SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


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


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998


                           Commission File No. 0-20097


                       ADVANCED MACHINE VISION CORPORATION


                            A California Corporation
                   IRS Employer Identification No. 33-0256103
                               2067 Commerce Drive
                                Medford, OR 97504
                             Telephone: 541-776-7700




Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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 |_|

On March 31, 1998, registrant had 10,636,384 shares of Class A Common Stock, and
76,835 shares of Class B Common Stock, all no par value, issued and outstanding.






                            Exhibit Index at Page 14

<PAGE>



                                      INDEX

                                                                     Page Number

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheets.........................................1
           Consolidated Statements of Operations...............................2
           Consolidated Statements of Cash Flows...............................3

           Notes to Unaudited Consolidated Financial Statements............4 - 8

Item 2.    Management's Discussion and Analysis of Financial
              Condition and Results of Operations.........................8 - 14


PART II.   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K..............................14 - 17

           Signature..........................................................17


<PAGE>

                          PART I. FINANCIAL INFORMATION
                          =============================

Item 1.  Financial Statements
================================================================================
Advanced Machine Vision Corporation
Consolidated Balance Sheets
================================================================================
<TABLE>
<CAPTION>
                                                               March 31,        December 31,
                                                                 1998               1997
                                                            -------------      -------------
                                                             (unaudited)         (audited)
<S>                                                         <C>                <C>          
                                     ASSETS
Current assets:

     Cash and cash equivalents                              $   4,777,000      $   6,045,000
     Accounts receivable - net                                  4,093,000          2,711,000
     Inventories                                                5,406,000          5,181,000
     Prepaid expenses                                             147,000            138,000
                                                            -------------      -------------

              Total current assets                             14,423,000         14,075,000
Property, plant and equipment - net                             4,813,000          4,775,000
Intangible assets - net                                         5,361,000          5,535,000
Other assets                                                      938,000            850,000
                                                            -------------      -------------

                                                            $  25,535,000      $  25,235,000
                                                            =============      =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                       $   1,937,000      $   1,436,000
     Accrued liabilities                                          953,000          1,146,000
     Customer deposits                                          1,008,000          1,073,000
     Accrued payroll                                              660,000            783,000
     Warranty reserve                                             445,000            477,000
     Current portion of notes payable                              27,000             27,000
                                                            -------------      -------------

              Total current liabilities                         5,030,000          4,942,000
                                                            -------------      -------------
Notes payable, less current portion                             8,334,000          8,342,000
                                                            -------------      -------------
Commitments and contingencies
Shareholders' equity:
     Common stock:
         Class A and B - 10,713,000 and 10,679,000
             shares issued and outstanding
             at March 31, 1998 and December 31, 1997,
             respectively                                      24,323,000         24,285,000
     Common stock warrants                                        402,000          2,197,000
     Additional paid in capital                                 4,618,000          2,823,000
     Accumulated deficit                                      (17,172,000)       (17,354,000)
                                                            -------------      -------------

              Total shareholders' equity                       12,171,000         11,951,000
                                                            -------------      -------------

                                                            $  25,535,000      $  25,235,000
                                                            =============      =============

</TABLE>

     See Accompanying Notes to Unaudited Consolidated Financial Statements.

<PAGE>

================================================================================
Advanced Machine Vision Corporation
Consolidated Statements of Operations
================================================================================
<TABLE>
<CAPTION>
                                                             Three Months Ended March 31,
                                                                1998             1997
                                                            -------------    ------------
                                                                      (unaudited)
<S>                                                         <C>            <C>           
Net sales                                                   $   7,103,000    $  9,337,000
Cost of sales                                                   3,770,000       4,730,000
                                                            -------------    ------------

Gross profit                                                    3,333,000       4,607,000
                                                            -------------    ------------

Operating expenses:
     Selling and marketing                                        937,000       1,253,000
     Research and development                                   1,150,000       1,019,000
     General and administrative                                   776,000       1,032,000
     Amortization of intangible assets                            174,000         199,000
                                                            -------------    ------------

                                                                3,037,000       3,503,000

Income from operations before other income and expense            296,000       1,104,000

Other income and expense:
     Investment and other income                                   62,000          57,000
     Interest expense                                            (168,000)       (360,000)
                                                            -------------    ------------

Income before income taxes                                        190,000         801,000

Provision for income taxes                                          8,000          32,000
                                                            -------------    ------------

Net income                                                  $     182,000    $    769,000
                                                            =============    ============

Earnings per share (Note 5):
     Basic                                                  $        0.02    $       0.07
                                                            =============    ============
     Diluted                                                $        0.02    $       0.05
                                                            =============    ============

Average shares outstanding - assuming dilution                 13,255,000      17,600,000
                                                            =============    ============

</TABLE>


     See Accompanying Notes to Unaudited Consolidated Financial Statements.

<PAGE>
================================================================================
Advanced Machine Vision Corporation
Consolidated Statements of Cash Flows
================================================================================
<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31,
                                                                       1998              1997
                                                                   ------------     ------------
                                                                             (unaudited)
<S>                                                                <C>              <C>         
Cash flows from operating activities:

   Net income                                                      $    182,000     $    769,000
   Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
     Depreciation and amortization                                      332,000          370,000
     Changes in assets and liabilities:
       Accounts receivable                                           (1,383,000)           4,000
       Inventories                                                     (226,000)        (630,000)
       Prepaid expenses and other assets                                (91,000)        (499,000)
       Accounts payable, short-term borrowings,
         accrued liabilities, customer deposits,
         accrued payroll, and warranty reserve                          119,000           989,000
                                                                   ------------     -------------

         Net cash (used in) provided by operating activities         (1,067,000)        1,003,000
                                                                   ------------     -------------

Cash (used in) provided by investing activities:
   Purchases of property and equipment                                 (195,000)         (142,000)
                                                                   ------------     -------------

         Net cash (used in) investing activities                       (195,000)         (142,000)
                                                                   ------------     -------------

Cash (used in) provided by financing activities:
   Notes payable to bank and others, net                                 (8,000)          (75,000)
   Proceeds from exercise of stock options                                2,000            15,000
                                                                   ------------     -------------

         Net cash (used in) financing activities                         (6,000)          (60,000)
                                                                   ------------     -------------

Net (decrease) increase in cash                                      (1,268,000)          801,000

Cash and cash equivalents, beginning of the period                    6,045,000         1,909,000
                                                                   ------------     -------------


Cash and cash equivalents, end of the period                       $  4,777,000     $   2,710,000
                                                                   ============     =============

</TABLE>

     See Accompanying Notes to Unaudited Consolidated Financial Statements.

<PAGE>
================================================================================
              ADVANCED MACHINE VISION CORPORATION AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

Note 1.  Principles of Consolidation
====================================
In the opinion of the  management of Advanced  Machine Vision  Corporation  (the
"Company" or "AMV"), the accompanying  consolidated financial statements,  which
have not been audited by independent  accountants  (except for the balance sheet
as of  December  31,  1997),  reflect  all  adjustments  (consisting  of  normal
recurring accruals) necessary to present fairly the Company's financial position
at March 31, 1998,  and December 31, 1997,  the results of  operations  and cash
flows for the  three-month  periods ended March 31, 1998 and 1997. The financial
statements  include  the  accounts  of the  Company  and its  four  wholly-owned
subsidiaries,  Applied  Laser  Systems,  Inc.,  SRC VISION,  Inc.  ("SRC"),  ARC
Netherlands BV and its  respective  subsidiary,  Pulsarr  Holding BV ("Pulsarr")
from its March 1, 1996 acquisition date to its May 6, 1997 disposition date, and
Ventek,  Inc.  ("Ventek")  from its July 24, 1996  acquisition  date (see Note 6
regarding the sale of Pulsarr). The Company's current operating subsidiaries are
SRC and Ventek.

Certain  notes and other  information  are  condensed  or omitted in the interim
financial  statements  presented in this  Quarterly  Report on Form 10-Q.  These
financial  statements  should be read in  conjunction  with the  Company's  1997
annual report on Form 10-K.

Note 2.  Nature of Operations
=============================
In February 1994, the Company acquired all of the issued and outstanding capital
stock of SRC for $8.1 million in cash. In March 1996,  the Company  acquired all
of the issued and  outstanding  stock of Pulsarr  for cash of $6.5  million  and
notes payable of $1.3 million (see Note 6 regarding the sale of Pulsarr for $8.4
million in May 1997).  In July 1996,  the  Company  acquired  the  business  and
certain assets of Ventek,  subject to certain  liabilities,  for $5.1 million in
notes  and  other  securities.  The  operations  of each of the  three  acquired
entities  are  included  in  the  consolidated  financial  results  since  their
respective  acquisition  dates,  and  in  the  case  of  Pulsarr,   through  its
disposition date.  Through its subsidiaries,  the Company designs,  manufactures
and  markets  computer-aided  vision  defect  detection  and  sorting and defect
removal equipment for use in a variety of industries, including food processing,
wood  products  and  recycling.   The  Company's  systems  combine  optical  and
mechanical systems technologies to perform diverse scanning, analytical sensing,
measuring and sorting  applications  on a variety of products such as food, wood
and plastic. The Company sells its products throughout the world.

Note 3.  Financing
==================
In April  1995,  the  Company  borrowed  $2,160,000  pursuant  to a  convertible
subordinated  secured  note.  Interest  on the note was 10.25%  and was  payable
semi-annually.  The note was convertible into the Company's Class A Common Stock
at $1.875 per share.  In  connection  with the  borrowing,  the  Company  issued
300,000  warrants  to  purchase  Class A Common  Stock at $1.875 per  share.  In
October 1996 and March 1997, $645,000 and $250,000 principal amounts of the note
were  converted by the  debtholders  into 344,000 and 133,000  shares of Class A
Common Stock.  The remaining  principal  amount of $1,265,000  was paid in April
1997. In August 1997, the warrants were repurchased by the Company (see Note 4).

In April 1996, the Company borrowed $3,400,000 pursuant to a convertible secured
note. Interest on the note was 6.75% and is payable quarterly. The interest rate
may be adjusted upward on each  anniversary date of the note if the market price
of the Company's  Class A Common Stock fails to reach certain  levels.  In April
1997,  the interest  rate was  adjusted to 9.75%.  The maximum  possible  coupon
interest rate is 11.25% if none of the market price thresholds are met. The note
is secured by 54% of the stock of ARC  Netherlands  BV. The note is  convertible
into the Company's  Class A Common Stock at $2.125 per share. In connection with
the borrowing,  the Company  issued 340,000  warrants to purchase Class A Common
Stock at $2.125 per share.  In August and September  1997, AMV  repurchased  the
warrants  and paid off  $2,500,000  of this note leaving  $900,000  outstanding,
which is due in April 2001 (see Note 4). In conjunction with this early pay-off,
AMV wrote off  $233,000 of deferred  debt  issuance  costs in the quarter  ended
September 30, 1997.

In July 1996, AMV issued the following  notes in connection with the acquisition
of  Ventek:  (i) a  6.75%  $1,000,000  note  due  July  23,  1999;  (ii) a 6.75%
$2,250,000 note due July 23, 1999  convertible into the Company's Class A Common
Stock at $2.25 per share;  and (iii) a  $1,125,000  note and stock  appreciation
rights payable (a) by issuance of up to 1,800,000 shares of Class A Common Stock
or at the Company's  option,  in cash on July 23, 1999, or (b) solely in cash in
the event AMV  Common  Stock is  delisted  from the  Nasdaq  Stock  Market.  The
$1,125,000 note and stock appreciation  rights payable were valued at $1,529,000
on the  acquisition  date based upon an  independent  appraisal  received by the
Company. All three notes are secured by all of the issued and outstanding shares
of Ventek.

In April 1998, AMV entered into a credit relationship with Bank of America NT&SA
for a line of credit ("LOC") and a new mortgage. The LOC Business Loan Agreement
provides that AMV can borrow the lesser of $2,000,000 or the collateral value of
pledged marketable securities, for interest at prime rate or the bank's offshore
rate plus  1.85% and has an April  30,  1999  expiration  date.  The  $3,000,000
mortgage  replaced  the 9.75%  $2,680,000  prior  mortgage,  provides  for fixed
interest at 8.3% and is due on May 1, 2008.

Note 4.  Stock Transactions; Shares Eligible For Future Sale; Effect of
         Warrants, Options and Convertible Securities; Possible Dilution
========================================================================
In January 1997, the 1997 Restricted Stock Plan ("1997 Plan") was established to
retain the services of selected employees, officers and directors of the Company
and provide them with strong  incentives  to enhance the Company's  growth.  The
total  number  of shares of Class A Common  Stock  issuable  under the 1997 Plan
shall not exceed  2,000,000.  In January 1997, the Company's  Board of Directors
awarded  2,000,000  shares  of  restricted  Class A Common  Stock  to three  key
employees  of the  Company.  On  September  25,  1997,  the three key  employees
contributed  back to the  Company  1,800,000  shares  which were  canceled.  The
remaining shares cannot be traded or transferred unless (i) the employee remains
in the employ of the Company  until January 10, 2000 and (ii) a payment of $1.80
per share is made by the employee to AMV. If any of the  conditions are not met,
the stock will be forfeited and returned to the Company.

On March 8, 1997, April 1, 1997, August 2, 1997 and March 9, 1998,  188,400 Unit
Purchase Options originally issued in connection with the Company's 1992 initial
public  offering,  135,000 Laidlaw  warrants,  300,000 Gerinda  warrants and the
Company's  Class A, B and C Warrants  to  purchase  approximately  11.4  million
shares, respectively, expired unexercised.

In August 1997,  the Company  purchased  1,001,640  shares of its Class A Common
Stock,  300,000  Class F Warrants  and  340,000  Class H  Warrants  in a private
transaction for $1.9 million.

In September 1997, the Company purchased at par $2.5 million of the $3.4 million
outstanding 6.75% Convertible Note.

Schedule  of  Outstanding  Stock,  Warrants  and  Potential  Dilution:
The following table summarizes, as of March 31, 1998, outstanding  common stock,
potential  dilution to the outstanding common stock upon exercise of warrants or
conversion  of  convertible  debt,  and proforma  proceeds  from the exercise of
warrants.  The table  also sets  forth the  exercise  or  conversion  prices and
warrant expiration and debt due dates.

<TABLE>
<CAPTION>
                                                                                                      Proforma
                                   Number or Principal                Common                          Proceeds
                                   Amount Outstanding               Stock After      Conversion        or Debt
          Security                  at March 31, 1998               Conversion          Price         Reduction
---------------------------------------------------------------------------------------------------------------
<S>                                   <C>                         <C>                  <C>          <C>
Common Stock:
    Class A                             10,636,000                  10,636,000
    Class B                                 77,000                      77,000
                                      ------------                ------------

Total currently outstanding             10,713,000                  10,713,000
                                      ------------                ------------
Warrants (expiration date):


    D (6/30/98-7/31/98)                    275,000                     275,000         $   2.75     $    756,000
    G (2/28/99)                            240,000                     240,000             2.00          480,000
    I (7/23/01)                          1,000,000 (A)               1,000,000             2.25        2,250,000
    J (9/30/99)                            300,000                     300,000             2.03          609,000
                                      ------------                ------------                      ------------

                                                                     1,815,000                         4,095,000
                                                                  ------------                      ------------
Convertible Debt (due date):
    6.75% Notes (4/16/01)             $    900,000                     423,000             2.13          900,000
    6.75% Ventek Note (7/23/99)       $  2,250,000                   1,000,000             2.25        2,250,000
    Ventek Note (7/23/99)             $  1,529,000 (A)               1,800,000                         1,529,000
                                                                  ------------                      ------------

                                                                     3,223,000                         4,679,000
                                                                  ------------                      ------------
Potentially outstanding shares
    and proforma proceeds
    or reduction of debt                                            15,751,000                      $  8,774,000
                                                                  ============                      ============


(A)  The Company  issued the  $1,529,000  note and Class I Warrant in connection
     with the Ventek  acquisition (see Note 4). The note is payable,  (a) at the
     Company's option, in cash or by delivery of up to 1,800,000 shares of Class
     A Common Stock on the third  anniversary date of the note; or (b) solely in
     cash in the  event AMV  Common  Stock is  delisted  from the  Nasdaq  Stock
     Market.  The Warrant  vests 25% per year through 1999 if sales and earnings
     objectives  are achieved.  As of December 31, 1997, the first 25% increment
     (for 1996) of the  Warrant  was vested  and the second 25%  increment  (for
     1997) did not vest as the  objectives  were not met.  The second  increment
     will only vest in the future if cumulative goals are achieved.
</TABLE>

The proforma amounts above are for illustrative purposes only. Unless the market
price of AMV's Class A Common  Stock rises  significantly  above the exercise or
conversion  prices,  it is unlikely  that any warrants will be exercised or that
the debt will be converted.

On March 31, 1998,  AMV had outstanding  options to purchase 3,426,000 shares of
Class A Common Stock,  2,944,000 of which are under its stock option plans.

The existence of these  outstanding  warrants,  options,  and convertible  debt,
including  those  granted or to be granted  under  AMV's Stock  Option  Plans or
otherwise could adversely affect AMV's ability to obtain future  financing.  The
price which AMV may receive for the Class A Common Stock issued upon exercise of
options and  warrants,  or amount of debt  forgiven in the case of conversion of
debt, may be less than the market price of Class A Common Stock at the time such
options and warrants are  exercised  or debt is  converted.  For the life of the
warrants,  options and convertible  debt, the holders are given, at little or no
cost, the opportunity to profit from a rise in the market price of their Class A
Common Stock without  assuming the risk of ownership.  Moreover,  the holders of
the options and warrants  might be expected to exercise  them at a time when AMV
would, in all likelihood,  be able to obtain needed capital by a new offering of
its  securities on terms more  favorable  than those provided for by the options
and warrants.

Stock  Rights  Plan:
In  February 1998,  the Company implemented a stock rights program.  Pursuant to
the program,  stockholders of record on February 27, 1998 received a dividend of
one  right  to  purchase for $15 one one-hundredth of a share of a newly created
Series A Junior Participating  Preferred Stock. The rights are attached to AMV's
Class A Common  Stock  and will also  become  attached  to shares  issued in the
future. The rights will not be traded separately and will not become exercisable
until the  occurrence of a triggering  event,  defined as an  accumulation  by a
single person or group of 20% or more of AMV's Class A Common Stock.  The rights
will expire on February 26, 2008 and are redeemable at $.0001 per right.

After a triggering  event, the rights will detach from the Class A Common Stock.
If AMV is then merged into, or is acquired by, another corporation,  the Company
has the  opportunity  to either (i) redeem the rights or (ii)  permit the rights
holder to receive in the merger stock of AMV or the  acquiring  company equal to
two times the exercise price of the right (i.e.,  $30). In the latter  instance,
the rights attached to the acquirer's  stock become null and void. The effect of
the rights  program  is to make a  potential  acquisition  of the  Company  more
expensive for the acquirer if, in the opinion of AMV's Board of  Directors,  the
offer is inadequate.

Note 5.  Earnings Per Share
===========================
Earnings per share is presented in the following table:
<TABLE>
<CAPTION>
                                                          For the Three Months Ended March 31,
                                        ------------------------------------------------------------------------
                                                      1998                                    1997
                                        ---------------------------------       --------------------------------
                                            Income             Shares              Income              Shares
                                        -------------       -------------       -------------      -------------
<S>                                     <C>                 <C>                 <C>                <C>
Calculation of EPS
Income (loss) available to

   common shareholders                  $     182,000          10,712,000       $     769,000         13,398,000
Reduction for contingently
   returnable shares as all conditions
   were not met as of period end                   --            (200,000)                 --         (2,000,000)
                                        -------------       -------------       -------------      -------------
Income (loss) available to
   common shareholders                  $     182,000          10,512,000       $     769,000         11,398,000
                                        =============       =============       =============      =============

----------------------------------------------------------------------------------------------------------------
Basic EPS                               $        0.02                           $       0.07
----------------------------------------------------------------------------------------------------------------

Effect of Dilutive Securities:
Stock options and warrants              $          --             943,000       $          --            686,000
Note and stock appreciation
   rights agreement                            25,000           1,800,000              25,000          1,800,000
Convertible debt                                   --                  --             137,000          3,716,000
                                        -------------       -------------       -------------      -------------
Income available to common
   shareholders and assumed
   conversions                          $     207,000          13,255,000       $     831,000         17,600,000
                                        =============       =============       =============      =============

----------------------------------------------------------------------------------------------------------------
Diluted EPS                             $        0.02                           $       0.05
----------------------------------------------------------------------------------------------------------------
</TABLE>

The  number of shares of common  stock,  along with  their  respective  exercise
prices,  underlying options,  warrants and convertible debt, which were excluded
from the  computation of diluted EPS because their exercise  prices were greater
than the average market price of common stock, are listed below.

                                                              March 31,
                                                   -----------------------------
                                                        1998            1997
                                                   -------------   -------------
Number of shares of common stock exercisable from:
   Options                                               645,000       1,439,000
   Warrants                                            1,275,000      14,290,000
   Convertible debt                                    1,424,000              --
                                                   -------------   -------------

                                                       3,344,000      15,729,000

   Exercise price ranges                           $2.13 - $4.94   $1.88 - $4.94


Note 6.  Acquisition and Sale of Pulsarr
========================================
On March 1, 1996, the Company  acquired all of the outstanding  capital stock of
Pulsarr  for cash of $6.5  million  and  notes  payable  of $1.3  million.  This
acquisition was accounted for under the purchase method of accounting.

On May 6, 1997,  the Company sold its Pulsarr  subsidiary to Barco NV of Belgium
for $8.4 million,  resulting in a gain of approximately  $5.0 million.  The sale
resulted in net cash proceeds to AMV of approximately $7 million and a reduction
of current and long-term debt of approximately  $4.6 million.  A $5 million gain
on the sale of Pulsarr in the  quarter  ended June 30, 1997 was largely a result
of previous  reduction in the carrying value of AMV's  investment in Pulsarr due
to the $4.9  million  charge for  acquired  in-process  technology  the  Company
recorded  in  the  quarter  ended  March  31,  1996  in  conjunction  with  this
acquisition.

The condensed  combined  statements of operations,  shown below as  supplemental
information, assume that Pulsarr was sold at the beginning of 1997. However, the
proforma  combined  balances are not  necessarily  indicative of balances  which
would have  resulted  had the  divestiture  occurred as of the  beginning of the
three-month  period  ending March 31, 1997.  Condensed  combined  statements  of
operations are presented below:

                                                        Three Months Ended
                                                             March 31,
                                                   -----------------------------
                                                        1998            1997
                                                      (Actual)       (Proforma)
                                                   -------------   -------------

           Sales                                   $   7,103,000   $   7,127,000
                                                   =============   =============
           Gross profit                            $   3,333,000   $   3,800,000
                                                   =============   =============
           Net income                              $     182,000   $     728,000
                                                   =============   =============
           Earnings per share:
               Basic                               $        0.02   $        0.06
                                                   =============   =============
               Diluted                             $        0.02   $        0.05
                                                   =============   =============


Note 7.    Inventories
======================
Inventories  are  stated at the lower of cost or market  and  include  material,
labor and related manufacturing  overhead.  The Company determines cost based on
the first-in, first-out (FIFO) method. Inventories consisted of:

                                                        Three Months Ended
                                                             March 31,
                                                   -----------------------------
                                                        1998            1997
                                                   -------------   -------------

           Raw materials                           $   2,135,000   $   1,584,000
           Work-in-process                             1,359,000       1,359,000
           Finished goods                              1,912,000       2,238,000
                                                   -------------   -------------

                                                   $   5,406,000   $   5,181,000
                                                   =============   =============

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations
================================================================================
On March 1, 1996, the Company  acquired  Pulsarr.  On July 24, 1996, the Company
acquired  Ventek.  In May 1997,  the Company  sold Pulsarr for $8.4 million (see
Note 6 to the Consolidated Financial Statements).  The discussion below pertains
to the operations of AMV with Pulsarr and Ventek included from their  respective
acquisition dates, and in the case of Pulsarr, through its disposition date.

The Company's  backlog at March 31, 1998, was $8,824,000  compared to $6,616,000
as of March 31, 1997. After excluding  Pulsarr,  backlog was $3,820,000 at March
31, 1997. The 1998 backlog is expected to be shipped within nine months.

Results of Operations - Comparison between three months ended March 31, 1998 and
March 31, 1997

Sales for the three months ended March 31,  1998  ("Q1  1998")  were $7,103,000,
down  24%  when  compared  to  sales  for the three months ended March 31,  1997
("Q1  1997")  of  $9,337,000.  Sales  for  Q1  1997  included  Pulsarr  sales of
$2,210,000,  whereas sales for Q1 1998 did not include any sales for Pulsarr due
to its sale in May 1997.  Sales at SRC increased by  approximately  $1.3 million
due to increased  demand for SRC products.  This increase was entirely offset by
decreased  sales at  Ventek  of $1.3  million  due to  softness  in the  plywood
manufacturing markets.

Gross profit  decreased by  $1,274,000 to $3,333,000 in Q1 1998 when compared to
$4,607,000 of gross profit in Q1 1997. In Q1 1998, gross profit was 47% of sales
as compared to 49% in Q1 1997. The decrease in gross profits  relates  primarily
to Ventek's  lower  sales,  which  resulted in lower gross  profits of nearly $1
million.  Gross profit for Q1 1997 included Pulsarr's gross profits of $807,000,
whereas Q1 1998 did not include any gross  profits due to the sale of Pulsarr in
May 1997.  The decreases in gross profits from Ventek and Pulsarr were partially
offset by increased gross profits at SRC of $525,000.

Selling and marketing  expense  decreased by $316,000 in Q1 1998 from Q1 1997 to
$937,000  amounting to 13% of sales in Q1 1998. Similar expenses in Q1 1997 were
$1,253,000,  or 13% of sales. The decrease in selling and marketing expenses was
primarily due to the sale of Pulsarr.

Research and development  expenses were $1,150,000 and $1,019,000 in Q1 1998 and
Q1 1997,  or 16% and 11% of sales,  respectively.  The  increase in research and
development  expenses is related to new projects,  which include  developing new
lighting,  camera and software  technologies.  Q1 1997 research and  development
expenses included  $154,000 related to Pulsarr,  whereas Q1 1998 did not include
any such expenses due to the sale of Pulsarr in May 1997.

General and  administrative  expenses  decreased $256,000 to $776,000 in Q1 1998
from $1,032,000 in Q1 1997. The decrease in general and administrative  expenses
is due principally to the sale of Pulsarr.

The decrease in amortization  of intangible  assets is primarily due to the sale
of Pulsarr.

The decrease in interest expense is due to reduced debt balances.

Net  income for Q1  1998 was  $182,000  as compared to net income of $769,000 in
Q1 1997 as a result of the factors discussed above.

Liquidity and Capital Resources

The Company's cash balance and working  capital was  $4,777,000 and  $9,393,000,
respectively,  at March 31,  1998 as  compared  to  $6,045,000  and  $9,133,000,
respectively,  at December 31, 1997.  The  Company's  long-term  debt and equity
balances at March 31, 1998 and December 31, 1997 were similar.

During  Q1 1998,  net  cash  used in  operating  activities  totaled  $1,067,000
compared to cash provided by operating  activities of $1,003,000 in Q1 1997. Net
income  decreased by $587,000 from Q1 1997 to Q1 1998,  which,  coupled with the
net use of cash from  working  capital  components,  caused  the  change in cash
provided by operations in Q1 1997 to cash used in operations in Q1 1998.

Cash used in  investment  activities  totaled  $195,000 in 1998 compared to cash
used in  investment  activities  of  $142,000  in 1997 and  related  entirely to
acquisition of property and equipment.  The Company has no material  commitments
for capital  expenditures  at March 31, 1998 other than $458,000 to acquire 3.44
acres of land adjacent to the Company's  current  Medford,  Oregon  facility for
purposes of possible future expansion.

Cash used in financing  activities  totaled  $46,000 in 1998 as compared to cash
used in  financing  activities  of $60,000 in 1997.  In April 1998,  the Company
refinanced  its  existing  $2,680,000  mortgage  due 2003 with a new  $3,000,000
mortgage due 2008.  The mortgage  interest  rate was lowered from 9.75% to 8.3%.
Additionally,  the Company  obtained a $2,000,000  revolving line of credit that
will expire on April 30, 1999.

Management  believes that the Company has sufficient  cash to enable the Company
to sustain its  operations  and to adequately  fund the cash flow expected to be
used in operating activities for the next twelve months.

Cautionary Statements and Risk Factors

The Company and its  representatives  may from time to time make written or oral
forward-looking  statements with respect to long-term objectives or expectations
of the Company, including statements contained in the Company's filings with the
Securities and Exchange Commission and in its reports to stockholders.

The words or phrases "will  likely," "are  expected to," "is  anticipated,"  "is
predicted,"  "forecast," "estimate," "project," "plans to continue," "believes,"
or similar expressions identify "forward-looking  statements" within the meaning
of the Private  Securities  Litigation Reform Act of 1995. Such  forward-looking
statements  are  subject to certain  risks and  uncertainties  that could  cause
actual results to differ materially from historical earnings and those presently
anticipated  or projected.  The Company  wishes to caution  readers not to place
undue reliance on any such  forward-looking  statements,  which speak only as of
the date made.  In connection  with the "Safe Harbor"  provisions on the Private
Securities  Litigation  Reform Act of 1995,  the  Company is hereby  identifying
important  factors that could affect the  Company's  financial  performance  and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements  expressed with respect to future periods in any
current statements.

The Company cautions that the following list of important factors may not be all
inclusive,  and it specifically declines to undertake any obligation to publicly
revise any  forward-looking  statements that have been made to reflect events or
circumstances  after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events. Among the factors that could have an impact
on the Company's  ability to achieve its operating results and growth plan goals
and/or affect the market price of the Company's stock are:

   * The Company's history of losses and negative cash flow.
   * The uncertain ability to manage growth and integrate acquired businesses.
   * Rapid  technological  change in the Company's  markets and the need for new
     product development.
   * Market acceptance of the Company's new products.
   * AMV's  dependence  on  certain  markets  and the  need to  expand  into new
     markets.
   * The lengthy sales cycle for the Company's products.
   * The Company's highly competitive marketplace.
   * The dependence on certain suppliers.
   * The  risks  associated  with  dependence  upon  significant  customers  and
     reliance on certain distributors.
   * The risks associated with international sales.
   * Fluctuations in quarterly  operating  results and seasonality in certain of
     the Company's markets.
   * Risks associated with acquisitions and other relationships.
   * Dependence upon key personnel.
   * The Company's ability to protect its intellectual property.
   * The possibility of product liability or other legal claims.
   * Exposure to possible warranty and litigation claims.
   * The possible need for additional financing.
   * The impact of the 1998 Shareholder Rights Plan.
   * The  inability  of the  Company or its  suppliers  or  customers  to remedy
     potential  problems  with information systems related to the arrival of the
     year 2000.

These risk factors are discussed in further detail below.

History of Losses; Negative Cash Flow:
Prior  to  1995  and  in  1996,  the  Company  experienced  losses and  negative
operating cash flow. The Company believes it may operate at a negative cash flow
for  certain  periods  in the  future  due to  (i)  the  need  to  fund  certain
development  projects,  (ii) cash  required  to enter new  market  areas,  (iii)
irregular  bookings by customers due to the relatively high per-unit cost of the
Company's products which may cause fluctuations in quarterly or yearly revenues,
(iv) cash  required for the repayment of debt,  especially  $3.25 million due in
July 1999,  and (v) possible cash needed to fully  integrate  SRC's and Ventek's
operations. If the Company is unable to consistently generate sustained positive
cash flow from operations, the Company must rely on debt or equity financing.

Although the Company  achieved  profitability  in 1995 and 1997, there can be no
assurance as to the  Company's  profitability  on a quarterly or annual basis in
the future. Furthermore,  the non-recurring expenses in early 1996 resulted in a
significant loss for the 1996 year.

Uncertain Ability to Manage Growth and Integrate Acquired Businesses:
As  part  of  its  business  strategy,  the  Company  intends  to  pursue  rapid
growth.  In March and July 1996, the Company  acquired  Pulsarr and Ventek which
had sales in 1995 of approximately $11.4 million and $4.4 million, respectively,
and would have added approximately 80% to the Company's 1995 sales on a proforma
basis.  Pulsarr was subsequently  sold in May 1997. A growth strategy  involving
the integration of new entities,  such as Ventek, will require the establishment
of sales  representatives  and  distribution  relationships,  expanded  customer
service  and  support,  increased  personnel  throughout  the  Company  and  the
continued implementation and improvement of the Company's operational, financial
and management  information systems. There is no assurance that the Company will
be able to attract qualified personnel or to accomplish other measures necessary
for its  successful  integration  of Ventek or other  acquired  entities  or for
internal  growth,   or  that  the  Company  can  successfully   manage  expanded
operations.  As the  Company  expands,  it may  from  time  to  time  experience
constraints that will adversely affect its ability to satisfy customer demand in
a timely fashion.  Failure to manage growth  effectively  could adversely affect
the Company's financial condition and results of operations.

Rapid Technological Change; Product Development:
The  markets  for  the  Company's  machine  vision products are characterized by
rapidly  changing  technology,  evolving  industry  standards  and  frequent new
product  introductions and enhancements.  For example, the Company believes that
the 1995 introduction by Key Technology,  Inc. of its new line of vision sorting
equipment  adversely  affected  bookings  in late  1995 and  1996.  Sales of the
Company's  products depend in part on the continuing  development and deployment
of new  technology  and services and  applications.  The Company's  success will
depend to a significant extent upon its ability to enhance its existing products
and develop new products that gain market acceptance.  There can be no assurance
that the Company will be successful in selecting,  developing and  manufacturing
new products or enhancing  its existing  products on a timely or  cost-effective
basis or that products or  technologies  developed by others will not render the
Company's  products  noncompetitive  or  obsolete.  Moreover,  the  Company  may
encounter  technical  problems in connection with its product  development  that
could   result  in  the  delayed   introduction   of  new  products  or  product
enhancements.

Market  Acceptance of New Products:
The  Company's  future  operating  results  will  depend  upon  its  ability  to
successfully  introduce and market,  on a timely and  cost-effective  basis, new
products and enhancements to existing  products.  There can be no assurance that
new products or enhancements, if developed and manufactured, will achieve market
acceptance.  The  Company  is  currently  in  the  initial  prototype  stage  of
development  on  a  new  high-speed   software  and  digital  signal  processing
technology designed to significantly improve system performance. There can be no
assurance that a market for this system will develop (i.e.,  that a need for the
system will exist,  that the system will be favored  over other  products on the
market,  etc.) or, if a market  does  develop,  that the  Company  will be able,
financially or operationally, to market and support the system successfully.

Dependence on Certain Markets and Expansion Into New Markets:
The future success and growth of the Company is dependent upon  continuing sales
in domestic and international food  processing  markets  as  well  as successful
penetration  of other existing and potential  markets.  A substantial portion of
the  Company's  historical  sales  has  been in the  potato  and other vegetable
processing  markets.  Reductions  in  capital  equipment  expenditures  by  such
processors  due  to  commodity  surpluses,  product price fluctuations, changing
consumer  preferences  or other  factors  could  have an  adverse  effect on the
Company's  results  of  operations.  The  Company  also  intends  to expand  the
marketing of its processing  systems in additional food markets such as meat and
granular  food  products,  as well as non-food  markets such as  plastics,  wood
products and tobacco,  and to expand its sales activities in foreign markets. In
the case of Ventek, the wood products market served is narrow and cyclical,  and
saturation  of that market and the  potential  inability to identify and develop
new markets could adversely  affect Ventek's growth rate. The Company may not be
able to successfully  penetrate  additional food and non-food  markets or expand
further in foreign markets.

Lengthy Sales Cycle:
The  sales  cycle  in  the  marketing and sale of the Company's  machine  vision
systems,  especially in new markets or in a new application,  is lengthy and can
be as long as three  years.  Even in existing  markets,  due to the  $150,000 to
$600,000 price range for each system and possibly  significant  ancillary  costs
required for a customer to install the system,  the purchase of a machine vision
system can constitute a substantial capital investment for a customer (which may
need more than one machine for its particular  proposed  application)  requiring
lengthy consideration and evaluation.  In particular,  a potential customer must
develop a high  degree  of  assurance  that the  product  will  meet its  needs,
successfully  interface  with the customer's  own  manufacturing,  production or
processing  system,  and have  minimal  warranty,  safety and service  problems.
Accordingly,  the time lag from  initiation of marketing  efforts to final sales
can be lengthy.

Competition:
The  markets  for  the  Company's  products  are  highly  competitive.  A  major
competitor of the Company  introduced  several years ago a new flat-belt optical
sorter product which has increased the  competition  that the Company faces.  In
the case of Ventek, the wood industry continues to develop alternative  products
to plywood (e.g., oriented strand board) which do not require vision systems for
quality control. Some of the Company's competitors, including Pulsarr, which was
sold  in  May  1997  to a  company  significantly  larger  than  AMV,  may  have
substantially greater financial,  technical,  marketing and other resources than
the Company.  Important  competitive  factors in the Company's  markets  include
price,  performance,  reliability,  customer  support and service.  Although the
Company  believes that it currently  competes  effectively with respect to these
factors,  the Company may not be able to continue to compete  effectively in the
future.

Dependence Upon Certain Suppliers:
Certain  key  components  and  subassemblies used in the  Company's products are
currently  obtained from sole sources or a limited  group of suppliers,  and the
Company does not have any long-term supply agreements to ensure an uninterrupted
supply of these  components.  Although the Company seeks to reduce dependence on
sole or limited source  suppliers,  the inability to obtain  sufficient  sole or
limited source components as required,  or to develop alternative sources if and
as required,  could result in delays or  reductions in product  shipments  which
could  materially and adversely  affect the Company's  results of operations and
damage customer relationships. The purchase of certain of the components used in
the  Company's  products  require  an 8 to 12 week  lead time for  delivery.  An
unanticipated  shortage of such components could delay the Company's  ability to
timely manufacture units, damage customer relations, and have a material adverse
effect on the Company. In addition,  a significant  increase in the price of one
or  more of  these  components  or  subassemblies  could  adversely  affect  the
Company's results of operations.

Dependence Upon Significant Customers and Distribution Channel:
The Company sold equipment  to an  unaffiliated  customer  totaling 14% of sales
in 1997 and to two unaffiliated customers totaling 13% and 12% of sales in 1996.
Sales  to  another  two unaffiliated  customers  totaled 19% and 16% of sales in
1995.  Ventek's  sales  have been to a relatively small number of multi-location
plywood manufacturers.  In the emerging pulp wood industry, the Company utilizes
a single exclusive distributor for its products in North America. In much of the
United  States  and in many  areas in the rest of the  world,  the  Company  has
entered  an  agreement  with  FMC   Corporation   to  be  its  exclusive   sales
representative. While the Company strives to create long-term relationships with
its customers, distributors and representatives,  there can be no assurance that
they will  continue  ordering  or selling  additional  systems.  The Company may
continue  to be  dependent  on a small  number of  customers,  distributors  and
representatives,  the  loss  of  which  would  adversely  affect  the  Company's
business.

Risk of International Sales:
Due  to  its  export  sales,  the  Company is subject to the risks of conducting
business   internationally,   including   unexpected   changes   in   regulatory
requirements; fluctuations in the value of the U. S. dollar which could increase
the sales prices in local currencies of the Company's  products in international
markets;  delays in obtaining  export  licenses,  tariffs and other barriers and
restrictions; and the burdens of complying with a variety of international laws.
For example, the possibility of sales to Indonesian customers has been adversely
affected by the recent currency  devaluation.  In addition,  the laws of certain
foreign countries may not protect the Company's  intellectual property rights to
the same extent as do the laws of the United States.

Fluctuations in Quarterly Operating Results; Seasonality:
The  Company  has  experienced  and  may  in the future  experience  significant
fluctuations  in revenues  and  operating  results  from quarter to quarter as a
result of a number of  factors,  many of which are  outside  the  control of the
Company.  These factors include the timing of significant  orders and shipments,
product  mix,  delays in  shipment,  capital  spending  patterns  of  customers,
competition  and  pricing,  new  product  introductions  by the  Company  or its
competitors,  the timing of research and development expenditures,  expansion of
marketing  and support  operations,  changes in material  costs,  production  or
quality  problems,  currency  fluctuations,  disruptions  in  sources of supply,
regulatory changes and general economic conditions.  These factors are difficult
to forecast,  and these or other factors could have a material adverse effect on
the Company's  business and operating results.  Moreover,  due to the relatively
fixed nature of many of the Company's costs,  including personnel and facilities
costs,  the  Company  would  not be able  to  reduce  costs  in any  quarter  to
compensate for any unexpected shortfall in net sales, and such a shortfall would
have a proportionately greater impact on the Company's results of operations for
that quarter.  For example, a significant portion of the Company's quarterly net
sales depends upon sales of a relatively  small number of  high-priced  systems.
Thus,  changes in the number of such  systems  shipped in any given  quarter can
produce  substantial  fluctuations in net sales,  gross profits,  and net income
from quarter to quarter. In addition,  in the event the Company's machine vision
systems'  average selling price  increases,  of which there can be no assurance,
the addition or cancellation of sales may exacerbate  quarterly  fluctuations in
revenues and operating results.

The Company's operating results may also be affected by certain seasonal trends.
For  example,  the Company may  experience  lower sales and order  levels in the
first  quarter  when  compared  with the  preceding  fourth  quarter  due to the
seasonality  of  certain  harvested  food  items  and the  timing  of  annual or
semi-annual  customer plant shut-downs  during which systems are installed.  The
Company  expects  these  seasonal  patterns to continue,  though their impact on
revenues is expected to decline as the Company  continues to expand its presence
in non-agricultural and other markets which are less seasonal.

Risks Associated With Acquisitions:
The  Company  may pursue strategic acquisitions or joint ventures in addition to
the  acquisitions  of  Pulsarr (subsequently divested in May 1997) and Ventek as
part of its growth strategy.  While the Company presently has no understandings,
commitments or agreements with respect to any further  acquisition,  the Company
anticipates that one or more potential opportunities may become available in the
future.  Acquisitions and joint ventures would require investment of operational
and financial resources and could require integration of dissimilar  operations,
assimilation of new employees,  diversion of management resources,  increases in
administrative  costs  and  additional  costs  associated  with  debt or  equity
financing.  For these reasons,  any  acquisition or joint venture by the Company
may have an adverse effect on the Company's  results of operations or may result
in dilution to existing  shareholders.  If additional  attractive  opportunities
become  available,  the Company may decide to pursue them  actively.  Any future
acquisitions or joint ventures may materially and adversely affect the Company.

Dependence Upon Key Personnel:
The  Company's  success  depends  to  a  significant  extent upon the continuing
contributions  of its key management,  technical,  sales and marketing and other
key personnel.  Except for William J. Young,  the Company's  President and Chief
Executive  Officer,  Alan R. Steel, the Company's Chief Financial  Officer,  Dr.
James Ewan,  SRC's  President and Chief Executive  Officer,  and the four former
stockholders  of  Ventek,  the  Company  does  not  have  long-term   employment
agreements or other  arrangements  with such  individuals  which would encourage
them to remain with the Company.  The Company's future success also depends upon
its ability to attract and retain additional skilled personnel.  Competition for
such  employees  is  intense.  The  loss of any  current  key  employees  or the
inability to attract and retain  additional key personnel  could have a material
adverse effect on the Company's business and operating results.

Intellectual Property:
The Company's competitive position may be affected  by  its  ability  to protect
its  proprietary technology.  Although the Company has a number of United States
and foreign patents, such patents may not provide meaningful  protection for its
product innovations. The Company may experience additional intellectual property
property risks in international markets where it may lack patent protection.

Product Liability and Other Legal Claims:
From  time to time, the Company may be involved in litigation arising out of the
normal  course  of  its  business, including product liability, patent and other
legal claims.  While the Company has a general liability  insurance policy which
includes  product  liability  coverage up to an aggregate amount of $10 million,
the  Company  may  not be  able  to  maintain  product  liability  insurance  on
acceptable  terms in the future.  Litigation,  regardless of its outcome,  could
result in  substantial  cost to and  diversion  of effort  by the  Company.  Any
infringement  claims or  litigation  against the Company  could  materially  and
adversely  affect  the  Company's  business,  operating  results  and  financial
condition.  If a substantial  product liability or other legal claim against the
Company  were  sustained  that was not covered by  insurance,  there could be an
adverse effect on the Company's  financial  condition and  marketability  of the
affected products.

Warranty Exposure and Performance Specifications:
The  Company  generally provides a one-year limited warranty on its products. In
addition,  for  certain custom-designed  systems,  the Company contracts to meet
certain performance specifications. In the past, the Company has incurred higher
warranty  expenses  related  to new  products  than  it  typically  incurs  with
established products. The Company may incur substantial warranty expenses in the
future with respect to new products,  as well as established  products,  or with
respect to its obligations to meet performance specifications, which may have an
adverse effect on its results of operations and customer relationships.

Possible Need for Additional Financing:
The Company may seek additional financing;  however, the Company may not be able
to  obtain  any additional financing on terms satisfactory to the Company, if at
all.  Potential increases  in  the number of outstanding shares of the Company's
Class A Common Stock due to  convertible  debt,  warrants and stock  options,  a
substantial  loss in 1996 and debt incurred for the acquisition of Ventek due in
1999,  may limit the Company's  ability to negotiate  additional  debt or equity
financing.

Shareholder Rights Plan:
In  February 1998,  the Company implemented a stock rights program.  Pursuant to
the program,  stockholders of record on February 27, 1998 received a dividend of
one  right to purchase for  $15  one one-hundredth of a share of a newly created
Series A Junior Participating  Preferred Stock. The rights are attached to AMV's
Class A Common  Stock  and will also  become  attached  to shares  issued in the
future. The rights will not be traded separately and will not become exercisable
until the  occurrence of a triggering  event,  defined as an  accumulation  by a
single person or group of 20% or more of AMV's Class A Common Stock.  The rights
will expire on February 26, 2008 and are redeemable at $.0001 per right.

After a triggering  event, the rights will detach from the Class A Common Stock.
If AMV is then merged into, or is acquired by, another corporation,  the Company
has the  opportunity  to either (i) redeem the rights or (ii)  permit the rights
holder to receive in the merger stock of AMV or the  acquiring  company equal to
two times the exercise price of the right (i.e.,  $30). In the latter  instance,
the rights attached to the acquirer's  stock become null and void. The effect of
the rights  program  is to make a  potential  acquisition  of the  Company  more
expensive for the acquirer if, in the opinion of AMV's Board of  Directors,  the
offer is inadequate.

While the  Company is not aware of any  current  intent to acquire a  sufficient
number of shares of the Company's  common stock to trigger  distribution  of the
Rights,  existence of the Rights could discourage offers for the Company's stock
that may exceed the  current  market  price of the stock,  but that the Board of
Directors deems inadequate.

Year 2000 Issues:
AMV  has  established a company-wide  initiative to examine the  implications of
the  Year  2000  on the Company's  computing  systems and related  technologies,
and to assess the potential need for changes.  The Company has identified  areas
of potential  business  impact,  and appropriate  modifications to its computing
systems are underway.  Management believes this will be accomplished in a timely
manner.  The Company is also  communicating  with  suppliers  and  customers  to
coordinate Year 2000 conversion.  Management does not currently believe that the
costs related to the Company's  compliance  with the Year 2000 issue will have a
material  adverse  effect  on  the  Company's  financial  position,  results  of
operations or cash flows.  However,  in the event that the Company or any of the
Company's significant  suppliers or customers experience  disruptions due to the
Year 2000 issue, the Company's operations could be adversely affected.


                           PART II. OTHER INFORMATION
                           ==========================

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

(a)  Exhibits

  Exhibit
   Number   Description
  -------   -----------------------------

    3.1     Restated Articles of Incorporation of the Company as amended to
            date. (8)

    3.2     Restated and Amended By-Laws of the Company. (2)

    4.4     Form of Class D Warrant Agreement. (1)

    4.6     Form of Class G Warrant Agreement. (3)

    4.7     Form of Class H Warrant Agreement. (7)

    4.8     Form of Class I Warrant Agreement. (5)

    4.9     Form of Laidlaw Warrant Agreement. (5)

    4.10    Form of stock option agreement. (4)

    4.11    Form of 1997 Restricted Stock Plan and restricted stock agreement.
            (6)

    4.12    Rights Agreement dated February 27, 1998 between the Company and
            American Stock Transfer and Trust Company. (12)

   10.1     Form of Indemnity Agreement between the Company and each of its
            officers and directors. (1)

   10.2     Employment Agreement between Alan R. Steel and the Company dated
            January 1, 1998. (13)

   10.3     Employment Agreement between William J. Young and the Company dated
            January 1, 1998. (13)

   10.4     Employment Agreement between William J. Young and SRC VISION, Inc.
            dated January 1, 1998. (13)

   10.5     Employment Agreement between James Ewan and SRC VISION, Inc. dated
            January 1, 1998. (13)

   10.6     Subscription Agreement dated April 9, 1996, between the Company and
            Swiss American Securities, Inc., as agent for Credit Suisse, related
            to the private placement of $3,400,000 of convertible secured notes.
            (3)

   10.7     Convertible Secured Note dated April 17, 1996, between the Company
            and Ilverton International, Inc. (7)

   10.8     Asset Purchase Agreement dated July 24, 1996, by and among AMV,
            Ventek and the shareholders of Ventek. (5)

   10.9     $1,000,000 Note dated July 24, 1996, between AMV and Ventek. (5)

   10.10    $2,250,000 Convertible Note dated July 24, 1996, between AMV and
            Ventek. (5)

   10.11    $1,125,000 Note dated July 24, 1996, between AMV and Ventek. (5)

   10.12    Stock Appreciation Rights Agreement dated July 24, 1996 between AMV
            and Ventek. (5)

   10.13    Form of Employment Agreement dated July 24, 1996 between Ventek and
            each of the four stockholders of Ventek. (5)

   10.14    Pledge and Security Agreement dated July 24, 1996, by and among AMV,
            AMV Subsidiary, Inc., Ventek and Solin and Associates, P.C. (5)

   10.15    1997 SRC VISION, Inc. Stock Option Plan and forms of stock option
            agreements. (11)

   10.16    Plan of Merger between ARC Capital and AMV to effect an amendment to
            the Company's Articles of Incorporation to change the Company's name
            from ARC Capital to Advanced Machine Vision Corporation. (8)

   10.17    Share Purchase Agreement dated April 29, 1997 between Barco NV and
            ARC Netherlands BV. (9)

   10.18    Settlement Agreement dated August 12, 1997. (10)

   10.19    1997 Nonqualified Stock Option Plan and form of option agreement.
            (10)

   10.20    Business Loan Agreement dated April 30, 1998 between AMV and Bank of
            America NT&SA, together with related documents.

   10.21    Promissory Note dated April 24, 1998 to Bank of America NT&SA,
            together with related documents.

   27       Financial Data Schedule.

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

  (1)      Previously filed as an exhibit to Form S-1 (File No. 33-45126).

  (2)      Previously filed as an exhibit to Form S-3 (File No. 333-10847).

  (3)      Filed with the SEC on April 14, 1996, as an exhibit to the Company's
           Form 10-K for the year ended December 31, 1995.

  (4)      Filed with the SEC as an exhibit to form S-1 (File No. 33-45126).

  (5)      Filed with the SEC on July 30, 1996, as an exhibit to the Company's
           Form 8-K dated July 24, 1996.

  (6)      Filed with the SEC on January 22, 1997, as an exhibit to the
           Company's Form 8-K dated January 9, 1997.

  (7)      Filed with the SEC on May 14, 1996, as an exhibit to the Company's
           Form 10-Q for the quarter ended March 31, 1996.

  (8)      Filed with the SEC on May 14, 1997 as an  exhibit to the Company's
           Form 10-Q for the quarter ended March 31, 1997.

  (9)      Filed with the SEC on May 9, 1997 as an exhibit to the Company's
           Form 8-K regarding  the sale of Pulsarr.

  (10)     Filed with the SEC on October 30, 1997 as an exhibit to the Company's
           Form 10-Q for the quarter ended September 30, 1997.

  (11)     Filed with the SEC on March 31, 1997 as an exhibit to the Company's
           Form 10-K for the year ended December 31, 1996.

  (12)     Filed with the SEC on February 20, 1998 as an exhibit to the
           Company's Form 8-A.

  (13)     Filed with the SEC on February 27, 1998 as an exhibit to the
           Company's Form 8-K regarding implementation of a stock rights program
           and employment contracts.

(b)  Reports on Form 8-K:

           On  February  27,  1998,   a  Form  8-K  was  filed   regarding   the
           implementation of a stock rights program and employment contracts.

<PAGE>

                                    SIGNATURE
                                    =========

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



         May 7, 1998                               /s/  Alan R. Steel
-----------------------------                   ------------------------------
                                                        Alan R. Steel
                                                   Vice President, Finance
                                                (Principal Financial and duly
                                                     Authorized Officer)