Exhibit 4.2
                        WARRANT REDUCTION OFFER STATEMENT
                          SILICON VALLEY RESEARCH, INC.
                          NOTICE OF TEMPORARY REDUCTION
                            OF WARRANT EXERCISE PRICE

         Silicon  Valley   Research,   Inc.,  a  California   corporation   (the
"Company"),  hereby  offers  to reduce  temporarily  the  exercise  price of its
warrants  to  purchase  shares of its common  stock,  no par value (the  "Common
Stock") dated December 30, 1997 (the "Warrants"),  upon the terms and subject to
the  conditions  set  forth  in this  Warrant  Reduction  Offer  Statement  (the
"Statement").  The Warrants are currently exercisable at $0.53 per share. During
the period (the  "Reduction  Period")  starting on the date hereof and ending at
5:00 p.m.,  Pacific  Daylight Time, on March 30, 2001 (the  "Expiration  Date"),
holders of the  Warrants  ("Warrant  Holders")  are  entitled to  purchase  upon
payment  in cash of a  reduced  exercise  price of $0.13 per one share of Common
Stock (the  "$0.13  Reduced  Exercise  Price") or $0.115  (the  "$0.115  Reduced
Exercise  Price")  per one  share of Common  Stock.  A holder  of  Warrants  may
exercise all or any portion of his or her Warrants in accordance  with the terms
of this  Statement.  The number of Warrants  that a Warrant  Holders  chooses to
exercise at a Reduced Exercise Price will be the "Subscription Amount". In order
to be entitled to the $0.115  Reduced  Exercise  Price,  the Warrant Holder must
agree  not to sell the  shares of  Common  Stock  acquired  upon  exercise  (the
"Shares")  for a period of 60 days.  Those Warrant  Holders  wishing to sell the
Shares  within 60 days of the exercise  must exercise the Warrants at the "$0.13
Reduced Exercise Price".


         After the  Expiration  Date,  the exercise  price of the Warrants  will
revert to $0.53 per share  through their  expiration  on December 29, 2002,  and
holders of the  Warrants  will no longer be  entitled  to the  Reduced  Exercise
Price. The Company is temporarily reducing the exercise price of the Warrants in
order to provide  holders  with an  incentive  to exercise  the  Warrants and to
provide the Company with financing for its current and future operations.


         The Company  originally  issued the Warrants in a private  placement of
3,811,974  Units  ("Units")  pursuant to a Unit Purchase  Agreement  dated as of
December 19, 1997,  among the Company and the investors named therein (the "Unit
Purchase  Agreement").  Each Unit was  composed of one share of Common Stock and
one Warrant.  The Company filed, on February 27, 1998, a registration  statement
on Form S-3 (the  "Registration  Statement")  with the  Securities  and Exchange
Commission (the  "Commission")  to register shares of Common Stock issuable upon
exercise of the Warrants.  The Registration  Statement was declared effective by
the  Commission  on March 16,  1998.  On March 24,  2000,  the Company  filed an
updated  prospectus to the Registration  Statement to ensure its  effectiveness.
The Common Stock issuable upon exercise of the Warrants will be freely  tradable
pursuant to the Registration Statement.

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

    INVESTMENT IN THE COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE
     OF RISK. INVESTORS MUST BE CAPABLE OF SUSTAINING A LOSS OF THEIR ENTIRE
                INVESTMENT. SEE "CERTAIN RECENT CONSIDERATIONS."


     THE WARRANT REDUCTION OFFER HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
    SECURITIES AND EXCHANGE COMMISION OR ANY STATE SECURITIES COMMISSION, NOR
       HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
       COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
      CONTAINED IN THIS WARRANT REDUCTION OFFER. ANY REPRESENTATION TO THE
                        CONTRARY IS A CRIMINAL OFFENSE.

           The date of this Warrant Reduction Offer is March 26, 2001.


<PAGE>

         This Warrant Reduction Offer is being sent to all registered holders of
the Warrants at the close of business on the date immediately preceding the date
hereof.   The  original  exercise  price  of  the  Warrants  was  determined  by
negotiations between the Company and the purchasers of the Warrants.  The Common
Stock is listed on the OTC  Bulletin  Board  (the  "Bulletin  Board")  under the
symbol "SVRI". See "Price Range for the Common Stock".

         This Warrant Reduction Offer is subject to a number of conditions.  The
Company reserves the right to extend the Reduction Period up to 30 calendar days
and to amend or terminate the Warrant Reduction Offer. The exercise price of the
Warrants  must be paid in cash,  by check made  payable to the order of "Silicon
Valley  Research,  Inc." or by wire  transfer,  in an amount  equal to $0.115 or
$0.13 per share. See "Offering Summary" and "The Warrant Reduction Offer".

         This Warrant  Reduction  Offer is being made by the Company in reliance
on the exemptions  from the  registration  requirements of the Securities Act of
1933, as amended (the "Securities  Act") afforded by Section 4(2) and/or Section
4(6)  thereof.  This Warrant  Reduction  Offer does not  constitute  an offer or
solicitation in any  jurisdiction  in which such offer or solicitation  would be
unlawful. The Warrant Reduction Offer is not being made to, nor will the Company
accept the  exercise  from,  any holder of the Warrants in any  jurisdiction  in
which the Warrant  Reduction  Offer or the  acceptance  thereof  would not be in
compliance with the securities or blue sky laws of such jurisdiction.

         If you require  assistance  in  connection  with the Warrant  Reduction
Offer, please contact Lisa A. Evans, Finance  Administrator,  at the Company, at
(408) 361-1018.

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

 NEITHER   THE COMPANY NOR ITS BOARD OF  DIRECTORS  MAKES ANY  RECOMMENDTION  TO
           HOLDERS TO  EXERCISE  OR TO REFRAIN  FROM  EXERCISING  THE  WARRANTS.
           HOLDERS MUST MAKE THEIR OWN DECISIONS ON WHETHER OR NOT TO EXERCISE.

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


<PAGE>

                                TABLE OF CONTENTS

                                                                          Page

Available Information                                                        4

Offering Summary                                                             5

The Warrant Reduction Offer                                                  7

Use of Proceeds                                                             11

Certain Recent Considerations                                               12

Description of Securities                                                   12

Price Range for the Common Stock                                            13

Legal Matters                                                               13


EXHIBITS

Warrant Exercise Agreement

Form 10-KSB for the year ended March 31, 2000

Form 10-QSB for the quarter ended December 31, 2000


<PAGE>

                              AVAILABLE INFORMATION

         The  Company  is  subject  to  the  informational  requirements  of the
Securities  Exchange  Act of  1934  (the  "Exchange  Act"),  and  in  accordance
therewith  files  reports,  proxy  statements  and  other  information  with the
Commission.  Such reports,  proxy statements and other  information filed by the
Company can be inspected and copied at the Securities and Exchange  Commission's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Holders
may also call the Commission at  1-800-SEC-0330  for further  information on the
Public Reference Room. The Company's  Securities and Exchange Commission filings
are  also   available   to  the   public  at  the   Commission's   Web  site  at
http://www.sec.gov.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The  following  documents  filed by the  Company  with  the  Commission
pursuant to the Exchange Act are  incorporated  herein by reference:  (i) Annual
Report on Form  10-KSB  for the year  ended  March 31,  2000 and (ii)  Quarterly
Report on Form 10-QSB for the quarter ended December 31, 2000.  These  documents
are included as exhibits to this Statement.

         Any statement  incorporated  by reference  herein shall be deemed to be
modified  or  superseded  for  purposes of this  Statement  to the extent that a
statement  contained herein or in any other subsequently filed document which is
deemed to be  incorporated  by  reference  herein  modifies or  supersedes  such
statement.  Any statement so modified or superseded shall not be deemed,  except
as so modified or superseded, to constitute a part of this Statement.


<PAGE>


                                OFFERING SUMMARY

         This summary  highlights  information  contained in other parts of this
Statement.  Because it is a summary,  it may not contain all of the  information
deemed  necessary  for a  decision  to invest  in the  Company's  common  stock.
Therefore, investors are urged to read the entire Statement carefully, including
"Certain  Recent  Considerations",  the Form 10-KSB for the year ended March 31,
2000 and the Form 10-QSB for the quarter ended December 31, 2000,  before making
an investment decision.

                                   The Company

         The Company, incorporated in 1979, develops and markets physical design
software for use by integrated circuit ("IC") designers,  including those of its
subsidiary,  Quality I.C. Corporation.  The Company's software products are used
to automatically and efficiently  arrange and connect the individual  components
that comprise an integrated circuit. While this process, commonly referred to as
"place and route",  is a crucial  element of most chip  designs,  some  critical
areas require a more manual approach.  Designers at Quality I.C. Corporation are
skilled  in the  production  of custom  chip  components  to  satisfy  demanding
performance and area  requirements.  By combining both strengths,  the Company's
design project support and consulting  services  encompass nearly all aspects of
the physical integrated circuit design process. The Company's end-user customers
include Hyundai,  Innovision Labs, Micron, Motorola,  N.E.C., OKI Semiconductor,
Samsung Electronics, SigmaTel, Sony, Texas Instruments and Yamaha.
<TABLE>
                                  The Offering
<CAPTION>
------------------------------------------------------- ----------------------------------------------------
<S>                                                     <C>
Warrants subject to Warrant Reduction Offer             The Warrant  Reduction  Offer includes  Warrants to
                                                        purchase  an  aggregate  of  3,329,735   shares  of
                                                        Common Stock.
------------------------------------------------------- ----------------------------------------------------
Maximum Subscription Amount

------------------------------------------------------- ----------------------------------------------------
Reduced Exercise Price                                  $0.115  per one  share of  Common  Stock  for those
                                                        Warrant  Holders  who agree not to sell the  shares
                                                        of  Common  Stock   acquired   upon  exercise  (the
                                                        "Shares")  for a period  of 60 days  commencing  on
                                                        the date of exercise
                                                        or
                                                        $0.13 per one share of Common Stock

------------------------------------------------------- ----------------------------------------------------
Reduction Period                                        Commencing  on the date  hereof  and ending at 5:00
                                                        p.m. Pacific Standard Time on March 30, 2001.
------------------------------------------------------- ----------------------------------------------------
Purpose  of  Warrant  Reduction  Offer                  To provide  holders  with an  incentive to exercise
                                                        the  warrants  and  to  provide  the  Company  with
                                                        financing  for its current  and future  operations.
                                                        See "The Warrant Reduction Offer - Purpose".
------------------------------------------------------- ----------------------------------------------------
Use of Proceeds                                         The Company  intends to use the net  proceeds  from
                                                        the exercise of the Warrants  primarily for working
                                                        capital.  See "Use of Proceeds".
------------------------------------------------------- ----------------------------------------------------
Expiration                                              5:00  p.m.  Pacific  Standard  Time,  on March  30,
                                                        2001,  subject  to  extension.   See  "The  Warrant
                                                        Reduction Offer - Expiration  Date;  Extensions and
                                                        Amendments".
------------------------------------------------------- ----------------------------------------------------
Securities Outstanding
  Prior to the Warrant Reduction                        38,115,452 shares of Common Stock
  Offer (1)
------------------------------------------------------- ----------------------------------------------------


<PAGE>

------------------------------------------------------- ----------------------------------------------------
  After the Warrant Reduction
  Offer (1)                                             41,445,187   shares  of  Common   Stock   (assuming
                                                        exercise of all Warrants)
------------------------------------------------------- ----------------------------------------------------
Risk Factors                                            Investment in the Common Stock is  speculative  and
                                                        involves  a  high  degree  of  risk.  See  "Certain
                                                        Considerations".
------------------------------------------------------- ----------------------------------------------------
How to Exercise Warrants                                Any holder of Warrants  wishing to  exercise  under
                                                        the Warrant  Reduction  Offer  should (i)  complete
                                                        and  sign the  Warrant  Exercise  Agreement  in the
                                                        form  attached  hereto  as  Exhibit  A, (ii) make a
                                                        check payable to "Silicon  Valley  Research,  Inc."
                                                        in an  amount  equal to  $0.115  per share or $0.13
                                                        per   share(or  see  wire   transfer   instructions
                                                        below),  and (iii)  forward the  original  Warrant,
                                                        the  Warrant  Exercise  Agreement  and a check  (or
                                                        wire transfer) to Silicon Valley Research,  Inc. at
                                                        6360  San  Ignacio  Avenue,  San  Jose,  California
                                                        95119,  Attention:   Lisa  Evans.  Payment  of  the
                                                        exercise  price may only be in cash  (same-day sale
                                                        is acceptable)  under the Warrant  Reduction Offer.
                                                        See  "The   Warrant   Reduction   Offer  -  How  to
                                                        Exercise".
------------------------------------------------------- ----------------------------------------------------
Acceptance                                              of all Warrants The Company will accept any and all
                                                        Warrants  properly  exercised  on or  prior  to the
                                                        Expiration Date, subject to certain conditions. See
                                                        "The Warrant  Reduction  Offer - Conditions  of the
                                                        Warrant Reduction Offer".
------------------------------------------------------- ----------------------------------------------------
Delivery of Securities                                  The Company  will deliver  certificates  for shares
                                                        of  Common  stock  issuable  upon  exercise  of the
                                                        Warrants as soon as  practicable  after the Company
                                                        is  in   receipt   of  the   required   funds   and
                                                        paperwork.  See  "The  Warrant  Reduction  Offer  -
                                                        Delivery of Securities".
------------------------------------------------------- ----------------------------------------------------
<FN>
---------------

(1)      As of March 23, 2001, does not include  outstanding options to purchase
         an  aggregate  of  5,069,500  shares  of Common  Stock and  outstanding
         warrants to purchase an aggregate of 270,000 shares of Common Stock.
</FN>
</TABLE>

<PAGE>

                           THE WARRANT REDUCTION OFFER

Terms of the Offer

         Upon the terms and subject to the conditions herein set forth,  holders
of the Warrants  are entitled to exercise  such  Warrants  during the  Reduction
Period  at a  reduced  exercise  price of price of $0.13 per one share of Common
Stock (the  "$0.13  Reduced  Exercise  Price") or $0.115  (the  "$0.115  Reduced
Exercise  Price")  per one share of Common  Stock.  A holder  of  Warrants  (the
"Warrant  Holder")  may  exercise  all or any portion of his or her  Warrants in
accordance  with the terms of this  Statement.  In order to be  entitled  to the
$0.115  Reduced  Exercise  Price,  the Warrant Holder must agree not to sell the
shares of Common Stock  acquired upon exercise (the "Shares") for a period of 60
days  commencing on the date of exercise.  Those Warrant Holders wishing to sell
the Shares  within 60 days of the  exercise  must  exercise  the Warrants at the
$0.13 Reduced Exercise Price. The Reduced Exercise Price is payable only in cash
(same-day-sale  is acceptable) under the Warrant Reduction Offer and the payment
methods in Section 2(c)(A), (B), and (D) of the Warrants are not permitted under
the Warrant  Reduction  Offer. The shares of Common Stock issuable upon exercise
of the Warrants will be separately  transferable upon their issuance.  After the
Expiration  Date,  the exercise  price of the Warrants  will revert to $0.53 per
share through their expiration on December 29, 2002.

         The Company will accept any and all of the  Warrants  that are properly
exercised,  subject to the conditions  set forth herein.  As of the date of this
Statement,  Warrants exercisable for a total of 3,329,735 shares of Common Stock
were outstanding.  As soon as practicable after the Company is in receipt of the
required funds and paperwork,  the Company will deliver registered  certificates
evidencing  the shares of Common Stock  issuable  upon  exercise of the Warrants
properly exercised on or prior to the Expiration Date, subject to the conditions
set forth herein. See " - Conditions of the Warrant Reduction Offer".

         No officer or director of the Company who beneficially own Warrants has
advised  the  Company  as to whether or not he or she  intends to  exercise  the
Warrants pursuant to the Warrant Reduction Offer.

Purpose

         The purpose of the Warrant Reduction Offer is to provide holders of the
Warrants  with an  incentive to exercise the Warrants and to provide the Company
with  financing  for its current and future  operations.  The Warrant  Reduction
Offer provides  holders of  outstanding  Warrants an opportunity to exercise the
Warrants at a reduced  exercise price.  If all of the  outstanding  Warrants are
exercised  at the Reduced  Exercise  Price,  the  Company  would  realize  gross
proceeds  of  up  to  $467,966,  before  expenses,  for  use  in  the  Company's
operations. See "Use of Proceeds".


<PAGE>

Expiration Date; Extensions and Amendments

         The Reduction  Period expires at 5:00 p.m.,  Pacific  Standard Time, on
March 30, 2001.  Such Period may be extended  for up to 30 calendar  days in the
sole discretion of the Company,  in which event the term "Expiration  Date" will
mean the time and date as  extended.  The  Company  will notify each holder of a
Warrant of any extension as soon as practicable.

         The Company also reserves the right to amend, at any time and from time
to time,  the terms of the Warrant  Reduction  Offer,  or terminate  the Warrant
Reduction Offer, subject to compliance with all applicable  requirements of law.
Any  announcement  relating to a change in the Warrant  Reduction  Offer will be
disseminated in a manner reasonably  designed to inform each holder of a Warrant
of such change.

How to Exercise

         The exercise of the Warrants pursuant to the Warrant Reduction Offer in
accordance  with the procedures  set forth below will,  subject to acceptance by
the Company,  constitute an agreement between the holder and the Company subject
to the terms and upon the conditions set forth herein.

         To properly  exercise a Warrant,  a holder must:  (i) complete and sign
the Warrant  Exercise  Agreement in the form attached  hereto as Exhibit A, (ii)
make a check or wire transfer payable to "Silicon Valley Research,  Inc." in the
amount of the aggregate  exercise price equal to $0.13 or $0.115 per share,  and
(iii) forward the original Warrant,  the Warrant Exercise  Agreement and a check
(or wire transfer) to Silicon Valley Research,  Inc. at 6360 San Ignacio Avenue,
San Jose,  California 95119,  Attention:  Lisa Evans, for receipt at or prior to
5:00 p.m.,  Pacific Standard Time, on the Expiration  Date,  except as otherwise
provided below. A holder may not use the Warrant Exercise  Agreement attached to
the original Warrant  Agreement in connection with this Warrant Reduction Offer.
In signing the Warrant Exercise Agreement attached hereto as Exhibit A, a holder
will be required to reaffirm the  representations  and  warranties  made by such
holder in the Unit Purchase  Agreement  with respect to the  acquisition  of the
Common Stock issuable upon exercise of the Warrants.

         The method of delivery of the Warrant  certificates and other documents
to the Company is at the election and risk of the holder. If such delivery is by
mail, the Company suggests that you use an overnight courier (holder may use SVR
FedEx account No. 1049-8288-3) or registered mail, return receipt requested, and
that the mailing is completed  sufficiently in advance of the Expiration Date to
permit  timely  delivery to the  Company.  Please  call Lisa A.  Evans,  Finance
Administrator,  at the Company  (408)  361-1018 if you have lost your Warrant to
arrange for replacement.


<PAGE>

         To wire funds  directly to the Company,  please  deliver the  following
wire transfer  instructions to your bank and mail the Warrant Exercise Agreement
and the original Warrant to the Company, as explained above.

                 Silicon Valley Bank
                 3003 Tasman Drive
                 Santa Clara, CA  95054
                 Routing #:  121140399
                 Account name to credit:  Silicon Valley Research, Inc.
                 Account number to credit:  3300101776

Determination of Validity

         All questions as to the validity,  form,  eligibility and acceptance of
the Warrants,  and the terms and conditions of the Warrant Reduction Offer, will
be resolved by the Company in its sole  discretion.  Its  determination  will be
final and binding.  The Company reserves the absolute right to reject any or all
exercises that are not in proper form or the  acceptance of which would,  in the
opinion of the  Company's  counsel,  be unlawful.  The Company also reserves the
absolute  right to waive any  irregularities  or  conditions  of exercise of the
Warrants.  Unless waived, any  irregularities  must be cured within such time as
determined by the Company in its sole discretion.  The Company will not be under
any duty to give  notification  of defects in such  exercises  or will incur any
liabilities for failure to give such notification. Exercise of the Warrants will
not be  deemed to have been made  until all  irregularities  have been  cured or
waived. Any Warrants received by the Company that are not properly exercised and
as to which the irregularities have not been cured or waived will be returned to
the holder thereof, together with the exercise price (without interest thereon),
as soon as practicable after the Expiration Date.

Tax Consequences

         Each holder of the Warrants  should consult with his or her tax adviser
with respect to the tax consequences of exercising the Warrants.

Delivery of Securities

         Upon the terms and subject to the  conditions of the Warrant  Reduction
Offer, the Company will deliver shares of Common Stock upon exercise of Warrants
as soon as practicable after the Company is in receipt of the required funds and
paperwork.  For  purposes of the Warrant  Reduction  Offer,  the Company will be
deemed to have  accepted  for  exercise  properly  exercised  Warrants  when the
Company  has given  oral or written  notice  thereof  to its  transfer  agent to
deliver the shares of Common Stock underlying such Warrants.  Stock certificates
representing Shares exercised at the $0.115 Reduced Exercise Price will bear the
following legend:


<PAGE>

THE TRANSFER, ASSIGNMENT OR OTHER HYPOTHECATION OF THESE SHARES IS SUBJECT TO AN
AGREEMENT  BETWEEN THE  SHAREHOLDER AND THE  CORPORATION.  THE SHARES MAY NOT BE
TRANSFERRED WITHOUT THE WRITTEN CONSENT OF THE CORPORATION.

Warrants not accepted for exercise by the Company will be returned to the holder
thereof, together with the exercise price (without interest thereon), as soon as
practicable  following the  Expiration  Date.  Any holder of Warrants who elects
only to exercise a portion of his or her Warrants will  receive,  in addition to
the  shares  of  Common  Stock  issuable  for the  portion  of the  Warrants  so
exercised,  a new  Warrant  certificate  for the  balance  of the  Warrants  not
exercised.

         If a holder of the  Warrants  wishes to have the shares of Common Stock
issuable  upon  exercise  of the  Warrants  registered  in a name other than the
holder's own name, then the holder in executing the Warrant  Exercise  Agreement
must  have  his or her  signature  guaranteed  by a  member  firm of a  national
securities exchange.

Conditions of the Warrant Reduction Offer

         Notwithstanding  any other  provisions of the Warrant  Reduction Offer,
the  Company  may amend or  terminate  the  Warrant  Reduction  Offer and is not
required to accept for exercise any Warrants if, prior to the Expiration Date:

         (i) there shall be pending,  instituted or threatened  any legal action
or  administrative  proceeding  before any court or governmental  agency, by any
person,  challenging the Warrant Reduction Offer or, in the sole judgment of the
Board  of  Directors  of  the  Company,   otherwise   adversely   affecting  the
transactions contemplated by the Warrant Reduction Offer;

         (ii) there  exists,  in the sole  judgment of the Board of Directors of
the Company,  any actual or threatened legal impediment to the acceptance of the
Warrants or the issuance of the underlying Common Stock;

         (iii)  there  shall  have  occurred  (a)  a  declaration  of a  banking
moratorium by United States or California authorities;  or (b) a commencement of
a war, armed  hostilities or other  international or national  calamity directly
involving the United States; or

         (iv) there shall have occurred any change or development  affecting the
business or financial  affairs of the Company which, in the sole judgment of the
Board of Directors of the Company,  would or might  prohibit,  restrict or delay
consummation  of  the  Warrant   Reduction   Offer  or  materially   impair  the
contemplated benefits of the Warrant Reduction Offer to the Company.

         In the event that the Company  terminates the Warrant  Reduction  Offer
pursuant to any of the conditions  set forth above,  the Company will ensure the
prompt return of the Warrants to the holders who  exercised  them and the refund
of the exercise price paid, without interest thereon.


<PAGE>

Expenses

         The  Company  will pay all  transfer  taxes  applicable  to the Warrant
Reduction Offer. The Company has not retained a dealer-manager  or similar agent
in connection with the Warrant  Exercise Offer and will not make any payments to
brokers,  dealers or other  persons for  soliciting  acceptances  of the Warrant
Reduction Offer.

Questions

         Please call Lisa A. Evans, Finance Administrator,  at the Company (408)
361-1018 if you have questions about the exercise of your Warrants.

                                 USE OF PROCEEDS

         In the event that all  Warrants are  exercised at the Reduced  Exercise
Price,  the  Company   estimates  that  the  net  proceeds   therefrom  will  be
approximately  $450,000 after payment of approximately  $2,000 in fees and other
expenses  of the  Warrant  Reduction  Offer.  However,  the  number of  Warrants
exercised depends on several factors beyond the control of the Company,  and the
Company is therefore  unable to predict the amount of net  proceeds.  Holders of
the Warrants are not obligated to exercise their  Warrants,  and there can be no
assurance of what percentage, if any, will be exercised.

         The Company expects to use the net proceeds from the Warrant  Reduction
Offer for working  capital.  A portion of the net  proceeds  may also be used to
obtain the right to use complementary technologies.  However, the Company has no
present  understandings,  commitments,  agreements or intentions with respect to
any such acquisitions.

         The  expected  expenditures   described  above  are  management's  best
estimates,  based on currently available information.  Actual expenditures could
vary  depending on numerous  factors,  including  the progress of the  Company's
research and development efforts, and competitive and technological advances. If
the number of Warrants  exercised  pursuant to the  Warrant  Reduction  Offer is
insufficient  to fund the  Company,  it will  require  additional  financing  to
continue operations or could be forced to cease operations altogether. As of the
date hereof,  the Company has no commitments to obtain additional debt or equity
financing,  and there is no assurance that such  financing  could be obtained on
terms acceptable to the Company.

                          CERTAIN RECENT CONSIDERATIONS

         Investment in the shares of Common Stock is speculative  and involves a
high degree of risk.  Holders of the Warrants should carefully review with their
financial,  legal,  tax and other  advisers  the  information  contained  in the
reports  and  statements  filed by the  Company  with the  Commission  and those
attached as Exhibits to this Statement.  Prospective  investors should also give
special  consideration  to the  matters  discussed  in the Form  10-QSB  for the
quarter ended December 31, 2000 attached as Exhibit C hereto,  under the heading
"Item 2 -  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations - Other Factors Affecting Future Results".


<PAGE>

                            DESCRIPTION OF SECURITIES

         The  authorized  capital  stock of the Company  consists of  60,000,000
shares of Common Stock and 1,000,000 shares of preferred stock, no par value.

Warrants

         In connection  with a private  placement of 3,811,974 Units on December
30, 1997,  the Company  issued the  Warrants  entitling  the holders  thereof to
purchase an aggregate of 3,811,974  shares of Common Stock at an exercise  price
of $0.53 per share. The outstanding Warrants are temporarily  exercisable at the
Reduced  Exercise Price of $0.13 or $0.115 per share during the Reduction Period
and thereafter are exercisable for $0.53 per share until December 29, 2002.

         The  Warrants  do not confer on the  Warrant  holders any voting or any
other rights of a  stockholder  of the Company.  They are not  redeemable by the
Company.

         The number of shares of Common Stock issuable upon the exercise of each
Warrant  is  subject  to  adjustment  upon the  occurrence  of  certain  events,
including a stock  dividend,  stock split,  reverse stock split or other similar
event altering the number of outstanding  shares of the Company's  Common Stock.
In the case of a capital  reorganization,  consolidation,  merger or sale of the
assets of the Company effected in such a way as to grant holders of Common Stock
shares of stock,  securities  or assets of another  entity,  each  Warrant  will
become exercisable to purchase the number of shares of stock or other securities
or  property  to which such  holder  would have been  entitled  had such  holder
exercised his Warrant immediately prior to the consummation of such event.


                        PRICE RANGE FOR THE COMMON STOCK

         The Common  Stock is currently  traded on the OTC Bulletin  Board under
the symbol SVRI.  From April 1992 to September 1995, the Common Stock was traded
on the Bulletin  Board,  from  September  1995 until February 1996 on the Nasdaq
SmallCap  Market,  and from February 1996 until  November 1998 was traded on the
Nasdaq National  Market.  The following table sets forth, for the fiscal periods
indicated,  the low and  high  closing  sales  prices  for the  Common  Stock as
reported by Nasdaq and the OTC Bulletin Board. The Company had approximately 300
shareholders of record and  approximately  5,200 beneficial  holders as of March
31, 2000.

Fiscal 1999 quarter ended  June 30  Sept. 30  Dec. 31  Mar. 31
                           -------  --------  -------  -------

         High              $1.38    $0.66     $0.41    $0.34
         Low               $0.59    $0.19     $0.16    $0.13

Fiscal 2000 quarter ended  June 30  Sept. 30  Dec. 31  Mar. 31
                           -------  --------  -------  -------

         High              $0.19    $0.15     $1.28    $1.19
         Low               $0.10    $0.13     $0.12    $0.48


<PAGE>

Fiscal 2001 quarter ended  June 30  Sept. 30  Dec. 31
                           -------  --------  -------

         High              $0.72    $0.70     $0.46
         Low               $0.19    $0.16     $0.13


         The prices set forth above reflect inter-dealer prices,  without retail
mark-up,  mark-down or  commissions  and may not  necessarily  represent  actual
transactions.

         The Company has not  declared or paid  dividends on its Common Stock in
fiscal 1999,  2000 or 2001.  Certain  covenants in the Company's loan agreements
restrict the payment of dividends.  The Company  currently  anticipates  that it
will retain all future  earnings for use in the  operation  and expansion of its
business and does not anticipate  paying any cash  dividends in the  foreseeable
future.

LEGAL MATTERS

         The  legality  of the shares of Common  Stock is being  passed  upon by
Silicon Valley Law Group, a law corporation, San Jose, California.


<PAGE>

                                    EXHIBIT A
                          SILICON VALLEY RESEARCH, INC.
                           WARRANT EXERCISE AGREEMENT
         (For use solely in connection with the Warrant Reduction Offer)

Silicon Valley Research, Inc.
6360 San Ignacio Avenue
San Jose, CA  95119
Attn:  Lisa A. Evans

Ladies and Gentlemen:

         I hold a warrant to purchase  common  stock (the  "Warrant")  issued by
Silicon Valley Research, Inc., a California corporation (the "Company") pursuant
to a Unit Purchase  Agreement  dated as of December 19, 1997,  among the Company
and the investors  named therein (the "Unit Purchase  Agreement").  I understand
that I may  exercise the Warrant for all or a portion of the number of shares of
common stock,  no par value,  of the Company (the "Common  Stock") stated in the
Warrant  for a reduced  cash  exercise  price of $0.__ per share  (the  "Reduced
Exercise  Price"),  as more  fully  described  in the  Warrant  Reduction  Offer
Statement of the Company dated March 26, 2001 (the "Warrant Reduction Offer"). I
understand that the Warrant  Reduction  Offer expires on March 30, 2001,  unless
extended or terminated earlier by the Company.

         I desire to  exercise  my  Warrant  to  purchase  the  number of shares
indicated  below upon the terms and subject to the  conditions  set forth in the
Warrant  Reduction Offer. If I do not exercise the full amount of my Warrant,  I
understand  that I will  receive  a new  warrant  certificate  representing  the
balance of my Warrant not exercised.

         I  understand  that if I choose to  exercise  my  Warrant at the $0.115
Reduced  Exercise Price that I may not sell the shares  acquired by the exercise
for 60 days  commencing  on the Date of  Exercise.  I also  understand  that the
certificate representing such shares will bear the following legend:

         THE  TRANSFER,  ASSIGNMENT  OR OTHER  HYPOTHECATION  OF THESE SHARES IS
         SUBJECT TO AN AGREEMENT  BETWEEN THE SHAREHOLDER  AND THE  CORPORATION.
         THE SHARES MAY NOT BE  TRANSFERRED  WITHOUT THE WRITTEN  CONSENT OF THE
         CORPORATION.

         I acknowledge  that: (i) my purchase of the Common Stock is speculative
and  involves a high degree of risk;  (ii) the Warrant  Reduction  offer has not
been approved by the Securities and Exchange  Commission (the  "Commission")  or
any state  securities  commission,  and  neither  the  Commission  nor any state
securities   commission  has  passed  upon  the  accuracy  or  adequacy  of  the
information  contained in the Warrant  Reduction  Offer;  (iii) I have carefully
reviewed the Warrant Reduction Offer Statement with my financial, legal, tax and
other advisers as I have deemed  necessary;  and (iv) I have determined that the
Common Stock is a suitable investment for me.


<PAGE>

         By signing this Warrant  Exercise  Agreement,  I hereby confirm that my
representations  and  warranties  contained  in  Section 2 of the Unit  Purchase
Agreement are true and correct as of the date hereof as if such  representations
and warranties  applied to the Common Stock to be issued upon the exercise of my
Warrant.

         I understand that the Reduced Exercise Price is payable only in cash or
via  same-day-sale  and that the payment  methods set forth in Section  2(c)(A),
(B), and (D) of the Warrant are not permitted under the Warrant Reduction Offer.
I am enclosing my original Warrant and a check or immediately available funds in
accordance  with the  directions  set forth below to acquire the Common Stock in
accordance with the instructions below:

Warrant Holder:________________________      Date of Exercise:________________
Social Security Number:________________      Exercise Price Per Share:________
Address:_______________________________      No. of Shares:___________________
_______________________________________      Total Exercise Price:____________
Exact Name of Title for Shares:
_______________________________________

         If I am exercising via Same-day Sale, I have completed and attached the
Same-day Sale Commitment form to this Warrant Exercise Agreement.

         If I am a  natural  person,  I have also  enclosed  the  signed  Spouse
Consent form attached to this Warrant Exercise Agreement.

         Name(s) and  address(es)  to whom the Common  Stock shall be issued and
delivered if different than above:

                      ____________________________________
                      ____________________________________
                      ____________________________________
                      ____________________________________

         THE  COMPANY  IS UNDER NO  OBLIGATION  TO REPORT  THE  EXERCISE  OF THE
WARRANT  TO THE  INTERNAL  REVENUE  SERVICE  OR ANY  STATE OR LOCAL  INCOME  TAX
AUTHORITY.  THE WARRANT HOLDER UNDERSTANDS THAT HE OR SHE MAY SUFFER ADVERSE TAX
CONSEQUENCES  AS A RESULT OF HIS OR HER PURCHASE OR  DISPOSITION  OF THE SHARES.
THE  WARRANT  HOLDER  REPRESENTS  THAT  HE OR SHE  HAS  CONSULTED  WITH  ANY TAX
CONSULTANT(S) THE WARRANT HOLDER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE
OR  DISPOSITION  OF THE SHARES AND THAT THE WARRANT HOLDER IS NOT RELYING ON THE
COMPANY FOR ANY TAX ADVICE.

                                                     Sincerely yours,

                                                     ___________________________
                                                     Name of Warrant Holder

                                                     By:________________________
                                                     Print Name:
                                                     Title:


<PAGE>

         Exercise by Mail: To properly exercise the Warrant by mail, please: (i)
complete and sign the Warrant Exercise  Agreement in the form attached hereto as
Exhibit  A,  (ii)  make a check or wire  transfer  payable  to  "Silicon  Valley
Research, Inc." in the amount of the aggregate exercise price equal to $0.115 or
$0.13 per share,  and (iii) forward the original  Warrant,  the Warrant Exercise
Agreement and your check (or wire transfer) to Silicon Valley Research,  Inc. at
6360 San Ignacio Avenue, San Jose, California 95119, Attention:  Lisa Evans, for
receipt at or prior to 5:00 p.m., Pacific Standard Time, on the Expiration Date,
except  as  otherwise  provided  above.  Please  call  Lisa  A.  Evans,  Finance
Administrator, at the Company (408) 361-1018 if you have lost your Warrant.

         Wire  Transfer  Instructions:  To wire funds  directly to the  Company,
please  deliver the following wire transfer  instructions  to your bank and mail
this Warrant  Exercise  Agreement and your original  Warrant to the Company,  as
explained above:

                 Silicon Valley Bank
                 3003 Tasman Drive
                 Santa Clara, CA  95054
                 Routing #:  121140399
                 Account name to credit:  Silicon Valley Research, Inc.
                 Account number to credit:  3300101776


                                 SPOUSAL CONSENT

         The undersigned spouse of the Warrant holder has read,  understands and
hereby approves the Warrant  Exercise  Agreement  between the Warrant holder and
the Company (the  "Agreement").  In consideration  of the Company's  granting my
spouse  the right to  purchase  the  shares as set forth in the  Agreement,  the
undersigned  hereby agrees to be irrevocably  bound by the Agreement and further
agrees that any  community  property  interest  shall  similarly be bound by the
Agreement.   The   undersigned   hereby   appoints  the  Warrant  holder  as  my
attorney-in-fact  with respect to any  amendment or exercise of any rights under
the Agreement.

Date: ____________________          _________________________________
                                         Spouse

                                    Address: ________________________
                                             ________________________


<PAGE>

                                  ATTACHMENT 1

                            SAME-DAY-SALE COMMITMENT

                                                              Date:_____________

SILICON VALLEY RESEARCH, INC.

6360 San Ignacio Avenue

San Jose, California 95119-1231

                  The undersigned  Warrant Holder ("Warrant  Holder") desires to
exercise  that  certain  warrant  described  in the  attached  Warrant  Exercise
Agreement (the  "Warrant")  with respect to ________ shares of your Common Stock
(the  "Number of  Shares"),  and to sell  immediately  ________ of the Number of
Shares  (the  "Same-Day-Sale   Shares")  through  the  undersigned  broker  (the
"Broker")  and for the Broker to pay directly to you from the proceeds from such
sale $___________ (the "Exercise Price").

                  Accordingly,  the Warrant Holder hereby represents as follows:
(i) Warrant Holder hereby irrevocably  exercises the Warrant with respect to the
Number of Shares;  and (ii) Warrant  Holder  hereby  irrevocably  elects to sell
through Broker the Same-Day-Sale  Shares and  unconditionally  authorizes you or
your  transfer  agent to deliver  certificates  representing  the  Same-Day-Sale
Shares to the Broker.

                  The Broker hereby  represents as follows:  (i) the Broker is a
member in good standing of the National  Association of Securities Dealers;  and
(ii) the Broker irrevocably commits to pay to you, no more than one (1) business
day after receiving  certificates  representing the  Same-Day-Sale  Shares,  the
Exercise Price by check or wire transfer to an account specified by you.


WARRANT HOLDER:                     BROKER:


-----------------------------       ------------------------------
(Signature)                         (Name of Firm)


-----------------------------       ------------------------------
(Printed Name and Title)            (Signature)


                                    ------------------------------
                                    (Printed Name)


                                    ------------------------------
                                    (Title)