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, 1999


                           Commission File No. 0-20097


                       ADVANCED MACHINE VISION CORPORATION


                            A California Corporation
                   IRS Employer Identification No. 33-0256103
                             3709 Citation Way #102
                                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, 1999, registrant had 12,813,551 shares of Class A Common Stock, and
56,002 shares of Class B Common Stock, all no par value, issued and outstanding.






                            Exhibit Index at Page 16

                                       i

<PAGE>

                                      INDEX
                                      -----


                                                                    Page Number
                                                                    -----------

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets.........................................1
          Consolidated Statements of Operations...............................2
          Consolidated Statement of Shareholders' Equity......................3
          Consolidated Statements of Cash Flows...............................4
          Notes to Unaudited Consolidated Financial Statements................5

Item 2.   Management's Discussion and Analysis of Financial
             Condition and Results of Operations..............................9


PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K....................................16

          Signature...........................................................19
















                                       ii


<PAGE>

                          PART I. FINANCIAL INFORMATION
                          -----------------------------

Item 1.  Financial Statements
-----------------------------
--------------------------------------------------------------------------------
Advanced Machine Vision Corporation
Consolidated Balance Sheets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                   March 31,        December 31,
                                                                                     1999               1998
                                                                                     ----               ----
                                                                                  (unaudited)         (audited)
                                                      ASSETS
<S>                                                                             <C>                <C>          
Current assets:
     Cash and cash equivalents                                                  $   3,057,000      $   4,423,000
     Accounts receivable - net                                                      4,038,000          4,073,000
     Inventories                                                                    7,826,000          7,379,000
     Prepaid expenses                                                                 163,000            181,000
     Current deferred tax asset                                                     1,175,000          1,175,000
                                                                                -------------      -------------

              Total current assets                                                 16,259,000         17,231,000
Property, plant and equipment - net                                                 5,103,000          5,274,000
Intangible assets - net                                                             4,714,000          4,894,000
Deferred tax asset                                                                    925,000            925,000
Other assets                                                                        1,414,000          1,515,000
                                                                                -------------      -------------

                                                                                $  28,415,000      $  29,839,000
                                                                                =============      =============

                                       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                           $   1,436,000      $     984,000
     Accrued liabilities                                                              781,000            997,000
     Customer deposits                                                                700,000          1,151,000
     Accrued payroll                                                                  639,000            761,000
     Warranty reserve                                                                 451,000            448,000
     Current portion of notes payable                                                  40,000            790,000
                                                                                -------------      -------------

              Total current liabilities                                             4,047,000          5,131,000
                                                                                -------------      -------------
Notes payable, less current portion                                                 6,324,000          7,862,000
                                                                                -------------      -------------
Commitments and contingencies
Shareholders' equity:
     Preferred stock                                                                2,579,000          2,579,000
     Common stock:
         Class A and B - 12,870,000 and 10,720,000
              shares issued and outstanding at March 31, 1999
              and December 31, 1998, respectively                                  26,103,000         24,329,000
     Common stock warrants                                                                 --            110,000
     Additional paid in capital                                                     5,020,000          4,910,000
     Accumulated deficit                                                          (15,688,000)       (15,112,000)
     Cumulative translation adjustment                                                 30,000             30,000
                                                                                -------------      -------------

              Total shareholders' equity                                           18,044,000         16,846,000
                                                                                -------------      -------------

                                                                                $  28,415,000      $  29,839,000
                                                                                =============      =============


                              See Accompanying Notes to Unaudited Consolidated Financial Statements.

                                                      1

</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Advanced Machine Vision Corporation
Consolidated Statements of Operations
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                 Three Months Ended March 31,
                                                                                 ----------------------------
                                                                                    1999              1998
                                                                                    ----              ----
                                                                                          (unaudited)
<S>                                                                             <C>              <C>         
Net sales                                                                       $  5,158,000     $  7,103,000
Cost of sales                                                                      2,504,000        3,770,000
                                                                                ------------     ------------

Gross profit                                                                       2,654,000        3,333,000
                                                                                ------------     ------------

Operating expenses:
     Selling and marketing                                                           947,000          937,000
     Research and development                                                      1,260,000        1,150,000
     General and administrative                                                      794,000          776,000
     Amortization of intangible assets                                               180,000          174,000
                                                                                ------------     ------------

                                                                                   3,181,000        3,037,000

Income (loss) from operations before other income and expense                       (527,000)         296,000

Other income and expense:
     Investment and other income                                                      67,000           62,000
     Interest expense                                                               (140,000)        (168,000)
                                                                                ------------     ------------

Income (loss) before income taxes                                                   (600,000)         190,000

Provision for (benefit from) income taxes                                            (24,000)           8,000
                                                                                ------------     ------------

Net income (loss)                                                               $   (576,000)    $    182,000
                                                                                ============     ============

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

Average shares outstanding - assuming dilution                                    11,520,000       13,255,000
                                                                                ============     ============


                                See Accompanying Notes to Unaudited Consolidated Financial Statements.

                                                       2
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Advanced Machine Vision Corporation
Consolidated Statement of Shareholders' Equity
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                              Accumulated
                                                Class A and B                                                    Other      Compre-
                  Series B Preferred Stock      Common Stock            Common    Additional                    Compre-     hensive
                  ------------------------    --------------------      Stock      Paid in      Accumulated     hensive     Income
                     Shares      Amount       Shares       Amount      Warrants    Capital        Deficit       Income      (loss)
                     -----       ------       ------       ------      --------   ----------      -------       ------    ---------

<S>                <C>          <C>        <C>          <C>          <C>          <C>          <C>            <C>         <C>
Balance, 
 December 31, 1998   119,106  $ 2,579,000   10,720,000  $24,329,000  $  110,000  $ 4,910,000  $ (15,112,000)  $  30,000

Conversion of
 note payable             --           --    1,800,000    1,774,000          --           --             --          --
Issuance of
 restricted stock         --           --      350,000           --          --           --             --          --
Cancellation/ 
 expiration of
 warrants                 --           --           --           --    (110,000)     110,000             --          --
Net loss                  --           --           --           --          --           --       (576,000)         --  $(576,000)
                   ---------  -----------  -----------  -----------  ----------  -----------  -------------   ----------  ---------

Balance, 
 March 31, 1999      119,106  $ 2,579,000   12,870,000  $26,103,000  $       --  $ 5,020,000  $ (15,688,000)  $  30,000
                   =========  ===========  ===========  ===========  ===========  ===========  =============  =========
Comprehensive loss                                                                                                        $(576,000)
                                                                                                                          =========

                                          See Accompanying Notes to Consolidated Financial Statements.

                                                                      3
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Advanced Machine Vision Corporation
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                 Three Months Ended March 31,
                                                                                 ----------------------------
                                                                                    1999              1998
                                                                                    ----              ----
                                                                                          (unaudited)
<S>                                                                             <C>              <C>

Cash flows from operating activities:
     Net income (loss)                                                          $   (576,000)    $    182,000
     Adjustments to reconcile net income to net cash
         (used in) provided by operating activities:
         Depreciation and amortization                                               373,000          332,000
         Changes in assets and liabilities:
              Accounts receivable                                                     35,000       (1,383,000)
              Inventories                                                           (447,000)        (226,000)
              Prepaid expenses and other assets                                      119,000          (91,000)
              Accounts payable, accrued liabilities, customer
                  deposits, accrued payroll and warranty reserve                     (89,000)         119,000
                                                                                ------------     ------------

                  Net cash (used in) operating activities                           (585,000)      (1,067,000)
                                                                                ------------     ------------

Cash (used in) investing activities:
     Purchases of property and equipment                                             (22,000)        (195,000)
                                                                                ------------     ------------

                  Net cash (used in) investing activities                            (22,000)        (195,000)
                                                                                ------------     ------------

Cash (used in) provided by financing activities:
     Notes payable to bank and others, net                                          (759,000)          (8,000)
     Proceeds from exercise of stock options                                              --            2,000
                                                                                ------------     ------------

                  Net cash (used in) provided by financing activities               (759,000)          (6,000)
                                                                                ------------     ------------

Net (decrease) in cash                                                            (1,366,000)      (1,268,000)

Cash and cash equivalents, beginning of the period                                 4,423,000        6,045,000
                                                                                ------------     ------------

Cash and cash equivalents, end of period                                        $  3,057,000     $  4,777,000
                                                                                ============     ============


                              See Accompanying Notes to Unaudited Consolidated Financial Statements.

                                                       4

</TABLE>
<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,  1998),  reflect  all  adjustments  (consisting  of  normal
recurring accruals) necessary to present fairly the Company's financial position
at March 31, 1999,  and December 31,  1998,  the results of  operations  for the
three-month  period  ended  March 31,  1999 and cash  flows for the  three-month
period ended March 31, 1999.  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 Ventek, Inc.  ("Ventek").  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  1998
annual report on Form 10-K.

Note 2.  Nature of Operations
-----------------------------

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 1996, the Company borrowed $3,400,000 pursuant to a convertible secured
note, $900,000 of which remains outstanding at March 31, 1999. The nominal 6.75%
interest rate may be adjusted upward on each  anniversary date (April 13) of the
note if the market  price of the  Company's  Class A Common Stock fails to reach
certain  levels.  In April 1998,  the interest rate was adjusted to 10.25%.  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 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.

                                        5

In February 1999, the Ventek notes were restructured. $750,000 of the $1,000,000
note  was  prepaid.  The  maturity  dates  of the  remaining  $250,000  and  the
$2,250,000  note were extended to July 23, 2000. The $1,125,000 note was paid in
full by  delivery  of  1,800,000  restricted  shares (see Note 10) and the stock
appreciation rights were cancelled.

In April 1998, AMV entered into a credit relationship with Bank of America NT&SA
("BofA") for a line of credit and a new mortgage.  The line of credit  agreement
provided that AMV could borrow the lesser of $2,000,000 or the collateral  value
of pledged marketable securities, and had an April 30, 1999 expiration date (see
below for a  description  of a  replacement  credit  facility).  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.

In April  1999,  the Company  entered  into a new line of credit  Business  Loan
Agreement with BofA for two loan  facilities.  The first provides for borrowings
of up to  $2,000,000,  interest at prime rate plus .5% or BofA's  offshore  rate
plus 2.35%, and is secured by accounts receivable,  inventory and equipment. The
second  provides  for  borrowings  of up to $500,000 for letters of credit to be
secured by cash instruments. Both facilities expire April 30, 2000.

Note 4.  Equity Transactions; Reduction in Outstanding Securities; Effect of
         Remaining Warrants, Options and Convertible Securities; Stock Rights
         Plan
-----------------------------------------------------------------------------

In October 1998, the Company sold 119,106 shares of Series B Preferred  Stock to
FMC Corporation ("FMC") for $2,620,000.  The preferred stock is convertible into
1,191,000 shares of Class A Common Stock, which, if converted,  represents a 10%
ownership  position  based on the  number of common  shares  outstanding  on the
transaction  date. Each share of preferred stock is allowed ten votes in matters
placed before the common  stockholders  except in the election of directors,  in
which case FMC has the right to elect one director.  The preferred stock pays no
dividends.  The preferred stock has a $22 per share liquidation preference.  FMC
also has a five-year option to purchase a number of shares of common stock equal
to 15% of the shares  outstanding  on the exercise  date at a price equal to the
greater of the  then-current  market  value of the AMV common stock or $2.20 per
share.

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.  Under the 1997 Plan,  there are currently  200,000
shares issued to three key employees of the Company. The shares cannot be traded
or  transferred  unless (i) the  employee  remains in the employ of the  Company
until January 10, 2000 and (ii) the employee  makes a payment of $1.80 per share
to AMV. If any of the  conditions  are not met, the stock will be forfeited  and
returned to the Company.

Between March 8, 1997 and February 28, 1999,  188,400 Unit Purchase  Options (to
acquire  1,696,000  shares of stock)  originally  issued in connection  with the
Company's  1992 initial  public  offering,  135,000  Laidlaw  warrants,  300,000
Gerinda  warrants,  the  Company's  Class  A,  B  and  C  Warrants  to  purchase
approximately 11.4 million shares,  275,000 Class D Warrants and 240,000 Class G
Warrants 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.

In June 1998, the Class I Warrant,  originally issued in the Ventek acquisition,
was amended to reduce the number of shares issuable pursuant to the warrant from
1,000,000  to  250,000.  In  connection  with  the  February  1999  Ventek  debt
restructuring  (see Note 3), the remaining  Class I Warrant was canceled and the
Company issued 350,000  restricted  shares of Class A Common Stock.  The 350,000
shares  cannot be traded or  transferred  unless  $1.25 per share is paid to the
Company between February 1, 2000 and January 31, 2001. Absent such payment,  the
shares shall be forfeited and returned to the Company for cancellation.

Schedule of Outstanding Stock,  Warrants and Potential  Dilution:
-----------------------------------------------------------------  The following
table  summarizes,  as of March 31, 1999,  outstanding  common stock,  potential
dilution to the outstanding common stock upon exercise of warrants or conversion
of convertible  debt, and proforma  proceeds or debt reduction from the exercise
or conversion.  The table also sets forth the exercise or conversion  prices and
warrant expiration and debt due dates.
<TABLE>
<CAPTION>
                                                                                       Proforma
                                   Number or Principal    Common       Exercise or     Proceeds
                                   Amount Outstanding   Stock After    Conversion      or Debt
          Security                  at March 31, 1999   Conversion        Price        Reduction
------------------------------     ------------------  ------------    ----------     -----------
<S> <C>                               <C>              <C>               <C>          <C>
Outstanding Common Stock                                 12,870,000
Warrants (expiration date):
    J (9/30/99)                            300,000          300,000      $   2.03     $    609,000
                                                       ------------                   ------------

Convertible Debt (due date):
    6.75% Notes (4/16/01)             $    900,000          423,000          2.13          900,000
    6.75% Ventek Note (7/23/00)       $  2,250,000        1,000,000          2.25        2,250,000
                                                       ------------                   ------------

                                                          1,423,000                      3,150,000
                                                       ------------                   ------------

Convertible Preferred Stock                119,100        1,191,000
                                                       ------------

Potentially outstanding shares
    and proforma proceeds
    or reduction of debt                                 15,784,000                   $  3,759,000
                                                       ============                   ============

</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 or preferred stock will be converted.

In  addition  to  the  FMC  option  described  above, on March 31, 1999, AMV had
outstanding  options  to  purchase  3,253,000  shares  of Class A Common  Stock,
2,622,000 of which are under its stock option plans.

The existence of these outstanding  warrants,  options, and convertible debt and
preferred stock,  including options that may 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, convertible debt and preferred stock, 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. In December 1998, the Rights Plan was amended to permit FMC
to acquire up to 1,600,000 shares of AMV Common Stock on the open market without
causing a triggering event.

Note 5.  Earnings (Loss) Per Share
----------------------------------

The  computation  of earnings  (loss) per share is  presented  in the  following
tables:
<TABLE>
<CAPTION>
                                                          For the Three Months Ended March 31,
                                                          ------------------------------------
                                                      1999                                    1998
                                        ---------------------------------       --------------------------------
                                            Income             Shares              Income              Shares
                                            ------             ------              ------              ------
<S>                                     <C>                    <C>              <C>                   <C>       
Calculation of EPS
------------------
Income (loss) available to
   common shareholders                  $    (576,000)         11,914,000       $     182,000         10,712,000
Reduction for contingently
   returnable shares as all conditions
   were not met as of period end                   --            (394,000)                 --           (200,000)
                                        -------------       -------------       -------------      -------------
Income (loss) available to
   common shareholders                  $    (576,000)         11,520,000       $     182,000         10,512,000
                                        =============       =============       =============      =============

-----------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per share         $       (0.05)                          $       0.02
-----------------------------------------------------------------------------------------------------------------

Effect of Dilutive Securities:
------------------------------
Stock options and warrants              $          --                  --       $          --            943,000
Note and stock appreciation
   rights agreement                                                    --              25,000          1,800,000
                                        -------------       -------------       -------------      -------------
Income (loss) available to
   common shareholders and
   assumed conversions                  $    (576,000)         11,520,000       $     207,000         13,255,000
                                        =============       =============       =============      =============

-----------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per share       $       (0.05)                          $       0.02
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The  number of shares  of Class A 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,
                                                   -----------------------------
                                                        1999            1998
                                                        ----            ----

Number of shares of common stock
   exercisable from:
     Options                                           3,253,000         645,000
     Warrants                                            300,000       1,275,000
     Convertible debt                                  1,424,000       1,424,000
                                                   -------------   -------------

                                                       4,977,000       3,344,000

   Exercise price ranges                           $1.00 - $3.00   $2.13 - $4.94

Note 6.  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:

                                                     March 31,        Dec. 31,
                                                       1999             1998
                                                       ----             ----

     Raw materials                                 $   3,093,000   $   2,837,000
     Work-in-process                                   1,058,000       1,563,000
     Finished goods                                    3,675,000       2,979,000
                                                   -------------   -------------

                                                   $   7,826,000   $   7,379,000
                                                   =============   =============

<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations
--------------------------------------------------------------------------------

The Company's  backlog at March 31, 1999, was $5,645,000  compared to $8,824,000
as of March 31, 1998.

Results of Operations - Comparison between three months ended March 31, 1999 and
March 31, 1998
--------------  Sales for the three months ended March 31, 1999 ("Q1 1999") were
$5,158,000, down 27% when compared to sales for the three months ended March 31,
1998 ("Q1 1998") of $7,103,000. The $1,945,000 decrease in sales is due to lower
demand for the Company's products.

Gross profit  decreased by $679,000 to  $2,654,000  in Q1 1999 when  compared to
$3,333,000  of gross  profit in Q1 1998.  The decrease in gross profit is due to
the decrease in sales. Gross profit as a percentage of sales was 51% in 1999 and
47% in 1998.  The increase in gross profit as a percentage  of sales is due to a
larger percentage of higher-margin products included in Q1 1999 sales.

Selling  and  marketing  expense increased by $10,000 in Q1 1999 from Q1 1998 to
$947,000 amounting to 18% of sales in Q1 1999.  Similar expenses in Q1 1998 were
$937,000, or 13% of sales.  The increase in selling and marketing  expenses as a
percentage  of sales is due to the fixed  selling  expenses  spread over a lower
sales base.

Research and development  expenses were $1,260,000 and $1,150,000 in Q1 1999 and
Q1 1998,  or 24% and 16% of sales,  respectively.  The  increase in research and
development  expenses is related to the  continuing  development of new products
for softwood veneer production applications.

General and  administrative  expenses  increased  $18,000 to $794,000 in Q1 1999
from $776,000 in Q1 1998.

The net loss for Q1 1999 was  $576,000  as compared to net income of $182,000 in
Q1 1998.

Liquidity and Capital Resources
-------------------------------   The Company's cash balance and working capital
were $3,057,000  and  $12,212,000,  respectively,  at March 31, 1999 as compared
to $4,423,000 and $12,100,000, respectively, at December 31, 1998. The Company's
long-term  debt decreased by approximately $2.2 million primarily as a result of
the  Ventek debt restructuring. Equity at March 31, 1999 increased from December
31, 1998 due to the Ventek debt restructuring, offset by a net loss for Q1 1999.

During  the Q1 1999,  net cash used in  operating  activities  totaled  $585,000
compared to cash used for operating  activities of $1,067,000 in Q1 1998. The Q1
1999 usage was due to the net loss and increase in inventory.  The Q1 1998 usage
was due principally to an increase in accounts receivable.

Cash used in investment  activities  totaled $22,000 in Q1 1999 compared to cash
used  in  investment  activities  of  $195,000  in Q1  1998.  The Company has no
material commitments for capital expenditures at March 31, 1999.

Cash used in  financing  activities  totaled  $759,000 in Q1 1999 as compared to
cash used in financing  activities of $6,000 in Q1 1998. In February  1999,  the
Company paid $750,000 of a $1,000,000 note and issued  1,800,000 shares of Class
A Common  Stock in  payment  of a  $1,529,000  note as part of the  Ventek  debt
restructuring.

                                       9

<PAGE>
In October  1998,  the Company  received  $2,620,000  from FMC  Corporation  for
119,106  shares  of  newly  issued  Series  B  Preferred  Stock  (see  Note 4 to
Consolidated Financial Statements).

In April 1999, the Company  entered into a Business Loan Agreement  providing up
to $2,500,000 of working capital financing (see Note 3 to Consolidated Financial
Statements).

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,
in its reports to stockholders and in information provided in its web site.

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.
     * Fluctuations in quarterly operating results and seasonality in certain of
       the Company's markets.
     * 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 distribution channels.
     * The risks associated with international sales.
     * The uncertain ability to manage growth and integrate acquired businesses.
     * 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 and in certain
fiscal  quarters  thereafter,   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 seasonality or economic downturns in some
markets and 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  $2.5  million  due in July  2000,  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, 1997 and 1998, there can be
no assurance as to the Company's profitability on a quarterly or annual basis in
the future.

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 patterns to continue.

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 marketing its new
generation  of  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.).

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,  longer
product  evaluation periods 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 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  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.  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 1998, the Company entered an
agreement  with  FMC  Corporation  to be its  exclusive  or  nonexclusive  sales
representative in much of the United States and in many areas in the rest of the
world.  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 that country's  currency  devaluation
when compared to the U. S. dollar over the past few years. 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.

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.  Pulsarr was  subsequently
sold in May 1997. A growth  strategy  involving the  integration of new entities
will  require  the  establishment  of a sales  representative  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 successful  integration of entities that
may be acquired in the future 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.

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 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 and preferred stock,  warrants and stock options, a substantial
loss in 1996 and debt incurred for the  acquisition  of Ventek due in 2000,  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.

In October 1998, FMC acquired 119,106 shares of the Company's Series B Preferred
Stock,  which,  if  converted  into common stock in  accordance  with its terms,
represented  a 10%  ownership  position  in the  Company on that date.  FMC also
received a five-year option to acquire 15% of the Company's  outstanding  common
stock  on the date of  exercise.  While  FMC's  resulting  beneficial  ownership
exceeds 20%, the transaction was not a triggering  event as defined in the Stock
Rights Plan since FMC acquired the shares  directly from the Company.  As stated
in a Schedule 13D filed with the Securities  and Exchange  Commission on October
22, 1998,  FMC's  purpose was to invest in the Company and its  technology.  FMC
currently intends to review its investment position in the Company  periodically
and,  depending on such review and factors including market conditions and share
prices, the Company's business  prospects,  technology,  future developments and
applicable legal requirements,  FMC may seek to acquire additional securities of
the Company from time to time in the open market or in negotiated  transactions.
In December 1998, the Company amended the Shareholder  Rights Plan to permit FMC
to purchase on the open market up to  1,600,000  shares of Class A Common  Stock
without such purchase being a triggering event.

While the Company is not aware of any other  circumstance  that might  result in
the acquisition of 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:
------------------  The  Company  is aware of the  potential  for  industry-wide
business  disruption,  which could  occur due to  problems  related to the "Year
2000" issue.  Management believes that it has a prudent plan in place to address
this issue within the Company and its supply chain.  The components of this plan
include:  an assessment of internal systems for modification and/or replacement,
communication  with external  suppliers to determine their state of readiness to
maintain an  uninterrupted  supply of goods and services to the Company,  and an
evaluation of products sold by the Company to customers as to the ability of the
products to work properly after the turn of the century.

Internal Systems:
The Company's process for achieving Year 2000 compliance for internal systems is
as follows:

1.  Develop an inventory of all internal systems that may be affected by Year
    2000 issues;
2.  Determine the Year 2000 compliance status of each internal system;
3.  Prioritize the importance of Year 2000 compliance for each internal system;
4.  Determine the method to be used to achieve compliance (modify, replace,
    cease use);
5.  Complete the planned action;
6.  Test the system.

The six steps for  internal  systems in use  throughout  the Company that may be
affected by Year 2000 issues have been completed. The Company is internally Year
2000-compliant.

Suppliers:
The  Company  has  initiated  a program to survey the Year 2000 readiness of its
major and critical suppliers.  The  Company  has sent letters to these suppliers
outlining its approach  towards  the Year 2000 issue and asking for either their
certification  that their product is  Year 2000-compliant or their commitment to
resolve  any  issues  they may have.  The  Company  has  identified suppliers it
views as critical to its business. Management has defined a critical supplier as
one  whose  inability  to  continue  to provide  goods and services would have a
serious  adverse  impact  on  the  Company's  ability  to  produce,  deliver and
collect  payment  for  its product.  To date, the Company has received responses
from  nearly  all  critical  suppliers.   The Company  is  following up on those
suppliers who have not responded.

Products:
The  main  functionality of the  Company's  products is not affected by the date
function.  The  Company's  products  shipped  subsequent  to  June 1998 are Year
2000-compliant.   For  products  shipped  prior  to  June  1998, the Company has
provided  instructions  to its customers on how to make the Company's  equipment
fully  compliant.  The Company will contact all customers by June 1999 to ensure
they have ample time to become fully complaint.

Costs:
Costs  incurred  in  the  Company's  Year 2000 compliance effort are expensed as
incurred  and  funded  with  cash  generated  from  operations.  These costs are
included in the normal,  recurring  costs incurred for product  development  and
systems maintenance and are not material to the Company's results of operations,
nor  are  they  expected  to be in the future. There  have  been no  significant
deferrals  of  other  information  technology projects.

Risks and Contingency Plan:
Although  the  Company  believes  it  is  taking  prudent action  related to the
identification  and  resolution  of  issues  related  to  the  Year  2000,   its
assessment  is still  in  progress.  It may never be able to know with certainty
whether certain critical suppliers are compliant.  Failure of critical suppliers
to  make their  computer  systems Year 2000  compliant  could result in delaying
deliveries   of   products  and services  to the Company.  If  such  delays  are
extensive, they could have a material adverse effect on the Company's business.

The  failure  to  correct  a  material  Year  2000  problem  could  result in an
interruption  in, or a failure of,  certain  normal  business  activities.  Such
failures  could  materially  and  adversely  affect  the  Company's  results  of
operations,  liquidity and financial  condition.  Due to the general uncertainty
inherent in the Year 2000 issue,  resulting in part from the  uncertainty of the
Year 2000 readiness of third-party suppliers, the Company is unable to determine
at this time whether the consequences of Year 2000 failures will have a material
impact on the Company's results of operations,  liquidity or financial position.
The Year 2000 compliance project is expected to reduce,  but not eliminate,  the
Company's  level of  uncertainty  about the Year 2000 issue and, in  particular,
about the Year 2000  compliance  and  readiness of its critical  suppliers.  The
Company  believes that, with the completion of the Year 2000 compliance  project
as scheduled, the possibility of significant  interruptions to normal operations
should be reduced.

The Company  continues  to evaluate the risks  associated  with  potential  Year
2000-related  failures.  As management  better  understands the risks within the
Company's  unique set of internal  systems,  business  partners and products,  a
formal  contingency  plan to alleviate  the impact of high  potential or serious
failures will be developed. The Company anticipates having this contingency plan
outlined by September 30, 1999.  The components of this plan will likely include
raw material and finished goods'  inventory  levels,  alternative  suppliers and
backup systems.  Until the contingency  plan is completed,  the Company does not
possess the information  necessary to estimate the potential  negative impact of
Year 2000  compliance  issues related to internal  systems,  its suppliers,  its
customers or other parties.

<PAGE>
                           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. (9)

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

     4.1          Form of Class G Warrant Agreement. (5)

     4.2          Form of Class H Warrant Agreement. (8)

     4.3          Form of Class I Warrant Agreement. (6)

     4.4          Form of stock option plan and stock option agreement. (1)

     4.5          Form of 1997 Restricted Stock Plan and restricted stock
                  agreement. (7)

     4.6          Form of amendments to restricted stock agreements. (19)

     4.7          Rights Agreement dated February 27, 1998 between the Company
                  and American Stock Transfer and Trust Company ("AST"). (13)

     4.8          Amendment to Rights Agreement between the Company and AST.
                  (20)

     4.9          Amendment to Class I Warrant Agreement. (15)

    4.10          Form of Certificate of Determination for Series A Junior
                  Participating Preferred Stock. (16)

    4.11          Form of Certificate of Determination for Series B Preferred
                  Stock. (18)

    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. (14)

    10.3          Employment Agreement between William J. Young and the Company
                  dated January 1, 1998. (14)

    10.4          Employment Agreement between William J. Young and SRC VISION,
                  Inc. dated January 1, 1998. (14)

    10.5          Employment Agreement between James Ewan and SRC VISION, Inc.
                  dated January 1, 1998. (14)


                                       16
<PAGE>
    10.6          Stock Purchase Agreement dated March 1, 1996 (without
                  exhibits) between Meijn Beheer BV and ARC Netherlands BV, a
                  wholly-owned subsidiary of the Company. (4)

    10.7          Stock Purchase Agreement dated March 1, 1996 between J. C.
                  Scholt and ARC Netherlands BV, a wholly-owned subsidiary of
                  the Company. (4)

    10.8          Convertible Note dated March 1, 1996 issued in connection with
                  that certain Stock Purchase Agreement dated March 1, 1996
                  between J. C. Scholt and ARC Netherlands BV. (4)

    10.9          Subscription Agreement dated January 18, 1996 between the
                  Company and Swiss American Securities,  Inc, as agent for
                  Credit Suisse related to the private placement of 1,400,000
                  shares of the Company's Class A Common Stock. (4)

   10.10          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. (5)

   10.11          Convertible Secured Note dated April 17, 1996, between the
                  Company and Ilverton International, Inc. (8)

   10.12          $1,000,000 Note dated July 24, 1996, between AMV and Ventek.
                  (6)

   10.13          $2,250,000 Convertible Note dated July 24, 1996, between AMV
                  and Ventek. (6)

   10.14          $1,125,000 Note dated July 24, 1996, between AMV and Ventek.
                  (6)

   10.15          Stock Appreciation Rights Agreement dated July 24, 1996
                  between AMV and Ventek. (6)

   10.16          Form of Employment Agreement dated July 24, 1996 between
                  Ventek and each of the four stockholders of Ventek. (6)

   10.17          Pledge and Security Agreement dated July 24, 1996, by and
                  among AMV, AMV Subsidiary, Inc., Ventek and Solin and
                  Associates, P.C. (6)

   10.18          1997 SRC VISION, Inc. Stock Option Plan and forms of stock
                  option agreements. (12)

   10.19          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. (9)

   10.20          Share Purchase Agreement dated April 29, 1997 between Barco NV
                  and ARC Netherlands BV. (10)

   10.21          Settlement Agreement dated August 12, 1997. (11)

   10.22          1997 Nonqualified Stock Option Plan and form of option
                  agreement. (11)

   10.23          Business Loan Agreement dated April 30, 1998 between AMV and
                  Bank of America NT&SA, together with related documents. (17)

   10.24          Promissory Note dated April 24, 1998 to Bank of America NT&SA,
                  together with related documents. (17)

   10.25          $250,000 Note dated June 5, 1998 from Rodger A. Van Voorhis to
                  Ventek. (15)

   10.26          Series B Preferred Stock Purchase Agreement between AMV and
                  FMC Corporation dated October 14, 1998. (18)

   10.27          Intellectual Property and Security Agreement dated October 14,
                  1998 between SRC VISION, Inc. and FMC Corporation. (18)

   10.28          1998 Senior Management and Director Stock Purchase Plan. (20)

   10.29          Business Loan Agreement dated April 12, 1999 between AMV and
                  Bank of America NT&SA.

      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 October 5, 1995, as an exhibit to the Company's
        Form 8-K dated October 2, 1995.

(4)     Filed with the SEC on March 6, 1996, as an Exhibit to the Company's Form
        8-K dated March 1, 1996.

(5)     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.

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

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

(8)     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.

(9)     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.

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

(11)    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.

(12)    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.

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

(14)    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.

(15)    Filed with the SEC on June 15, 1998 as an exhibit to the Company's Form
        8-K dated June 5, 1998.

(16)    Filed with the SEC on February 27, 1998 as an exhibit to the Company's
        Form 8-A dated February 27, 1998.

(17)    Filed with the SEC on August 4, 1998 as an exhibit to the Company's Form
        10-Q dated August 4, 1998.

(18)    Filed with the SEC on October 19, 1998 as an exhibit to the Company's
        Form 8-K dated October 14, 1998.

(19)    Filed with the SEC on October 30, 1998 as an exhibit to the Company's
        Form 10-Q dated October 30, 1998.

(20)    Filed with the SEC on January 14, 1999 as an exhibit to the Company's
        Form 8-K dated December 22, 1998.


(b)    Reports on Form 8-K:
---------------------------

       On January 14, 1999, a Form 8-K was filed with the SEC regarding the
       adoption of the 1998 Senior Management and Director Stock Purchase Plan
       and an amendment to the Company's Stock Rights Agreement.

       On February 16, 1999, a Form 8-K was filed with the SEC regarding the
       restructuring of debt due to the former owners of Ventek.


                                    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 11, 1999                          /s/  Alan R. Steel
-------------------------------           -------------------------------
                                                   Alan R. Steel
                                              Vice President, Finance
                                           (Principal Financial and duly
                                                 Authorized Officer)







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