<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

(Mark One)

[X]      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 
                  For the quarterly period ended December 31, 1997 or

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 
                  For the transition period from ________to________


COMMISSION FILE NO. 0-13836


                          SILICON VALLEY RESEARCH, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


               California                           94-2743735
--------------------------------------------------------------------------------
     (State or other jurisdiction of               (IRS Employer
     incorporation or organization)              Identification No.)


     6360 San Ignacio Avenue         San Jose, CA              95119-1231
--------------------------------------------------------------------------------
     (Address of principal executive offices)                  (Zip Code)

                                 (408) 361-0333
--------------------------------------------------------------------------------
               Registrant's telephone number, including area code



--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

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 [ ]

Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.

           Common Shares Outstanding at December 31, 1997: 20,601,673


<PAGE>   2
                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES

                                      INDEX


<TABLE>
<CAPTION>
                                                                                             Pages
                                                                                             -----
Part I.     FINANCIAL INFORMATION

<S>         <C>                                                                              <C>
            Item 1.      Financial Statements

                Consolidated Balance Sheets -
                    March 31, 1997 and December 31, 1997 (unaudited)                            3

                Consolidated Statements of Operations -
                    Three and Nine Months Ended December 31, 1996 and 1997 (unaudited)          4

                Consolidated Statements of Cash Flows -
                    Nine Months Ended December 31, 1996 and 1997 (unaudited)                    5

                Notes to Consolidated Financial Statements (unaudited)                        6-7

            Item 2.      Management's Discussion and Analysis of
                         Financial Condition and Results of
                         Operations                                                          8-13

            Item 3.      Quantitative and Qualitative Disclosure about Market Risk             13

Part II.    OTHER INFORMATION                                                                  14

            Item 1       Legal Proceedings
            Item 2       Changes in Securities and Use of Proceeds
            Item 3       Defaults Upon Senior Securities
            Item 4       Submission of Matters to a Vote of
                         Securities Holders
            Item 5       Other Information
            Item 6       Exhibits and Reports on Form 8-K

            Signatures                                                                         15
</TABLE>


                                       2
<PAGE>   3
                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                       March 31, 1997      December 31, 1997
                                                       --------------      -----------------
<S>                                                    <C>                 <C>     
                                                                              (Unaudited)
Assets

Current Assets:
Cash and cash equivalents                                  $  2,064             $  3,159
Accounts receivable, net of allowances of
      $150 in each period                                     1,129                  549
Prepaid expenses and other current assets                       453                  249
                                                           --------             --------
                                                              3,646                3,957

Fixed assets, net                                               879                  641
Other assets, net                                             3,952                2,136
                                                           --------             --------
                                                           $  8,477             $  6,734
                                                           ========             ========

Liabilities and Shareholders' Equity

Current Liabilities:
Short-term borrowings                                      $   --               $    285
Current portion of long-term debt                               189                  211
Accounts payable                                                515                  234
Accrued expenses                                              1,443                  988
Deferred revenue                                              1,018                  698
                                                           --------             --------
                                                              3,165                2,416

Long-term debt, less current portion                            254                  179
                                                           --------             --------

                                                              3,419                2,595
                                                           --------             --------
Contingencies (Note 6)

Shareholders' Equity:
Preferred stock, no par value:
     Authorized: 1,000 shares
     Issued and outstanding: none                              --                   --
Common stock, no par value:
     Authorized: 40,000 shares
     Issued and outstanding:
         12,227 shares at March 31, 1997
         and 20,602 shares at December 31, 1997              32,375               39,093
Accumulated deficit                                         (27,308)             (35,001)
Cumulative translation adjustment                                (9)                  47
                                                           --------             --------
                                                              5,058                4,139
                                                           --------             --------

                                                           $  8,477             $  6,734
                                                           ========             ========
</TABLE>


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       3
<PAGE>   4
                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                            Three Months Ended                        Nine Months Ended
                                                               December 31,                              December 31,
                                                       -----------------------------             -----------------------------
                                                         1996                 1997                 1996                 1997
                                                       --------             --------             --------             --------
<S>                                                    <C>                  <C>                  <C>                  <C>     
Revenue:
License fees and other                                 $    616             $    131             $  2,380             $    860
Maintenance fees                                            649                  421                2,050                1,389
                                                       --------             --------             --------             --------
         Total revenue                                    1,265                  552                4,430                2,249
                                                       --------             --------             --------             --------

Cost of revenue:
License fees and other                                      522                  255                  819                1,785
Maintenance fees                                            144                  151                  380                  412
                                                       --------             --------             --------             --------
         Total cost of revenue                              666                  406                1,199                2,197
                                                       --------             --------             --------             --------

Gross profit                                                599                  146                3,231                   52
                                                       --------             --------             --------             --------

Operating expenses:
Engineering, research and development                     1,193                  934                2,705                2,711
Selling and marketing                                     1,498                  728                4,714                3,001
General and administrative                                2,845                  253                3,948                  833
Impairment loss on prepaid royalty (Note 6)                --                   --                   --                  1,217
                                                       --------             --------             --------             --------
         Total operating expenses                         5,536                1,915               11,367                7,762
                                                       --------             --------             --------             --------

Operating loss                                           (4,937)              (1,769)              (8,136)              (7,710)
                                                       --------             --------             --------             --------

Other income (expense):
Interest income                                              52                   16                  251                  121
Interest expense                                             (8)                 (13)                 (24)                 (25)
Other, net                                                 --                   (119)                   2                  (79)
                                                       --------             --------             --------             --------
         Total other income (expense)                        44                 (116)                 229                   17
                                                       --------             --------             --------             --------

Loss before provision for
         income taxes                                    (4,893)              (1,885)              (7,907)              (7,693)

Provision for income taxes                                 --                   --                   --                   --
                                                       --------             --------             --------             --------

Net loss                                               $ (4,893)            $ (1,885)            $ (7,907)            $ (7,693)
                                                       ========             ========             ========             ========


Net loss per basic share and diluted share             $  (0.42)            $  (0.11)            $  (0.69)            $  (0.47)
                                                       ========             ========             ========             ========

Shares used in per share calculation                     11,520               16,868               11,473               16,537
                                                       ========             ========             ========             ========
</TABLE>


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       4
<PAGE>   5
                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                               Nine Months Ended
                                                                                  December 31,
                                                                          -----------------------------
                                                                            1996                 1997
                                                                          --------             -------- 
<S>                                                                       <C>                  <C>      

Cash Flows from Operating Activities:
Net loss                                                                  $ (7,907)            $ (7,693)
Adjustments to reconcile net loss to net
cash used in operating activities:
         Provision for impairment of prepaid marketing royalty                --                  1,217
         Amortization of software development costs                            433                1,358
         Depreciation and amortization                                         636                  732
         Provision for doubtful accounts                                       546                 --
Changes in assets and liabilities, net:
         Accounts receivable                                                 2,357                  580
         Prepaid expenses and other current assets                            (252)                 204
         Accounts payable                                                      (95)                (281)
         Accrued expenses                                                    1,477                 (455)
         Deferred revenue                                                     (583)                (320)
         Other, net                                                         (1,463)                 213
                                                                          --------             --------

Net cash used in operating activities                                       (4,851)              (4,445)
                                                                          --------             --------

Cash Flows from Investing Activities:
Acquisition of fixed assets                                                   (577)                 (45)
Capitalization of software development costs and
    purchase of software licenses                                           (1,787)              (1,421)
                                                                          --------             --------

Net cash used in investing activities                                       (2,364)              (1,466)
                                                                          --------             --------

Cash Flows from Financing Activities:
Principal payments of long-term debt                                           (35)                (108)
Advances on credit lines                                                      --                    340
Proceeds from issuance of common stock                                         369                6,718
                                                                          --------             --------

Net cash provided by financing activities                                      334                6,950
                                                                          --------             --------

Effect of exchange rate changes on cash                                         22                   56
                                                                          --------             --------

Net increase (decrease)  in cash and
    cash equivalents                                                        (6,859)               1,095
Cash and cash equivalents at beginning
    of  period                                                              10,238                2,064
                                                                          --------             --------

Cash and cash equivalents at end
    of period                                                             $  3,379             $  3,159
                                                                          ========             ========
</TABLE>


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       5
<PAGE>   6
                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1997- UNAUDITED
                     (IN THOUSANDS, EXCEPT FOR SHARE PRICE)


NOTE 1: BASIS OF PRESENTATION AND FINANCIAL STATEMENT INFORMATION

        The accompanying consolidated financial statements have been prepared by
the Company, pursuant to the rules and regulations of the Securities and
Exchange Commission for interim financial statements. Therefore, they do not
include all the disclosures which were presented in the Company's Annual Report
on Form 10-K. These financial statements do not include all disclosures required
by generally accepted accounting principles and accordingly, should be read in
conjunction with the consolidated financial statements and notes included as
part of the Company's latest Annual Report on Form 10-K.

         In the opinion of management, the consolidated financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the consolidated financial position, results of
operations and cash flows for the interim period. The results of operations
presented are not necessarily indicative of the results to be expected for the
full year or for any other period.

         The report of Price Waterhouse LLP on the Company's fiscal 1997
consolidated financial statements was amended on September 17, 1997 to add an
explanatory paragraph regarding the Company's ability to continue as a going
concern. There can be no assurance that the Company will not continue to incur
significant operating losses or that required additional financing will be
available to meet the Company's business plans in fiscal 1998 and beyond.

         In February 1997, the Company restated its unaudited consolidated
financial statements for the quarters ended June 30, 1996 and September 30, 1996
to reverse certain transactions and related expenses which were recognized other
than in accordance with the Company's accounting policies. The financial
statements for the three and nine months ended December 31, 1996 include the
effect of the restatement referred to above.


NOTE 2: EARNINGS PER SHARE

         In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings per Share" (SFAS
128), which the Company adopted for the third quarter of fiscal 1998. As
required by the statement, all prior period earnings per share (EPS) amounts
presented have been restated to conform with the provisions of SFAS 128. Under
SFAS 128, the Company presents two EPS amounts. Basic EPS is calculated based on
loss to common shareholders and the weighted-average number of shares
outstanding during the reported period. Diluted EPS includes additional dilution
from common stock equivalents, such as stock issuable pursuant to the exercise
of stock options and warrants. Common stock equivalents were not included in the
computation of diluted earnings per share because to do so would have been
antidilutive for the periods presented.


NOTE 3: STATEMENT OF CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
                                               Nine Months Ended
                                                  December 31
                                              -------------------
                                              1996           1997
                                              ----           ----
<S>                                           <C>            <C>
Supplemental Cash Flow Information:
Cash paid during the period for:
                 Interest                      $24            $25
                 Income taxes                   13             --
</TABLE>


                                       6
<PAGE>   7
                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                          DECEMBER 31, 1997- UNAUDITED
                     (IN THOUSANDS, EXCEPT FOR SHARE PRICE)


NOTE 4: BALANCE SHEET COMPONENTS

<TABLE>
<CAPTION>
                                           March 31,         December 31,
                                             1997                1997
                                         ------------        ------------
<S>                                      <C>                 <C>         
Other Assets:
Software development costs               $      2,163        $      1,799
Software licenses                               2,388               3,138
                                         ------------        ------------
                                                4,551               4,937
Less accumulated amortization                  (2,425)             (3,198)
                                         ------------        ------------
                                                2,126               1,739
Prepaid royalties, net                          1,592                 192
Other                                             234                 205
                                         ------------        ------------
                                         $      3,952        $      2,136
                                         ============        ============
Accrued Expenses:
Payroll and related costs                $        434        $        432
Taxes payable                                     108                 106
Other                                             901                 450
                                         ------------        ------------
                                         $      1,443        $        988
                                         ============        ============
</TABLE>

NOTE 5: BANK LINE OF CREDIT

         In June 1997, the Company entered into an additional line of credit
with its bank. The revolving line of credit will provide for borrowings up to
$2,000 with available borrowings limited to certain percentages of eligible
accounts receivable. Interest at prime plus one percent will be due monthly with
principal due in one year. As of December 31, 1997, $285 has been borrowed under
the line of credit.

NOTE 6: CONTINGENCIES

         The Company is subject to various types of litigation during its normal
course of business. In January 1997, Gambit Automated Design, Inc. ("Gambit"), a
competitor of the Company, filed a complaint alleging misappropriation of trade
secrets, breach of contract, inducing breach of contract, breach of fiduciary
duty, unfair competition and unjust enrichment against the Company and a former
employee of Gambit who is a current employee of the Company. Gambit sought
injunctive relief, compensation and punitive damages, restitution and attorneys'
fees and costs. The parties have reached an agreement in principle to resolve
this litigation. Such agreement is awaiting final documentation and does not
call for the payment of any monies by the Company.

         In June 1996, the Company entered into an agreement whereby the Company
was granted the exclusive marketing rights to Bell Labs' CLOVER line of deep
submicron verification products worldwide, with the exception of Japan and
Taiwan, where the Company would co-market with Bell Labs' existing distributors.
Pursuant to the four year agreement, the Company made prepaid royalty payments
of $1,750. The agreement also provided for future prepaid royalty payments of:
$1,250 in fiscal 1998 and $1,000 in fiscal 1999. Despite active marketing
efforts, the product had limited success due to product issues and to strong
competitive factors. The Company recognized an impairment loss on the balance of
unamortized prepaid royalties totaling $1,217 during the nine months ended
December 31, 1997. In July and August 1997, both parties sent notices of
termination, alleging breach of the agreement by the other party. In December
1997, the dispute was resolved when the parties entered into a Settlement
Agreement and Mutual Release.

NOTE 7: CAPITAL STOCK-PRIVATE PLACEMENT

         On December 30, 1997, the Company completed a private placement of
Units comprising 3,812 shares of Common Stock and warrants to purchase an
additional 3,812 shares of Common Stock at $0.53 per share, with proceeds to the
Company of $2,820. The shares of Common Stock are unregistered. The Company will
file a registration statement with the Securities and Exchange Commission on or
before February 28, 1998 to register these shares pursuant to the terms of the
private placement agreement. One director and one officer/director participated
in the private placement.


                                       7
<PAGE>   8
ITEM 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements which reflect the
Company's current view with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties,
including those discussed in the Other Factors Affecting Future Results section
of this Item 2, elsewhere in this Form 10-Q and as set forth in the Company's
form 10-K on file with the SEC that could cause actual results to differ
materially from historical results or those anticipated. In this report, the
words "anticipates," "believes," "expects," "intends," "future," and similar
expressions identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof.

RESULTS OF OPERATIONS

REVENUE

         Total revenue for the third quarter of fiscal year 1998, which ended
December 31, 1997, was $552, a decrease from $1,265 in the third quarter a year
ago. The 56% decrease in revenues was due to lower license and maintenance
revenue during the third quarter, primarily resulting from a reduction in
capital investment by semiconductor manufacturers and increased competition.
Total revenue for the nine month period ended December 31, 1997 decreased to
$2,249 from $4,430 over the nine month period ended December 31, 1996. The 49%
decrease is primarily due to weakened demand based on a delay in capital
investment by semiconductor manufacturers caused, in part, by the current
financial crisis in Asia, increased competition and the timing of renewals of
maintenance contracts. International sales, primarily in Japan and the Far East,
accounted for 31% of total revenue for the nine month period ended December 31,
1997 compared to 22% in the same period a year ago.

         The Company's expense levels are based, in part, on its expectations as
to future revenue levels, which are difficult to predict. A substantial portion
of the Company's revenues in each quarter results from shipments during the last
month of that quarter, and for that reason among others, the Company's revenues
are subject to significant quarterly fluctuations. If revenue levels are below
expectations, as in the nine months ended December 31, 1997, operating results
may be materially and adversely affected. In addition, the Company's quarterly
and annual results may fluctuate as a result of many factors, including the size
and timing of software license fees, timing of co-development projects with
customers, timing of operating expenditures, increased competition, new product
announcements and releases by the Company and its competitors, gain or loss of
significant customers or distributors, expense levels, renewal of maintenance
contracts, pricing changes by the Company or its competitors, personnel changes,
foreign currency exchange rates, and economic conditions generally and in the
electronics industry specifically.

COST OF REVENUE

         Cost of license fees and other revenue for the third quarter of fiscal
year 1998 was $255, compared to $522 in the third quarter of fiscal 1997. Cost
of license fees for the nine months ended December 31, 1997 was $1,785, compared
to $819 in the nine months ended December 31, 1996. Cost of license fees is
primarily the amortization of software development costs and amortization of
prepaid royalty payments to third parties. As a result of the significant
reduction in revenue and due to the Company's expanded product development
program, the Company wrote-off $1,036 of unamortized software development costs
in the nine months ended December 31, 1997.

         Cost of maintenance fees for the third quarter of fiscal year 1998 was
$151 compared to $144 in the third quarter of fiscal 1997. Cost of maintenance
fees for the nine months ended December 31, 1997 was $412 compared to $380 in
the nine months ended December 31, 1996. Cost of maintenance fees is primarily
the cost of providing technical support and technical documentation.


                                       8
<PAGE>   9
ENGINEERING, RESEARCH AND DEVELOPMENT EXPENSES

         Engineering, research and development expenses for the third quarter of
fiscal year 1998 were $934 compared to $1,193 in the third quarter a year ago.
Comparing the third quarter of fiscal 1998 and the third quarter of fiscal 1997,
engineering, research and development expenses were 169% and 94% of total
revenue, respectively. Engineering, research and development expenses for the
nine months ended December 31, 1997 were $2,711 compared to $2,705 for the nine
months ended December 31, 1996. Comparing these periods, engineering, research
and development expenses were 121% and 61% of total revenue, respectively.
Engineering, research and development expenses were lower in the third quarter
of fiscal 1998 due to the capitalization of software development costs per the
Company's policy of capitalizing costs relating to significant enhancements of
the Company's products which occured during the quarter ended December 31, 1997.

SELLING AND MARKETING EXPENSES

         Selling and marketing expenses for the third quarter of fiscal year
1998 decreased to $728 from $1,498 in the third quarter a year ago. In the third
quarter of fiscal 1998 and the third quarter of fiscal 1997, selling and
marketing expenses were 132% and 118% of total revenue, respectively. Selling
and marketing expenses for the nine months ended December 31, 1997 decreased to
$3,001 from $4,714 in the nine months ended December 31, 1996. Comparing the
nine month periods, selling and marketing expenses were 133% and 106% of total
revenue, respectively. The dollar decrease is due to the effects of the
Company's cost-cutting measures and lower commissions resulting from reduced
revenue during the nine months ended December 31, 1997.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses decreased to $253 for the third
quarter of fiscal year 1998 from $2,845 in the third quarter a year ago. In the
third quarter of fiscal 1998 and the third quarter of fiscal 1997, general and
administrative expenses were 46% and 225% of total revenue, respectively.
General and administrative expenses for the nine months ended December 31, 1997
decreased to $833 from $3,948 in the nine months ended December 31, 1996.
Comparing the nine month periods, general and administrative expenses were 37%
and 89% of total revenue, respectively. The third fiscal quarter of the prior
year included approximately $2,400 of significant nonrecurring charges
associated with severance arrangements, litigation accruals, legal fees and
accounting fees. In addition, general and administrative expenses have decreased
due to streamlining the organization, lower relocation expenses, lower
consulting and legal expenses and cost-cutting measures instituted by
management.

IMPAIRMENT LOSS ON PREPAID ROYALTY

         In June 1996, the Company entered into an agreement whereby the Company
was granted the exclusive marketing rights to Bell Labs' CLOVER line of deep
submicron verification products worldwide, with the exception of Japan and
Taiwan. Pursuant to the four year agreement, the Company has made prepaid
royalty payments of $1,750. Despite active marketing efforts, the product had
limited success due to product issues and to strong competitive factors.
Accordingly, the Company ceased sales of the product line in July 1997.
Provision was made in the accompanying financial statements for the nine months
ended December 31, 1997 to expense the full amount of unamortized prepaid
royalty of $1,217, the future value of which was considered impaired.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, the Company has financed its operations primarily
through sales of equity securities and to a lesser extent, cash generated from
operations. To date in fiscal 1998, the Company has received net cash of $6,718
from the private placement of equity securities ("financing activities"). During
the nine months ended December 31, 1997, cash and cash equivalents increased
$1,095 from $2,064 to $3,159. This increase resulted from cash provided by
financing activities of $6,950 less cash used by operations of $4,445 and $1,466
of cash used for investing activities.


                                       9
<PAGE>   10
         The Company incurred a significant loss in the first nine months of
fiscal 1998 and expects operating losses to continue, at least in the near term,
as it expands its product development and marketing capabilities. The
achievement of profitability is primarily dependent upon the continued
development and commercial acceptance of the Company's products, the successful
management of the business and management's ability to strategically focus the
Company. There can be no assurance as to whether or when achievement of
profitable operations will occur. In addition, the Company is experiencing
negative cash flow from operations and it is expected that it will continue to
experience negative cash flow at least through 1998.

         The Company's primary unused sources of funds at December 31, 1997
consisted of cash and cash equivalents of $3,159 and an available line of credit
of $1,715 from its bank, limited to certain percentages of eligible accounts
receivable. The Company believes its cash and cash generated from operations and
available borrowings may not be sufficient to finance its operations through
1998. Management is exploring financing alternatives to supplement the Company's
cash position. Potential sources of additional financing include private equity
financings, mergers, strategic investments, strategic partnerships or various
forms of debt financings. The Company has no commitments or arrangements to
obtain any additional funding and there can be no assurance that the required
financing of the Company will be available on acceptable terms, if at all. The
unavailability or timing of any financing could prevent or delay the continued
development and marketing of the products of the Company and could require
substantial curtailment of operations of the Company.

         The report of Price Waterhouse LLP on the Company's fiscal 1997
consolidated financial statements was amended on September 17, 1997 to add an
explanatory paragraph regarding the Company's ability to continue as a going
concern. There can be no assurance that the Company will not continue to incur
significant operating losses or that required additional financing will be
available to meet the Company's business plans in fiscal 1998 and beyond.

OTHER FACTORS AFFECTING FUTURE RESULTS

DEPENDENCE ON SINGLE PRODUCT LINE. Revenues from sales of the SVR GARDS family
of products have historically represented a substantial majority of the
Company's revenues. Although the Company has introduced its SVR SonIC family of
products, the Company expects that revenues from the sale of SVR GARDS products
will continue to account for at least a significant portion of the Company's
revenues for the foreseeable future. The life cycles of the Company's products
are difficult to predict due to the effect of new product introductions or
product enhancements by the Company or its competitors, market acceptance of new
and enhanced versions of the Company's products and competition in the Company's
marketplace. Declines in the demand for the SVR GARDS family of products,
whether as a result of competition, technological change, price reductions or
otherwise, could have a material adverse effect on the Company's business,
operating results and financial condition.

NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE; RISK OF PRODUCT DEFECTS. The EDA
industry is characterized by extremely rapid technological change, frequent new
product introductions and enhancements, evolving industry standards and rapidly
changing customer requirements. The development of more complex ICs embodying
new technologies will require increasingly sophisticated design tools. The
Company's future results of operations will depend, in part, upon its ability to
enhance its current products and to develop and introduce new products on a
timely and cost-effective basis that will keep pace with technological
developments and evolving industry standards and methodologies, as well as
address the increasingly sophisticated needs of the Company's customers. The
Company has in the past, and may in the future, experience delays in new product
development and product enhancements.

         The Company has recently released significant upgrades to GARDS to
provide a new Power Router, to SonIC to provide a new placer and new routing
capabilities, and to SC to provide a rewritten Global Router and fast new
placement. There can be no assurance that these new products will gain market
acceptance or that the Company will be successful in developing and marketing
product enhancements or other new products that respond to technological change,
evolving industry standards and changing customer requirements, that the Company
will not experience difficulties that could delay or prevent the successful
development, introduction and marketing of these products or product
enhancements, or that its new products and product enhancements will adequately
meet the requirements of the marketplace and achieve any significant degree of
market acceptance.


                                       10
<PAGE>   11
         In addition, all of the Company's current products operate in, and
planned future products will operate in, the Unix operating system. In the event
that another operating system, such as Windows NT, were to achieve broad
acceptance in the EDA industry, the Company would be required to port its
products to such an operating system, which would be costly and time consuming
and could have a material adverse effect on the Company's business, operating
results or financial condition. Failure of the Company, for technological or
other reasons, to develop and introduce new products and product enhancements in
a timely and cost-effective manner would have a material and adverse effect on
the Company's business, operating results and financial condition. In addition,
the introduction, or even announcement of products by the Company or one or more
of its competitors embodying new technologies or changes in industry standards
or customer requirements could render the Company's existing products obsolete
or unmarketable. There can be no assurance that the introduction or announcement
of new product offerings by the Company, or one or more of its competitors, will
not cause customers to defer purchases of existing Company products. Such
deferment of purchases could have a material adverse effect on the Company's
business, operating results or financial condition.

         Software products as complex as those offered by the Company may
contain defects or failures when introduced or when new versions are released.
The Company has in the past discovered software defects in certain of its
products and may experience delays or lost revenue to correct such defects in
the future. Although the Company has not experienced material adverse effects
resulting from any such defects to date, there can be no assurance that, despite
testing by the Company, errors will not be found in new products or releases
after commencement of commercial shipments, resulting in loss of market share or
failure to achieve market acceptance. Any such occurrence could have a material
effect upon the Company's business, operating results or financial condition.

COMPLIANCE WITH NASDAQ LISTING REQUIREMENTS; DISCLOSURE RELATING TO LOW-PRICED
STOCK. The Company's Common Stock is quoted on the Nasdaq National Market (the
"National Market"). However, in order to continue to be included in the National
Market, a company must meet certain maintenance criteria. Continued inclusion
requires, among other things, a minimum bid price of $1.00 per share or, in the
alternative, a public market float of a least $3,000 and net tangible assets of
at least $4,000. Effective February 23, 1998, the maintenance criteria will be
increased, requiring a minimum bid price of $1.00 per share, and $4,000 in net
tangible assets (total assets less total liabilities and goodwill) and $5,000
market value of the public float (excluding shares held directly or indirectly
by any officer or director of the Company and by any person holding beneficially
more than 10% of the Company's outstanding shares).

         As of December 31, 1997, the closing sales price of a share of the
Company's Common Stock was $0.6563. By letter dated November 17, 1997, The
Nasdaq Stock Market, Inc. ("Nasdaq") informed the Company that the Company's
Common Stock had failed to maintain a closing bid price greater than or equal to
$1.00 during the last ten consecutive trading dates. The letter stated that the
Company will be provided ninety calendar days in which to regain compliance with
the minimum bid price or an alternative requirement (Market value of a public
float of at least $3,000 and net tangible assets of at least $4,000). If at any
time during the ninety day period, the Common Stock reports a closing bid price
of $1.00 or greater for ten consecutive trading days, the Company will have
complied with the minimum bid price requirement. If the Company is unable to
demonstrate compliance on or before the end of the period, it must submit
proposals for achieving compliance. Should the Company fail to submit the
necessary information in such time frame, or if the submission is deemed not to
warrant continued listing, Nasdaq will immediately issue a formal notice of
deficiency which will specify the delisting date of the Company's securities. On
the basis of all information available, Nasdaq staff will determine whether or
not the Company may continue to be listed on the Nasdaq National Market.

         Failure to meet these maintenance criteria in the past and future may
result in the delisting of the Company's Common Stock from the National Market
and the quotation of the Company's Common Stock on the Nasdaq SmallCap Market
(the "SmallCap Market"), if the requirements for inclusion on the SmallCap
Market are met. As a result of quotation on the SmallCap Market, an investor may
find it more difficult to dispose of the Company's Common Stock. Effective
February 1998, a company must have $4,000 in net tangible assets or $50,000
market capitalization or $750 net income in two of the last three years, a
minimum bid price of $4.00 per share and a public float of $5,000 for inclusion
in the SmallCap Market, subject to certain exception. Failure to meet the
SmallCap Market inclusion criteria, or the failure to meet the SmallCap Market
maintenance criteria if the initial SmallCap Market inclusion criteria are met,
may result in the delisting of the Company's Common Stock from Nasdaq. Trading,
if any, in the Company's Common Stock would thereafter be conducted in the


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<PAGE>   12
non-Nasdaq over-the-counter market. As a result of such delisting, an investor
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's Common Stock.

         In addition, if the Company's Common Stock were delisted from trading
on Nasdaq and the trading price of the Common Stock was less than $5.00 per
share, trading in the Common Stock would also be subject to certain rules
promulgated under the Exchange Act, which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on broker-dealers who sell penny stock to
persons other than established customers and accredited investors (generally
institutions). For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. The additional
burden imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in the Common Stock, which could
severely limit the market liquidity of the Common Stock and limit the ability of
sellers to sell the Common Stock in the secondary market.

         By letter dated December 2, 1997, Nasdaq informed the Company that
based upon a review of the Company's most recently filed financial statements
and market data, the Company may not meet the new requirements with respect to
net tangible assets and minimum bid price for continued listing on The National
Market, which will become effective on February 23, 1998.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. Numerous factors may
materially and unpredictably affect operating results of the Company, including
the uncertainties of the size and timing of software license fees, timing of
co-development projects with customers, timing of operating expenditures,
increased competition, new product announcements and releases by the Company and
its competitors, gain or loss of significant customers or distributors, expense
levels, renewal of maintenance contracts, pricing changes by the Company or its
competitors, personnel changes, foreign currency exchange rates, and economic
conditions generally and in the electronics industry specifically. Any
unfavorable change in these or other factors could have a material adverse
effect on the Company's operating results for a particular quarter. Many of the
Company's customers order on an as-needed basis and often delay delivery of firm
purchase orders until their project commencement dates are determined, and, as a
result, the Company operates with no significant backlog. Quarterly revenue and
operating results will therefore depend on the volume and timing of orders
received during the quarter, which are difficult to forecast accurately.
Historically, the Company has often recognized a substantial portion of its
license revenues in the last month of the quarter, with these revenues
frequently concentrated in the last two weeks of the quarter. Operating results
would be disproportionately affected by a reduction in revenue because only a
small portion of the Company's expenses vary with its revenue. Operating results
in any period should not be considered indicative of the results to be expected
for any future period, and there can be no assurance that the Company's revenues
will increase or that the Company will achieve profitability.

LENGTHY SALES CYCLE. The licensing and sales of the Company's software products
generally involves a significant commitment of capital by prospective customers,
with the attendant delays frequently associated with large capital expenditures
and lengthy acceptance procedures. For these and other reasons, the sales cycle
associated with the licensing of the Company's products is typically lengthy and
subject to a number of significant risks over which the Company has little or no
control. Because the timing of customer orders is hard to predict, the Company
believes that its quarterly operating results are likely to vary significantly
in the future. Actual results of the Company could vary materially as a result
of a variety of factors, including, without limitation, the high average selling
price and long sales cycle for the Company's products, the relatively small
number of orders per quarter, dependence on sales to a limited number of large
customers, timing of receipt of orders, successful product introduction and
acceptance of the Company's products and increased competition.

DEPENDENCE UPON SEMICONDUCTOR AND ELECTRONICS INDUSTRIES; GENERAL ECONOMIC AND
MARKET CONDITIONS. The Company is dependent upon the semiconductor and more
generally, the electronics industries. Each of these industries is characterized
by rapid technological change, short product life cycles, fluctuations in
manufacturing capacity and pricing and gross margin pressures. Each of these
industries is highly cyclical and has periodically experienced significant
downturns, often in connection with, or in anticipation of, declines in general
economic conditions during which the number of new IC design projects often
decreases. Purchases of new licenses from the Company are largely dependent upon
the commencement of new design projects, and factors negatively affecting any of
these industries could have a 


                                       12
<PAGE>   13
material adverse effect on the Company's business, operating results or
financial condition. The Company's business, operating results and financial
condition may in the future reflect substantial fluctuations from period to
period as a consequence of patterns and general economic conditions in either
the semiconductor or electronics industry.

INTERNATIONAL SALES. International sales, primarily in Japan, Korea and Taiwan,
accounted for approximately 52%, 43%, 25% and 31% of the Company's total revenue
in fiscal 1995, 1996, 1997 and the first nine months of fiscal 1998,
respectively. Declining revenues from international sales were a result of the
reduction in capital expenditures by semiconductor manufacturers, particularly
in Asia as a result of the current financial crisis in that region, and
increased competition in the electronic design automation (EDA) software market.
The Company expects that international sales will continue to account for a
significant portion of its revenue and plans to continue to expand its
international sales and distribution channels. This revenue involves a number of
inherent risks, including economic downturn in the electronics industry in Asia,
traditionally slower adoption of the Company's products internationally, general
strikes or other disruptions in working conditions, generally longer receivables
collection periods, unexpected changes in or impositions of legislative or
regulatory requirements, reduced protection for intellectual property rights in
some countries, potentially adverse taxes, delays resulting from difficulty in
obtaining export licenses for certain technology and other trade barriers. There
can be no assurance that such factors will not have a material adverse effect on
the Company's future international sales and, consequently, on the Company's
results of operations. Sales orders received by foreign sales subsidiaries are
primarily denominated in currencies other than the U.S. dollar. In order to
reduce the risk of loss between the time the Company's products are purchased by
subsidiaries and the time payment is made, the subsidiaries enter into foreign
exchange contracts when economically feasible.

COMPETITION. The EDA software market in which the Company competes is intensely
competitive and subject to rapid technological change. The Company currently
faces competition from EDA vendors, including Cadence Design Systems, Inc.
("Cadence"), which currently holds the dominant share of the market for IC
physical design software, Avant! Corporation and Mentor Graphics. These EDA
vendors have significantly greater financial, technical and marketing resources,
greater name recognition and, in some cases, a larger installed customer base
than the Company. These companies also have established relationships with
current and potential customers of the Company and can devote substantial
resources aimed at preventing the Company from enhancing relationships with
existing customers or establishing relationships with potential customers. The
Company believes that competitive factors in the EDA software market include
product performance, price, support of industry standards, ease of use, delivery
schedule, product enhancements, and customer technical support and service. The
Company believes that, with respect to ease of use, the Company's products may
not be perceived as competing favorably.

         Competition from EDA companies that choose to enter the IC physical
design market could present particularly formidable competition due to their
large installed customer base and their ability to offer a complete integrated
IC design solution, which the Company does not offer. The Company expects
additional competition from other established and emerging companies. In
addition, the EDA industry has become increasingly concentrated in recent years
as a result of consolidations, acquisitions and strategic alliances.
Accordingly, it is possible that new competitors or alliances among competitors
could emerge and rapidly acquire significant market share. There can be no
assurance the Company will be able to compete successfully against current and
future competitors or that competitive pressures faced by the Company will not
have a material adverse effect on its business, operating results and financial
condition.

MANAGEMENT TRANSITION. The Company is experiencing a period of management
transition that has placed, and may continue to place, a significant strain on
its resources, including its personnel. Robert R. Anderson resumed the role of
Chief Executive Officer in December 1996 and has assembled a new senior
management team. The Company's ability to manage growth successfully will
require its new management personnel to work together effectively and will
require the Company to improve its operations, management and financial systems
and controls. If the Company management is unable to manage this transition
effectively, the Company's business, competitive position, results of operations
and financial condition will be materially and adversely affected.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.


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<PAGE>   14
                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings (in thousands):

                  In June 1996, the Company entered into an agreement whereby
                  the Company was granted the exclusive marketing rights to Bell
                  Labs' CLOVER line of deep submicron verification products
                  worldwide, with the exception of Japan and Taiwan, where the
                  Company would co-market with Bell Labs' existing distributors.
                  Pursuant to the four year agreement, the Company made prepaid
                  royalty payments of $1,750. The agreement also provided for
                  future prepaid royalty payments of: $1,250 in fiscal 1998 and
                  $1,000 in fiscal 1999. In July and August 1997, both parties
                  sent notices of termination, alleging breach of the agreement
                  by the other party. In December 1997, the dispute was resolved
                  when the parties entered into a Settlement Agreement and
                  Mutual Release.

                  In January 1997, Gambit Automated Design, Inc. ("Gambit"), a
                  competitor of the Company, filed a complaint alleging
                  misappropriation of trade secrets, breach of contract,
                  inducing breach of contract, breach of fiduciary duty, unfair
                  competition and unjust enrichment against the Company and a
                  former employee of Gambit who is a current employee of the
                  Company. Gambit sought injunctive relief, compensation and
                  punitive damages, restitution and attorneys' fees and costs.
                  The parties have reached an agreement in principle to resolve
                  this litigation. Such agreement is awaiting final
                  documentation and does not call for the payment of any monies
                  by the Company.

Item 2.           Changes in Securities and Use of Proceeds:  Not Applicable

Item 3.           Defaults Upon Senior Securities:  Not Applicable

Item 4.           Submission of Matters to a Vote of Securities Holders: 
                  Not Applicable

Item 5.           Other Information:   Not Applicable

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

EXHIBITS:

EXHIBIT
NUMBER        DESCRIPTION OF EXHIBIT
-------        ---------------------

3.1     Registrant's Amended and Restated Articles of Incorporation as amended
        to date (incorporated by reference to Exhibit 3.01 of Registrant's
        Registration Statement on Form S-1 ( File No. 2-89943) filed March 14,
        1984, as amended (the "1984 Registration Statement")).

3.2     Registrant's amendment to Amended and Restated Articles of Incorporation
        filed September 19, 1997 (incorporated by reference to Exhibit 3.02 of
        Registrant's Quarterly Report on Form 10-Q for the quarter ended
        September 30, 1997).

3.3     Registrant's bylaws, as amended to date (incorporated by reference to
        Exhibit 4.01 of the 1984 Registration Statement).

3.5     Amendment to Bylaws dated November 12, 1996 (incorporated by reference
        to Exhibit 3.04 of Registrant's Quarterly Report on Form 10-Q for the
        quarter ended December 31, 1996).

4.1     Form of Unit Purchase Agreement among the Company and several investors
        dated as of December 19, 1997, as amended.

4.2     Form of Warrant to Purchase Common Stock dated as of December 30, 1997.

27.     Financial Data Schedule

REPORTS ON FORM 8-K:

No Form 8-K's were filed during the quarter covered by this report.


                                       14
<PAGE>   15
                                    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.


                                       SILICON VALLEY RESEARCH, INC.





Date:       February 11, 1998          /s/ Robert R. Anderson
            -----------------          -------------------------------------
                                       Robert R. Anderson
                                       Chief Executive Officer and
                                       Chairman of the Board


                                       /s/ Laurence G. Colegate, Jr.
                                       Laurence G. Colegate, Jr.
                                       Senior Vice President,
                                       Finance and Administration

                                       (Chief Financial and Accounting
                                       Officer)


                                       15
<PAGE>   16
                                 EXHIBIT INDEX


3.1     Registrant's Amended and Restated Articles of Incorporation as amended
        to date (incorporated by reference to Exhibit 3.01 of Registrant's
        Registration Statement on Form S-1 ( File No. 2-89943) filed March 14,
        1984, as amended (the "1984 Registration Statement")).

3.2     Registrant's amendment to Amended and Restated Articles of Incorporation
        filed September 19, 1997 (incorporated by reference to Exhibit 3.02 of
        Registrant's Quarterly Report on Form 10-Q for the quarter ended
        September 30, 1997).

3.3     Registrant's bylaws, as amended to date (incorporated by reference to
        Exhibit 4.01 of the 1984 Registration Statement).

3.5     Amendment to Bylaws dated November 12, 1996 (incorporated by reference
        to Exhibit 3.04 of Registrant's Quarterly Report on Form 10-Q for the
        quarter ended December 31, 1996).

4.1     Form of Unit Purchase Agreement among the Company and several investors
        dated as of December 19, 1997, as amended.

4.2     Form of Warrant to Purchase Common Stock dated as of December 30, 1997.

27.     Financial Data Schedule