U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended SEPTEMBER 30,  1998

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
         SECURITIES EXCHANGE ACT OF 1934
         For the transition period from:            to
                                            ------       ------

                 Commission file number                  0-14937
                           ----------------------------------------

                             PMC INTERNATIONAL, INC.
        (Exact name of small business issuer as specified in its charter)

                   COLORADO                            84-0627374
      (State or other jurisdiction of                (IRS Employer
        incorporation or organization)             Identification No.)

               555 17th Street, 14th Floor, Denver, Colorado 80202
                    (Address of principal executive offices)

                                   (303) 292-1177
                           (Issuer's telephone number)

                                 Not Applicable
     (Former name, former address and former fiscal year, if changed 
                                since last report)

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

As of November 6, 1998, the issuer had  outstanding  4,446,842  shares 
of CommonStocks, par value $.01 per share.

Transitional Small Business Disclosure Format
Yes            No        X
        ------        ------

                              Page 1 of 23
<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

                                   FORM 10-QSB
                                      INDEX

                                                           Page  #
PART I   Financial Information

     Item 1   Financial Statements (Unaudited)                   3

          Condensed Consolidated Balance Sheets                  3
         - September 30,  1998 & December 31, 1997

         Condensed Consolidated Statements of Income             5
         - Three & Nine months ended
           September 30,  1998 & September 30,  1997

         Condensed Consolidated Statements of Cash Flow          6       
         - Nine months ended
         - September 30,  1998 & September 30,  1997

         Notes to Unaudited Condensed 
         Consolidated Financial Statements                       7

    Item 2   Management's Discussion & Analysis
             of Financial Condition & Results of Operations     10

PART II  Other Information

    Item 1   Legal Proceedings                                  20

    Item 6   Exhibits & Reports on Form 8-K                     21

Signatures                                                      22

Exhibit Index                                                   23


                              Page 2 of 23
<PAGE>



PART I.     FINANCIAL INFORMATION

ITEM 1      FINANCIAL STATEMENTS (Notes 1 & 8)
            ----------------------------------

                         PMC INTERNATIONAL, INC. AND SUBSIDARIES
                          CONDENSED CONSOLIDATED BALANCE SHEETS

                                          ASSETS


                                            (Unaudited)
                                            September 30,         December 31,
                                                1998                  1997

CURRENT ASSETS

 Cash and cash equivalents (Note 2)       $    289,828           $ 2,953,740
 Receivables:
     Investment management fees (Note 3)       992,033             1,041,390
     Other receivables                          89,047               166,221

FURNITURE AND EQUIPMENT, at cost,
     net of accumulated depreciation of
     $1,376,221 and $1,277,801 (Note 1)        783,052               965,168

SOFTWARE AND PRODUCT DEVELOPMENT COST, 
     at cost, net of accumulated 
     depreciation of $ 609,795 and 
     $963,469 (Notes 1 & 4)                    434,238             1,208,713

PREPAID EXPENSES AND OTHER ASSETS              903,698             1,023,364

LONG TERM NOTE RECEIVABLE (Note 5)              74,350               623,115

GOODWILL, net of amortization
 of $6,289,738 and $146,096 (Notes 1 & 4)    1,251,075             5,394,606
                                         -----------------       ------------
     TOTAL ASSETS                            4,817,321            13,376,317
                                        ==================       ============


                        See notes to financial statements

                              Page 3 of 23
<PAGE>


                LIABILITIES AND SHAREHOLDERS' EQUITY

                                          (Unaudited)
                                          September 30,         December 31,
                                              1998                  1997

LIABILITIES
     Accounts payable and 
     accrued expenses (Note 6)            $  5,810,327           $ 2,331,979
     Other liabilities                          92,148               104,125
     Deferred revenue                        1,154,179             1,307,382
     Notes payable - current (Note 7)        2,223,380               166,158
     Obligations under capital lease           269,435               384,986
     Notes payable - long-term (Note 7)         40,000               200,000
                                           ------------          ------------

     TOTAL LIABILITIES                       9,589,469             4,494,630
                                           ------------          ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Preferred stock, no par value - 
     authorized 5,000,000 shares;
     issued and outstanding,
     138,182 shares and 138,182 shares         345,455               345,455
     Common stock, $.01 par value - 
     authorized 50,000,000 shares;
     issued and outstanding,
     4,446,942 shares and 
     4,857,903 shares                           44,468                48,579
     Additional paid-in capital             20,989,816            22,977,526
     Accumulated deficit                   (26,151,887)          (14,489,873)
                                           ------------          ------------

         TOTAL SHAREHOLDERS' EQUITY         (4,772,148)            8,881,687
                                           ------------          ------------

TOTAL LIABILITIES AND
     SHAREHOLDERS' EQUITY                    4,817,321            13,376,317
                                           ============          ============


                        See notes to financial statements

                              Page 4 of 23

<PAGE>

<TABLE>


             PMC INTERNATIONAL, INC. AND SUBSIDARIES
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)
<CAPTION>

                                        Three Months Ended                 Nine Months Ended
                                           September 30,                      September 30,

REVENUE
<S>                                      <C>               <C>               <C>               <C> 
                                         1998              1997              1998              1997
                                         ----              ----              ----              ----
 Investment management fees        $   5,089,008     $   3,163,246     $  15,810,571     $   8,896,390
     Other income                         54,253            41,121           203,987           159,183
                                    -------------     -------------     -------------     -------------

         Total revenue                                                                                    
                                       5,143,261         3,204,367        16,014,558         9,055,573
                                    -------------     -------------     -------------     -------------

DIRECT EXPENSES

  Investment manager and other fees    3,128,035         1,702,820         9,686,257         4,437,494
                                    -------------     -------------     -------------     -------------

GROSS MARGIN                       $   2,015,226         1,501,547         6,328,301         4,618,079
                                    -------------     -------------     -------------     -------------

OPERATING EXPENSES
     Salaries and benefits             2,546,042           959,232         6,104,866         3,175,892
     Clearing charges and user fees      157,628           149,804           466,870           402,248
     Advertising and promotion           310,610           245,014           798,857           661,743
     General and administrative          352,077           276,234         1,078,725           784,018
     Occupancy and equipment costs     1,161,350           545,273         2,450,175         1,153,027
     Professional fees                   572,783            85,751           947,180           513,036
     Amortization of goodwill          5,871,245            10,498         6,143,642            10,498
                                    -------------     -------------     -------------     -------------

         Total operating expense      10,971,735         2,271,806        17,990,315         6,700,462
                                    -------------     -------------     -------------     -------------

NET LOSS BEFORE INCOME TAXES       $  (8,956,509)    $    (770,259)     $(11,662,014)    $  (2,082,383)

INCOME TAXES                                   -                 -                -                  -
                                    -------------     -------------     -------------     -------------

NET LOSS                           $  (8,956,509)    $    (770,259)    $(11,662,014)     $  (2,082,383)
                                    =============     =============     ==============    =============

NET LOSS PER COMMON SHARE          $       (1.87)    $       (0.21)    $      (2.42)             (0.58)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                     4,790,798         3,716,767         4,835,223         3,659,744
                                    =============     =============     =============     =============

</TABLE>

                              Page 5 of 23

<PAGE>



                            PMC INTERNATIONAL, INC. AND SUBSIDARIES
                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (Unaudited)

                                                   Nine Months Ended
                                                     September 30,

                                            1998                     1997
                                            ----                     ----
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Loss                             $(11,662,014)          $(2,082,383)
     Adjustments to reconcile net loss 
      to net cash used in 
      operating activities
     Depreciation and amortization           1,375,674               634,249
     Write-off of acquired goodwill          5,780,447
     Write-off of product development
     asset                                     440,697
     Changes in operating assets and 
      liabilities
       Investment management fees 
         receivable                             49,357            (1,185,055)
       Other receivables                        77,174                36,342
       Prepaid expenses and other assets       119,666            (1,088,487)
       Accounts payable                      1,400,424               358,056
       Accrued expenses                         63,938                76,866
       Other liabilities                       (11,983)               13,782
       SEC Settlement 
          Distribution                         (13,986)             (605,591)  
       Deferred revenues                      (153,203)              839,131
                                           ------------          ------------

     Net cash used in operating 
      activities                            (2,533,809)           (3,003,090)
                                           ------------          ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of furniture, and equipment       (182,116)             (869,180)
   Cost of product development                (294,814)             (797,918)
   Decrease of long term note receivable       548,765                24,683
   Goodwill recognized on ADAM purchase              -            (5,410,574)
   Write off of loan to KP3, LLC and 
     collateral securing KP3,LLC loan
     from bank                               (1,983,504)                  -
                                           ------------          ------------

   Net cash provided by (used in) 
    investing activities                    (1,911,669)           (7,052,989)
                                           ------------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net proceeds from notes payable           2,100,000               353,729
   Principal payments on notes payable        (202,883)                    -
   Principal payments on obligations 
    under capital lease                       (115,551)              162,834
   Proceeds from issuance of common stock            -             6,505,395
                                           ------------          ------------
   Net cash provided by financing 
    activities                               1,781,566             7,021,958
                                           ------------          ------------

NET INCREASE (DECREASE) IN CASH                                                 
                                            (2,663,912)           (3,034,121)
                                           ============          ============

CASH, at beginning of period                                                   
                                             2,953,740             6,499,390
                                           ------------          ------------
CASH, at end of period                    $    289,828           $ 3,465,269
                                           ============          ============
                              
                              Page 6 of 23

<PAGE>



                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
       FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997

NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited condensed  consolidated financial statements include
the historical accounts of Portfolio  Management  Consultants,  Inc. ("PMC") for
all periods,  the  accounts of PMCI since  September  30, 1993,  the accounts of
Portfolio  Brokerage Services,  Inc., and Portfolio  Technology  Services,  Inc.
since inception,  and PMC Investment  Services,  Inc.  (formerly ADAM Investment
Services,  Inc.) since September 24, 1997. These financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange Commission.  Accordingly, they do not include all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting  of normal  accruals and  elimination of  intercompany  accounts and
transactions)  considered  necessary for a fair presentation have been included.
The unaudited  condensed  consolidated  financial  statements  should be read in
conjunction with the  consolidated  financial  statements and footnotes  thereto
included in the Company's Annual Report on Form 10-KSB, as amended, for the year
ended December 31, 1997.

NOTE 2 - CASH AND CASH EQUIVALENTS

In September  1998, in connection  with a separation  agreement  with the former
President  and CEO,  a bank realized  on cash  collateral  in the  amount of
$1,750,000  previously  pledged  by the  Company  in support of a loan made to a
company (the "LLC") owned and controlled by the Company's  former  President and
CEO. As part of the LLC loan transaction, the Company collateralized the loan on
behalf of the LLC and the 410,961  shares of PMCI common  stock owned by the LLC
were pledged to the Company.  These shares were surrendered to the Company under
the terms of the LLC's pledge to the Company and were returned to treasury.  The
Company had also loaned the LLC amounts  sufficient  to pay interest on the loan
so long as the amount of loans made and bank collateral  provided did not exceed
$2,000,000.  As a part of the separation agreement, the Company also forgave the
loans made to the LLC to pay interest amounting to approximately $224,000.

NOTE 3 - RECEIVABLES

Investment  management  fees have been  reduced by $350,000  to reflect  amounts
believed to be uncollectable.

NOTE 4 - SOFTWARE AND PRODUCT DEVELOPMENT & GOODWILL

During third quarter 1998, the Company determined that certain of its long lived
assets should be adjusted to reflect impairment of their value. Accordingly, the
Company  reviewed its valuation of goodwill related to the acquisition of PMCIS.
The Company  recorded a write-down of $5,780,000  in goodwill  principally  as a
result of a material  decline in assets under  management  acquired in the PMCIS
transaction.  In addition,  capitalized  development  costs were written down by
$441,000.

                              Page 7 of 23
<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 5 - LONG TERM RECEIVABLE

A long term note  receivable  acquired in 1993 related to a reverse  acquisition
transaction involving the Company was paid in full.

NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Severance  and  other  related  termination   expenses  were  recorded  totaling
$953,000,  primarily related to the resignation of the former President and CEO.
Accrued  expenses  also  includes  the  second  earn out  payment  to the former
shareholders of PMCIS of approximately $2,000,000, including interest.

NOTE 7 - NOTES PAYABLE

     On July 7, 1998, in  connection  with the execution of the Letter of Intent
(see Item 2,  Management's  Discussion and Analysis,  Overview),  Dundee Bancorp
Inc.  ("Dundee")  provided a loan to the  Company of $1.5  million  for  working
capital  purposes.  The loan is secured by the  assets of the  Company  and by a
pledge of the stock of each of the Company's  subsidiaries  and is guaranteed by
PMC,  PMCIS,  and PTS.  The loan,  which  accrues  interest  at 12%,  was due on
November 30, 1998, unless extended by mutual agreement.  Also included is a loan
from  a  bank  with  an  original   principal   amount  of  $600,000  which  was
collateralized by accounts  receivable and of which $36,725 was paid on June 24,
1998.  Principal  payments are due as follows:  $363,725 on January 1, 1999, and
$200,000 on April 1, 1999.  Interest on the note at the rate of 11% per annum is
due and payable monthly. In a transaction  occurring  subsequent to the close of
the third quarter, the indebtedness to Dundee was paid in full. See Note 8.

NOTE 8 - SUBSEQUENT EVENTS

On October 15,  1998,  the Company  obtained a loan from The Ziegler  Companies,
Inc.,  ("Ziegler")  in the  principal  amount of  $500,000.  The note is due and
payable  on  December  31,  1998,  and  interest  accrues  thereon at prime rate
(currently 8%). The principal  balance of the note is convertible into shares of
the  Company's  Series A  Preferred  Stock at the rate of $2.50 per  share.  The
Company  also  granted to Ziegler an option to  purchase an  additional  111,818
shares of preferred stock at $2.50 per share through December 31, 1999.

In October 1998, in connection with the proposed  transactions with Ziegler, the
Company entered into warrant  purchase  agreements with certain of its officers,
directors and  affiliates  of its  directors,  pursuant to which such  officers,
directors  and  affiliates  of its  directors  have sold to the Company  certain
outstanding  warrants  to  purchase  common  shares of stock of the Company at a
purchase price of $0.05 per warrant share.  The aggregate number of Common Stock
underlying  the purchased  warrants is 150,001.  The current  exercise price per
warrant share ranged from $4.00 to $8.50.

On November 3, 1998, the Company  entered into a Merger  Agreement with Ziegler,
whereby  Ziegler  would  conduct a tender  offer for the  Company's  outstanding
shares of common and  preferred  stock and  thereafter  seek to have the Company
become a  wholly-owned  subsidiary  through a merger of a subsidiary  of Ziegler
with and  into the  Company.  In  connection  with  the  signing  of the  Merger
Agreement,  the Company and Ziegler entered into a Credit Agreement  whereby the
Company was loaned $3.5  million.  The note is due and payable on March 31, 1999

                              Page 8 of 23
<PAGE>

     and  interest  accrues  therein at prime rate  (currently  8%). The note is
convertible  into shares of the  Company's  common stock at the rate of $.60 per
share.  Ziegler also  received an option to purchase an  additional  4.5 million
shares of common stock at $.60 per share  through the later of March 31, 1999 or
15 days after all loans due Ziegler are paid in full.  A portion of the proceeds
of the $3.5 million  loan was used to repay in full the note due to Dundee.  The
loans are secured by the assets of the  Company,  will be secured by a pledge of
the  stock of each of the  Company's  subsidiaries  and are  guaranteed  by PMC,
PMCIS, and PTS.

On  November  3, 1998,  the  Company  entered  into a First  Amendment  to Stock
Purchase  Agreement  with  the  former  shareholders  of  PMCIS  (formerly  ADAM
Investment  Services,  Inc.).  Under the  amendment,  the payment of the Initial
Purchase Price Adjustment which had been due in full on November 6, 1998, in the
amount of approximately  $2,000,000,  was restructured as follows. The principal
amount of $1,822,311  accrues  interest at the rate of 8.5% through  November 6,
1998,  and  thereafter at the rate of 12%. The Company paid $500,000 by November
6, 1998; is to pay  $500,000 on the earlier of January 6, 1999,  or one business
day after the completion of Ziegler's tender offer; and the balance of principal
and interest is to be paid the earlier of March 31, 1999,  or the  completion of
the merger with the  subsidiary  of Ziegler.  A portion of the proceeds from the
$3.5  million loan was used to make the November 6th payment to the former PMCIS
shareholders.

Also on November 3, 1998, the Company  entered into a new  employment  agreement
with its President,  Scott A. MacKillop,  and his prior employment agreement and
change in  control  severance  agreement  were  terminated.  The new  employment
agreement provides for a minimum salary of $240,000 that the Company may augment
with performance-based increases as established in the Company's discretion, and
participation  in the Company's  other benefit plans.  In addition,  it provides
that if payment in full of the Initial Purchase Price Adjustment under the PMCIS
Stock  Purchase  Agreement  is not paid in  accordance  with the  agreement,  as
amended,  then the  Company  will pay Mr.  MacKillop  $250,000 on the earlier of
April 2, 1999, or two business days after the consummation of the Merger.




                              Page 9 of 23



<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2. 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 and in the  consolidated  financial  statements  and footnotes
included in the Company's Annual Report on Form 10-KSB, as amended, for the year
ended  December  31,  1997.  The  discussion  below  contains  "forward  looking
statements"  within  the  meaning  of the  federal  securities  laws,  including
statements  regarding  the  Company's  prospects,  cash  flows,  liquidity,  and
potential  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.

Overview

     In  order  to  bring  financial  stability  to the  Company,  the  Board of
Directors  and  management  put  significant  effort  into  finding a  strategic
investor,  purchaser or merger  candidate for the Company.  As a result of those
efforts,  the Company  entered into a Merger  Agreement,  Credit  Agreement  and
related documents with The Ziegler  Companies,  Inc.  ("Ziegler") on November 3,
1998,  pursuant to which PMC  International,  Inc.  would  become a wholly owned
subsidiary of Ziegler.  Based upon the Company's  operating  history,  financial
condition,  and  prospects,  as  well as the  factors  described  below,  in the
business  judgment of the Board of Directors,  the transactions with Ziegler are
in the best interests of the shareholders, clients and vendors of the Company.

The Company provides investment  management and consulting services to financial
advisers  which  enable  advisers  to  offer  their  clients  a  wide  range  of
institutional quality investment programs.  Through these programs,  the Company
offers financial advisers access to separately managed accounts,  managed mutual
fund portfolios,  and other back-office and consulting services.  These services
are tailored for use by fee-based  financial  advisers who charge their  clients
based on a percentage of assets under management.

The number of  fee-based  advisers  has grown  rapidly  in recent  years and the
demand for  services  like those  offered by the  Company  has also  grown.  The
Company  has  benefited  from this  growth,  increasing  both its  assets  under
management and its revenues significantly in recent years. As the market for the
Company's  services  grew,  competition  within  this  segment of the  financial
services industry also increased.

To address the  opportunities  in this  market,  the Company  pursued a strategy
designed to expand its services to  financial  advisers,  increase  assets under
management,  and  improve  operating  efficiency.  That  strategy  included  the
following actions.  First, the Company invested significantly in the development
of  its  own  proprietary  portfolio  accounting  system.  Second,  it  expended
significant  resources developing a mutual fund investment program that featured
sophisticated  software designed to help advisers market the program to clients.
Third, the Company pursued and obtained a number of institutional  relationships
that were aggressively  priced and called for a high degree of customization and
software development. Finally, in September 1997, it acquired PMCIS

                              Page 10 of 23
<PAGE>

                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
              CONDITION AND RESULTS OF OPERATIONS. (cont'd)

(formerly,  ADAM Investment Services, Inc.), a provider of mutual fund portfolio
management services, for a price of up to $9 million.

The Company  encountered  difficulties  in implementing  the strategy  described
above.  The  Company's  efforts to develop a  proprietary  portfolio  accounting
system were only partially successful and failed to produce many of the intended
benefits.  This failure resulted in the loss of at least one major institutional
relationship, and caused significant disruption to the Company's operations. The
Company's efforts to develop its own mutual fund program were costly and did not
generate  the  interest  among  financial   advisers  or  produce  the  revenues
anticipated  by  the  Company.   Many  of  the  Company's  large   institutional
relationships proved unprofitable and diverted resources from the Company's core
business.  All of these  difficulties  slowed the Company's efforts to integrate
the PMCIS  business  with the  Company's  operations  to such a degree  that the
Company failed to realize many of the expected benefits of that acquisition.

Because of those difficulties, in March 1998, the Board retained Putnam, Lovell,
de Guardiola and Thornton,  Inc. ("Putnam  Lovell"),  to advise the Company with
respect  to a possible  sale of the  Company or  identification  of a  strategic
investor.  The Board and the Company's  management offered the names of a number
of possible purchasers and investors and Putnam Lovell generated its own list.

Through  this  process  the  Company  received  two  formal  offers.  The  Board
considered both offers,  taking into account the Company's  financial  condition
and  strategic  objectives.  Based  on its  review  of both  offers,  the  Board
determined to hold negotiations with Dundee Bancorp Inc.  ("Dundee") and on July
7, 1998,  entered into a Letter of Intent with Dundee  whereby Dundee would make
an equity investment of $24 million in the Company.  Dundee also provided a $1.5
million bridge loan to the Company.

On August 10, 1998, the Letter of Intent was terminated based on Dundee's stated
belief that the Company would not provide the strategic business advantages that
Dundee had  originally  hoped to achieve  through its investment in the Company.
Following  termination of the Dundee Letter of Intent,  the Company  immediately
began an effort to identify a new investor or purchaser for the Company. Members
of the Board and the Company's management,  and representatives of Putnam Lovell
contacted companies that had previously expressed an interest in the Company, as
well as companies not  previously  contacted.  The Company's  management  met in
person with a number of companies to discuss a possible investment and the Board
spoke by telephone  with three of them.  Seven  companies  submitted  investment
proposals  for  consideration  by the  Company,  two of which were  subsequently
withdrawn.

On August 24,  1998,  the Company  entered  into a Separation  Agreement  
with Kenneth S.  Phillips,  the  Company's  founder,  CEO and President,
and the Board  accepted his  resignation.  Effective that date,  the Board
appointed C.R.  "Sonny" Tucker as the Company's acting CEO and Scott A.
MacKillop as the  Company's  President.  Mr. Tucker had been serving as 
a consultant to the Company on certain organizational and operational issues. 
Mr. MacKillop had served as the

                              Page 11 of 23
<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  
         CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)

Company's  Chief Operating  Officer,  President of its PMCIS  subsidiary,  and a
member  of  the  Board.  Effective  that  date,  the  Company's  entered  into a
consulting agreement with Mr. Tucker for his engagement as the Company's Interim
CEO. The agreement  provides that Mr.  Tucker will be  indemnified  for all acts
taken as an officer of and  consultant  to the Company to the same extent as the
Company's other officers and directors  (consistent with the Company's  Articles
of Incorporation).  Under Mr. Tucker's  agreement,  he is to be paid $28,350 per
month,  and may be paid a bonus from time to time at the sole  discretion of the
Company's  Board of  Directors.  The  initial  term of Mr.  Tucker's  Consulting
Agreement was two months commencing August 24, 1998 with the term to be extended
for successive one-month periods unless either party gives timely written notice
to the contrary to the other party.

The  Company  also  entered  into  a  Confidentiality/Nonsolicitation  Agreement
effective as of August 24, 1998 with Mr. Tucker,  which provides that Mr. Tucker
will not disclose or use for any purpose unrelated to his service to the Company
any confidential  information  during the course of such service.  The agreement
also provides that, without the Company's prior written consent, during the term
of the agreement and for 12 months thereafter Mr. Tucker will not (i) solicit or
attempt to cause any employee,  agent or contractor of the Company or any of its
affiliates  to terminate  his or her  consulting  period,  agency or  contractor
relationship,  as applicable, with the Company or such affiliate, (ii) interfere
or attempt to  interfere  with the  relationship  between  the  Company  and its
employees,  contractors  and agents,  (iii)  solicit  similar  business that the
Company or any of its  affiliates  offers from any customer or client  served by
the Company,  or (iv)  interfere or attempt to interfere  with any  transaction,
agreement or business relationship in which the Company or any of its affiliates
was involved.

From  August  through  September,  the Board of  Directors  met eight  times and
considered and evaluated (i) the Company's  financial  condition and the Board's
responsibilities to creditors,  shareholders, and clients, (ii) the scope of the
effort to seek an investor for the Company,  (iii) the specific discussions that
management and members of the Board were having with potential  investors,  (iv)
the relative merits of the proposals that were received, and (v) the probability
of timely completing a transaction.

On September 2, 1998, the Board retained Value Investing Partners,  Inc. ("Value
Investing")  to advise  the  Company on issues  relating  to a  potential  sale,
solicit  potential  strategic  investors,   manage  the  process  of  receiving,
qualifying and accepting offers,  and to render an opinion as to the fairness of
the  consideration  to be paid by any  strategic  investor  in the  Company.  On
September  25,  1998,  after  thorough  review of the  Company's  situation  and
options,  the Board  authorized the Company's  management to execute a Letter of
Intent with Ziegler.

On October 15, 1998,  the Company  entered into a revised  letter of intent with
Ziegler  under the  following  terms:  Ziegler  to make a cash  tender  offer to
existing  shareholders at $0.60 per share of Common Stock and $2.50 per share of
Preferred  Stock  followed  by a cash  merger  (the  "Merger");  Ziegler to make
available a $3,500,000  credit facility  convertible  into Common Stock at $0.60
per share and  Ziegler  to  receive an option to  purchase  4,500,000  shares of
Common  Stock at $0.60 per  share;  Ziegler to loan the  Company  an  additional
$500,000 immediately under a note convertible into Preferred Stock at $2.50 per

                              Page 12 of 23
<PAGE>
         
                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  
         CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)

share;  and Ziegler to receive an option to purchase  111,818  shares of
Preferred  Stock at $2.50 share.

On October 15, 1998, upon agreement by the parties to revised terms reflected in
the revised Letter of Intent,  Ziegler loaned the Company $500,000 pursuant to a
promissory note (the "First Note").  The First Note is repayable by December 31,
1998,  bears interest at a variable rate equal to the prime rate as published in
the  Wall  Street  Journal  (Midwest  Edition),  and the  principal  balance  is
convertible  into Preferred  Shares at the rate of $2.50 per share upon election
by Ziegler.  The Company and Ziegler also entered into a preferred  stock option
agreement,  pursuant to which the Company granted Ziegler the option to purchase
111,818 Preferred Shares at a price of $2.50 per share.  These Preferred Shares,
together  with those that may be  acquired  upon  conversion  of the First Note,
would equal upon  exercise and  conversion  an  aggregate  of 311,818  Preferred
Shares,  or approximately  69% of the then outstanding  Preferred  Shares.  This
would be an  amount  sufficient  to  approve  on behalf  of the  holders  of the
Preferred  Shares any amendment to the  provisions of the Company's  Articles of
Incorporation  applicable to the Preferred  Shares and sufficient to approve the
Merger on behalf of the  holders of the  Preferred  Shares.  The $2.50 per share
conversion  price under the First Note,  and exercise  price under the Preferred
Stock Option Agreement,  is equal to the liquidation preference of the Preferred
Stock.

On October 26, 1998,  Value Investing  issued its opinion that, as of such date,
the  consideration  to be received  by the  Company's  shareholders  pursuant to
Ziegler's  tender  offer  and the  Merger  is fair  to the  shareholders  from a
financial  point of view.  The  Board met on  October  26,  1998,  and after due
consideration,  the Board unanimously  approved the tender offer, the Merger and
the other transactions with Ziegler.

On October 28,  1998,  the Board met again to consider the  Company's  financial
condition and to evaluate the status of and proposed changes to the transactions
with Ziegler,  including the proposed termination of Mr. MacKillop's  employment
agreement and change in control  severance  agreement and the execution of a new
employment agreement between Mr. MacKillop and the Company. The Board considered
the  Company's  circumstances,  the  impact of the  changes  on  timeliness  and
likelihood  of  completing  the  transactions,  and the  benefits to  creditors,
shareholders   and  clients.   The  Board  authorized  going  forward  with  the
transactions.  The Board also considered and approved,  without Mr.  MacKillop's
participation,  the  termination  and  execution  of  the  agreements  with  Mr.
MacKillop.

Also in October  1998,  the Company's  directors and executive  officers who own
Common Shares,  certain of the Company's employees and affiliates and affiliates
of certain  directors  entered into shareholder  tender  agreements  pursuant to
which they have agreed to tender their Common  Shares in the tender  offer.  The
number of shares subject to tender  agreements is 262,277 or approximately  5.9%
of the Common Shares outstanding.

On November  3, 1998,  the Merger  Agreement  and Credit  Agreement  between the
Company and Ziegler were finalized and signed and the Company and Ziegler issued
a joint press release  publicly  announcing  the  transaction.  Under the Credit
Agreement, Ziegler loaned the Company $3.5 million pursuant to a promissory note
(the "Second Note"). The Second Note is repayable March 31, 1999,

                              Page 13 of 23
<PAGE>
 
                   PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  
              CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)

bears  interest  at the same rate as the First  Note,  and is  convertible  into
Common  Shares at the rate of $.60 per  share  upon  election  by  Ziegler.  The
Company and Ziegler also entered into a common stock option  agreement  pursuant
to which the Company  granted  Ziegler the option to purchase 4.5 million Common
Shares at a price of $.60 per share.  These Common  Shares  together  with those
that may be  acquired  upon  conversion  of the  Second  Note  would  equal upon
exercise and conversion an aggregate of 10,333,333 or  approximately  70% of the
then outstanding Common Shares. This would be an amount sufficient to approve on
behalf of the holders of Common  Shares any  amendment to the  provisions of the
Company's  Articles of Incorporation  applicable to Common Shares and sufficient
to approve the Merger on behalf of the holders of Common Shares.

In connection  with the execution of the Merger  Agreement,  the Company entered
into a new one year  employment  agreement  with Mr.  MacKillop.  This agreement
provides for a one-year  term and a minimum  salary of $240,000 that the Company
may augment with  performance-based  increases as  established  in the Company's
discretion, and participation in the Company's other benefit plans. In addition,
the new  employment  agreement  provides  that if payment in full of the Initial
Purchase Price Adjustment  under the PMCIS Stock Purchase  Agreement is not paid
in  accordance  with the  Agreement,  as amended,  then the Company will pay Mr.
MacKillop  $250,000 on the earlier of April 2, 1999,  or two business days after
the consummation of the Merger.  Upon the  effectiveness of this agreement,  Mr.
MacKillop's  existing  employment  agreement  and  change in  control  severance
agreement  terminated.  Also  on that  date,  the  Company  executed  the  First
Amendment  to Stock  Purchase  Agreement  modifying  the terms of payment of the
Initial Purchase Price Adjustment payable to the former PMCIS shareholders. Such
payment  was due in full on  November  6, 1998 and under the  modified  terms is
payable as follows:  $500,000 payable November 6, 1998; $500,000 due the earlier
of January 6, 1999 or one business day after  consummation of the Offer; and the
balance  (including  interest  accruing  at 8.5% until  November 6, 1998 and 12%
thereafter)  due at the earlier of the effective time of the Merger or March 31,
1999. If the Company  fails to make any of the  foregoing  payments and does not
cure such nonpayment within 5 business days after receiving notice thereof, such
nonpayment will constitute a default under the First Amendment to Stock Purchase
Agreement, such First Amendment will become null and void, and the rights of the
former  PMCIS  shareholders  under the PMCIS  Stock  Purchase  Agreement  may be
enforced to the full extent permitted thereunder.

On November 9, 1998, ZACQ Corp., a wholly owned subsidiary of Ziegler, commenced
its tender offer for the Company's outstanding Common and Preferred Shares.

                              Page 14 of 23

<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
              CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)


Results of Operations

The Quarter in Review

During the third  quarter of 1998,  the Company  recorded  poor  operating
results  primarily  from 1)  recurring  losses from ongoing operating  
activities  2)  restructuring  charges  in  connection  with the  Company's 
corporate  restructuring  and 3) write  down of goodwill.  The net loss for 
the third quarter was $8,956,509.  The loss included one time charges such as:

Write down of goodwill/capitalized costs                 $5,900,000
Severance/employee separation costs                       1,000,000
Write down of receivables                                   350,000
Termination of Atlanta lease                                100,000
                                                        ------------
                                                        $ 7,350,000

     The charges and  write-offs  are part of the  Company's  overall  corporate
restructuring.  The Company has reorganized its executive management,  including
the departure of its President and Chief Executive Officer, Kenneth S. Phillips,
is refocusing its efforts on its core  business,  has  implemented  cost control
measures, has reduced head count and has entered into merger and loan agreements
with Ziegler in order to create a new strategic  alliance.  The Company believes
that these measures,  taken in concert,  will stabilize the Company's  financial
condition,  provide the opportunity for the Company to be successful, and are in
the best interests of the Company's shareholders, clients, and vendors.

Three Months Ended  September 30, 1998 Compared to Three Months Ended  September
30, 1997 Nine Months  Ended  September  30, 1998  Compared to Nine Months  Ended
September 30, 1997

Revenues
Total revenue was $5,200,000 for the quarter ended September 30, 1998,  compared
to $3,200,000  for the  corresponding  period in 1997, an increase of 49%. Total
revenue was $16,000,000 for the nine months ended September 30, 1998,  compared
to  $9,000,000  for the  corresponding  period in 1997,  an increase of 72%. The
increases were attributable primarily to the PMCIS acquisition in September 1997
and the  related  increases  in gross  revenues  for the  period.  In  addition,
revenues in PMC's core wrap business increased during the periods, though offset
in part by a reduction in revenues from the loss of an institutional customer.

Investment  Management  and Other Fees,  Including  Manager,  Adviser,  and
Custody Fees
Investment  management and other fees, including manager,  adviser,
and custody fees,  were  $3,100,000  for the quarter  ended  September 30, 1998,
compared to $1,700,000 for the corresponding period in 1997, an increase of 82%.
Investment  management and other fees were  $9,700,000 for the nine months ended
September 30, 1998, compared to $4,400,000 for the corresponding period in 1997,
an increase of 120%. These increases were principally  attributable to the PMCIS
acquisition.  Also,  direct expenses  increased in proportion to revenues in the
PMC core wrap fee business.

                              Page 15 of 23
<PAGE>

                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
         CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)


Net Revenue after Investment Manager and Other Fees
Net  revenue  after  investment  manager and other fees was  $2,000,000  for the
quarter ended September 30, 1998,  compared to $1,500,000 for the  corresponding
period in 1997,  an increase of 34%. Net revenue  after  investment  manager and
other fees was $6,300,000 for the nine months ended September 30, 1998, compared
to  $4,600,000  for the  corresponding  period in 1997,  an increase of 37%. The
increase was  primarily  attributable  to the PMCIS  acquisition.  Institutional
clients do not have associated direct expenses,  therefore, gross margin may not
be  comparable  from  period to period  because of the mix of  business  between
institutional,  mutual fund wrap and the core separate account wrap fee lines of
business.

Operating Expenses
     Operating  expenses were  approximately  $11,000,000  for the quarter ended
September 30, 1998,  compared to  $2,300,000  for the  corresponding  quarter in
1997,  an increase of 380%.  Operating  expenses were  $18,000,000  for the nine
months ended  September 30, 1998,  compared to $6,700,000 for the  corresponding
period in 1997,  an increase of 169%.  The  increase in  operating  expenses are
related to  increases  in  salaries  and  benefits  as a result of 1)  severance
payments,  2) the PMCIS acquisition,  and 3) the increase in business related to
the E&Y relationship.  Severance payments were recognized  primarily as a result
of the resignation of the former  President and CEO.  Eighteen people were added
to payroll in conjunction  with the PMCIS  acquisition in 1997. Four people have
been added in 1998 to support the E&Y program.  Although the Company has reduced
staffing in  connection  with its  corporate  restructuring,  decreased  expense
resulting from those  reductions will not be evident until the fourth quarter of
1998 and the first quarter of 1999.  General & administrative  and occupancy and
equipment   expenses  increased  as  a  result  of  the  PMCIS  acquisition  and
overlapping  costs  of  maintaining  duplicate  facilities.   Professional  fees
increased as a result of 1)  increased  fees from the merged two  companies,  2)
expenses  associated  with  the  Company's  capital  raising  efforts,  and 3) a
consulting  contract with a former PMCIS employee.  Amortization of goodwill was
the single largest component of operating expenses,  representing $5,871,245 for
the quarter and  $6,143,642  for the nine months ended  September 30, 1998.  The
substantial increase over the prior period is as a result of 1) an adjustment in
the  third  quarter  to  reflect  the  impairment  of  the  PMCIS  goodwill,  2)
amortization of goodwill related to the PMCIS  acquisition,  and 3) write off of
capitalized  product development costs. The PMCIS goodwill was written down as a
result of  significant  attrition  of PMCIS assets  under  management  since the
acquisition date.

Income Taxes
The Company's effective tax rate for 1997 is 0 (zero).

Net Loss
The Company  recorded a net loss of $9,000,000  for the quarter ended  September
30, 1998,  as compared to $800,000  for the same period in 1997,  an increase of
1025%.  The net loss was  $11,700,000  for the nine months ended  September  30,
1998,  as  compared  to  $2,100,000  for the  corresponding  period in 1997,  an
increase of 457%.

                              Page 16 of 23
<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
         CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)

The  increase in loss for the nine month  period ended  September  30, 1998,  is
primarily  related  to  the  Company's  corporate  restructuring  and  increased
headcount to meet its obligations to clients, as follows:

1.  PMCIS goodwill amortization, including write-down        $6,100,000
2.  Increase in salaries and benefits                        $1,800,000
3.  Severance payments/employment agency fees                $1,000,000
4.  Increase in amortization/depreciation, included in G&A     $700,000
                                                            -----------
                                                             $9,600,000

Continuing  losses from  operations  have resulted in significant  strain on the
Company's  cash  balances.  However,  the Company is  continuing  its efforts to
reduce  expenses in all areas of the Company and  continues to focus  efforts on
its core business in order to grow assets under  management and  administration.
The Company's  relationship with its largest institutional client is progressing
and the Company is addressing  unprofitable  relationships.  Management believes
that these  efforts  along with a capital  infusion  should allow the Company to
continue operations until it becomes cash flow positive, which is anticipated to
occur by the second  quarter  1999.  There is no  assurance  that the  Company's
restructuring  will be  successful.  If the Company is not able to  successfully
restructure,  the  business  and  financial  condition  of the  Company  will be
materially adversely affected. As discussed below,  management believes that the
Company's  proposed strategic  alliance with Ziegler  will provide
economic  stability  allowing the Company to reach a positive cash flow position
in fiscal 1999.

At September 30,  1998, the Company had cash of $290,000, including restricted
cash of $100,000.

Liquidity and Capital Resources 
Cash used in operating  activities was $2,500,000 for the nine months ended
September 30, 1998. This was due primarily to the net loss from operations.

Cash used in investing  activities was $1,900,000 for the nine months ended
September 30, 1998.  Cash used in investing  activities was primarily the result
of the write off of cash collateral pledged to secure the KP3, LLC, loan and the
write off of the related  loan from the Company to KP3,  LLC to pay  interest on
the KP3, LLC loan.
0
Cash provided by financing activities of $1,800,000 was primarily related to the
borrowings for working capital from Dundee and from a local bank.

The Company  anticipates  that it will continue to experience  operating  losses
until such time as it can realize the  benefits  of the cost  restructuring  and
growth in assets under management and administration.

In connection  with the Company's  entering into a Merger  Agreement to create a
new strategic  alliance with Ziegler, the Company received
loans totaling $4 million in October and November 1998. In addition, the Company
restructured  the terms of  payment of the  Initial  Purchase  Price  Adjustment
payment due to the former  shareholders of PMCIS.  The Company is using the loan
proceeds to pay aged liabilities, repay the note to Dundee,

                              Page 17 of 23
<PAGE>

                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  
         CONDITION  AND  RESULTS  OF  OPERATIONS. (cont'd)

make the first  installment  payment to the former PMCIS  shareholders,  and for
other  working  capital  purposes.  Management  believes  that the cash infusion
coupled  with the  Company's  restructuring  efforts  and  proposed  merger will
position the Company to be  successful in 1999.  There is no assurance  that the
merger will be consummated, and in that event, the Company will need to seek out
other  sources  of  capital  to  repay  its  borrowings  and to  meet  its  cash
requirements  until it becomes cash flow  positive.  There is no assurance  that
such other  sources of capital  would be  available  to the  Company to meet its
needs and in that  circumstance,  the  business and  financial  condition of the
Company will be materially adversely affected.

Year 2000
Many existing  computer programs use only two digits to identify a specific year
and therefore may not accurately  recognize the upcoming  change in the century.
If not  corrected,  many computer  applications  could fail or create  erroneous
results by or at the year 2000.  Due to the  Company's  dependence  on  computer
technology to operate its business, and the dependence of the financial services
industry on computer  technology,  the nature and impact of Year 2000 processing
failures on the Company's  business could be material.  The Company is currently
modifying  its  computer  systems and working with its third party vendors in 
order to enable its systems and dependent systems to process data
and  transactions  incorporating  year 2000  dates  without  material  errors or
interruptions.

     The Company has undertaken initiatives intended to ensure that its computer
equipment and software will function  properly with respect to dates in the Year
2000  and  thereafter.  For  this  purpose,  the term  "computer  equipment  and
software" includes systems that are commonly thought of as IT systems, including
portfolio accounting,  financial accounting,  data processing,  network systems,
trading and  telephone  systems,  and other  miscellaneous  systems,  as well as
systems that are not commonly  thought of as IT systems,  such as alarm systems,
fax machines,  heating and air conditioning  facilities,  or other miscellaneous
systems.  Both IT and non-IT  systems may  contain  imbedded  technology,  which
complicates  Year 2000  identification,  assessment,  remediation,  and  testing
efforts.  Based upon its  identification  and  assessment  efforts to date,  the
Company  found that  certain  of the  computer  equipment  and  software  in use
required  replacement or  modification.  In addition,  in the ordinary course of
replacing  computer  equipment and software,  the  Company  attempts  to  obtain
replacements that are Year 2000 compliant.  Utilizing both internal and external
resources  to  identify  and assess  needed Year 2000  remediation,  the Company
currently anticipates that its Year 2000 identification, assessment, remediation
and testing efforts, which began in December 1997, will be completed by July 15,
1999, and that such efforts will be completed prior to any currently anticipated
impact on its computer equipment and software.  The Company estimates that as of
September 30, 1998, it had completed  approximately  35% of the initiatives that
it believes will be necessary to address  potential Year 2000 issues relating to
its computer equipment and software.  The projects  comprising the remaining 65%
of the  initiatives are in process and expected to be completed on or about July
15, 1999.

                              Page 18 of 23
<PAGE>

     The  Company  has  also  contacted  its  significant  vendors  and  service
providers and has  communicated  with many strategic  customers to determine the
extent to which interfaces with such entities are vulnerable to Year 2000 issues
and whether the  products and services  purchased  from or by such  entities are
Year 2000  compliant.  The Company will continue to follow-up  with  significant
vendors  and service  providers  to obtain  assurances  that they expect to have
addressed all their material Year 2000 issues on a timely basis.

     The  Company   currently   expects  that  costs  to  comply  will  be  born
substantially by outside entities, and the Company anticipates that its costs to
achieve Year 2000  compliance  will not exceed $250,000 over the next 15 months.
These costs exclude the time that may be spent by management and  administrative
staff in guiding and assisting the information technology effort described above
or for bringing internal systems into Year 2000 compliance. However, if all Year
2000 issues are not properly identified, there can be no assurance that the Year
2000  issues will not  materially  adversely  impact  the  Company's  results of
operations  or adversely  affect the  Company's  relationships  with  customers,
vendors, or others.  Additionally,  there can be no assurance that the Year 2000
issues  of other  entities  will  not  have a  material  adverse  impact  on the
Company's systems or results of operations.

     The Company has begun, but not yet completed,  a comprehensive  analysis of
the  operational  problems and costs that would be  reasonably  likely to result
from the failure by the Company and certain  third  parties to complete  efforts
necessary to achieve Year 2000 compliance on a timely basis. A contingency  plan
is being developed but is not yet completed, for dealing with the most
reasonably likely worst case scenario, and such scenario has not yet been 
clearly identified.  The Company  currently plans to complete such analysis 
and  contingency  planning by December 31, 1999.

     The  costs  of  the  Company's   Year  2000   identification,   assessment,
remediation and testing  efforts and the dates on which the Company  believes it
will complete such efforts are based upon  management's  best  estimates,  which
were derived using numerous assumptions regarding future events,  including the
continued availability of certain resources,  third-party remediation plans, and
other factors.  There can be no assurance that these estimates will prove to be
accurate,  and actual  results  could  differ  materially  from those  currently
anticipated.  Specific  factors  that  could  cause  such  material  differences
include,  but are not limited to, the availability and cost of personnel trained
in Year 2000 issues,  the ability to identify,  assess,  remediate  and test all
relevant computer codes and embedded technology,  and similar uncertainties.  In
addition,  variability of  definitions  of  "compliance  with Year 2000" and the
different products and services, and combinations thereof, purchased and sold by
the Company  may lead to claims  whose  impact on the  Company is not  currently
estimable.  No assurance can be given that the  aggregate  cost of defending and
resolving  such  claims,  if any,  will  not  materially  adversely  affect  the
Company's results of operations.
 

                              Page 19 of 23

<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

In June 1997, the Portfolio  Management  Consultants,  Inc.,  ("PMC") received a
letter  from  an  attorney  representing  a  former  employee  which  threatened
litigation relating to a dispute over such former employee's remuneration by the
Company  unless the Company  agreed to settle with him by a specified  date. The
Company  responded  to the letter and stated its  position  that no amounts  are
owed.  By  correspondence  from The  National  Association  of Security  Dealers
("NASD") dated December 19, 1997, PMC was notified that the matter was submitted
by the employee to the NASD for arbitration. The employee is seeking damages for
lost  earnings  from his prior  employer,  lost  commissions  from PMC and other
damages,  totaling $1,190,000.  PMC has responded to the NASD Arbitration demand
by denying  that the NASD has  jurisdiction  over the matter and seeking to have
the matter dismissed.  On May 13, 1998, the Company filed a verified Application
for Stay of Arbitration in Denver  District  Court,  asking for an order staying
arbitration due to the fact that there is no agreement for  arbitration  between
the parties.  A hearing on the  Application was held on October 30, 1998 and the
Court  ruled in the  Company's  favor,  staying  the  arbitration.  The  Company
believes  that the claims  described in the NASD  arbitration  are without basis
and, if reasserted, the Company intends to defend the matter vigorously.

In August 1998,  the Company  settled a dispute with its former  Executive  Vice
President,  Mr. David Andrus,  concerning his entitlement to severance under his
Employment Agreement.

On November 5, 1998, the Company  received a letter from the Securities and
Exchange  Commission  requesting  that  the  Company's  two  investment  adviser
subsidiaries,  PMC and PMCIS, respond to certain possible  deficiencies noted in
the  letter.  Among  other  matters,  the letter  inquired  as to the  financial
condition of the Company and its  subsidiaries  and their  ability to meet their
contractual  commitments to clients as a result of such  condition.  Ziegler has
advised the Company that, on or after consummation of the Merger, it is prepared
to devote sufficient  financial resources to the Company and its subsidiaries so
that they can meet their respective contractual commitments referred to above.
The  Company  is  not  aware  of  any  other  material   legal   proceedings  or
investigations currently pending or threatened against the Company.

                              Page 20 of 23

<PAGE>




                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION (cont'd)

ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

A.   Exhibits

     10.1  Agreement and Plan of Merger,  dated  November 3, 1998,  among The 
           Ziegler Companies,  Inc., ZACQ Corp. and the Company.* 
     10.2  Employment Agreement, dated November  3, 1998, between  the 
           Company and Scott A.  MacKillop.*  
     10.3  First Amendment to Stock Purchase Agreement, dated as of November 3,
           1998, among the Company and the former PMCIS Shareholders.*
     10.4  Consulting Agreement, effective as of August 24, 1998, between the 
           Company and C.R. "Sonny" Tucker.*
     10.5  Confidentiality/Nonsolicitation Agreement, effective as of 
           August 24, 1998, between the Company and C.R. "Sonny" Tucker.* 
     10.6  Convertible  Promissory Note, dated October 15, 1998,  under which 
           the Company promises to pay $500,000 to the order of The Ziegler 
           Companies, Inc.*
     10.7  Credit Agreement, dated November 3, 1998, between The Ziegler 
           Companies, Inc. and the Company.*
     10.8  Stock Option Agreement, dated as of October 15, 1998, between The 
           Ziegler Companies, Inc.  and the Company with respect to
           Preferred Shares.*
     10.9  Stock Option Agreement, dated as of November 3, 1998, between The
           Ziegler Companies, Inc. and the Company with respect to
           Common Shares.*
     10.10 Form of  Shareholder  Tender  Agreement  between  The  Ziegler
           Companies, Inc. and certain officers, directors, employees and
           affiliates  of  directors  of the Company  (including  list of
           parties executing such agreements and the applicable number of
           Common Shares).*
     10.11 Form of Warrant  Purchase  Agreement  between  the Company and
           certain warrant holders  (including list of parties  executing
           such agreements and the applicable number of warrants).*
     10.12 Guaranty, dated October 15, 1998, by PMCIS.* 10.13 Guaranty, dated
           October 15, 1998, by PTS.* 10.14 Guaranty, dated October 15, 1998, 
           by PMC.*
     10.15 General Business Security Agreement, dated October 15, 1998, by the 
           Company.*
     10.16 General Business Security Agreement, dated October 15, 1998, 
           by PMCIS.*
     10.17 General Business Security Agreement, dated October 15, 1998, 
           by PTS.*
     10.18 General Business Security Agreement, dated October 15, 1998, by PMC.*

* Incorporated  by reference from the Company's statement on Schedule 14d-9
 filed with the Commission on November 10, 1998.

B.       Reports on Form 8-K
                 None
                              
                              Page 21 of 23

<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES


SIGNATURES

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

                                      PMC INTERNATIONAL, INC.
                                      REGISTRANT



Date: November 16, 1998          /s/      Scott A. MacKillop                   
                              Scott A. MacKillop
                              President



                              Page 22 of 23

<PAGE>


                    PMC INTERNATIONAL, INC. AND SUBSIDIARIES

                                  EXHIBIT INDEX

A.  Number                  Exhibit

    10.01  Agreement and Plan of Merger,  dated November 3, 1998,  among The 
           Ziegler Companies,  Inc., ZACQ Corp. and the Company.* 
    10.02  Employment Agreement, dated November  3, 1998,  between the  Company
           and Scott A.  MacKillop.*  
    10.03  First Amendment to Stock Purchase Agreement, dated as of November 3,
           1998, among the Company and the former PMCIS Shareholders.*
    10.04  Consulting Agreement, effective as of August 24, 1998, between the 
           Company and C.R. "Sonny" Tucker.*
    10.05  Confidentiality/Nonsolicitation  Agreement,  effective  as of 
           August  24, 1998, between the Company and C.R. "Sonny" Tucker.* 
    10.06  Convertible Promissory Note, dated October 15, 1998, under which the
           Company promises to pay $500,000 to the order of The Ziegler 
           Companies, Inc.*
    10.07  Credit Agreement, dated November 3, 1998, between The Ziegler 
           Companies, Inc. and the Company.*
    10.08  Stock Option Agreement, dated as of October 15, 1998, between The
           Ziegler Companies, Inc.  and the Company with respect to
           Preferred Shares.*
    10.09  Stock Option Agreement, dated as of November 3, 1998, between The
           Ziegler Companies, Inc. and the Company with respect to
           Common Shares.*
    10.10  Form of  Shareholder  Tender  Agreement  between  The  Ziegler
           Companies, Inc. and certain officers, directors, employees and
           affiliates  of  directors  of the Company  (including  list of
           parties executing such agreements and the applicable number of
           Common Shares).*
    10.11  Form of Warrant  Purchase  Agreement  between  the Company and
           certain warrant holders  (including list of parties  executing
           such agreements and the applicable number of warrants).*
    10.12  Guaranty, dated October 15, 1998, by PMCIS.* 
    10.13  Guaranty, dated October 15, 1998, by PTS.* 
    10.14  Guaranty, dated October 15, 1998, by PMC.*
    10.15  General Business Security Agreement, dated October 15, 1998,
           by the Company.*
    10.16  General Business Security Agreement, dated October 15, 1998, 
           by PMCIS.*
    10.17  General Business Security Agreement, dated October 15, 1998, 
           by PTS.*
    10.18  General Business Security Agreement, dated October 15, 1998, 
           by PMC.*

* Incorporated  by reference from the Company's statement on Schedule 14d-9 
  filed with the Commission on November 10, 1998.

                              Page 23 of 23