SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549


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

                                     FORM 10-QSB




(Mark one)
[x]    Quarterly Report under section 13 or 15(d) of the Securities
       Exchange Act of 1934

                 For the quarter ended September 30, 1999

[ ]    Transition Report under section 13 or 15(d) of the Securities
       Exchange Act of 1934

                        Commission File No. 0-27908

               Semiconductor Laser International Corporation
  ------------------------------------------------------------------------
       (Exact Name of Small Business Issuer as Specified in its Charter)

             Delaware                                      16-1494566
----------------------------------------              -------------------
(State or other Jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                         Identification No.)

15 Link Drive, Binghamton, New York                          13904
----------------------------------------              -------------------
(Address of principal executive offices)                   (Zip code)

Registrant's telephone number, including area code: (607) 722-3800

     Check whether the issuer (1) 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 a 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    [ ]

     As of October 31, 1999, there were outstanding 15,153,955 shares of the
issuer's common stock, par value $.01 per share.

Transitional Small Business Disclosure Format

               Yes    [ ]                        No    [x]

<PAGE>
                                       1

                         Part I. Financial Information

Item 1. Financial Statements


                   Semiconductor Laser International Corporation

                                   Balance Sheet
<TABLE>
<CAPTION>

                                                   December 31,    September 30,
                                                       1998            1999
                                                                    (unaudited)
                                                   ------------     ------------
<S>                                               <C>              <C>
Assets
Current assets
  Cash                                            $    112,695     $    844,185
  Accounts Receivable, net of allowance for
   doubtful accounts of $560,645 and $560,645,
   respectively                                        296,193          348,749
  Inventory                                            333,806          724,890
  Prepaid expenses and other assets                    180,853          148,008
                                                   ------------     ------------
                  Total current assets                 923,547        2,065,832

Property, plant and equipment, net                   2,691,926        2,629,748
Deposits and other assets                              123,957          145,831
                                                   ------------     ------------
                  Total assets                    $  3,739,430     $  4,841,411
                                                   ============     ============

Liabilities and Shareholders' Equity
Current liabilities
  Accounts payable                                $  1,127,589     $    460,509
  Notes payable ( Line of Credit )                     550,000        1,000,000
  Accrued expenses and other liabilities               164,235          397,060
  Current portion of long-term debt                     37,170           43,392
                                                   ------------     ------------
                  Total current liabilities          1,878,994        1,900,961

Long-term debt                                         765,687          724,931
Accrued royalty payments                               100,000          100,000
                                                   ------------     ------------
                  Total liabilities                  2,744,681        2,725,892
                                                   ------------     ------------
Commitments and contingencies (Note 5)

Shareholders' Equity
Preferred stock, Series B $.01 par value,
  1,000,000 shares authorized; 1,000,000
  issued and outstanding at September 30, 1999           -               10,000
Common stock, $.01 par value, 20,000,000 shares
 authorized, 10,039,552 issued and outstanding
 at December 31, 1998, and 15,153,955 issued
 and outstanding at September 30, 1999                 100,396          151,540
Common Stock Issuable                                   41,073             -
Treasury stock                                        (248,241)        (248,241)
Additional paid-in capital                          18,061,560       21,906,625
Accumulated deficit                                (16,960,039)     (19,704,405)
                                                   ------------     ------------
                  Total Shareholders' Equity           994,749        2,115,519
                                                   ------------     ------------
                  Total liabilities and
                    Shareholders' Equity          $  3,739,430     $  4,841,411
                                                   ============     ============
</TABLE>

                  See accompanying notes to financial statements

<PAGE>
                                       2

                  Semiconductor Laser International Corporation

                             Statement of Operations

<TABLE>
<CAPTION>
                                                  Three Months Ended              Nine Months Ended
                                                     September 30,                   September 30,
                                                 1998             1999           1998            1999
                                              (unaudited)      (unaudited)    (unaudited)     (unaudited)
                                              -----------      -----------    -----------     -----------
<S>                                           <C>              <C>            <C>             <C>
Net sales                                     $   600,110      $   441,560    $ 1,375,016     $ 1,103,107

Cost of sales                                    (962,588)        (403,282)    (2,399,532)     (1,709,688)
                                              -----------      -----------    -----------     -----------
     Gross margin                                (362,478)          38,278     (1,024,516)       (606,581)

Operating expenses:

Research and development expenses                    -              16,788          7,273          61,318
Sales and marketing expenses                       40,421           67,839        343,867         264,413
General and administrative expenses               738,681          671,837      1,807,205       1,841,299
                                               ----------       ----------    -----------     -----------
         Loss from operations                  (1,141,580)        (718,186)    (3,182,861)     (2,773,611)

Interest income                                     5,109           22,969         37,119          29,371
                                               ----------       ----------    -----------     -----------
         Net loss                              (1,136,471)        (695,217)    (3,145,742)     (2,744,240)
                                               ==========       ==========    ===========     ===========

Net loss per share, basic and dilutive           ($0.11)          ($0.05)        ($0.35)         ($0.22)
                                               ==========       ==========    ===========     ===========

Weighted average shares outstanding            10,039,552       13,476,629      9,078,563      12,374,959
                                               ==========       ==========    ===========     ===========


</TABLE>



                  See accompanying notes to financial statements

<PAGE>
                                       3

                  Semiconductor Laser International Corporation

                            Statement of Cash Flows

<TABLE>
<CAPTION>
                                                        Nine Months Ended
                                                           September 30,
                                                      1998            1999
                                                   (unaudited)     (unaudited)
                                                   -----------     -----------
<S>                                                <C>             <C>
Cash flows from operating activities:
Net loss                                           $(3,145,742)    $(2,744,240)
Adjustments to reconcile net loss to
  net cash used in operating
  activities:
   Depreciation and amortization                       152,846         158,031
   Amortization of deferred expenses                      -             15,517
Change in assets and liabilities:
   Increase in accounts
     receivable, net                                  (420,999)        (52,556)
   Increase in inventory                              (129,900)       (391,084)
   Decrease in prepaid expenses
     and other assets                                   42,337          32,845
   (Increase)decrease in deposits
     and other assets                                  312,820         (21,874)
   Increase (decrease) in accounts
     payable                                           312,627        (667,080)
   Increase in accrued expenses
     and other liabilities                               8,441         232,814
                                                   -----------     -----------
Net cash used in operating activities               (2,867,570)     (3,437,627)
                                                   -----------     -----------
Cash flows from investing activities:
Purchase of property, plant and
   equipment                                          (176,501)        (96,325)
                                                   -----------     -----------
Net cash provided from (used for)
   investing activities                               (176,501)        (96,325)
                                                   -----------     -----------
Cash flows from financing activities
Proceeds from short-term debt                          550,000         450,000
Payments on long-term debt                             (27,113)        (40,756)
Issuance of warrants                                      -             31,500
Issuance of stock, net of expenses                   1,042,835       3,824,698
                                                   -----------     -----------
Net cash provided by (used for) financing
   activities                                        1,565,722       4,265,442
                                                   -----------     -----------
Net (decrease) increase in cash                     (1,478,349)        731,490
Cash at beginning of period                          1,934,574         112,695
                                                   -----------     -----------
Cash at end of period                              $   456,225         844,185
                                                   ===========     ===========

</TABLE>


                  See accompanying notes to financial statements

<PAGE>
                                        4

                  Semiconductor Laser International Corporation


                          Notes to Financial Statements
                                September 30, 1999
                                   (Unaudited)


1. Organization

   Semiconductor Laser International Corporation (the"Company") was
   incorporated in New York State in September 1993 (inception) and,
   subsequently,  reincorporated  in Delaware in September 1997, to produce high
   power  semiconductor  diode laser  wafers and bars  ("HPDLs"),  and to market
   these products worldwide.

   The Company's primary activities since incorporation,  as a development stage
   enterprise,  had  been  research  and  development,  business  and  financial
   planning,  raising capital and constructing  and equipping its  manufacturing
   facility.  The Company had previously  relied on facilities  provided through
   the Wright  Cooperative  Research and Development  Agreement  (CRDA) with the
   U.S. Air Force for the  development  and quality control testing of its HPDLs
   The CRDA expired in September 1996. The Company has since completed the
   construction of its manufacturing  facility in Binghamton, New York, where it
   is conducting all activities.

   Effective April 1, 1997, the Company ceased operating as a development  stage
   enterprise as it began commercial production of its products.

2. Financial Resources and Liquidity

   The Company has incurred net losses from inception (September 21,1993) and
   had at September 30, 1999 an accumulated deficit of $19,704,405 and working
   capital of $164,871.  Such losses have resulted primarily from a lack
   of adequate sales revenue to generate net profits. Subsequently, the Company
   has operated with the proceeds from the Company's initial public offering and
   private equity  financing (see Note 5). The Company expects that its cash and
   working  capital   requirements  will  continue  to  be  significant  as  its
   operations expand.  The Company anticipates that such cash and working
   capital requirements will be satisfied through a combination of revenue
   growth and additional private equity financing.

   There is no assurance, however, that the Company will be able to obtain funds
   to  support  its  operations.  As a result of the  foregoing,  there  remains
   substantial doubt as to the Company's ability to continue as a going concern.
   In the past the Company has been able to raise the capital necessary ($21.9
   million from inception to date) but there can be no assurance that the
   Company will be able to raise additional capital.  If the Company achieves
   cash breakeven by the end of 2000, then its cash needs would be minimized or
   eliminated.  However, based upon past performance there can be no assurance
   that this will happen.  The accompanying financial statements do not include
   any adjustments that might result from the outcome of this uncertainty.


3. Basis of Presentation

   The  accompanying  unaudited  financial  statements have been prepared by the
   Company.  Certain information and footnote  disclosures  normally included in
   financial   statements   prepared  in  conformity  with  generally   accepted
   accounting  principles have been condensed or omitted.  In the opinion of the
   Company's  management,   the  disclosures  made  are  adequate  to  make  the
   information  presented not misleading,  and the financial  statements contain
   all adjustments necessary to present fairly the financial position as of
   September 30, 1999 and the results of operations and cash flows for the nine
   months ended September 30, 1999 and 1998.  The results of operations for the
   nine months ended September 30, 1999 are not necessarily indicative of the
   results to be expected for the full year.

<PAGE>
                                       5

4. Summary of Significant Accounting Policies

   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 reported  amount of assets and  liabilities and disclosure of
   contingent assets and liabilities as of the date of the financial  statements
   and the reported  amounts of revenue and expenses  during the period.  Actual
   results could differ from those estimates.

   Inventory

   Inventory is valued at the lower of cost or market on a first in, first out
   (FIFO) method.  Prior to July 1, 1999, the Company manufactured its product
   on a job basis, however subsequent to July 1, 1999 the Company began building
   finished goods and certain semi-assembled products for anticipated sales,
   thus representing the increase in work-in-process and finished goods since
   December 31, 1998.

   Depreciation and amortization

   Property, plant and equipment are recorded at cost and depreciated  over the
   assets'   estimated   useful  lives  ranging  from  three  to  twenty  years.
   Depreciation  is  computed  using  the  straight-line  method  for  financial
   reporting and the modified  accelerated  cost recovery  system for income tax
   purposes.  Expenditures  for major renewals and  betterments  that extend the
   useful lives of property,  plant and equipment are capitalized.  Expenditures
   for maintenance and repairs are charged to expense as incurred.

   Intangible  assets are  amortized  using the  straight-line  method over five
   years.

   Impairment of long-lived assets

   Assessments  of the  recoverability  of long-lived  assets are conducted when
   events or  circumstances  occur that indicate that the carrying  value of the
   asset may not be  recoverable.  The determination of impairment is based on
   the ability to recover  such  carrying  value from the future  undiscounted
   cash flows of related operations.

<PAGE>
                                       6

   Revenue recognition

   Revenue  recognition is based on the terms of the underlying sales agreements
   (purchase orders or contracts).  Revenues for fixed price milestone contracts
   are recognized  upon the  completion and billing of the milestone.  Customers
   entering  into  long-term  contracts  with  the  Company  include  the U.  S.
   Government,  prime or subcontractors for which the U.S. Government may be the
   end customer and other domestic end-users.

   Warranty Costs

   The Company  provides for the  recognition of the potential for rework to its
   products by establishing a warranty reserve based on an historic  analysis of
   past experience.

   Research and development

   Research and development costs are expensed as incurred.

   Supplemental Cash Flow Disclosures

   Common Stock was issued to Company vendors in February and May, 1999 to
   satisfy payable obligations.  A total of 135,147 shares of Common Stock were
   issued to satisfy $50,023 of accounts payable.

   Income taxes

   The Company follows the asset and liability method for deferred income taxes.
   This method  provides that deferred tax assets and  liabilities  are recorded
   using currently enacted tax rates applied to the differences  between the tax
   bases of assets and  liabilities  and their  carrying  values  for  financial
   statement purposes.  A valuation allowance is recorded when it is more likely
   than not that deferred tax assets will not be realized.  Presently, a
   valuation allowance has been recorded for the net deferred tax assets of the
   Company, consisting primarily of the net operating loss carryforward.

   Net loss per share

   Net loss per share is computed  using the weighted  average  number of common
   shares outstanding.

   As of September 30, 1999, the Company had outstanding warrants and options to
   purchase 3,446,334 and 578,355 shares of common stock,  respectively,  which
   are not included in the calculation of earnings per share for the nine months
   ended September 30, 1999, and would not be included in such calculation due
   to the anti-dilutive nature of these instruments.

<PAGE>
                                       7

5. Commitment, Contingencies and Other Matters

   Operating Leases

   In October 1996, the Company entered into a master  equipment lease agreement
   with FINOVA Technology Finance,  Inc. ("FINOVA").  The agreement provided for
   the sale  and  ultimate  leaseback  by the  Company  of up to  $3,500,000  of
   equipment,  furnishings and fixtures.  As part of the  consideration  for the
   agreement,  the Company  issued a warrant  certificate  for 58,334  warrants,
   entitling  FINOVA  to  purchase  a  corresponding  number  of  shares  of the
   Company's  common stock at $5.00 per share.  The warrants could not have been
   assigned,  sold,  transferred or otherwise  disposed of prior to February 27,
   1998. The warrants are currently  exercisable.  The warrants have been valued
   at $167,710,  the fair market value of the Company's  warrants at the date of
   issuance and such value is being amortized over the term of the lease.

   Rent expense under  non-cancellable  operating  leases,  including the FINOVA
   leases, was $832,241 for the nine months ended September 30, 1999.  Rent
   expense under non-cancellable operating  leases, including the FINOVA leases,
   was $788,390 for the nine months ended September 30, 1998.

   Pursuant to a Forbearance Agreement, dated as of July 6, 1999, between the
   Company and FINOVA, FINOVA agreed to forbear from collecting certain overdue
   monthly    payments for April, 1999, until June 30, 1999, and interest only
   payments for the months of May, June and July, 1999, until July 30, 1999.  In
   addition, pursuant to a letter agreement, dated November 18, 1999,  FINOVA
   has agreed to enter into a forbearance agreement with the Company under which
   FINOVA agrees to collect interest only payments for the months of October,
   November and December, 1999 and to defer principal payments to the end of the
   lease terms.

   Future minimum payments under non-cancellable operating leases, including the
   FINOVA lease agreement, at September 30, 1999, are as follows:

<TABLE>
<CAPTION>

                                 Year ending
                                 December 31,      Commitment
                                -------------     -------------
<S>                                 <C>            <C>
                                    1999(1)(2)     $  292,166(1)
                                    2000            1,109,656
                                    2001(2)           297,668
                                                  -------------
                                                   $1,699,490
                                                  =============
           (1) Three months
           (2) Information does not reflect latest forbearance agreement with
               FINOVA

</TABLE>

   Litigation/Investigation

   The Company is currently engaged in litigation with a former employee who the
   Company sought action  against  relative to a breach of  confidentiality  and
   defamation of  character.  The former  employee has responded  with a counter
   claim  alleging  defamation of character and is seeking  $500,000 in damages.
   The litigation is presently in the discovery  stage. The Company believes the
   counter claim is without merit and is vigorously  defending such action.  The
   Company  further  believes that the ultimate  outcome of such action will not
   have a material impact on the financial condition or results of operations of
   the Company.

   Since April 1998,  the Company has been  responding to informal  requests for
   information from the Securities and Exchange Commission.  In August 1998, the
   Company  learned that in June 1998,  the Commission had issued a formal order
   of  investigation to determine  whether  violations of certain aspects of the
   federal securities laws had occurred in connection with the Company. Pursuant
   to this formal order of investigation, the Company and certain of its current
   and former  officers  and  directors  have  produced  documents  pursuant  to
   subpoenas from the Northeast  Regional Office of the Commission.  The Company
   is  not  able  to  speculate  as  to  the  specific  subject  matter  of  the
   investigation on the Company.  There can be no assurance as to the timeliness
   of the completion of the investigation or as to the final result thereof, and
   no assurance can be given that the final result of the investigation will not
   have a material  adverse  effect on the Company.  The Company has  cooperated
   with  the  investigation,  and will  continue  to  respond  to  requests  for
   information in connection with the investigation if received.

   In August 1998, the Company learned that the United States  Attorney's Office
   for the Southern District of New York is investigating  whether violations of
   securities  laws  have  occurred  in  connection  with the  Company's  public
   disclosures.  The  Company  has  cooperated  with the  investigation  and has
   responded  to  a  grand  jury  subpoena   issued  in   connection   with  the
   investigation.  There  can  be no  assurance  as to  the  timeliness  of  the
   completion of the  investigation  or as to the final result  thereof,  and no
   assurance  can be given that the final result of the  investigation  will not
   have a material  adverse  effect on the  Company or its  current  management.
   Management believes that there are meritorious  defenses to the issues raised
   by this investigation and intends to defend this matter vigorously.

   The Company is currently engaged in litigation with Newport Corporation, a
   vendor who is seeking to recover $100,508 for goods allegedly sold to the
   Company.  Based on losses sustained by the Company as a result of previously
   supplied defective equipment from this vendor, the Company's counterclaim
   exceeds the amount sued for by Newport Corporation.  The Company believes
   that the ultimate outcome of the action will not have a material impact on
   the financial condition or results of operations of the Company.

   The Company is currently engaged in litigation with IOS Capital Corporation,
   a vendor who is seeking to recover $55,821 on the basis of an alleged default
   by the Company in making its lease agreement installments for color copying
   equipment. The vendor was incapable of providing a working product acceptable
   to the Company and the equipment was returned to the vendor accordingly.  The
   Company believes that the ultimate outcome of the action will not have a
   material impact on the financial condition or results of operations of the
   Company.

   The Company's allowance for doubtful accounts includes an allowance for a
   receivable due from Rocky Mountain Instruments ("RMI") which is in dispute.
   The Company has commenced an action against RMI to collect this amount.


 <PAGE>
                                       8

 Financing

   The Company entered into the Securities  Purchase  Agreement (the "Securities
   Purchase  Agreement"),  dated as of February 5, 1999, between the Company and
   bmp, as amended by Amendment  No. 1 to  Securities  Purchase  Agreement  (the
   "Amendment"),  dated as of April 28,  1999,  between the Company and bmp (the
   Securities  Purchase  Agreement,  as amended by the Amendment is  hereinafter
   referred to as the "Amended Purchase Agreement").

   Pursuant to the terms of the  Securities  Purchase  Agreement,  bmp agreed to
   make a two stage  equity  investment  in the  Company  in an  amount  ranging
   between  $2,050,000  and  $2,750,000.  The first stage of the  investment was
   consummated on February 8, 1999 by the parties,  and bmp purchased  2,000,000
   newly issued  shares of the  Company's  Common  Stock at a purchase  price of
   $0.375  per  share  for an  aggregate  purchase  price of  $750,000.  bmp had
   previously  purchased  367,650  shares  of  the  Company's  Common  Stock  in
   unrelated open market  transactions.  In the second stage of the  investment,
   bmp agreed to purchase a minimum of 650,000 and a maximum of 1,000,000  newly
   issued  shares of  non-voting  Series B Stock of the Company (such minimum or
   maximum  number of shares to  constitute  all of the issued  and  outstanding
   shares of Series B Stock) at a purchase  price of $2.00 per  share,  or $0.40
   per share of Common Stock into which the Series B Stock is convertible, for a
   minimum  aggregate  purchase  price of  $1,300,000  and a  maximum  aggregate
   purchase  price  of  $2,000,000,  subject  to  the  satisfaction  of  certain
   conditions contained in the Securities Purchase Agreement.

   Pursuant to the  Amendment,  bmp agreed to purchase  the maximum of 1,000,000
   newly  issued  shares of Series B Stock as contemplated by the Securities
   Purchase Agreement for an aggregate purchase price of $2,000,000, to be paid
   in several installments.  On April 29, 1999, bmp purchased 232,500 shares of
   Series B Stock for a purchase price of $465,000 (the "April  Installment"),
   on May 31, 1999 bmp purchased 192,500 shares of Series B Stock for a purchase
   price of $385,000 (the "May  Installment") and on June 26, 1999, bmp
   purchased 575,000 shares of Series B Stock for a purchase price of $1,150,000
   (the "June Installment").

   The shares of common stock issued to bmp contain certain demand and piggyback
   registration  rights and the preferred  stock contains  certain  antidilution
   rights.

   In  connection  with the  Amendment,  the Company  entered  into a consulting
   agreement (the "Consulting  Agreement"),  dated as of April 28, 1999, between
   the Company and bmp Management Consultants GmbH ("bmp Consultants"), a German
   limited  liability  corporation  wholly  owned by bmp AG  Venture  Capital  &
   Network Management, the parent company of bmp, providing for the retention of
   bmp Consultants as strategic and financial consultants to the Company, for an
   aggregate  consulting fee of $200,000.  The $200,000 aggregate consulting fee
   is payable as follows:  (i) six  monthly  installments  of $15,000  beginning
   immediately  following the funding of the April  Installment  and ending five
   months  following such funding date,  (ii) $50,000  payable at the closing of
   the June Installment and (iii) six monthly installments  beginning six months
   following  the  funding of the April  Installment  and ending  eleven  months
   following such funding date. Per a verbal agreement with bmp Consultants SLI
   will be billed on a work performed basis.  As of September 30, 1999, bmp
   Consultants had been paid $53,000.

   In connection with the Amendment, on June 26, 1999, the Company issued to bmp
   a five year warrant to purchase an aggregate of 500,000 shares of Common
   Stock, at an exercise price of $0.50 per share (the "bmp Warrant").  The
   shares issuable upon exercise of the bmp warrant contain certain demand and
   piggyback registration rights. In addition, bmp is eligible to receive a
   finder's fee in the amount of 5% of the net proceeds of any transaction
   involving the raising of debt or equity capital in a private placement from a
   source introduced to the Company by bmp consummated by the Company within 24
   months following payment of the June Installment.

   In conjunction with the Securities Purchase Agreement, on February 16, 1999,
   the Company issued to BSB Bank & Trust Company, warrants to purchase an
   aggregate  of 500,000  shares of the  Company's  common  stock at an exercise
   price of $0.575 per share.  The warrants  expire on February  16,  2004,  and
   contain certain registration rights. The value of the warrants has been
   reflected as deferred financing costs in the Company's financial statements
   and will be amortized over the period commencing from date of issue to
   May 31, 2000.

   The Company has completed a private placement of Common Stock with certain
   accredited investors introduced to the Company by a funding source referred
   to the Company by bmp.  As of September 30, 1999, 2,979,256 shares of Common
   Stock have been issued at an aggregate purchase price of $1,117,221.  The
   Company received $1,061,422 net of finder's fees. The shares of Common Stock
   issued in this private placement contain certain piggyback registration
   rights.

<PAGE>
                                       9

Item 2.  Management's Discussion and Analysis or Plan of Operation

Certain statements in this Report under the caption "Management's
Discussion and Analysis and Plan of Operation" and elsewhere constitute or may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Litigation Reform Act"),
including, without limitation, statements regarding future cash requirements.
The Company desires to avail itself of certain "safe harbor" provisions of the
Litigation Reform Act and is therefore including this special note to enable
the Company to do so. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: inability to obtain additional financing on
acceptable terms, manufacturing delays due to equipment or technical problems,
delays in product development; costs associated with and outcome of pending
investigations described elsewhere herein; failure to receive or delays in
receiving regulatory approval; lack of enforceability of patents and proprietary
rights; general economic and business conditions; industry capacity; industry
trends; demographic changes; competition; material costs and availability; the
loss of any significant customers; changes in business strategy or development
plans; quality of management; availability, terms and deployment of capital;
business abilities and judgment of personnel; availability of qualified
personnel; changes in, or the failure to comply with, government
regulations; and other factors referenced in this report.

Overview

The Company was  considered a  development  stage  company  until April 1, 1997.
During 1997,  the Company  began the  commercialization  of many of its proposed
products. Since its inception in 1993, the Company had been engaged primarily in
research and development,  business and financial  planning,  recruitment of key
management and technical  personnel,  raising capital to fund operations and the
development of its HPDL product prototypes.  The Company has since completed the
construction and equipping of the first phase of its manufacturing  facility and
has begun the  commercialization  of its  products and the  generation  of sales
revenues. The Company is seeking to increase sales in order to fully utilize its
production   capacity.   Increasing  sales  levels  and  higher  utilization  of
production capacity are critical to the Company's  financial success.  Financial
resources  and liquidity  during this period of growth are of utmost  importance
and concern to the Company.  Recent events including cash flow problems have
placed considerable strain on Company management, financial, manufacturing and
other resources.

The manufacture of  semiconductor  lasers such as those sold by the Company is a
highly complex and precise process,  requiring production in a highly controlled
and clean  environment  with the  utilization  of materials  free of defects and
contamination.  These factors have a significant impact on production yields and
product  reliability  which in turn affect operating results and future customer
acceptance. The Company as well as other semiconductor laser manufacturers have,
from time to time, experienced technical production problems which have resulted
in adverse financial consequences.  No assurance can be given that the Company's
systems,  procedures,  procurement  efforts and production process are such that
these problems will not be experienced in the future.

Since the onset of commercial  production,  the Company,  on occasion,  has been
unable to  manufacture  certain  products in  quantities  sufficient to meet the
demands  of its  existing  customer  base and that of new  customers  based upon
equipment  and/or other technical  problems arising at various points during the
production process.  Previous problems with fiber coupling subcontractors have
been corrected.  Due to ongoing problems with the Company's HVAC which have been
temporarily corrected the Company hired a new HVAC company in early August.
Since that time the Company has not experienced any significant down time due
to the system.  However, the Company has been informed that the current system
is not designed to handle high temperature and high humidity conditions and is
prone to malfunction during periods of rapid temperature variations.  The
Company has installed the necessary equipment to prevent the system from
malfunctioning during periods of rapid temperature variations.  In addition, the
Company has been provided with proposals for a more complete and permanent
solution and is currently evaluating various alternatives.  The Company is also
considering possible legal action against the HVAC equipment manufacturer and
the HVAC system installer.

The Company entered into a licensing agreement with Northwestern University (the
"Northwestern  License") on September 1, 1996. The  Northwestern  License is for
the exclusive rights to produce,  market and sell aluminum-free  HPDLs worldwide
using certain patents and knowhow, as defined in the Northwestern License, owned
by Northwestern  University.  Under the terms of the Northwestern  License,  the
rights  expire upon the  expiration of the patents or ten years from the date of
the first commercial sale in countries where no patent rights exist. The Company
also has the right to  terminate  the  Northwestern  License  after three years.
No later than  August  1999,  the  Company  began to sell to its  customers
aluminum-free HPDLs that the Company had manufactured.  The Company has notified
Northwestern of such sales and has proffered to Northwestern  royalties for such
sales.  Thus, the Company believes it has met the milestones specified in the
License Agreement  and will  continue  to sell,  ship and invoice  aluminum-free
HPDLs.  However, technical difficulties and reliability issues, which are not
now anticipated, could delay large scale production of the product.

In consideration for the Northwestern License, the Company paid Northwestern
University a non-refundable license fee of $21,000 plus $10,000 of the Company's
unregistered common stock (1,231 shares). In addition, the Company issued 1,500
shares of unregistered common stock, valued at $2,586.  These amounts have been
charged to research and development expense.  Royalties are also payable and
have been paid for sales derived from this technology, based on net sales volume
on a sliding scale from 4% to 1%.

The Company  entered  into a Joint  Venture  Agreement  (the  "Orthogenesis
Agreement"),  dated  September  28, 1999,  between the Company and  Orthogenesis
System,  Inc.  ("Orthogenesis").  Pursuant to the Orthogenesis Agreement,  the
Company and Orthogenesis agreed to develop,  sell and distribute low level laser
systems   used  in   non-invasive   medical   treatments   for  the  purpose  of
biostimulation.  Primarily intended for use with certain medical conditions, its
principal  focus is on  arthritic  conditions,  accelerated  wound  healing  and
chronic pain. Potential secondary  applications include acute injuries,  such as
those  relating to sports or casual  physical  overexertion.  The laser also has
potential to be used in related areas within veterinary practices.

Under the Orthogenesis Agreement,  the Company and Orthogenesis each have a
50% voting  interest in the joint  venture  and the Company has been  granted an
exclusive  license to manufacture the Orthogenesis  laser system for the term of
the  joint  venture.  The  Company  has  agreed  to  manufacture  and  sell  the
Orthogenesis   laser  system  at  the  Company's  total  cost  of  manufacturing
(including  material,  direct labor and overhead costs) such system. The Company
has also agreed to perform the financial and  accounting  functions for the
joint venture and will be responsible  for responding to customers' complaints.
Orthogenesis has agreed to be responsible for marketing, research and
development and product upgrades of such systems. Profits derived from the sale
of the Orthogenesis laser system will be divided 75% to the Company and 25% to
Orthogenesis.

The Company believes that it has the capability of manufacturing this system
without any significant initial capital investment.  The system has shown
promise in early tests although no definitive study has been completed to date
and there can be no assurance that any future studies will be favorable.  The
Company intends to commence marketing in Canada and in certain other countries
where it expects it will be permitted to sell the system without any additional
regulatory approval and expects to eventually apply for FDA approval to enable
it to sell the system in the United States.  The Company's ability to obtain FDA
approval and to increase sales materially is dependent on its ability to raise
capital for the joint venture.

The Company  received  notice from The Nasdaq Stock  Market that its  securities
were delisted from The Nasdaq SmallCap Market, effective as of the close of
business on May 26, 1999. The Nasdaq Stock Market based its determination on the
Company's failure to meet the minimum bid price requirement for its common stock
and the  minimum  net  tangible  assets  requirement  set forth under the Nasdaq
Marketplace  Rules.  The Company's  securities  are currently  quoted on the
NASDAQ OTC Bulletin Board(Symbol SLIC) and are also traded over the Berliner
Freiverkehr, an electronic quotation system in Germany similar to the OTC
Bulletin Board.  The delisting of the Company's Common Stock could cause the
market  price of the Common Stock to decline and could make it much more
difficult to buy or sell the Common Stock on the open market.

Results of Operations


Three months ended September 30, 1999, compared to three months ended September
30, 1998.


Sales were $441,560 for the three months ended September 30, 1999 as compared to
$600,110 for the same period in the prior year.  The decrease in sales was the
result of decreased government contract and commercial revenue.  The decrease
in commercial revenue was caused by fewer orders received.

Cost of sales for the three months ended September 30,1999 decreased
approximately $559,000 compared to the same period in 1998 as a result of a
decrease in product sales which decreased cost of goods sold by approximately
$188,000 primarily in material cost and the cost of government contracts and
approximately $371,000 due to the inclusion of certain finished goods and
work-in-process inventories on the balance sheet, offset to the cost of goods
sold, in the third quarter of 1999.  In the same period in 1998, these cost were
charged to cost of goods sold.  See Inventory Note on Page 5 (Inventory Change).

Research and development labor cost expense of approximately $17,000 was
recorded for the three months ended September 30, 1999.

Sales and Marketing expenses increased approximately $27,000 for the three
months ended September 30, 1999 as compared to the same period in 1998.  The
increase occurred primarily in travel and meeting expenses necessitated to
stimulate increased order activity and was offset by reduced expenses for
brochures  and catalogs.

General and administrative expenses decreased approximately $67,000 for the
three months ended September 30, 1999 as compared to the same period in 1998.
Significant reductions occurred in professional fees (due primarily to reduced
legal expenses) and office expenses offset by increases in labor costs and
repairs and maintenance.

Interest income increased for the three months ended September 30, 1999 as
compared to the three months ended September 30, 1998, as a result of higher
cash balances available from investment.


Nine months ended September 30, 1999, as compared to the nine months ended
September 30, 1998.


Sales for the nine months ended September 30, 1999 decreased approximately
$272,000 over the same period in the prior year as a result of reduced
commercial and government contract revenue.

Cost of sales for the nine months ended September 30, 1999, decreased
approximately $690,000 over the nine months ended September 30, 1998, as a
result of the decrease in product sales in 1999, accounting for approximately
$319,000 of the decrease.  The reduction was primarily in labor and materials.
The remaining $371,000 decrease is attributable to the impact on cost of goods
sold of the finished goods and work-in-process inventory inclusion on the
balance sheet previously discussed.

Research and development labor cost expenses of approximately $61,000 were
recorded for the nine months ended September 30, 1999.

Sales and marketing expense decreased approximately $80,000 for the nine months
ended September 30, 1999 as compared to the nine months ended September 30, 1998
primarily as a result of decreased costs associated with advertising offset by
increased expenses in travel and marketing.

General and administrative expenses increased approximately $34,000 for the
nine months ended September 30, 1999 as compared to the same period in the prior
year.  Increases occurred primarily in labor costs and loan interest expense
due to the full utilization of the $1 million line of credit in 1999.

Interest income decreased as a result of lower cash balances available for
investment.


Liquidity and Capital Resources

The Company's cash and cash equivalents at September 30, 1999 were $844,185 as
compared to $112,695 at December 31, 1998, a net increase of $731,490 for the
nine months ended September 30, 1999. The increase was the result of $3,437,627
used in operating activities, $96,325 used in investing activities and
$4,265,442 provided by financing activities.


<PAGE>
                                       10

The $4,265,442 provided by financing activities was derived from the issuance of
4,979,256 shares of common stock which provided $1,824,698(net of legal
expenses), 1,000,000  shares of Series B Convertible  Preferred Stock which
provided $2,000,000 and 500,000 warrants which provided $31,500 and an increase
in the availability under the line of credit of $450,000(See "Financing" under
Note 5 in the Notes to the Financial  Statements).  The Company drew down
against the additional availability under the line by borrowing $300,000 in the
month of March and $150,000 in the month of April.  The aforementioned were
offset by payments on the long-term debt.

The Company has a $1,000,000 collateralized line of credit with BSB for purposes
of providing working capital.  The line of credit bears interest at prime plus
2.5% on the used portion and matures May 31, 2000. At September 30, 1999, the
Company had the full $1,000,000 outstanding under this Line of Credit.
Additionally, the Company's ability to satisfy its cash maintenance requirements
in accordance with the eligibility formula of its line of credit agreement will
likely depend on its ability to raise additional capital in the fourth quarter.

The Company entered into the Securities Purchase Agreement, dated as of
February 5, 1999, between the Company and bmp, as amended by Amendment  No. 1 to
the Securities Purchase Agreement, dated as of April 28, 1999, between the
Company and bmp.

Pursuant to the terms of the  Securities  Purchase  Agreement,  bmp agreed to
make a two stage  equity  investment  in the  Company  in an  amount  ranging
between  $2,050,000  and  $2,750,000.  The first stage of the  investment was
consummated on February 8, 1999 by the parties,  and bmp purchased  2,000,000
newly issued  shares of the  Company's  Common  Stock at a purchase  price of
$0.375  per  share  for an  aggregate  purchase  price of  $750,000.  bmp had
previously  purchased  367,650  shares  of  the  Company's  Common  Stock  in
unrelated open market  transactions.  In the second stage of the  investment,
bmp agreed to purchase a minimum of 650,000 and a maximum of 1,000,000  newly
issued  shares of  non-voting  Series B Stock of the Company (such minimum or
maximum  number of shares to  constitute  all of the issued  and  outstanding
shares of Series B Stock) at a purchase  price of $2.00 per  share,  or $0.40
per share of Common Stock into which the Series B Stock is convertible, for a
minimum  aggregate  purchase  price of  $1,300,000  and a  maximum  aggregate
purchase  price  of  $2,000,000,  subject  to  the  satisfaction  of  certain
conditions contained in the Securities Purchase Agreement.

Pursuant to the  Amendment,  bmp agreed to purchase  the maximum of 1,000,000
newly  issued  shares of Series B Stock as contemplated by the Securities
Purchase Agreement for an aggregate purchase price of $2,000,000, to be paid
in several installments.  On April 29, 1999, bmp purchased 232,500 shares of
Series B Stock for a purchase price of $465,000, on May 31, 1999 bmp purchased
192,500 shares of Series B Stock for a purchase price of $385,000 and on
June 26, 1999, bmp purchased 575,000 shares of Series B Stock for a purchase
price of $1,150,000.

In connection with the first installment of the bmp investment, BSB agreed to
increase the amount available under the Line of Credit to $1,000,000, to extend
the maturity date thereof until June 30, 1999 and to further extend the maturity
of the Line of Credit until May 31, 2000 upon the investment by bmp in the
Company of an additional $1.3 million dollars, subject to the absence of any
material adverse change in the business.  BSB waived the requirement that the
Company maintain the balance of the Line of Credit within its collateral base
formula until the earlier of June 30, 1999 or the date that the Company was in
receipt of funds equaling an additional $1.3 million arising out of the final
installments of the bmp investment.  Upon funding by bmp of the full amount of
the final installments of the investment,  BSB extended the maturity date of the
Line of Credit until May 31, 2000.  The  Company issued warrants to purchase an
aggregate  of 500,000  shares of Common  Stock to BSB, at an  exercise  price of
$0.575 per share, in consideration  for the modifications to the Line of Credit.
The warrants expire in 2004 and contain certain registration rights.

Pursuant to a Forbearance Agreement, dated as of July 6, 1999, between the
Company and FINOVA, FINOVA agreed to forbear from collecting certain overdue
monthly payments for April, 1999, until June 30, 1999, and interest only
payments for the months of May, June and July, 1999, until July 30, 1999.  In
addition, pursuant to a letter agreement dated November 18, 1999, FINOVA has
agreed to enter into a forbearance agreement with the Company under which FINOVA
agrees to collect interest only for the months of October, November and
December, 1999 and to defer principal payments to the end of the lease term.

Prior to July 1, 1999, the Company manufactured its product on a job basis,
however subsequent to July 1, 1999 the Company began building finished goods
and certain semi-assembled products for anticipated sales, thus representing an
approximate $200,000 increase in work-in-process and finished goods since
December 31, 1998.  See Note 4 to Financial Statements.

The Company has completed a private placement of Common Stock with certain
accredited investors introduced to the Company by a funding source referred to
the Company by bmp.  2,979,256 shares of Common Stock were issued at an
aggregate purchase price of $1,117,221 in the private placement.  The Company
received $1,061,392 net of finder's fees. The shares of Common Stock issued in
this private placement contain certain piggyback registration rights.

The Company's allowance for doubtful accounts includes allowances for a
receivable due from RMI which is in dispute.  The Company has commenced an
action against RMI to collect this amount.


<PAGE>
                                       11

The Company has incurred net losses from inception  (September 21, 1993) and has
an accumulated deficit at September 30, 1999 of $20,075,200.  Such losses  have
resulted from the Company's  activities as a development  stage company and have
been  financed  primarily  out of proceeds  from the  Company's  initial  public
offering and private  equity  financing.  The Company  expects that its cash and
working capital  requirements  will continue to be significant as its operations
expand.  Potential  sources for such cash and working capital  requirements  are
revenue growth and additional  private equity financing.  It is anticipated that
the Company will continue to incur losses for the  immediate  future until it is
able to achieve profitable operations or to generate sales sufficient to support
its operations.

The need to raise equity capital at current stock prices is likely to result in
substantial dilution to shareholders and could result in a change of control.
The Company's current business plan requires additional capital infusion in the
fourth quarter of this fiscal year and subsequent infusions until such time as
the Company's sales are sufficient to provide internally generated and
sustainable cash flows.  However, achieving positive cash flow is dependent upon
sales levels which the Company has not historically achieved.  The Company is
currently seeking to raise additional equity capital through a private
placement.  The Company is also evaluating the availability of additional
borrowing capacity against its real estate and equipment.  Without an additional
equity infusion of approximately $250,000, the Company estimates it would have
sufficient cash flow to operate until December 31, 1999. For Fiscal 2000, the
Company is seeking to raise approximately $3-5 million in a combination of debt
and equity capital, including additional availability from a secured financing.

There can be no  assurance  that the Company  will be able to obtain  additional
debt or equity financing when needed, on commercially reasonable terms or at
all.

<PAGE>
                                       12


                          PART II. - OTHER INFORMATION

Item 1. Legal Proceedings.

     The Company is involved in litigation as described in Note 5 in the
     financial statements.


Item 2. Changes in Securities and Use of Proceeds.

     The Company has scheduled a special meeting of its stockholders to be held
     on December 14, 1999, for the purpose of increasing the number of
     authorized shares of its Common Stock from 20,000,000 to 75,000,000.


Item 3. Defaults Upon Senior Securities.

     None


Item 4. Submission of Matters to a Vote of Security Holders.

     None

Item 5. Other Information.

     Edwin B. Spievack, who served as a director of the Company from May 1999
     until the beginning of September 1999, advised the Company of his
     determination to resign his position as director of the Company.  Mr.
     Spievack was elected by the Board of Directors of the Company on May 7,
     1999 and was approved by the stockholders of the Company on June 11, 1999.
     Mr.Spievack resigned as of September 7, 1999.  There has been no
     disagreement between the Company and Mr.Spievack.  The Board of Directors
     elected Dr. Vincent T. Tomaselli as a director of the Company, to replace
     Mr. Spievack, on September 14, 1999.

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

         (a)   Exhibits.

               10.1  Joint Venture Agreement, dated as of September 28,1999, by
                     and between the Company and Orthogenesis Systems, Inc.

               10.2  Forbearance Letter Agreement, dated November 18, 1999,
                     between the Company and FINOVA

               27.1  Financial Data Schedule

         (b) Reports on Form 8-K.

                     None

<PAGE>
                                         13

                                 SIGNATURES

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


                    Semiconductor Laser International Corporation
                    ---------------------------------------------
                                     (Registrant)



Date: November 22, 1999                 By:/s/ Geoffrey T Burnham
                                       ----------------------------
                                        Geoffrey T. Burnham
                                          Chairman of the Board, President
                                          and Chief Executive Officer
                                          (principal executive officer)

      November 22, 1999                 By:/s/ Leonard E. Lundberg
                                        ----------------------------
                                        Leonard E. Lundberg
                                          Chief Financial Officer,
                                          Principal Financial Officer
                                          And Principal Accounting Officer

[TYPE]    EX-10.1


                           JOINT VENTURE AGREEMENT

     This Joint Venture Agreement ("Agreement"), dated as of September 28, 1999,
by and among Semiconductor Laser International  Corporation  ("SLI"), a Delaware
corporation,  and  Orthogenesis  Systems,  Inc.  ("Orthogenesis"),  a  New  York
corporation.

     WHEREAS,  SLI and  Orthogenesis  desire  to form a  joint  venture  for the
development,  production,  commercialization,  marketing  and  sale  of  certain
medical laser system products.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  respective
representations,  warranties and agreements set forth herein, and for other good
and  valuable  consideration  the  receipt and  sufficiency  of which are hereby
acknowledged, the parties do hereby agree as follows:

     1.  Incorporation of Recitals.  The above recitals are true and correct and
are incorporated herein by reference.

     2. Definitions.  Capitalized terms used in thisAgreement shall have the
meanings set forth below:

     (a) "Company" or "Joint Venture" shall mean Orthogenesis Technologies, LLC,
a Delaware limited  liability company which shall be a joint venture between SLI
and Orthogenesis.

     (b)  "Inventions"  shall mean  processes  for the creation of medical laser
system  products in addition to the  Orthogenesis  System and  Component  System
conceived  or  reduced  to  practice  during  the  term of this  Agreement.

     (c)"Know-How" shall mean any and all information  generated during the Term
of this  Agreement  which is  owned or  controlled  by SLI or  Orthogenesis  and
directly  relates  to  the  Systems  and  shall  include,   without  limitation,
manufacturing data and any other information, documentation and devices relating
to the Systems and useful for the development,  commercialization  or safety and
effectiveness of the Systems.

     (d) "Orthogenesis" shall have the meaning ascribed thereto in the prologue
hereof.

     (e) "Orthogenesis System" shall mean the medical laser system product which
is described in Schedule I attached hereto and incorporated herein by reference.

     (f) "Patent Rights" shall mean the patents and patent  applications  listed
on Schedule II attached  hereto and  incorporated  herein by reference,  and any
patents which issue from the patent  applications listed on Schedule II, and all
substitutions,    additions,    extensions,   reissues,   renewals,   divisions,
continuations  and  continuations-in-part  thereof and any foreign  counterparts
thereto.

     (g) "Proprietary Information" shall mean that portion of the Know-How which
is(i)  in  written,   graphical  or  in  other   tangible   form  and  stamped
"Proprietary", "Confidential" or with

                                     1

a  similar  legend,  (ii)  stored  in  a  computer  format  and  designated
"Proprietary", "Confidential" or with a similar legend or (iii) described orally
and  designated  orally  as  "Proprietary",  "Confidential"  or  with a  similar
designation.

     (h) "SLI" shall have the meaning ascribed thereto in the prologue hereof.

     (i) "Systems" the combined Orthogenesis System and other Inventions which
SLI shall manufacture and sell to the Company.

    3.Formation of the Joint Venture; Responsibilities; Distribution of Profits.

     (a) Promptly after the execution of this  Agreement,  SLI and  Orthogenesis
shall  organize  the Company by filing a  Certificate  of  Formation in the form
attached  hereto  as  Exhibit  A with the  Secretary  of  State of the  State of
Delaware and adopt a Management Agreement in the form attached hereto as Exhibit
B. Voting  interests in the Joint  Venture shall be allocated 50% to SLI and 50%
to Orthogenesis.  The business of the Company shall be to commercialize,  market
and sell the Systems. The Company's  headquarters shall be located in the County
of Broome in the State of New York.

     (b) The Board of Managers of the Company shall at all times consist of four
managers,  two of which  shall be  designated  by SLI and two of which  shall be
designated by  Orthogenesis.  The Board of Managers  shall make decisions on all
operating matters and extraordinary matters shall be voted upon by the members.

     (c) The  following  persons shall be elected to the offices set forth below
opposite  his name to serve in such  offices  until the Board of Managers  shall
elect their respective successors:

         President                        Geoffrey T. Burnham
         Vice President                   Robert H. Zawada
         Secretary                        Theodore J. Zawada
         Treasurer                        Leonard Lundberg

     (d) SLI shall  manufacture  and sell the  Systems  to the  Company at SLI's
total cost of  manufacturing  (including  material,  direct  labor and  overhead
costs) the Systems.  The Company will sell the Systems to customers of the Joint
Venture at an additional  margin  determined by the Board of Managers.  Transfer
cost per unit will be refined as  production  history is  developed  and will be
modified annually based on actual cost expenditures.

                                   2

     (e) SLI shall  perform  the  financial  and  accounting  functions  for the
Company and shall be responsible for responding to customers' complaints.

     (f) Orthogenesis   shall  be  responsible  for  marketing,   research  and
development and product upgrades of the Systems.

     (g) The Company's profits (or net income) shall be allocated 75% to SLI and
25% to Orthogenesis.  Except as provided in Section 5(e) and Section 12, losses,
costs and expenses  shall be shared by SLI and  Orthogenesis  in  proportion  to
their respective membership interests.

     (h) SLI and  Orthogenesis  shall each have access to examine all  financial
records and accounts of the Company.

     (i) At such time as  $500,000  in  financing  is raised by the  Company  as
contemplated  by Section 6 hereof or SLI and  Orthogenesis  mutually agree based
upon the level of committed sales orders,  the Board of Directors of the Company
shall hire a full-time engineer and such other employees as they deem necessary.

     4.  Collateral for Orders of the Joint Venture.  All customer orders of the
Joint Venture shall require  appropriate  partial payment in advance and letters
of credit to  collateralize  the balance as  determined by the Board of Managers
unless otherwise  agreed to by the Company and the  distribution  representative
and/or customer agent.

     5. Exclusive License; Patent Rights.

     (a) SLI  hereby  grants to the Joint  Venture an  exclusive  license of the
Patent Rights and Know-How of SLI insofar as they relate to the  manufacture  of
the Orthogenesis System to make, use and sell the Systems worldwide in the field
of medical laser system  products for the uses described on Schedule I. The term
of such license shall be coterminous with the Term of the Joint Venture.

     (b) Orthogenesis hereby grants to the Joint Venture an exclusive license of
the Patent  Rights and  Know-How of  Orthogenesis  insofar as they relate to the
manufacture  of the  Orthogenesis  System  to make,  use and  sell  the  Systems
worldwide in the field of medical laser system  products for the uses  described
on Schedule I. The term of such license  shall be  coterminous  with the Term of
the Joint Venture.

     (c) All Patent Rights of Orthogenesis,  including,  without limitation, the
existing  patentable  technology  developed by or licensed to Orthogenesis to be
used in the  development  of the  Systems,  shall be and  remain  the  exclusive
property of  Orthogenesis  but subject to the exclusive  license  referred to in
paragraph 5(a) above.
                                   3

    (d) All Patent Rights of SLI, including,  without limitation,  the existing
patentable  technology  developed  by or  licensed  to  SLI  to be  used  in the
development  of the Systems,  shall be and remain the exclusive  property of SLI
but subject to the exclusive license referred to in paragraph 5(b) above.

     (e) SLI and  Orthogenesis  shall  each be  responsible  for  defending  and
indemnifying  each other and the Joint Venture from and against  claims by third
parties  for  patent  infringement  pertaining  to the  patented  or  patentable
technology assigned and licensed by SLI or Orthogenesis,  as the case may be, to
the Company. The cost of prosecuting claims of the Company against third parties
to enforce the intellectual property rights of the Joint Venture shall be shared
by SLI and Orthogenesis in proportion to their membership interest.  Costs borne
by a party in excess of its proportionate  share shall be treated a secured loan
payable in equal  installments over a five year period and secured by the assets
of the Joint Venture.

     (f) SLI shall  bear the  costs and  expenses  involving  evaluation  of the
patentability  of the  Orthogenesis  System  and  obtaining  letters  of  patent
thereon. In the event that SLI shall determine that letters patent,  required to
perform the  obligations to  manufacture  the Systems,  cannot be obtained,  SLI
shall provide written notice thereof to SLI and Orthogenesis  shall unilaterally
have the right but not the  obligation to terminate  this Agreement by providing
Orthogenesis with written notice of such  termination.  Any funds so expended by
SLI shall be in the form of a loan to the Joint Venture which will be repaid out
of the proceeds from future financing or profits.

     6.  Financing.   If  SLI  and  Orthogenesis  mutually  determine  that  the
operations of the Company require financing,  SLI and Orthogenesis will each use
its best efforts to secure such financing.

     7. Proprietary  Information.  The parties hereto agree to treat Proprietary
Information in confidence and to undertake the following additional  obligations
with respect thereto:

     (a) To use Proprietary Information for the sole purpose of performing their
obligations hereunder;

     (b) Not to disclose Proprietary Information except as mutually agreed to;

     (c) To  limit  dissemination  of  Proprietary  Information  to  only  those
employees who have the need to know; and

     (d) To return Proprietary Information and all documents, notes, or physical
evidence thereof to the originator thereof upon termination of this Agreement.

     8.  Representation  and  Warranties.  The parties hereto  individually  and
separately  represent  and  warrant to each  other,  as of the date  hereof,  as
follows:
                                   4

     (a) Each is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the states of their respective  formations,  and each
is duly  qualified  to do  business,  and is in  good  standing,  in each  other
jurisdiction in which the nature of its business requires it to be so qualified;

     (b) The execution, delivery and performance of this Agreement by such party
hereto and the transactions contemplated hereby have been duly authorized by all
necessary  corporate or other actions,  and no other  proceedings,  corporate or
otherwise, are necessary to authorize this Agreement, which, when executed, will
constitute  the  valid and  binding  agreement  of each  party,  enforceable  in
accordance with its terms.

     (c)  Neither  the  execution  and  delivery  of  this   Agreement  nor  the
consummation of the transactions contemplated hereby will constitute a violation
or  breach  of  (i)  the  organizational  documents  of  such  party,  (ii)  any
contractual  restriction  contained in any indenture,  loan or credit agreement,
lease,  mortgage,   security  agreement,  bond,  note,  or  other  agreement  or
instrument  binding or affecting  such party or any its assets or (iii) any law,
rule, regulation, order, license requirement,  writ, judgment, award, injunction
or decree applicable to, binding on or affecting such party or its assets;

     (d) No  approval,  consent,  notice,  order,  authorization,  registration,
qualification or other action by any governmental authority or such other person
or party is required for the conduct of business by any party in connection with
the due execution, delivery and performance by such party of this Agreement;

     (e) Such party has no prior commitments,  arrangements, agreements or other
understandings  with, or any other  obligations  to, any other party which might
interfere  with, or preclude the due and proper  fulfillment of, its obligations
under this Agreement;

     (f) Neither  execution of this Agreement by such party nor the  fulfillment
of the terms and  conditions  of this  Agreement  by such party will violate the
rights of any  third  party or result  in the  creation  of any right  which may
adversely affect the Patent Rights;

     (g) No  work  to be  done  by such  party  in  performing  its  obligations
hereunder will violate any confidential  relationship or otherwise  constitute a
misappropriation  or other  unauthorized use of secrets or technical Know-How of
any such party;

     (h) Such party owns or has the right to use all rights which are  necessary
to perform its  obligations  under this  Agreement,  and its  performance of its
obligations will not violate the proprietary rights of any other party;

     (i) Schedule II contains a complete and accurate list (including  ownership
or licensing status) of the Patent Rights of such party which are being licensed
to the Company under this Agreement; and

                                    5

     (j) The Patent  Rights and license to the Company  under this  Agreement do
not and  will  not  infringe  upon  any  copyrights  or  patents,  or any  other
proprietary rights, of any other person, firm or corporation.

     9. Term of the Joint Venture.  The term of the joint venture shall commence
on the date  hereof and expire on the second  (2nd)  anniversary  of the date of
this Agreement (the "Term");  subject to earlier  termination in accordance with
the terms and  conditions  contained in Section 5(f) and Section10  hereof.  The
Term shall be extended  automatically  for  successive  five year periods unless
terminated  by either  party on  thirty  (30)  days  notice  to the other  party
provided that the sole grounds for  termination  shall be pursuant to Section 10
hereof or if sales of the  Company  do not reach or exceed  the level  specified
below:

     $1,000,000  average  annual  sales  for the  first  two  years  of the Term
                 (measured on the second anniversary of the date hereof);

     $2,000,000  average  annual sales for the next five years  (measured on the
                 seventh anniversary of the date hereof);

     $2,000,000  average annual sales for each  successive  five year period and
net income equal to 5% of sales (measured on the twelfth anniversary of the date
hereof and every five years thereafter -- i.e., on the seventeenth  anniversary,
the twenty-second anniversary, etc.);

     10.  Termination;  Survival.  Either  party  in its  sole  discretion,  may
terminate  this  Agreement  upon written  notice given to the other party as set
forth herein in the event of any one of the following:

     (a)  In the  event  of a  breach  of any  material  agreement,  obligation,
representation  or warranty made  hereunder by either party,  the  non-breaching
party shall give notice in writing to the breaching  party of the nature of such
breach,  including  the details of such  breach.  If such breach is not remedied
within sixty (60) days after receipt of such notice, or, if not capable of being
cured in such sixty  (60) day  period,  if the  breaching  party  shall not have
commenced the cure of such breach in good faith and be  diligently  pursuing the
cure of such breach  within such sixty (60) day period (which in all cases shall
be cured within one hundred twenty (120) days) the non-breaching  party shall be
entitled to terminate  this  Agreement  upon notice in writing to the  breaching
party.

     (b) The parties hereto may terminate this Agreement, such termination to be
evidenced  by a  writing  executed  by each of  them,  if a court  of  competent
jurisdiction   shall  have  issued  an  order,   decree  or  ruling  permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable.
                                    6

     (c) In the event that a case or proceeding under the bankruptcy laws of the
United  States of America now or  hereafter  in effect or under any  insolvency,
reorganization,  receivership,  readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed by or against  either party and not dismissed  within ninety
(90) days  thereof,  the other party may terminate  this  Agreement by providing
written notice.

     11.  Binding  Effect;  Assignment  and Transfer.  This  Agreement  shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.  Notwithstanding  the foregoing,  no party may assign or
transfer any of its rights and  obligations  hereunder  or any  interest  herein
without  the prior  written  consent of the other  party  hereto  except if such
consent is sought by reason of a merger,  sale of stock or sale of substantially
all of its assets in which the  successor  shall have a net worth at least equal
to the selling party immediately  prior to the transfer,  such consent shall not
be unreasonably withheld

     12. Costs and Expenses.  Each party agrees to pay its own respective  costs
and expenses in connection with the negotiation and execution of this Agreement.

     13. Indemnification.

     (a) Indemnification by SLI. SLI shall defend,  indemnify and hold harmless
each of the Company and Orthogenesis and their respective  officers,  directors,
shareholders,  partners, employees,  licensees, agents, successors and assignees
from and  against  any and all  liabilities,  losses  and  expenses  whatsoever,
including without limitation claims, damages,  judgments,  awards,  settlements,
investigations,  costs and expenses  (including  without  limitation  reasonable
attorneys'  fees  and  disbursements)  which  any of them may  incur  or  become
obligated to pay arising out of or  resulting  from any breach by SLI, of any of
its representations, warranties or obligations under this Agreement.

     (b) Indemnification by Orthogenesis.  Orthogenesis shall defend,  indemnify
and hold  harmless  each of the Company and SLI and their  respective  officers,
directors, shareholders,  partners, employees, licensees, agents, successors and
assignees  from  and  against  any  and all  liabilities,  losses  and  expenses
whatsoever,  including without limitation claims,  damages,  judgments,  awards,
settlements,  investigations,  costs and expenses  (including without limitation
reasonable  attorneys'  fees and  disbursements)  which any of them may incur or
become  obligated  to pay  arising  out  of or  resulting  from  any  breach  by
Orthogenesis of any of its representations, warranties or obligations under this
Agreement.

     (c) Indemnification Procedure. Any party seeking indemnification under this
Section shall give the party from which indemnification is sought prompt notice.

     14. Amendments; Waivers and Consents. No modification,  amendment or waiver
of or with respect to any provision of this Agreement or any related  documents,
nor consent to any  departure  by any party from any of the terms or  conditions
hereof, shall be effective unless it shall

                                       7

   be in  writing  and  signed by all of the  parties  hereto.  Any  waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.  Such waiver or failure to insist upon strict  compliance with such
obligation,  covenant,  agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any  subsequent or future  failure.  This Agreement
embodies  the entire  agreement  between the parties  hereto with respect to the
subject hereof and supersedes all prior agreements and  understandings  relating
to the subject hereof.


     15. GOVERNING LAW; CONSENT AND WAIVER.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE SUBSTANTIVE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS.

     (b) EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
OF THE UNITED STATES LOCATED IN THE COUNTY OF BROOME AND STATE OF
NEW YORK.

     (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT.  INSTEAD ANY DISPUTE RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT JURY.

     16.  Descriptive  Heading.  The headings of the various  paragraphs of this
Agreement are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions herein.

     17. Notices.  All notices,  requests and other  communications to any party
hereunder shall be in writing (including telecopy, telex or similar writing) and
shall be deemed given or made as of the date delivered,  if delivered personally
or by telecopy (provided that delivery by telecopy shall be followed by delivery
of an additional copy personally,  by mail or overnight courier),  one day after
being  delivered  by  overnight  courier  or three days  after  being  mailed by
registered or certified mail (postage prepaid, return receipt requested), to the
parties at the following addresses:

     If to SLI, to:

            Semiconductor Laser International Corporation
            15 Link Drive
            Binghamton, New York 13904
            Attention: Geoffrey T. Burnham
            Fax No.: (607) 722-3900

                                   8

     with a copy to:

            Swidler Berlin Shereff Friedman LLP
            919 Third Avenue
            New York, New York 10022
            Attention: Richard A. Goldberg, Esq.
            Fax No.: (212) 758-9526

     If to Orthogenesis, to:

            Orthogenesis Systems, Inc.
            81 Suburban Court
            West Seneca, New York 14224
            Attention: Robert H. Zawada

     with a copy to:

            Michael J. Poretta, Esq.
            P.O. Box 240
            20 Buffalo Street
            Hamburg, New York 14075
            Fax No.: (716) 649-0190

     18. No Third  Party  Beneficiaries.  This  Agreement  shall not  confer any
rights or  remedies  upon any  person  other than the  parties  hereto and their
respective successors and permitted assigns.

     19.   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts, each of which shall be deemed to be an original, but all of which,
when taken together, shall constitute one and the same agreement.

     20.  Severability.  In the  event  that  any one or more of the  provisions
contained in this Agreement shall for any reason be held to be invalid,  illegal
or  unenforceable  in any  respect,  in whole or in part,  the  validity  of the
remaining  provisions  shall not be affected  and the  remaining  portion of any
provision  held to be  invalid,  illegal  or  unenforceable  shall  in no way be
affected, prejudiced or disturbed thereby.

                                      9

     IN WITNESS WHEREOF the parties have caused this agreement to be executed by
their respective officers, as of the date first above written.

                                                     SEMICONDUCTOR LASER
                                                     INTERNATIONAL CORPORATION


                                                 /s/ Geoffrey T. Burnham
                                             By: ______________________________
                                                   Name: Geoffrey T. Burnham
                                                   Title: President


                                                    ORTHOGENESIS SYSTEMS, INC.


                                                /s/ Robert H. Zawada
                                             By:______________________________
                                                   Name: Robert H. Zawada
                                                   Title: President

                                     10


                                Schedule I


     The  Orthogenesis  System  is low  level  laser  therapy  unit,  used  as a
non-invasive medical treatment laser for the purpose of biostimulation.

     The  use of the  laser  system  is for the  treatment  of  certain  medical
conditions.  Its'  primary  uses  are for  treatment  of  arthritic  conditions,
accelerated wound healing and chronic pain.  Secondary  applications are for the
treatment of acute injuries,  for example sprains and other soft tissue injuries
that may occur  during  athletic  events.  the  laser  also has  application  to
veterinary practice.

     The laser is  comprised  of a series of diode  laser  units  attached to an
electronic  control system that  regulates the output of the laser diodes.  This
microprocessor  based control system is settable,  by the practitioner,  so that
the user can program the  operating  parameters  for  treatment  of a particular
condition.

                                   11

                               Schedule II

     List of Patent Rights:

[TYPE]    EX-10.2

           November 22, 1999


           Mr. Len Lundberg
           Chief Financial Officer
           Semiconductor Laser International, Corp.
           15 Link Drive
           Binghamton, NY 13904

           Dear Len:

           FINOVA Capital Corporation (FINOVA) hereby agrees to financial
           accommodations for Semiconductor Laser International for the
           months of months of October, November and December on account nos.
           S610001, S610002, S610003 and S610004.  These accommodations will
           take the form of a Forbearance Agreement with interest only collected
           for October, November and December.   Principal payments will be
           deferred to the end of the lease terms.

           Sincerely,


           By: /s/ Gail Klepfisz
           ---------------------
           Gail Klepfisz
           Director - Credit


                                   12