<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-QSB


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
     ACT OF 1934
     For the quarterly period ended September 30, 1997



[_]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE 
     ACT OF 1934
     For the transition period from __________ to __________



                        Commission file number: 0-28560


                           RESEARCH ENGINEERS, INC.
       (Exact name of small business issuer as specified in its charter)


               Delaware                               22-235686
    (State or other jurisdiction of          (IRS. Employer Identification 
           incorporation)                                 No.)


                           22700 SAVI RANCH PARKWAY
                         YORBA LINDA, CALIFORNIA 92887
                   (Address of principal executive offices)

                                (714) 974-2500
             (Registrant's telephone number, including area code)


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [_]


The number of shares outstanding of the registrant's only class of Common Stock,
$.01 par value, was 5,704,000 on November 1, 1997
<PAGE>
 
PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                              SEPTEMBER 30, 1997
                                  (Unaudited)
              (In thousands, except share and per share amounts)
<TABLE> 
<CAPTION> 
                                    ASSETS

Current assets:
<S>                                                            <C> 
  Cash and cash equivalents                                     $   971 
  Short term investments                                          2,576
  Accounts receivable (net of allowance for 
    doubtful accounts of $39)                                     2,138
  Deferred income taxes                                             402
  Notes and related party loans receivable                           64
  Prepaid expenses and other current assets                         564
                                                                ------- 
         Total current assets                                     6,715

Property, plant and equipment, net                                2,793
Goodwill (net of accumulated amortization of $335)                1,156
Other assets                                                        822
                                                                -------
                                                                $11,486
                                                                =======

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                              $   280
  Accrued expenses                                                  356
  Income taxes payable                                              215
  Deferred maintenance revenue                                      818
  Current portion of long-term bank debt                            188
  Other                                                              55
                                                                -------
         Total current liabilities                                1,912

Long-term bank debt                                               1,883
Deferred income taxes                                                55
Other                                                                 3
                                                                -------
         Total liabilities                                        3,853
                                                                -------

Stockholders' equity               
  Preferred stock, par value $.01. Authorized 5,000,000 
    shares; issued and outstanding none                               -
  Common stock, par value $.01. Authorized 20,000,000 
    shares; issued and outstanding 5,704,00 shares                   57
  Additional paid-in capital                                      6,794
  Retained earnings                                                 679
  Unrealized gain on investments                                     66
  Foreign currency translation adjustment                            37
                                                                -------
         Total stockholders' equity                               7,633
                                                                -------
                                                                $11,486
                                                                =======

</TABLE> 

  See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
 
                   RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)
              (In thousands, except share and per share amounts)
<TABLE> 
<CAPTION> 
                                             Three Months        Three Months         Six Months        Six Months    
                                                Ended               Ended               Ended             Ended      
                                             September 30,       September 30,       September 30,     September 30, 
                                                 1997                1996                1997              1996      
                                             ------------        ------------        ------------      ------------  
<S>                                          <C>                 <C>                 <C>               <C>           
Net revenues:                                                                                                        
  Product sales                                $    2,646          $    2,107          $    5,015        $    3,841  
  Maintenance and support                             448                 348                 873               679  
                                               ----------          ----------          ----------        ----------
     Total net revenues                             3,094               2,455               5,888             4,520  
                                                                                                                     
Cost of revenues                                      144                 187                 349               339  
                                               ----------          ----------          ----------        ----------

     Gross profit                                   2,950               2,268               5,539             4,181  
                                               ----------          ----------          ----------        ----------


Operating expenses:
  Selling, general and administrative               2,340               1,642               4,505             2,850
  Research and development                            504                 313                 954               789
                                               ----------          ----------          ----------        ----------

     Total operating expenses                       2,844               1,955               5,459             3,639
                                               ----------          ----------          ----------        ----------


     Operating income                                 106                 313                  80               542
                                               ----------          ----------          ----------        ----------


Other (income)/expense: 
  Interest, net                                        (3)                (31)                (22)               26
  Other                                               (29)                (28)                (46)              (69)
                                               ----------          ----------          ----------        ----------

Income before income taxes                            138                 372                 148               585
Income tax expense                                     25                  84                  20               157
                                               ----------          ----------          ----------        ----------

     Net income                                $      113          $      288          $      128        $      428
                                               ==========          ==========          ==========        ==========

Net income per common and common 
  equivalent share                             $     0.02          $     0.06          $     0.02        $      .09
                                               ==========          ==========          ==========        ==========

Weighted average number of common 
  and common equivalent shares 
  outstanding                                   5,816,647           5,204,571           5,789,052         4,710,833
                                               ==========          ==========          ==========        ==========
</TABLE> 

         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
 
                   RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                (In thousands)

<TABLE> 
<CAPTION> 
                                                                    Six Months            Six Months
                                                                      Ended                 Ended
                                                                   September 30,         September 30,
                                                                       1997                  1996
                                                                   ------------          ------------
<S>                                                                <C>                   <C> 
Cash flows from operating activities:
  Net income                                                        $      128            $      428
  Adjustments to reconcile net income to net cash provided
    (used) by operating activities:
      Depreciation and amortization                                        361                   192
      Deferred income taxes                                                (86)                  127
      Changes in operating assets and liabilities:        
        Accounts receivable                                                  -                   (97)
        Notes and related party loans receivable                            (1)                  (11)
        Prepaid expenses and other current assets                          (96)                 (179)
        Other assets                                                      (563)                 (141)
        Accounts payable, accrued expenses and other 
          current liabilities                                             (251)                 (278)
        Deferred maintenance revenue                                        31                    29
        Income taxes payable                                               (54)                   22
        Other long-term liabilities                                        (18)                  (54)
                                                                    ----------            ----------
             Net cash (used in) provided by operating activities          (549)                   38
                                                                    ----------            ----------

Cash flows from investing activities:
  Purchase of property, plant and equipment                               (196)                  (93)
  Purchase of short-term investments                                    (3,019)               (3,034)
  Sale of short term investments                                         2,204                     -
  Proceeds from repayment of related party note receivable                   -                    48
                                                                    ----------            ----------
             Net cash used in investing activities                      (1,011)               (3,079)
                                                                    ----------            ----------

Cash flows from financing activities:
  Net proceeds from issuance of common stock                                 9                 6,469
  Repayment of bank debt                                                   (57)               (1,740)
  Repayment of stockholder loans                                             -                  (481)
                                                                    ----------            ----------
             Net cash (used in) provided by financing activities           (48)                4,248
                                                                    ----------            ----------
             (Decrease) increase in cash and cash equivalents           (1,608)                1,207

Cash and cash equivalents, beginning of period                           2,579                   528
                                                                    ----------            ----------
Cash and cash equivalents, end of period                            $      971                 1,735
                                                                    ==========            ==========
</TABLE> 
       See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
                   RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1997
                                  (Unaudited)


1. BASIS OF PRESENTATION
 
   The consolidated financial statements include the accounts of Research
   Engineers, Inc. (the "Company") and its wholly-owned subsidiaries. These
   consolidated financial statements have been prepared by the Company, without
   audit, and include all adjustments which are, in the opinion of management,
   necessary for a fair presentation of the results of operations for the three
   months and six months ended September 30, 1997 and 1996, the financial
   position at September 30, 1997, and the cash flows for the six months ended
   September 30, 1997 and 1996, pursuant to the rules and regulations of the
   Securities and Exchange Commission. Accordingly, they do not include all of
   the information and footnotes required by generally accepted accounting
   principles for complete financial statements. Results of operations for the
   three months and six months ended September 30, 1997 are not necessarily
   indicative of the results to be expected for the full year ended March 31,
   1998.


2. USE OF ESTIMATES

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the amounts reported in the consolidated financial statements and
   accompanying notes. Actual results could differ from those estimates.


3. NET EARNINGS PER SHARE

   Net earnings per share has been determined, in accordance with the treasury
   stock method, by dividing net earnings by the weighted average number of
   common and common equivalent shares outstanding during the period.

   In February 1997, the Financial Accounting Standards Board issued Statement
   of Financial Accounting Standards No. 128, "Earnings Per Share ("EPS"),"
   which will require the Company to disclose basic EPS and diluted EPS for all
   periods for which an income statement is presented, and which will replace
   disclosure currently being made for primary EPS and fully-diluted EPS. The
   Company is required to adopt this standard in its quarter ended December 31,
   1997. The impact of Statement 128 on the calculation of primary EPS and 
   fully-diluted EPS for the three months and six months ended September 30,
   1997 and 1996 is not material.


4. RECLASSIFICATIONS

   Certain prior quarter amounts have been reclassified to conform to the
   current quarter presentation.

                                       5
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

Research Engineers, Inc. (the "Company") is a leading provider of technically
sophisticated stand-alone and network-based engineering software products that
provide fully-integrated easy-to-use design automation and analysis solutions
for use by engineering analysis and design professionals worldwide.  The
Company's comprehensive line of Windows-based engineering software products
includes STAAD-III, the Company's structural analysis and design software, as
well as mechanical, civil and process/piping engineering products.  The
Company's software products assist engineers in performing a myriad of mission-
critical engineering tasks, including analysis and design of industrial,
commercial, transportation and utility structures, pipelines, machinery and
automotive and aerospace products and survey, contour and digital terrain
modeling.

The following discussion and analysis addresses the results of the Company's
operations for the three months and six months ended September 30, 1997, as
compared to the Company's results of operations for the three months and six
months ended September 30, 1996.


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 AND
SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

Net revenues - Net revenues for the quarter ended September 30, 1997 increased
by $639,000 (26%) to $3,094,000, as compared to $2,455,000 for the quarter ended
September 30, 1996.  For the six months ended September 30, 1997, revenues
increased by $1,368,000 (30%) to $5,888,000 from $4,520,000 for the six months
ended September 30, 1996.  These increases in net revenues were primarily
attributable to the Company's continued growth in overseas markets.

Revenues are derived primarily from sales of the Company's engineering software
products and, to a lesser extent, from sales of software maintenance contracts
relating to its products.  Software product revenues are recognized upon
shipment.  Product maintenance revenues are amortized over the length of the
maintenance contract, which is usually twelve months.

International net revenues as a percentage of total revenues for the quarter
ended September 30, 1997 increased to 56%, up from 43% for the quarter ended
September 30, 1996.  For the six months ended September 30, 1997, international
revenues increased to 57%, up from 45% for the six months ended September 30,
1996.  The increase in international revenues for the periods was primarily the
result of increased revenues from the Asian market as the Company's products
continue to gain market acceptance and the result of the acquisition of QSE
(Bristol) Limited in December 1996.  The Company's domestic revenues are
denominated in U.S. Dollars, while revenues and expenses for the Company's
foreign subsidiaries and sales offices are usually recorded in the applicable
foreign currency and translated with any applicable foreign exchange
adjustments.  There were no foreign exchange gains or losses that were material
to the Company's financial results during either the three month or the six
month periods ended September 30, 1997 and 1996.

Gross profit - Gross profit increased by $682,000 (30%) to $2,950,000 in the
quarter ended September 30, 1997 as compared to $2,268,000 for the quarter ended
September 30, 1996. Gross profit increased by $1,358,000 (32%) to $5,539,000 for
the six months ended September 30, 1997 as compared to $4,181,000 for the six
months ended September 30, 1996.  These increases were primarily due to
increased sales volume.

Selling, general and administrative expense - Selling, general and
administrative expense increased by $698,000 (43%) to $2,340,000 for the quarter
ended September 30, 1997 as compared to $1,642,000 for the quarter ended
September 30, 1996, and increased as a percentage of net revenues to 76% from
67% in the comparable quarter of the prior year. Selling, general and
administrative expense increased by $1,655,000 (58%) to $4,505,000 in the six
months ended September 30, 1997 as compared to $2,850,000 for the six

                                       6
<PAGE>
 
months ended September 30, 1996, and increased as a percentage of net revenues
to 77% from 63% in the comparable period of the prior year. Selling expenses in
both the three and six month periods increased primarily as a result of higher
commissions being paid associated with higher net revenues in the overseas
markets. General and administrative expenses in both the three and six month
periods increased due to the addition of administrative, customer service and
technical support personnel, combined with increases in professional fees, and
in the six month period, due to a one time charge for severance paid to a former
QSE (Bristol) Limited employee.

Research and development expense - Research and development expense increased by
$191,000 (61%) to $504,000 in the quarter ended September 30, 1997 as compared
to $313,000 for the quarter ended September 30, 1996, and increased as a
percentage of net revenues to 16% from 13% in the comparable quarter of the
prior year. Research and development expense increased by $165,000 (21%) to
$954,000 in the six months ended September 30, 1997 as compared to $789,000 for
the six months ended September 30, 1996, and decreased as a percentage of net
revenues to 16% from 17% in the comparable six months of the prior year.  The
increases in research and development expense are primarily due to the
finalization of STAAD/Pro, the Company's next generation structural engineering
product.

Other (income) expense - Net interest (income) expense decreased by $28,000 to
($3,000) in the quarter ended September 30, 1997 as compared to ($31,000) for
the quarter ended September 30, 1996. The Company completed its initial public
offering during the second quarter of fiscal 1997, the proceeds of which were
used to pay off debt and increase investments. Therefore, the Company had a
decrease in interest expense during the second quarter ended September 30, 1996
as well as increased interest income from investing the offering proceeds. Net
interest (income) expense increased by $48,000 to ($22,000) in the six months
ended September 30, 1997 as compared to $26,000 for the six months ended
September 30, 1996. This increase in net interest income is a result of an
increased amount of interest income from investments during the six months ended
September 30, 1997 as compared to the six months ended September 30, 1996, as
well as a decrease in interest expense during the first quarter of fiscal 1998
compared to the first quarter of fiscal 1997.

Income taxes - Income tax expense decreased by $59,000 to $25,000 in the quarter
ended September 30, 1997 as compared to $84,000 for the quarter ended September
30, 1996.  Income tax expense decreased by $137,000 to $20,000 in the six months
ended September 30, 1997 as compared to $157,000 for the six months ended
September 30, 1996.  This decrease in interest tax expense is primarily the
result of a pretax loss in the United States for the quarter and six months
ended September 30, 1997 and the related tax benefit for the net operating loss
that was recorded.

LIQUIDITY AND CAPITAL RESOURCES

Certain statements contained in this "Liquidity and Capital Resources" are
"forward-looking statements" that involve risks and uncertainties.  The actual
future results of the Company could differ materially from those statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this report, uncertainties regarding market
acceptance of new products, including those acquired from QSE (Bristol) Limited,
and product enhancements, delays in the introduction of new products, increased 
costs associated with overseas markets, and risks associated with managing the
Company's growth, as well as those factors discussed in the Company's Form 
10-KSB/A for the fiscal year ended March 31, 1997 which was filed with the 
Securities and Exchange Commission on August 19, 1997 and the risks described in
the "Outlook" section therein.

The Company currently finances its operations (including capital expenditures)
primarily through cash flows from operations as well as its cash and short-term
investment balances.

The Company's principal sources of liquidity at September 30, 1997 consisted of
$971,000 of cash, $2,576,000 of short-term investments and $500,000 available
under a line of credit with Union Bank of California.

                                       7
<PAGE>
 
The decrease in total cash and investments during the six months ended September
30, 1997 was primarily attributable to purchases of capital assets and other
assets consisting mainly of purchased technology, combined with a decrease in
accounts payable offset by an increase in deferred maintenance.

The Company has a $500,000 line of credit with Union Bank of California. The
line of credit bears interest at the prime rate.  This credit line is
collateralized by substantially all of the assets of the Company. The line of
credit expires on November 28, 1997. As of September 30, 1997 there was no
principal or accrued interest outstanding under the line of credit. The Company
plans to negotiate a renewal of the line of credit, however, there can be no
assurances that such negotiations will be successful.

The Company believes that its current cash and short-term investment balances
and cash generated from operations and borrowings available under the Company's
line of credit will provide adequate working capital to fund the Company's
operations at currently anticipated levels through September 30, 1998.  To the
extent that such amounts are insufficient to finance the Company's working
capital requirements, the Company will be required to raise additional funds
through public or private equity or debt financings.  There can be no assurance
that such additional financings will be available, if needed, or, if available,
will be on terms satisfactory to the Company.

                                       8
<PAGE>
 
PART II -- OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           None

ITEM 2.    CHANGES IN SECURITIES

           None

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

           None

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           (a)      The Annual Meeting of Stockholders of the Company was held
                    on September 25, 1997.

           (b)      Omitted pursuant to Instruction 3 to Item 4 of Form 10-QSB.

           (c)(i)   PROPOSAL ONE: Election of five Directors by the holders of 
                    issued and outstanding shares of Common Stock:
<TABLE> 
<CAPTION> 
                                              For         Abstain      Against
                                           ---------    -----------   ----------
                    <S>                    <C>          <C>           <C> 
                    Amrit K. Das           5,391,619         0          14,758
                    Jyoti Chatterjee       5,391,619         0          14,758
                    Dan W. Heil            5,391,619         0          14,758
                    Bruce E. Cummings      5,391,619         0          14,758
                    Santanu Das            5,391,619         0          14,758
</TABLE> 

           (c)(ii)  PROPOSAL TWO: Ratification of the approval of the Company's 
                    1997 Stock Option Plan:

<TABLE> 
                             <S>                  <C> 
                             For:                 4,049,203
                             Against:                58,246
                             Abstain:                54,968
                             Broker Non-Voting:   1,243,960
</TABLE> 

           (c)(iii) PROPOSAL THREE: Ratification of the appointment of KPMG Peat
                    Marwick LLP as the Company's indepenedent accountants for
                    the fiscal year beginning April 1, 1997:

<TABLE> 
                             <S>                  <C> 
                             For:                 5,399,269
                             Against:                 4,708
                             Abstain:                 2,400    
                             Broker Non-Voting:           0
</TABLE> 

           (d)       Not applicable.
    
ITEM 5.    OTHER INFORMATION

           None

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)   Exhibits

                     27.1 Financial Data Schedule

           (b)   Reports on Form 8-K

                     None

                                       9
<PAGE>
 
                                  SIGNATURES
                                  ----------

In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


Date:  November 14, 1997

                                      RESEARCH ENGINEERS, INC.


                                      By: /S/ WAYNE BLAIR
                                         --------------------------------------
                                         Wayne Blair
                                         Chief Financial Officer, Secretary
                                         and Treasurer (principal financial 
                                         and accounting officer)

                                       10
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

Exhibit 27.1  Financial Data Schedule

                                       11