<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-QSB

(Mark One)

   X   Quarterly report pursuant to Section 13 or 15(d) of the Securities
  ---  Exchange Act of 1934
             For the quarterly period ended September 30, 1999 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 small business issuer 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 ___
                         ---

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

         Common Shares Outstanding at September 30, 1999: 26,221,220

Transitional Small Business Disclosure Statement Format (Check One) YES___  NO X
                                                                               -

       This report contains 21 pages.  The exhibit index is on page 20.
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES

                                     INDEX

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

             Item 1.  Financial Statements

               Consolidated Balance Sheets -
                 March 31, 1999 and September 30, 1999 (unaudited)                                 3

               Consolidated Statements of Operations -
                 Three and Six Months Ended September 30, 1998 and 1999 (unaudited)                4

               Consolidated Condensed Statements of Cash Flows -
                 Six Months Ended September 30, 1998 and 1999 (unaudited)                          5

               Notes to Consolidated Financial Statements                                        6-9

             Item 2.  Management's Discussion and Analysis of
                      Financial Condition and Results of
                      Operations                                                               10-18

             Item 3.  Quantitative and Qualitative Disclosures About Market Risk                  18

Part II.     OTHER INFORMATION                                                                 19-20
             -----------------

             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                                                                           21

Exhibit 27.  Financial Data Schedule
</TABLE>

                                 Page 2 of 21
<PAGE>

                        PART I.  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                                (In thousands)

<TABLE>
<CAPTION>
Assets                                         March 31, 1999   September 30, 1999
------                                         --------------   ------------------
                                                                    (Unaudited)
<S>                                            <C>              <C>
Current Assets:
  Cash and cash equivalents                      $        247         $        388
  Accounts receivable, net of allowances of
     $150 at March 31, 1999 and
     $118 at September 30, 1999                           444                  303
  Prepaid expenses and other current assets               109                   90
                                                 ------------         ------------
                                                          800                  781

Fixed assets, net                                         290                  170
Other assets, net                                         969                  682
                                                 ------------         ------------
                                                 $      2,059         $      1,633
                                                 ============         ============

Liabilities and Shareholders' Equity
------------------------------------

Current Liabilities:
  Short-term borrowing                           $        225         $         --
  Current portion of long-term debt                       137                   --
  Notes payable                                            50                   25
  Accounts payable                                        450                  322
  Accrued expenses                                        478                  534
  Deferred revenue                                        235                   74
                                                 ------------         ------------
                                                        1,575                  955

Long-term debt, less current portion                       --                1,000
                                                 ------------         ------------

Deferred tax liability                                     24                   24
                                                 ------------         ------------

Commitments and Contingencies (Note 8)

Shareholders' Equity:
Preferred stock, no par value:
  Authorized: 1,000 shares
  Issued and outstanding: none                             --                   --
Common stock, no par value:
  Authorized: 60,000 shares
  Issued and outstanding:
   26,214 shares at March 31, 1999
   and 26,221 shares at September 30, 1999             43,930               44,141
Accumulated deficit                                   (43,587)             (44,618)
Cumulative translation adjustment                         117                  131
                                                 ------------         ------------
                                                          460                 (346)
                                                 ------------         ------------

                                                 $      2,059         $      1,633
                                                 ============         ============
</TABLE>

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

                                 Page 3 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                     Consolidated Statements of Operations
                                  (Unaudited)
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                               Three Months Ended            Six Months Ended
                                                  September 30,                September 30,
                                              1998           1999           1998           1999
                                           ----------     ----------     ----------     ----------
<S>                                        <C>            <C>            <C>            <C>
Revenue:
  License fees and other                   $      157     $       18     $      382     $       76
  Maintenance and services                        203            385            571            636
                                           ----------     ----------     ----------     ----------
  Total revenue                                   360            403            953            712
                                           ----------     ----------     ----------     ----------

Cost of revenue:
  License fees and other                          109             80            179            160
  Maintenance and services                        117            225            346            356
                                           ----------     ----------     ----------     ----------
  Total cost of revenue                           226            305            525            516
                                           ----------     ----------     ----------     ----------

Gross margin                                      134             98            428            196
                                           ----------     ----------     ----------     ----------

Operating expenses:
  Engineering, research and development           771            265          1,407            716
  Selling and marketing                           506             33          1,174            240
  General and administrative                      231            136            643            321
                                           ----------     ----------     ----------     ----------
  Total operating expenses                      1,508            434          3,224          1,277
                                           ----------     ----------     ----------     ----------

Operating loss                                 (1,374)          (336)        (2,796)        (1,081)
                                           ----------     ----------     ----------     ----------

Other income (expense):
  Interest income                                  32             --             45             --
  Interest expense                                (14)           (21)           (29)           (21)
  Other, net                                      104            (36)           (35)            71
                                           ----------     ----------     ----------     ----------
  Total other income                              122            (57)           (19)            50
                                           ----------     ----------     ----------     ----------

Loss before provision for
  income taxes                                 (1,252)          (393)        (2,815)        (1,031)

Provision for income taxes                         --             --             --             --
Net loss                                   $   (1,252)    $     (393)    $   (2,815)    $   (1,031)
                                           ==========     ==========     ==========     ==========

Net loss per basic and diluted share       $    (0.05)    $    (0.01)    $    (0.11)    $    (0.04)
                                           ==========     ==========     ==========     ==========

Weighted-average common shares
  outstanding (basic and diluted)              26,199         26,220         25,290         26,219
                                           ==========     ==========     ==========     ==========
</TABLE>

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

                                 Page 4 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                Consolidated Condensed Statements of Cash Flows
                                  (Unaudited)
                                (In thousands)

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                              September 30,
                                                         1998               1999
                                                       -------            -------
<S>                                                    <C>                <C>
Cash Flows from Operating Activities:
Net loss                                               $(2,815)           $(1,031)
Adjustments to reconcile net loss to net
cash used in operating activities:
 Depreciation and amortization:
  Fixed assets                                             154                 76
  Software licenses and development costs                  306                253
 Gain on cancellation of debt                               --                (96)
 Loss on sale of fixed assets                               --                 41
Changes in assets and liabilities, net:
 Accounts receivable                                        74                141
 Prepaid expenses and other current assets                 117                 19
 Accounts payable                                          (98)              (128)
 Accrued expenses                                         (154)                56
 Deferred maintenance revenue                             (145)              (161)
 Other, net                                                 52                 33
                                                       -------            -------

Net cash used in operating activities                   (2,509)              (797)
                                                       -------            -------

Cash Flows from Investing Activities:
Acquisition of fixed assets                                (17)                (7)
Capitalization of software development costs and
 purchase of software licenses                             (23)                --
                                                       -------            -------

Net cash used in investing activities                      (40)                (7)
                                                       -------            -------

Cash Flows from Financing Activities:
Proceeds from sale of fixed assets                          --                 11
Proceeds from subordinated debt financing                   --              1,000
Principal payments of long-term debt                       (97)              (135)
Principal payments on notes payable                       (125)               (25)
Proceeds from issuance of common stock and warrants      2,094                 80
                                                       -------            -------

Net cash provided by financing activities                1,872                931
                                                       -------            -------

Effect of exchange rate changes on cash                     27                 14
                                                       -------            -------

Net increase in cash and
 cash equivalents                                         (650)               141
Cash and cash equivalents at beginning
 of period                                               1,926                247
                                                       -------            -------

Cash and cash equivalents at end
 of period                                             $ 1,276            $   388
                                                       =======            =======
</TABLE>

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

                                 Page 5 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999 - Unaudited
                                (In thousands)

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 Moss Adams LLP on the Company's fiscal 1999 consolidated
financial statements dated June 10, 1999 included 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 2000 and beyond.


Note 2:   Earnings Per Share

     The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share" (FAS 128). Under FAS 128, the Company presents two EPS
amounts. Basic EPS is calculated based on income or 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 when the Company reported a loss because to do so would have
been antidilutive for the periods presented.

     The following is a reconciliation of the computation for basic and diluted
EPS:

<TABLE>
<CAPTION>
                                                   Three Months Ended              Six Months Ended
                                                      September 30,                  September 30,
                                                 1998            1999           1998           1999
                                                -------        -------         -------        -------
<S>                                             <C>            <C>             <C>            <C>
Net loss                                        $(1,252)       $  (393)        $(2,815)       $(1,031)
                                                =======        =======         =======        =======

Weighted-average common shares
  outstanding (basic)                            26,199         26,220          25,290         26,219

Weighted-average common stock equivalents:
  Stock options                                      --             --              --             --
  Warrants                                           --             --              --             --
                                                -------        -------         -------        -------
Weighted-average common shares
  outstanding (diluted)                          26,199         26,220          25,290         26,219
                                                =======        =======         =======        =======
</TABLE>

                                 Page 6 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        September 30, 1999 - Unaudited
                                (In thousands)

Note 3:   Comprehensive Income (Loss)

     The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income." This Statement requires that all items
recognized under accounting standards as components of comprehensive earnings be
reported in an annual financial statement that is displayed with the same
prominence as other annual financial statements. This Statement also requires
that an entity classify items of other comprehensive earnings by their nature in
an annual financial statement. Other comprehensive earnings in these financial
statements include foreign currency translation adjustments. Annual financial
statements for prior periods will be reclassified, as required. The Company's
total comprehensive earnings were as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended             Six Months Ended
                                                  September 30,                  September 30,
                                             1998           1999             1998            1999
                                           -------         -------         -------         -------
<S>                                        <C>             <C>             <C>             <C>
Net loss                                   $(1,252)        $  (393)        $(2,815)        $(1,031)
Other comprehensive (loss) gain                (95)             --              27              14
                                           -------         -------         -------         -------
 Total comprehensive loss                  $(1,347)        $  (393)        $(2,788)        $(1,017)
                                           =======         =======         =======         =======
</TABLE>

Note 4:   Statement of Cash Flows Information

<TABLE>
<CAPTION>
                                                             Six Months Ended
                                                               September 30,
                                                            1998         1999
                                                           ------       ------
<S>                                                        <C>          <C>
Supplemental Cash Flow Information:
Cash paid during the period for:
  Interest                                                 $   29       $   --
  Income Taxes                                                 --           --
</TABLE>

Note 5:   Balance Sheet Components

<TABLE>
<CAPTION>
                                                  March 31,      September 30,
                                                    1999             1999
                                                  --------         --------
<S>                                               <C>            <C>
Other Assets:
Software development costs                        $    799         $    799
Software licenses                                      979              979
                                                  --------         --------
                                                     1,778            1,778
Less accumulated amortization                       (1,087)          (1,340)
                                                  --------         --------
                                                       691              438
Prepaid royalties, net                                  25               --
Goodwill                                               195              171
Other                                                   58               73
                                                  --------         --------
                                                  $    969         $    682
                                                  ========         ========

Accrued Expenses:
Payroll and related costs                         $    228         $    339
Taxes payable                                          106              106
Accrued professional fees                              108               63
Other                                                   36               26
                                                  --------         --------
                                                  $    478         $    534
                                                  ========         ========
</TABLE>

                                 Page 7 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        September 30, 1999 - Unaudited
                                (In thousands)

Note 6:   Bank Lines of Credit

     On June 8, 1998, the Company's $2,000 line of credit with its bank expired
and the $285 outstanding under the line of credit became due and payable.  $225
of this amount remained outstanding as of May 11, 1999.  In addition, $137
outstanding on an equipment line with the same lender also became due and
payable. The amounts outstanding under its line of credit and equipment line of
credit are classified as current in the March 31, 1999 balance sheets.  On May
11, 1999, the Company entered into a Settlement Agreement with the lender
whereby SVR agreed to issue a cash payment for a portion of the debt and to
issue warrants to purchase common stock ("Warrants") for cancellation of the
remainder.  The Settlement Agreement required that SVR make the cash payment and
deliver the Warrants to the lender by June 8, 1999, which the Company did.


Note 7:   Subordinated Debt Financing

     In June 1999, the Company began a subordinated debt/warrant financing.  The
financing included approximately $1,000 of three-year notes and the sale of
approximately 8,000 Warrants at $0.01 per Warrant.  The debt bears simple
interest of 10% and the Warrants have a five-year term with an exercise price
per share of $0.125.  This financing transaction consists of two closings.  The
first closing took place on June 7, 1999.  The Company received $768 cash
proceeds from this closing.  This included $711 of three-year notes and the sale
of approximately 5,700 Warrants at $0.01 per Warrant.  The second closing was to
have taken place on July 15, 1999.  The closing was extended until September 24,
1999 pending negotiation of a workout with the Creditors' Committee through the
Credit Managers' Association to resolve accounts payable issues that was
satisfactory to the majority of the investors.  An agreement was reached and the
Company received approximately $312 cash proceeds from the second closing.  The
Company has used part of the proceeds from the financing to complete the
Settlement Agreement with its lender and to pay other accounts payable and
intends to use the balance of the proceeds to help fund its operations. The
Company's CEO, the Company's Chairman of the Board, an affiliate of a Company
director and two Company 10% shareholders participated in the financing.


Note 8:   Commitments and Contingencies

     As with other companies in industries similar to Silicon Valley Research,
Inc., the Company is subject to the risk of adverse claims and litigation on a
variety of matters, including infringement of intellectual property, intentional
and/or negligent misrepresentation of material facts and breach of fiduciary
duties.  Due to its present cash shortage and resulting inability to pay its
vendors, several of its vendors had initiated collection actions against the
Company.  Through the Credit Managers' Association, the Company has settled with
95% of its creditors.  Each of such creditors chose one of the following payment
plans:

     1.   receive 30% of its unsecured claim in exchange for a complete release
          of claim of the remaining balance; or

     2.   receive 15% of its unsecured claim in exchange for an agreement to
          stay collection activities for one year with 10% interest earned on
          the remaining balance.

The Company intends to settle with the remaining 5% of its creditors at a rate
of 30% of their unsecured claims.

                                 Page 8 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        September 30, 1999 - Unaudited
                                (In thousands)

Note 9:   Recent Accounting Pronouncements

     In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use."  Statement of Position 98-1
provides guidance for determining whether computer software is internal-use
software and on capitalization of the costs associated with internal-use
computer software.  It also provides guidance on accounting for the proceeds of
computer software originally developed or obtained for internal use and then
subsequently sold to the public.  The Company has not yet determined the impact,
if any, of adopting this statement.  The disclosures prescribed by Statement of
Position 98-1 will be effective for the year ending March 31, 2000 consolidated
financial statements.


Note 10:  Year 2000 Issues

     The "Year 2000 Issue" arises because most computer systems and programs
were designed to handle only a two-digit year, as opposed to a four-digit year.
When the year 2000 begins, these computers may interpret "00" as the year 1900
and could either stop processing date-related computations or could process them
incorrectly.  As the Company's customers and potential customers devote
resources to this issue, resources previously allocated to other information
systems requirements may be redirected to address Y2K problems and issues.  To
the extent that the Company's products are not selected as part of customers'
overall Y2K solution, redirection of these customer resources could have a
material adverse effect on the Company's results of operations and financial
condition.  In addition, the Y2K Issue creates risk for the Company from
unforeseen problems in its internal computer systems and from interaction with
third parties.  Failure on the Company's part, or on the part of third parties'
computer systems could have a material impact on the Company's ability to
conduct its business and to process and account for the transfer of funds
electronically.

                                 Page 9 of 21
<PAGE>

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

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-QSB 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

     Revenue for the second quarter of fiscal year 2000, which ended September
30, 1999, was $403, an increase from $360 in the second quarter a year ago.
Revenue for the six month period ended September 30, 1999 decreased to $712 from
$953 over the six month period ended September 30, 1998.  The decrease was
primarily due to a decrease in license and maintenance revenue.  A substantial
portion of the Company's resources were being used for non-revenue generating
activities.  Management and administrative personnel were concentrating on new
financing and investment, as well as working out a payment solution with
creditors.  During the first quarter of fiscal 2000, technical personnel were
used to prepare for the Company's annual trade show.  International sales,
primarily Japan and the Far East, accounted for 1% of total revenue in the
second quarter of fiscal 2000 compared to 64% in the second quarter a year ago.

     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 quarter ended
September 30, 1999, 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
and service contracts, 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.

     The Company's expense levels are based, in part, on its expectations as to
future revenue levels, which are difficult to predict.

COST OF REVENUE

     Cost of license fees and other for the second quarter of fiscal year 2000
was $80, compared to $109 in the second quarter of fiscal 1999.  Cost of license
fees and other for the six months ended September 30, 1999 was $160, compared to
$179 for the six months ended September 30, 1998.  Cost of sales of license fees
and other is primarily the amortization of software development costs.

     Cost of maintenance and services for the second quarter of fiscal year 2000
was $225 compared to $117 in the second quarter of fiscal 1999.  Cost of
maintenance and services for the six months ended September 30, 1999 was $356
compared to $346 for the six months ended September 30, 1998.  Cost of
maintenance and services is primarily the cost of providing design services,
technical support and technical documentation.  Cost of maintenance and services
includes the design services costs of Quality I.C. Corporation, which was
acquired by the Company on March 31, 1998.

                                 Page 10 of 21
<PAGE>

ENGINEERING, RESEARCH AND DEVELOPMENT EXPENSES

     Engineering, research and development expenses for the second quarter of
fiscal year 2000 were $265 compared to $771 in the second quarter a year ago.
Comparing the second quarter of fiscal 2000 and the second quarter of fiscal
1999, engineering, research and development expenses were 66% and 214% of total
revenue, respectively.  Engineering, research and development expenses for the
six months ended September 30, 1999 were $716 compared to $1,407 for the six
months ended September 30, 1998.  Comparing these periods, engineering, research
and development expenses were 101% and 148% of total revenue, respectively.  The
decrease in engineering, research and development expenses is due to cost-
cutting measures instituted by management, including a reduction in personnel,
while maintaining an emphasis on new product research and development.

SELLING AND MARKETING EXPENSES

     Selling and marketing expenses for the second quarter of fiscal year 2000
decreased to $33 from $506 in the second quarter a year ago.  In the second
quarter of fiscal 2000 and the second quarter of fiscal 1999, selling and
marketing expenses were 8% and 141% of total revenue, respectively.  Selling and
marketing expenses for the six months ended September 30, 1999 decreased to $240
from $1,174 for the six months ended September 30, 1998.  Comparing the six
month periods, selling and marketing expenses were 34% and 123% of total
revenue, respectively.  The decrease is due to the effects of the Company's
cost-cutting measures, including a reduction in salaries and occupancy costs.

GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses decreased to $136 for the second
quarter of fiscal year 2000 from $231 in the second quarter a year ago.  In the
second quarter of fiscal 2000 and the second quarter of fiscal 1999, general and
administrative expenses were 34% and 64% of total revenue, respectively.
General and administrative expenses for the six months ended September 30, 1999
decreased to $321 from $643 for the six months ended September 30, 1998.
Comparing the six month periods, general and administrative expenses were 45%
and 67% of total revenue, respectively.  The decrease is due to the effects of
the Company's cost-cutting measures, including a reduction in salaries and
professional fees.

OTHER INCOME (EXPENSE)

     Other income for the first six months of fiscal year 2000 includes $96 gain
recognized on the cancellation of indebtedness.  See Note 6 to the Consolidated
Financial Statements

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 2000, the Company has received approximately
$1,000 cash proceeds from a subordinated debt/warrant financing.  During the six
months ended September 30, 1999, cash and cash equivalents increased $141 from
$247 to $388.  This increase resulted from cash provided by the financing
activities of $931 less cash used by operations of $797 and $7 of cash used for
investing activities.  During the same period, accounts receivable decreased
from $444 to $303 resulting from a decrease in revenue for the six months.

     The Company incurred a loss in the second quarter of fiscal 2000 and
expects operating losses to continue, at least in the near term, until its
revenues are adequate to generate margin to cover expenses.  At September 30,
1999, the Company had an accumulated deficit of $44,618.  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 may continue to experience negative cash flow through fiscal 2000
and potentially thereafter.

                                 Page 11 of 21
<PAGE>

     The Company's primary unused sources of funds at September 30, 1999
consisted of cash and cash equivalents of $388.  On June 8, 1998, the Company's
$2,000 line of credit with its bank expired and the $285 outstanding under the
line of credit became due and payable.  $225 of this amount remained outstanding
as of May 11, 1999.  In addition, $137 outstanding on an equipment line with the
same lender also became due and payable.  On May 11, 1999, the Company entered
into a Settlement Agreement with the lender whereby SVR agreed to issue a cash
payment for a portion of the debt and to issue warrants to purchase common stock
("Warrants") for cancellation of the remainder.  The Settlement Agreement
required that SVR make the cash payment and deliver the Warrants to the lender
by June 8, 1999, which the Company did.

     In June 1999, the Company began a subordinated debt/warrant financing.  The
financing included approximately $1,000 of three-year notes and the sale of
approximately 8,000 Warrants at $0.01 per Warrant.  The debt bears simple
interest of 10% and the Warrants have a five-year term with an exercise price
per share of $0.125.  This financing transaction consists of two closings.  At
the first closing, which took place on June 7, 1999, the Company received $768
cash proceeds.  This included $711 of three-year notes and the sale of
approximately 5,700 Warrants at $0.01 per Warrant. The second closing was
scheduled for July 15, 1999.  The second closing was extended until September
24, 1999, pending negotiation of a workout with the Creditors' Committee through
the Credit Managers' Association to resolve accounts payable issues.  An
agreement was reached and the Company received approximately $312 cash proceeds
from the second closing.  The Company used part of the proceeds from the
financing to complete the Settlement Agreement with its lender and to pay other
accounts payable. The Company intends to use the balance of the proceeds to help
fund its operations. The Company's CEO, the Company's Chairman of the Board, an
affiliate of a Company director and two Company 10% shareholders participated
in this financing. The Company may require additional financing prior to year-
end.

     As of September 30, 1999, the Company's current assets were less than its
current liabilities.  However, its cash and cash equivalents were roughly equal
to the cash required to fund those of its current liabilities due in the next
six to nine months since a substantial amount of the accounts payable, accrued
liabilities and deferred revenue do not require cash to fund them at present.
As to the accounts payable, this is because an agreement was reached with the
Creditors' Committee through the Credit Managers' Association.  The agreement
with the Creditors' Committee provided for a reduction of approximately $65 of
the Company's current payables and postponement of approximately $185 of its
current payables.

     The Company's operations have required substantial cash in the past; for
example, $797 during the first six months of fiscal 2000.  However, management
has implemented cost reducing measures and expects revenues to increase during
the remainder of fiscal 2000.  Assuming management is successful with their cost
reduction and revenue achievement programs, the Company expects to fund future
operations without requiring additional financing.  However, it is possible that
it could require additional financing to fund future operations.

     The Company may issue a series of Preferred Stock with rights, preferences,
or privileges senior to those of the Common Stock.  It has no commitments or
arrangements to obtain any additional funding and there is no assurance that the
amount of capital required will be available on acceptable terms, if at all.
However, because its Common Stock was delisted from trading on the NASDAQ
national market in November, 1998, and now trades in the over-the-counter
market, its ability to sell Common Stock or securities convertible into Common
Stock may be adversely affected.  See "Delisting From NASDAQ; Disclosure
Relating to Low-Priced Stock" below for possible effect of current common stock
trading on future issuances.

     The unavailability or timing of any financing could prevent or delay the
Company's continued development and marketing of our products and services.  In
addition, substantial curtailment of its operations may be required which could
result in bankruptcy.

OTHER FACTORS AFFECTING FUTURE RESULTS

Recent and Expected Losses; Accumulated Deficit.  For the quarter ended
-----------------------------------------------
September 30, 1999, we incurred a net loss of approximately $393.  We had an
accumulated deficit of approximately $44,618 as of September 30, 1999.  We may
incur losses for most of the next fiscal year.  We may incur significant
additional

                                 Page 12 of 21
<PAGE>

losses for a longer period. There is no assurance that we will generate positive
cash flow from operations or that we will attain or sustain profitability in the
future. To the extent we grow or continue to incur losses, our operating and
investing activities may use cash and, consequently, require us to obtain
additional sources of financing in the future or to reduce operating expenses.

Need for Future Financing.  As described above, under Management Discussion and
-------------------------
Analysis-Liquidity and Capital Resources, we may require additional financing to
fund our operations during fiscal 2000.  This is due to the cash requirements to
service our current debt and our continued negative cash flow from operations.
There can be no assurance that we will be able to raise such financing or that
any such financing we are able to conduct will be on attractive terms.

Going Concern Assumptions.  Our independent accountants' report on our
-------------------------
consolidated financial statements as of and for the years ended March 31, 1997,
1998 and 1999 contain an explanatory paragraph indicating that our historical
operating losses and limited capital resources raise substantial doubt about our
ability to continue as a going concern.  We may require substantial additional
funds in the near future.  If we are unable to raise sufficient funds or
generate sufficient cash from operations to cover the cost of our operations, it
is likely that any independent accountant's report on our future financial
statements will include a similar explanatory paragraph.

New Products and Rapid Technological Change; Risk of Product Defects.  The
--------------------------------------------------------------------
Electronic Design Automation ("EDA") industry is characterized by the following:

   extremely rapid technological change
   frequent new product introductions and enhancements
_  evolving industry standards
_  rapidly changing customer requirements.

     The development of more complex integrated circuits with new technologies
will require more sophisticated design tools.  The success of our future
operations partly depends upon our ability to enhance our current products and
to develop and introduce new products on a timely and cost-effective basis.  Our
products and services must keep pace with technological developments and
evolving industry standards and methodologies, as well as address the
increasingly sophisticated needs of our customers.  It is possible that in the
future, we may experience delays in new product development and product
enhancements.  We have experienced similar delays in the past.

     We announced a new product named DCP (Design Cockpit Platform).  However,
there is no guarantee that:

_  this new product will gain market acceptance
_  we will be successful in developing and marketing product enhancements

_  we will be successful in developing other new products that respond to
   technological change, evolving industry standards and changing customer
   requirements
_  we will not experience difficulties that could delay or prevent the
   successful development introduction and marketing of these products or
   product enhancements
   our new products and product enhancements will adequately meet the
   requirements of the marketplace and achieve any significant degree of market
   acceptance

     All of our present products operate in the Unix operating system and we
intend for all of our future products to operate in the Unix operating system as
well as the Linux operating system.  In the event that another operating system,
such as Windows NT, were to achieve broad acceptance in the EDA industry, we
would be required to port our products.  This would be costly and time consuming
and could have a material adverse effect on our business, operating results or
financial condition.  If we fail to develop and introduce new products and
product enhancements in a timely and cost-effective manner, for technological or
other reasons, it could also have material and adverse effects on our business,
operating results and financial condition.

                                 Page 13 of 21
<PAGE>

Introducing or even announcing new products by us or our competitors, including
new technologies or changes in industry standards or customer requirements,
could render some or all of our existing products obsolete or unmarketable.
Furthermore, customers might defer purchases due to the introduction or
announcement, which would also have a material adverse effect on our business,
operating results or financial condition.

     Complex software products, such as those we offer, can contain defects or
even fail when introduced or released.  We have, in the past, discovered defects
in certain of our products.  We may experience delays or lost revenue in
connection with repairs and corrections of defects we find in the future.
Although to date we have not experienced material adverse effects resulting from
defects, it is possible in the future that despite testing, errors will go
undiscovered in new products or releases until after shipment.  These errors may
result in loss of market share or failure to achieve market acceptance.  If this
were to occur, it could have a material adverse effect upon our business,
operating results or financial condition.

Delisting From NASDAQ; Disclosure Relating to Low-Priced Stock.  Our common
--------------------------------------------------------------
stock was delisted from trading on the NASDAQ National Market November 16, 1998.
Our common stock immediately began trading on the OTC Bulletin Board.  As a
result, our ability to obtain additional financing through the issuance of
common stock or securities convertible into common stock may be adversely
affected.  You might find that disposing of our common stock is more difficult
than is has been in the past.  The trading price of our common stock is
currently less than $5.00 per share.  Because of our common stock falls into the
category defined as penny stock, trading in the common stock is currently
subject to certain rules promulgated under the Exchange Act, which require
additional disclosure by broker-dealers.   These rules require us, in advance of
trading, to provide you with disclosure schedules, which explain the penny stock
market and associated risks.  The rules impose various sales practice
requirements on broker-dealers who sell penny stock.  Broker-dealers engaging in
some types of these transactions must make a special suitability determination
and obtain your written consent prior to sale.  This additional burden may
discourage broker-dealers from actively effectuating common stock transactions,
which in turn could have the adverse effect of severely limiting the
marketability of our common stock.  Therefore, the ability of Silicon Valley
Research, Inc. shareholders to resell their stock would be limited.  In turn,
this could adversely effect our ability to obtain future equity financing.

Possible Volatility of Stock Price.  The market price of our common stock has
----------------------------------
been volatile.  The following events could cause the market price of our common
stock to fluctuate substantially:

_  future announcements concerning our competitor's or our quarterly
   variations in operating results
_  the introduction of technological innovations, new products, or changes in
   product pricing policies
-  proprietary rights or other litigation, or
_  changes in earnings estimates by analysts or other factors

     The stock market has from time to time experienced significant price and
volume fluctuations that have particularly affected the market prices for the
common stocks of technology companies like us.  These fluctuations have often
been unrelated to the operating performance of particular companies.

     In the past, shareholder class action suits have been filed against
companies following periods of volatility of stock price.  Litigation of this
nature could occur in our future.  Litigation often diverts management attention
and resources and is costly to the company.  If we were placed in this position,
it could have a material adverse effect on our business, financial condition and
operation results.  Significant liabilities are always possible effects of
litigation.

Potential Fluctuations in Quarterly Operating Results.  Numerous factors may
-----------------------------------------------------
materially and unpredictably affect our operating results, including:

_  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 us and our competitors

                                 Page 14 of 21
<PAGE>

- gain or loss of significant customers or distributors
- expense levels
- renewal of maintenance contracts
- pricing changes by us or our competitors
- personnel changes
- foreign currency exchange rates
- economic conditions generally and in the electronics industry specifically

Any unfavorable change in these or other factors could have a material adverse
effect on our operating results for a particular quarter. Many of our customers
order on an as-needed basis and often delay delivery of firm purchase orders
until their project commencement dates are determined. As a result, we operate
with no significant backlog. Therefore, quarterly revenue and operating results
will depend on the volume and timing of orders received during the quarter,
which are difficult to forecast accurately. Historically, we have often
recognized a substantial portion of our license revenues in the last month of
the quarter, with these revenues frequently concentrated in the last two weeks
of the quarter. Our operating results would be disproportionately affected by a
reduction in revenue because only a small portion of expenses vary with revenue.
Operating results in any period should not be considered indicative of the
results to be expected for any future period. Our revenues may or may not
increase and we may or may not become profitable.

Lengthy Sales Cycle. The licensing and sale of our software products generally
-------------------
involve a significant commitment of capital from prospective customers. Delays
are frequently associated with large capital expenditures and lengthy acceptance
procedures. For these and other reasons, the sales cycle associated with the
licensing of our products is typically lengthy and subject to a number of
significant risks over which we have little or no control. Because the timing of
customer orders is hard to predict, we believe that our quarterly operating
results are likely to vary significantly in the future. Our actual results could
vary materially as a result of a variety of factors, including, without
limitation:

- the high average selling price and long sales cycle for our 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
- acceptance of our products and increased competition

Dependence Upon Semiconductor and Electronics Industries; General Economic and
------------------------------------------------------------------------------
Market Conditions. At Silicon Valley Research, Inc., we are 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. Each of these
industries is highly volatile and has periodically experienced significant
downturns. Often in connection with, or in anticipation of, declines in general
economic conditions, the number of new integrated circuit design projects often
decreases. Our customers' purchases of new licenses from us are largely
dependent upon the commencement of new design projects. Factors negatively
affecting any of these industries could have a material adverse effect on our
business, operating results or financial condition. Our business, operating
results and financial condition may in the future reflect substantial
fluctuations from period to period due to patterns and general economic
conditions in either the semiconductor or electronics industry.

International Sales. International sales, primarily in Japan and Taiwan,
-------------------
accounted for approximately 25% of the total revenue in fiscal 1997, 32% in
1998, 36% in 1999 and 1% and the first six months of 2000. 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 EDA software
market. We expect that international sales will continue to account for a
significant portion of our revenue. We plan to continue to expand our
international sales and distribution channels. However, this revenue involves a
number of inherent risks, including:

- economic downturn in the electronics industry in Asia

                                 Page 15 of 21
<PAGE>

- traditionally slower adoption of the our 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
- other trade barriers

The factors listed above may have a material adverse effect on our future
international sales and, consequently, on our operating results.

     Effective December 1998, we discontinued operating our Tokyo office and in
March 1999, we discontinued operating our Taiwan office. In the future, we will
use distributors to service the Japanese and Taiwanese markets.

Competition. The EDA software market in which Silicon Valley Research, Inc.
-----------
competes is intensely competitive and subject to rapid technological change. We
currently face competition from EDA vendors, including Cadence, which currently
holds the dominant share of the market for integrated circuit physical design
software, Avant! and Synopsys. These EDA vendors have significantly greater
financial, technical and marketing resources, greater name recognition and a
larger installed customer base than we do. These companies also have established
relationships with current and potential customers of ours and can devote
substantial resources aimed at preventing us from enhancing relationships with
existing customers or establishing relationships with potential customers. We
believe that competitive factors in the EDA software market include:

- product performance
- price
- support of industry standards
- ease of use
- delivery schedule
- product enhancement
- customer technical support and service

     Competition from other EDA companies that choose to enter the integrated
circuit physical design market could present particularly formidable competition
due to their large installed customer base and their ability to offer a complete
integrated circuit design solution. We expect 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. We cannot assure you that we will be able to compete
successfully against current and future competitors or that competitive
pressures faced by us will not have a material adverse effect on our business,
operating results and financial condition.

                                 Page 16 of 21
<PAGE>

Dependence on Certain Customers and Resellers. A small number of customers
---------------------------------------------
account for a significant percentage of our total revenue.

                  PERCENTAGE OF OUR TOTAL REVENUE BY CUSTOMER

<TABLE>
<CAPTION>
                        Customer                               Fiscal 1997          Fiscal 1998          Fiscal 1999
                        --------                               -----------          -----------          -----------
<S>                                                            <C>                  <C>                  <C>
HAL Computer Systems, Inc., a subsidiary of Fujitsu Ltd.                14%                 N/A                  N/A

Lucent Technologies                                                     19%                 N/A                  N/A

Motorola, Inc.                                                          13%                  13%                  18%

Aspec Technology                                                       N/A                   20%                 N/A
</TABLE>

We cannot assure you that sales to these entities, individually or as a group,
will reach or exceed historical levels in any future period. Any substantial
decrease in sales to one or more of these customers could have a material
adverse effect on our business, operating results or financial condition. We
currently sell and market our products overseas through a limited number of
distributors. Our history of performance with our distributors is also limited.
We cannot offer you assurance that the new distributors will be able to
successfully distribute and support our products on a timely basis or that such
distributors will not reduce their efforts devoted to selling our products or
terminate the relationship as a result of competition with other suppliers'
products. The loss of, or changes in, the relationship with, or performance by,
one or more of our international distributors could have an adverse effect on
our business.

Management Transition. Here at Silicon Valley Research, Inc., we are
---------------------
experiencing a period of management transition that has placed, and may continue
to place, a significant strain on our resources, including our personnel. James
O. Benouis joined the Company in March 1998 as our President and Chief Operating
Officer. On August 4, 1998, Mr. Benouis was appointed our Chief Executive
Officer. Effective April 2, 1999, Laurence G. Colegate, Jr. resigned as Chief
Financial Officer.

     Our ability to manage growth successfully will require our management
personnel to work together effectively and will require us to improve our
operational, management and financial systems and controls. If our management is
unable to bring about this transition effectively, our business, competitive
position, results of operations and financial condition will be materially and
adversely affected. See "Dependence on Key Personnel" below.

Dependence on Key Personnel. Our success depends to a significant extent upon a
---------------------------
number of key technical and management employees, in particular, Robert R.
Anderson, Chairman, and James O. Benouis, President and Chief Executive Officer.
We do not currently have "key man" life insurance on Mr. Anderson or Mr.
Benouis. The loss of services of Mr. Anderson or Mr. Benouis or any of our other
key employees could have a material adverse effect on us. See "Management
Transition" above.

     Also, our success depends in large part on our ability to attract and
retain highly skilled technical, managerial, sales and marketing personnel.
Competition for such talented personnel is intense. We cannot assure you that we
will be successful in retaining our key technical and management personnel or in
attracting and retaining the personnel we require now in order to grow.

Proprietary Rights. Silicon Valley Research, Inc. relies on contract, trade
------------------
secret and copyright law to protect its technology. Competitors may develop
similar or superior technologies or duplicate our technology. We generally enter
into confidentiality or license agreements with our employees, distributors and
customers, and limit access to and distribution of our software, documentation
and other proprietary information. Despite these precautions, it is possible for
a third party to copy or otherwise obtain and use our products or technology
without authorization, or to develop similar technology independently. In
addition, effective copyright and trade protection may be unavailable or limited
in certain foreign countries.

                                 Page 17 of 21
<PAGE>

     There has been substantial industry litigation regarding patents and other
intellectual property rights involving technology companies. In the future,
litigation may be necessary to protect and enforce our intellectual property
rights, to defend us against claimed infringement of the rights of others and to
determine the scope and validity of the proprietary rights of others. Any such
litigation could be costly and could divert management's attention, which could
have a material adverse effect on our business, results of operations or
financial condition regardless of the outcome of the litigation. In addition,
third parties making claims against us with respect to intellectual property
infringement may block our ability to sell products in the United States and
abroad, and could result in an award of substantial damages. In the event of a
claim of infringement, Silicon Valley Research, Inc. and our customers could be
required to obtain one or more licenses from third parties. We cannot assure you
that either our customers or we could obtain necessary licenses from third
parties at a reasonable cost or at all.

Concentration of Stock Ownership. Our present directors, executive officers and
--------------------------------
5% shareholders and their affiliates beneficially own approximately 77% of the
outstanding common stock as of September 30, 1999. As a result, these
shareholders may be able to exercise significant influence over all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. Such concentration of ownership may have
the effect of delaying or preventing a change in control of Silicon Valley
Research, Inc.

Depressive Effect of Warrants.  We have a substantial number of common stock
-----------------------------
warrants outstanding with an exercise price of $0.125 (9,251) and of $0.37
(2,400). These warrants may have the effect of causing our stock price to be
lower than it would be otherwise.

Effect of Certain Charter Projections; Blank Check Preferred Stock.  Our Board
------------------------------------------------------------------
of Directors has the authority to issue up to 1,000 shares of preferred stock
and to determine the price, rights, preferences, privileges and restrictions,
including voting rights, without any further vote or action by shareholders. The
rights of the holders of the common stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of our outstanding voting stock.

Inflation. To date, inflation has not had a significant impact on the results
---------
of our operations.

Recent Accounting Pronouncements. In April 1998, the American Institute of
--------------------------------
Certified Public Accountants issued Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use."
Statement of Position 98-1 provides guidance for determining whether computer
software is internal-use software and on capitalization of the costs associated
with internal-use computer software. It also provides guidance on accounting for
the proceeds of computer software originally developed or obtained for internal
use and then subsequently sold to the public. We have not yet determined the
impact, if any, of adopting this statement. The disclosures prescribed by
Statement of Position 98-1 will be effective for the year ending March 31, 2000
consolidated financial statements.

Year 2000 Issue.  The "Year 2000 Issue" arises because most computer systems and
---------------
programs were designed to handle only a two-digit year, as opposed to a four-
digit year. When the year 2000 begins, these computers may interpret "00" as the
year 1900 and could either stop processing date-related computations or could
process them incorrectly. As our customers and potential customers devote
resources to this issue, resources previously allocated to other information
systems requirements may be redirected to address Y2K problems and issues. To
the extent that our products are not selected as part of customers' overall Y2K
solution, redirection of these customer resources could have a material adverse
effect on our results of operations and financial condition. In addition, the
Y2K Issue creates risk for us from unforeseen problems in our internal computer
systems and from interaction with third parties. Failure on our part, or on the
part of third parties' computer systems could have a material impact on our
ability to conduct our business and to process and account for the transfer of
funds electronically. The Company's management has evaluated the effect of Y2K
on its systems and software products and does not anticipate any material
adverse effects from Y2K on its operations or financial position.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not Applicable

                                 Page 18 of 21
<PAGE>

                          PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings:

          As with other companies in industries similar to the Silicon Valley
          Research, Inc., the Company is subject to the risk of adverse claims
          and litigation on a variety of matters, including infringement of
          intellectual property, intentional and/or negligent misrepresentation
          of material facts and breach of fiduciary duties.  Due to its present
          cash shortage and resulting inability to pay its vendors, several of
          its vendors have initiated collection actions against the Company.
          Through the Credit Managers' Association, the Company has settled with
          95% of its creditors for a complete release of claim or an agreement
          to stay collection activities for one year. Each of such creditors
          chose one of the following payment plans:

               1.   receive 30% of its unsecured claim in exchange for a
                    complete release of claim of the remaining balance; or
               2.   receive 15% of its unsecured claim in exchange for an
                    agreement to stay collection activities for one year with
                    10% interest earned on the remaining balance.

Item 2.   Changes in Securities and Use of Proceeds:

          In June 1999, the Company began a subordinated debt/warrant financing.
          The financing included approximately $1,000,000 of three-year notes
          and the sale of approximately 8,000,000 Warrants at $0.01 per Warrant.
          The debt bears simple interest of 10% and the Warrants have a five-
          year term with an exercise price per share of $0.125. This financing
          transaction consists of two closings. The first closing took place on
          June 7, 1999. The Company received $768,200 cash proceeds from this
          closing. This included $711,000 of three-year notes and the sale of
          approximately 5,700,000 Warrants at $0.01 per Warrant. The second
          closing was to have taken place on July 15, 1999. The closing was
          extended until September 24, 1999 pending negotiation of a workout
          with the Creditors' Committee through the Credit Managers' Association
          to resolve accounts payable issues that was satisfactory to the
          majority of the investors. An agreement was reached and the Company
          received approximately $311,800 cash proceeds from the second closing.
          The Company used part of the proceeds from the financing to complete
          the Settlement Agreement with its lender and to pay other accounts
          payable and intends to use the balance of the proceeds to help fund
          its operations. The Company's CEO, the Company's Chairman of the
          Board, an affiliate of a Company director and two Company 10%
          shareholders participated in the financing.

Item 3.   Defaults Upon Senior Securities: Not Applicable

Item 4.   Submission of Matters to a Vote of Securities Holders:

          (A)  On September 13, 1999, the Annual Meeting of the Shareholders of
               the Registrant was held. A total of 18,291,742 shares, or
               approximately 70% of the shares outstanding, were represented at
               this meeting.

          (B)  At the annual meeting, the shareholders elected Robert R.
               Anderson as Director with 18,199,315 votes in favor and 92,427
               withheld; James O. Benouis as Director with 18,183,527 votes in
               favor and 108,215 withheld; and David G. Arscott and David Knight
               as Directors with 18,200,327 votes in favor and 91,415 votes
               withheld.

          (C)  The shareholders ratified the appointment of Moss Adams LLP as
               the Company's independent public accountants with 18,188,558
               votes in favor, 70,863 against and 32,321 votes abstained.


Item 5.   Other Information: Not Applicable

                                 Page 19 of 21
<PAGE>

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

                                (A)  Exhibits:

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

(a)(1)    The financial statements filed as part of this Report at Item 1 are
          listed in the Index to Financial Statements and Financial Statement
          Schedules on page 2 of this Report.

(a)(2)    The following exhibits are filed with this Quarterly Report on Form
          10-Q:

3.01      Registrant's 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")).

3.02      Registrant's amendment to Amended and Restated Articles of
          Incorporation (incorporated by reference to Exhibit 3.02 of
          Registrant's Quarterly Report on Form 10-Q for the quarter ended
          September 30, 1998).

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

3.05      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).

10.01     Agreement and Stipulation between Registrant and Finova Technology
          Finance, Inc.

10.02     Workout Agreement of Silicon Valley Research, Inc.

27.00     Financial Data Schedule


                           (B)  Reports on Form 8-K:

No Reports on Form 8-K were filed during the quarter covered by this report.

                                 Page 20 of 21
<PAGE>

                                   SIGNATURE


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


                                        SILICON VALLEY RESEARCH, INC.



Date: November 12, 1999                 /s/ James O. Benouis
      -----------------                 --------------------
                                        James O. Benouis
                                        President and
                                        Chief Executive Officer


                                        (Chief Financial and Accounting
                                        Officer)

                                 Page 21 of 21