  was   determined   that  due  to  the  nature  of  this
transaction,  goodwill  should  not have been  recorded.  Accordingly,  the
balances of the  additional  paid-in  capital  and deficit at December  31,
1995,  have been  restated  from amounts  previously  reported to reflect a
retroactive  charge of  $350,000  to  additional  paid-in  capital  for the
original  goodwill  recorded  and a credit of $52,513  to  deficit  for the
amortization  of such goodwill to that date.  Of the amount  charged to the
deficit,  $23,340  (negligible  per  share) is  applicable  to 1995 and has
been  reflected as a reduction of general and  administrative  expenses for
that year,  the  balance  being  charged to the  deficit  at  December  31,
1994.  The effect on the 1996  statement of  operations  would be to reduce
the net loss by $23,340 (negligible per share).

PMC was  organized  in 1986  and its  principal  business  activity  is the
administration of private and  institutional  managed account programs with
its customers  located  substantially  in the United  States.  Its services
include  investment  suitability  analysis,  portfolio  modeling  and asset
allocation,  money manager selection,  portfolio accounting and performance
reporting.   PMC  is  registered   as  an  investment   adviser  under  the
Investment Advisors Act of 1940.

In June, 1994,  Portfolio Brokerage Services,  Inc. ("PBS") was capitalized
through a series of  transactions  with PMCI and PMC,  whereby PBS became a
wholly  owned  subsidiary  of PMCI by  issuing  1,000  shares of its common
stock in exchange for certain assets and  liabilities  with a book value of
$1,532,332.  PBS is  engaged in  business  as a  securities  broker-dealer.
As a broker-dealer  it executes  security  transactions for PMC's privately
managed  account   programs,   on  behalf  of  its  customers  through  the
customer's custodian bank on a delivery vs. payment basis.

Portfolio  Technology  Services ("PTS") was organized in June, 1994 but had
no  operations  until 1995.  PTS was formed for the  purpose of  developing
proprietary software for use in the financial services industry.

The accompanying  consolidated  financial statements include the historical
accounts of PMC for all periods  and the  accounts of PMCI since  September
30,  1993,  PBS and PTS since  inception.  All  intercompany  accounts  and
transactions have been eliminated in consolidation.


                                    F-8 of 18: Financial Statements Section



<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)


NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Significant Accounting Policies

Revenue  from  investment  management  services is recorded as such revenue
accrue  under the terms of the  related  investment  management  contracts.
Revenue from software  customizations  is recorded as such revenue  accrues
under  the  terms  of  the  related   agreements.   Revenue  from  software
maintenance  is recorded  as such  revenue  accrues  under the terms of the
maintenance   contracts.   Software   products   are  used  in   generating
investment   management   revenues  and  therefore  are  recorded  as  such
revenues  accrue  under  the  terms of the  related  investment  management
contracts.

Securities  transactions  and related  commission  income are recorded on a
trade date  basis.  In the normal  course of  business,  PBS  executes,  as
agent,  transactions  on behalf of  customers.  If the agency  transactions
do not settle  because of failure to perform by either the  customer or the
counter-party,  PBS may be  obligated to discharge  the  obligation  of the
non-performing  party  and,  as a result,  may  incur a loss if the  market
value  of the  security  is  different  from  the  contract  amount  of the
transactions.

The Company  has  developed a  windows-based  software  program for sale to
financial  product  distribution  entities.  The  product  is  designed  to
guide   clients  of  these   entities   through  the  process  of  choosing
appropriate  combinations  of mutual  funds for their own  portfolios.  The
majority of costs  incurred to establish the  technological  feasibility of
this  product  were borne by  unrelated  individuals  prior to the  product
being  introduced  to  the  Company.   Prior  to  achieving   technological
feasiblilty  in  1995,  the  Company  incurred   approximately  $50,000  in
research  and  development  costs after  receiving  the  products  from the
unrelated  individuals.  These costs have been  included  in the  statement
of operations  for 1995. All subsequent  costs  incurred  directly  related
to the  development  of the software were  capitalized.  Capitalized  costs
are being  amortized over the economic life of the software,  which in this
case is three years.  It is the  Company's  policy to amortize and evaluate
software  for net  realizable  value  on a  product-by-product  basis.  The
software  became  available for sale during 1996.  The  Company's  plans to
generate   revenues  from  this  product  are  four  fold;   license  fees,
customization  fees,  a  continuing  fee  equal to a  percentage  of assets
under  management of the end users  purchasing  such  software,  and annual
maintenance  fees.  Costs of maintenance  and customer  support are charged
to expense  when the  related  revenue is  recognized,  or when those costs
are  incurred,   whichever   occurs  first.  The  Company's  policy  is  to
capitalize  all software  costs  incurred in developing  computer  software
products  until such  products  are  available  for  release to  customers.
Subsequent  cost  incurred  to  enhance  and  redesign   existing  software
products  are  capitalized  and  such   capitalizations   ceases  when  the
enhanced or redesigned products are released.

The Company  provides for  depreciation  of furniture  and equipment on the
straight line and  declining  balance  methods based on estimated  lives of
three to seven years.

The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires management to make estimates and
assumptions  that  affect the  reported  amounts of assets and  liabilities
and  disclosure of  contingent  assets and  liabilities  at the date of the
financial  statements  and the  reported  amounts of revenues  and expenses
during  the  reporting  period.  Actual  results  could  differ  from those
estimates.

                                    F-9 of 18: Financial Statements Section


<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

The Company  follows the  intrinsic  value based  method of  accounting  as
prescribed by APB 25,
Accounting   for  Stock   Issued   to   Employees,   for  its   stock-based
compensation.  Under the Company's  stock option plan,  the exercise  price
is  equal  to the  fair  value  of the  options  at the  grant  date and no
compensation cost is recognized.

Cash and cash  equivalents  for  purposes  of the  statement  of cash flows
includes  highly  liquid  investments  with a maturity  of three  months or
less at the date of acquisition.

Net  loss per  share of  common  stock  is  based on the  weighted  average
number of shares of common  stock  outstanding.  Common  stock  equivalents
are not included in the  weighted  average  calculation  since their effect
would  be  anti-dilutive.   Dividends  on  cumulative  preferred  stock  of
$22,455;  $56,715;  $57,166;  and $133,430 for the periods  ended March 31,
1997 and 1996,  and  December  31, 1996 and 1995,  respectively,  have been
added back to the net loss in computing the net loss per share.

The Company adopted the provisions of SFAS 121, Accounting for the 
Impairment of Long-Lived and for Long-Lived Assets to Be Disposed Of, in
its financial statement's for the year ended December 31, 1996.  The
adoption of SFAS 121 had no material affect on the Company's financial
statements.

The Company  reviews its  long-lived  assets for impairment to determine if
the carrying amount of the asset is recoverable.

Certain 1995 amounts have been reclassified to conform to the 1996
presentation.

NOTE 2 -  LONG TERM NOTE RECEIVABLE

In connection with the Schield reverse  acquisition,  the Company  acquired
a long  term  note  receivable  related  to the  sale of  Schield's  market
timing  operations  to an entity  controlled  by a founder of Schield.  The
note is payable in monthly  installments  of  $32,000,  including  interest
through  August,  1998.  The note was recorded at its estimated  fair value
as of  September  30, 1993.  The discount  from the face amount of the note
receivable  is a credit to interest  income over the life of the note using
the  interest  method.  The  principal  balance of the note as of  December
31, 1996 is $634,578 compared to its carrying amount of $570,494. While the
original transaction involved a transfer of operations by the Company  to a 
former  employee  who had been responsible for managing the operations, the
transaction  was handled on  an  arms  length  basis.   The Company did not 
provide  any  guarantee  of the obligations of the buyer and had no further 
involvement  with  the  business  after  the  sale.   Payments  on the note
receivable have been made on a timely fashion in all material respects.

NOTE 3 -  SHAREHOLDERS' EQUITY

Preferred Stock

Holders of preferred  stock are entitled to receive  dividends at a rate of
$0.325 per share per annum  (equal to 13% of the  purchase  price per share
attributable   to   the   preferred    stock).    Dividends   are   payable
semi-annually  on  January 15 and July 15 in each  year.  Dividends  accrue
from the date of the  preferred  stock  issuance and are  cumulative.  Upon
liquidation or dissolution of the Company,  holders of preferred  stock are
entitled  to a  preference  over the  holders of common  stock in an amount
per share equal to the original  purchase  price  attributed  to a share of
preferred stock ($2.50) plus all

                                    F-10 of 18: Financial Statements Section


<PAGE>

                          PMC INTERNATIONAL, INC.
                             AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)

NOTE 3 -  SHAREHOLDERS' EQUITY (continued)

unpaid  cumulative  dividends.  The  preferred  stock is  non-participating
and the  holders  of  preferred  stock  have no  preemptive  rights  and no
voting  rights  except as may be required  by  Colorado  law. At the option
of the Company,  the preferred  stock may be redeemed in whole, or in part,
at  a  price  of  $2.75  per  share,  plus  unpaid  cumulative   dividends.
Redemption  can only occur if certain  conditions  regarding the bid prices
of the  Company's  common stock and the  Company's  after-tax  earnings are
met.

As of January 15, 1997, cumulative dividends in arrears totaled
$322,700.

Common Stock

During  December,  1996, the Company issued  8,916,043 shares of its common
stock  through   several   issuances.   First,  a  private   placement  was
completed  whereby  5,177,000  shares were  issued for cash of  $11,001,125
less  offering  costs  of  $1,040,384.   Secondly,  convertible  promissory
notes  issued in  December,  1995 and the first  half of 1996 in the amount
of $1,500,000  were repaid and the proceeds were used to exercise  warrants
for  1,500,000  common  shares and 150,000 new warrants  were issued to the
noteholders   in   connection   therewith   (see  Note  6).   Thirdly,   in
connection  with the  shareholder  note  payable  as  described  in Note 6,
warrants to purchase  1,023,750  shares of common stock were  exercised for
cash of  $1,023,750  and  warrants to purchase  1,976,250  shares of common
stock  were  exchanged  for  976,250  shares  of  common  and  150,000  new
warrants.  Additionally,  certain  preferred  shareholders  exercised their
conversion  rights and  exchanged  173,120  preferred  shares  for  238,043
shares of common.

NOTE 4 -  INCOME TAXES

The   Company   has  an  unused  net   operating   loss   carryforward   of
approximately  $7,000,000 for income tax purposes,  $1,200,000  expiring in
2009,  $1,800,000  in 2010 and the  remainder  expiring  in 2011.  This net
operating  loss  carryforward  may result in future  income tax benefits of
approximately  $2,800,000;  however,  because  realization  is uncertain at
this time,  a valuation  reserve in the same  amount has been  established.
Deferred   income   taxes   reflect  the  net  tax  effects  of   temporary
differences  between the  carrying  amounts of assets and  liabilities  for
financial   reporting   purposes  and  the  amounts  used  for  income  tax
purposes.   Significant   components   of  the   Company's   deferred   tax
liabilities and assets as of December 31, 1996 and 1995 are as follows:

                                                    1996             1995
                                                ------------     ----------
Deferred tax liabilities                    $              -   $          -

Deferred tax assets
   Net operating loss carry forwards               2,579,000      1,149,500
   Legal settlement                                  233,300        175,000
                                                   ---------      ---------
   Total deferred tax assets                       2,812,300      1,324,500
   Valuation allowance for deferred tax assets$   (2,812,300)   $(1,324,500)
                                                  ----------     ----------
                                                           -              -

The   valuation   allowance  for  deferred  tax  assets  was  increased  by
$1,487,800 and $855,300 during 1996 and 1995, respectively.

                                    F-11 of 18: Financial Statements Section


<PAGE>


                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)
NOTE 5 -  REGULATORY REQUIREMENTS

PBS is subject to the  Securities  and  Exchange  Commission's  Uniform Net
Capital Rule (Rule 15c3-1),  which requires the  maintenance of minimum net
capital.  At  December  31,  1996,  PBS had  net  capital  and net  capital
requirements  of $233,288 and  $100,000,  respectively.  The  Company's net
capital  ratio  (aggregate  indebtedness  to  net  capital)  was  .53 to 1.
According  to Rule 15c3-1,  PBS's net capital  ratio shall not exceed 15 to
1. On a  consolidated  basis,  as a result of the  requirement,  net assets
of $120,000 are  unavailable  for any purpose  other than meeting PBS's net
capital requirements at December 31, 1996.

NOTE 6 -  NOTES PAYABLE

Notes payable consist of the following:
                                                         1996           1995
                                                     -----------    -----------
8-1/2% note  payable to  shareholder,  due July
26, 2000  interest  payable  monthly  beginning  
August  10,  1996,  principal  and  all accrued 
and unpaid interest is due at maturity, secured
by  all  assets  of  PMCI  and its subsidiaries 
(except PBS which security interest is  only to
its outstanding common stock owned by PMCI).          $       -      $1,200,000

11.5%   note    payable   to    shareholder(s),    
unsecured,  due  August  1,  1998,  payable  in
monthly    installments   of   $832   including   
interest.   In  1996  and  1995,  principal  of
$8,535 and $6,159 mature.                                14,694          22,470

9% notes  payable to  employees  and  unrelated
individuals,  due December 29, 1996,  principal
and  interest  payable  on or  before  maturity
date,  secured  by a  second  lien  on  Company
assets.                                                       -         425,000
                                                       --------       ---------
                                                      $  14,694      $1,647,470
                                                      =========      ==========

The above  $1,200,000  shareholder  note  payable is related to a financing
and stock purchase  agreement which  encompasses a series of  transactions,
none of which are  considered  binding until certain  criteria are met. The
shareholder  acquired  1,000,000  shares of the Company's common stock in a
private   transaction  with  another  individual  and  loaned  the  Company
$1,200,000.   In   connection   with  this  loan,  a  warrant  to  purchase
1,200,000  shares of common  stock at $1.00 per share (see note 3) was also
received.  In  addition,  the  shareholder  obtained  an option to lend the
Company an additional  $1,800,000  and received  warrants  similar to those
issued in  connection  with the initial  loan.  Through July 9, 1996,  this
shareholder  fulfilled  its option and  loaned  the  Company an  additional
$1,800,000 and received  1,800,000  warrants to purchase common shares.  On
December  24,  1996,  the  shareholder  and  the  Company  entered  into an
agreement  whereby  (1) the  Company  would  remit  $1,976,250  against the
principal amount of the loan, (2) the shareholder  would exercise  warrants
to purchase  1,023,750  common shares at $1.00 per share to be used against
the remaining  principal  balance,  and (3) the shareholder  would exchange
its  remaining  warrants  for  976,250  shares of common  stock and 150,000
warrants to purchase common stock at $2.125 per share.


                                    F-12 of 18: Financial Statements Section


<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)

NOTE 6 -  NOTES PAYABLE (continued)
During March,  1995,  through a private  offering,  PMCI issued $300,000 of
convertible  promissory  notes bearing 15% interest per annum.  These notes
were repaid in July 1995.  In  addition,  in  November,  1996,  the Company
borrowed  $250,000 from  unrelated  persons on a short-term  basis carrying
interest at 12%. In December,  1996 these  amounts were repaid  through the
proceeds of the private offering (see Note 3).

On December  14, 1995 the  Company  commenced a private  offering of units.
Each unit  consisted of a promissory  note with limited  conversion  rights
in the  principal  amount of $1,000 and a warrant to purchase  1,000 shares
of common  stock at a price per share  equal to the greater of $1.00 or the
market  price on the initial  closing  date of the  offering.  If the notes
were not paid by the due date,  the  notes,  at the  option of the  holder,
became  convertible  into shares of the Company's common stock on the basis
of one share for each $1.00 of unpaid  principal  and  interest.  On May 7,
1996 a second  private  offering of units  commenced with similar terms and
after  completion  $1,500,000 of  promissory  notes were  outstanding  from
both  offerings.  Prior to the due date of the  notes,  the  Company  asked
its  noteholders  to agree to apply  their  principal  balance  against the
exercise  price of  their  warrants  and,  in  addition,  they  would  also
receive  warrants to purchase  150,000 shares of the Company's  stock at an
exercise price of $2.125 per share.  Subsequently,  the noteholders  agreed
to this arrangement.

Interest expense for the years ended December 31, 1996 and 1995 was
$331,008 and $102,011 respectively.

NOTE 7 -  COMMITMENTS AND CONTINGENCIES

In  January  1997,  KP3,  LLC,  a  limited   liability  company  owned  and
controlled by the  Company's  president  and chief  executive  officer (the
"LLC")  borrowed  $1,750,000  from a bank with a due date of  December  31,
1997.  The  purpose  of the loan was to  finance  payment  of the  deferred
portion of the  purchase  price of  1,643,845  shares of Common Stock owned
by the LLC that were  purchased  from a former  officer  of the  Company at
the  time  of  his  departure.  In  connection  with  this  borrowing,  the
Company   agreed  to   collateralize   the  loan  on  behalf  of  the  LLC.
Accordingly,  $1,890,000  of cash  included  in cash and  cash  equivalents
(representing  the initial  principal  balance and in an interest  reserve)
in the  accompanying  balance  sheet became  restricted  for this  purpose.
The  Company  has also  agreed to loan the LLC  amounts  sufficient  to pay
interest  on the  loan  so  long as the  amount  of  loans  made  and  bank
collateral  provided  would  not  exceed  $2,000,000.   The  borrower  (the
LLC) has agreed to reimburse the Company for any amounts paid by the Company
toward the loan or for collateral  applied to the loan, including  interest
at an annual rate of 9%, and have  granted the Company a security  interest 
in 1,643,845 shares of the Company's common stock held by it.

PMC had been under a formal order of private investigation by the Securities
and Exchange Commission relating to certain aspects of PMC's former practice
of principal trading.  PMC discontinued this practice in April 1994.  In 
1995, the Company submitted a settlement proposal to the Commission, without
admitting or denying liability, on behalf of PMC under a plan pursuant to 
which PMC would disgorge its trading profits realized from principal trading
together with prejudgement interest in an amount estimated to be $465,000.
In 1996, the settlement was accepted by the Commission with the total amount
payable, including accrued interest approximating $620,000.  These amounts
have been included in other liabilities in the accompanying financial 
statements.

The  Company  has leases  for  office  space and  equipment  under  various
operating  and capital  leases.  Included in  furniture  and  equipment  is
$295,552  of  equipment  under  capital  leases at  December  31,  1996 and
accumulated depreciation relating to these leases of $30,184.


                                    F-13 of 18: Financial Statements Section


<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)

NOTE 7 -  COMMITMENTS AND CONTINGENCIES (continued)

Future minimum lease payments under noncancelable leases as of December
31, 1996 are as follows:

                                                     Principal
  Year ending                                           due
  December 31,        Operating        Capital     Capital Lease
  -----------        ----------      ----------     -----------
     1997            $  375,824      $  123,992     $   103,119
     1998               351,672         103,486          95,336
     1999               298,658          22,178          21,366
     2000               293,567               -               -
     2001                24,000               -               -
  Thereafter                  -               -               -
                    -----------      ----------     -----------
                     $1,343,721         249,656     $   219,821
                    ===========                     ===========

  Less amount
    representing interest                29,835
                                     ----------
  Present value of net
    minimum lease payments           $  219,821
                                     ==========

Total  rent  expense  for  facilities  and  equipment  for the years  ended
December 31, 1996 and 1995, was $471,339 and $410,263, respectively.

NOTE 8 -   STOCK OPTIONS AND WARRANTS

The  Company  has no formal  stock  option  plan,  however  it has  granted
options  to   officers,   employees,   shareholders   and   certain   other
individuals  and  entities  allowing  them to purchase  common stock of the
Company  generally  at the  market  value of the  stock  at date of  grant.
Options are generally for a five-year  term however,  in certain  instances
the term is longer.
 
                                    F-14 of 18: Financial Statements Section



<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)

NOTE 8 -   STOCK OPTIONS AND WARRANTS (continued)

In addition,  common stock  warrants  have been issued in  connection  with
certain  private  offerings  of   debt.  At  December  31,  1996,
warrants  to  purchase  common  stock at various  prices  were  outstanding
which expire as follows:

      Expiration                    Exercise
      Date               Warrants     Price
      --------------     --------     ------
      December, 1998      300,000      1.620
      June, 2001          200,000      1.000
      November, 2001       25,000      1.625
      December, 2001      550,000      2.125
                         --------
                        1,075,000
                        =========

The  following  table  describes   certain   information   related  to  the
Company's  compensatory  stock option activity for the year ending December
31, 1996.


                                                Number     Weighted Average
                                             of Options    Exercise Prices
                                             ----------      --------
     Outstanding, December 31, 1995          1,016,000        $1.42
     Grants during year:
       Exercise price = market price         1,352,500         1.40
   Exercise price greater than market price    200,000         1.56
     Exercised during year                      (1,000)        1.38
     Forfeited during year                     (22,000)        1.13
     Expired during year                       (35,000)        2.79
                                             ---------
     Outstanding, December 31, 1996          2,510,500         1.45
                                             =========
     Exercisable, December 31, 1996          1,400,500         1.45
                                             =========



                                    F-15 of 18: Financial Statements Section

<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)


NOTE 8 -   STOCK OPTIONS AND WARRANTS (continued)

The weighted average grant date fair value of the options granted in 1996
was as follows:

Exercise price = market price             $ .67
Exercise price greater than market price   1.03

The fair value of each option  grant is estimated  using the  Black-Scholes
option-pricing  model with the following  assumptions:  risk-free  interest
rate of 5.88% to 6.50%;  dividend yield of -0-%;  expected lives of five to
six years; and volatility of 44.2%.

A summary of the Company's outstanding and exercisable stock options as
of December 31, 1996 are as follows:
                                                              Weighted Average
         Range of         Number         Weighted Average     Remaining
      Exercise prices   of Options       Exercise Price       Contractual Life
                                                                  (months)
      --------------    ----------       --------------       ----------------

      $1.00 - $1.38
      Outstanding        1,228,500            $1.14                 31 (a)
      Exercisable          728,500             1.17                 39

      $1.50 - $1.56
      Outstanding          977,500             1.55                 63 (b)
      Exercisable          567,500             1.55                 63 (c)

      $2.13 - $2.50
      Outstanding          252,500             2.20                 58
      Exercisable           52,500             2.50                  6

      $3.10
      Outstanding           52,000             3.10                 13
      Exercisable           52,000             3.10                 13

(a) Excludes 200,000 options which expire 12 months after employee
    termination.
(b) Excludes 800,000 options which expire 12-24 months after employee
    termination.
(c) Excludes 480,000 options which expire 12-24 months after employee
    termination.

                                    F-16 of 18: Financial Statements Section


<PAGE>

                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Continued)

NOTE 8 -   STOCK OPTIONS AND WARRANTS (continued)

As  previously   described,   the  Company   applies  APB  25  and  related
Interpretations  in  accounting  for its  stock  options.  Accordingly,  no
compensation  cost  has  been  recognized.  Had  compensation  cost for the
Company's  options  been  determined  based on the fair  value at the grant
dates for  awards  consistent  with the method of SFAS 123,  the  Company's
net loss and loss per share would have  increased to the pro-forma  amounts
indicated below:

                                         1996              1995
                                    -----------        -----------
Net loss                          $  (5,111,682)      $ (2,518,266)
                                  

Net loss per share                $        (.91)      $       (.47)
                                  


NOTE 9 -   EMPLOYEE BENEFIT PLAN

Salary deferral "401(k)" plan

The plan allows  employees,  who have  completed one year of employment and
at least  1,000  hours  service,  to defer up to 15% of their  salary.  The
Company  intends to match employee  contributions  by an amount  determined
annually  by the board of  directors.  Only  contributions  up to the first
6%  of  an  employee's   salary  will  be  considered  for  the  match.  On
February  15, 1995  PMCI's  Board of  Directors  approved  the  issuance of
15,212  shares of PMCI  common  stock  (valued at the  market  price at the
date of grant of $1.00  per  share)  to match  participant's  contributions
for the year ended December 31, 1994.

NOTE 10 - RISKS AND UNCERTAINTIES

PMC's  revenues  are  primarily  derived  from a  percentage  of the assets
under  the   management  of  its   distribution   channels.   Assets  under
management  are impacted by both the extent to which PMC  attracts  new, or
loses existing  clients and the  appreciation  or  depreciation of the U.S.
and  international  equity and fixed  income  markets.  Assets of customers
of an  unrelated  organization  constitute  approximately  16% of the total
customer  assets in PMC's  managed  account  programs  as of  December  31,
1996. A downturn in general  economic  conditions  could cause investors to
cease using the products,  including  its  proprietary  software  products,
and services of the Company or its distribution channels.

The Company has deposits in banks in excess of the FDIC insured amount of
$100,000.  The amounts in excess of the $100,000 are subject to loss
should the banks cease business.

                                    F-17 of 18: Financial Statements Section



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                          PMC INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1996 AND 1995
                                (Concluded)


NOTE 11 - FAIR VALUES OF FINANCIAL INSTRUMENTS

SFAS 107 requires  disclosure  of the fair value of financial  instruments,
both  assets  and   liabilities   recognized  and  not  recognized  in  the
statement of financial  position,  for which it is  practicable to estimate
fair value.

The  following  methods  and  assumptions  were used to  estimate  the fair
value of  financial  instruments  for which it is  practicable  to estimate
value:

The carrying  amount of cash and cash  equivalents  reported in the balance
sheet  approximates  fair  value  because  of the short  maturity  of those
instruments.

The carrying  amount of receivables,  accounts  payable,  accrued  expenses
and other  liabilities  approximates  fair value because of the  collection
or payments on those instruments are expected in the short term.

The long-term  note  receivable  was  discounted at inception  (see Note 2)
and at December  31,  1996,  discounting  the note at the current  interest
rate at  which  similar  loans  would  be made to  borrowers  with  similar
credit  ratings  and for the  same  maturities  yields a fair  value  which
approximates the carrying value.

Based on the borrowing rates  currently  available to the Company for loans
with  similar  terms and  maturities,  the  carrying  value of  obligations
under capital leases approximate fair value.

The carrying  amount of deferred  revenue  approximates  fair value because
it is expected to be realized within ninety days.

                                    F-18 of 18: Financial Statements Section

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                          Financial Data Schedule

                       as Filed Electronically with

                  The Securities and Exchange Commission