<PAGE>



                         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, 1997

[ ]    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)

             New York                                    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 November 1, 1997, there were outstanding 3,570,242 shares of the 
issuers common stock, par value $.01 per share.

Transitional Small Business Disclosure Format

               Yes    [ ]                        No    [x]

<PAGE>

                         Part I. Financial Information

Item 1. Financial Statements


                   Semiconductor Laser International Corporation
                         

                                   Balance Sheet
<TABLE>
<CAPTION>

                                                   December 31,    September 30,
                                                       1996            1997 
                                                                    (unaudited)
                                                   ------------     ------------
<S>                                               <C>              <C>
Assets
Current assets
  Cash and cash equivalents                       $  4,266,168     $    638,104
  Accounts Receivable, net of allowance for
   doubtful accounts of $25,000 and $25,000,             
   respectively                                         61,047          237,903
  Inventory                                              6,316          128,870
                                                     ------------     ------------
                  Total current assets               4,333,531        1,005,277

Property, plant and equipment, net                   3,035,929        2,687,732
Intangible assets, net                                   1,348              843
Deposits and other assets                              655,928          602,809
                                                   ------------     ------------
                  Total assets                    $  8,026,736     $  4,296,661   
                                                   ============     ============

Liabilities and Shareholders' Equity
Current liabilities
  Accounts payable                                $  1,142,272     $    788,391
  Accrued expenses and other liabilities                92,199           82,413
  Current portion of long-term debt                     25,948           35,485
                                                   ------------     ------------
                  Total current liabilities          1,260,419          906,289

Long-term debt                                         809,926          807,565
Accrued royalty payments                               100,000          100,000
                                                   ------------     ------------
                  Total liabilities                  2,170,345        1,813,854
                                                   ------------     ------------
Commitments and contingencies (Note 6)

Shareholders' Equity
Common stock, $.01 par value, 20,000,000 shares
 authorized, 3,409,607 issued and outstanding
 at December 31, 1996, and 3,570,242 issued and
 outstanding at September 30, 1997                      34,096           35,702
Common stock issuable                                1,123,438           51,250
Treasury stock                                        (248,241)        (248,241)
Additional paid-in capital                          10,081,464       11,154,013
Accumulated deficit                                 (5,134,366)      (8,509,917)
                                                   ------------     ------------
                  Total Shareholders' Equity         5,856,391        2,482,807
                                                   ------------     ------------
                  Total liabilities and 
                    Shareholders' Equity          $  8,026,736     $  4,296,661   
                                                   ============     ============
</TABLE>

                  See accompanying notes to financial statements      

<PAGE>

                  Semiconductor Laser International Corporation
                        

                             Statement of Operations

<TABLE>
<CAPTION>
                                        Three Months Ended             Nine Months Ended
                                           September 30,                 September 30,
                                         1996         1997             1996             1997
                                      (Unaudited)  (Unaudited)      (Unaudited)     (Unaudited)
                                      -----------  -----------     -------------   -------------
<S>                                   <C>          <C>             <C>             <C>

Sales                                 $    -       $   147,916     $     -         $     326,724

Cost of Sales                              -          (517,466)          -              (871,043)
                                       ----------   ----------      ------------    ------------
     Gross Profit                                     (369,550)                         (544,299)

Operating expenses:

Research and development expenses         282,859       30,571           532,307         545,098
General and administrative expenses       393,337      606,220           972,928       2,376,751
Royalties                                  -            -                 43,188          -
                                       ----------   ----------      ------------    ------------
         Total operating expenses         676,196      636,791         1,548,423       2,921,849
                                       ----------   ----------      ------------    ------------

         Loss from operations             676,196    1,006,341         1,548,423       3,466,148

Interest income                            79,339       14,318           183,192          90,597
                                       ----------   ----------      ------------    ------------
         Loss before extraordinary
           item                           596,857      992,023         1,365,231       3,375,551

Extraordinary loss on the early 
  extinguishment of debt                    -            -               305,301           -
                                       ----------   ----------      ------------    ------------
         Net loss after extraordinary
           item                       $   596,857  $   992,023     $   1,670,532   $   3,375,551
                                       ==========   ==========      ============    ============
Net loss per share

        Loss before extraordinary 
           item                        $  (0.18)    $  (0.28)         $  (0.48)       $  (0.95)
        Extraordinary item                  -             -              (0.11)             -
                                        --------     --------          --------        --------
Net loss                               $  (0.18)    $  (0.28)         $  (0.59)       $  (0.95)
                                        ========     ========          ========        ========

Weighted average shares outstanding     3,387,238    3,569,600         2,834,753       3,541,320
                                        =========    =========         =========       =========

</TABLE>



                  See accompanying notes to financial statements

<PAGE>


                  Semiconductor Laser International Corporation

                            Statement of Cash Flows

<TABLE>
<CAPTION>
                                                    Nine Months Ended
                                                      September 30,
                                                1996                1997
                                             (Unaudited)         (Unaudited)
                                            -------------       ------------- 
<S>                                         <C>               <C>                        
Cash flows from operating activities:
Net loss                                    $ (1,670,532)       $ (3,375,551)
Adjustments to reconcile net loss to
  net cash used in operating 
  activities:
   Depreciation and amortization                  53,985              90,204
   Expenses settled through the 
     issuance of common stock                     30,730                       
   Amortization of debt discount                  51,585
   Amortization of deferred expenses                                  61,341
   Extraordinary loss on early                
     extinguishment of debt                      305,301                   
   Gain on sale of equipment                                         (17,364)
Change in assets and liabilities:
   (Increase)decrease in accounts
     receivable, net                             (32,947)           (176,856)
   Decrease (increase)in inventory                (3,716)           (122,554) 
   (Increase) decrease in deposits
     and other assets                           (480,558)           (350,490)
   (Increase) decrease in deferred
     financing costs                             134,431   
   Increase (decrease) in accounts
     payable                                     111,953              91,518
   Increase(decrease) in accrued 
     expenses and other liabilities              (11,811)             (9,786)
                                              -----------         -----------
Net cash used in operating activities         (1,511,579)         (3,809,538)
                                              -----------         -----------
Cash flows from investing activities:
Purchase of plant, property and 
   equipment                                    (844,020)         (2,837,439)
Sale of equipment                                                  3,010,145
                                              -----------         -----------
Net cash provided from (used for)
   investing activities                         (844,020)            172,706  
                                              -----------         -----------
Cash flows from financing activities
Proceeds from long-term debt                     455,000              31,306
Payments on long-term debt                      (879,682)            (24,109)
Issuance of common stock, net of
   expenses                                    7,860,472               1,971
                                              -----------         -----------
Net cash provided by financing
   activities                                  7,435,790               9,168
                                              -----------         -----------
Net (decrease) increase in cash, cash
   equivalents and restricted cash             5,080,191          (3,627,664)
Cash, cash equivalents and restricted
   cash at beginning of period                   531,042           4,266,168
                                              -----------         -----------
Cash, cash equivalents and restricted 
   cash at end of period                     $ 5,611,233         $   638,504
                                              ===========         ===========                              
       
</TABLE>


                  See accompanying notes to financial statements

<PAGE>


                  Semiconductor Laser International Corporation


                          Notes to Financial Statements
                               September 30, 1997



1. Organization
     
   Semiconductor Laser International Corporation ( the "Company") was 
   incorporated in New York State on September 21, 1993 (inception), and
   subsequently reincorporated in Delaware on September 26, 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 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 Company has since completed the construction of its
   manufacturing facility in Binghamton, New York where it is conducting all
   activities.

   Production of the Company's products has begun at the Company's new
   facility in Binghamton, New York.  Effective April 1, 1997 the Company 
   ceased operating as a development stage enterprise as it began commercial
   production of its product.  
  
2. 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, 1997, the results of operations for the three
   and nine month periods ended September 30,1997 and 1996 ( which are not
   necessarily indicative of the results to be expected for the full year) and
   cash flows for the nine month periods ended September 30, 1996 and 1997.

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

   Cash Equivalents

   The Company considers all highly liquid debt instruments purchased with an
   initial maturity of three months or less to be cash equivalents.

<PAGE>

   Inventory

   Inventory is valued at the lower of cost or market.  Cost is determined
   by the first in, first out (FIFO) method and the cost of finished goods
   includes costs to purchase materials and subcontracted labor costs.

   Deferred Financing Costs

   Costs incurred in the preparation of the Company's initial public 
   offering were deferred and offset against the proceeds received from
   the offering.

   Depreciation and Amortization

   Property plant and equipment are recorded at cost and depreciated over
   the assets' estimated useful lives ranging from three to thirty 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 the property 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.

   Research and Development

   Research and development costs are expensed as incurred.  Included in 
   research and development expenses are costs related to the development
   of prototypes of $508,816 for the nine month period ended September 30,
   1997.

   Income Taxes

   The Company follows the asset and liability approach for deferred income
   taxes.  This method provides that deferred tax assets and liabilities 
   are recorded, using currently enacted tax rates, based upon the 
   difference between the tax bases of assets and liabilities and their 
   carrying amounts for financial statement purposes.  A valuation 
   allowance is recorded when it is more likely than not that deferred 
   tax assets will not be realized.

   Net Loss Per Share

   Net loss per share is computed using the weighted average number of 
   common shares outstanding and dilutive common share equivalents.  Common 
   shares issued, and options and warrants granted, by the Company during 
   the twelve months preceding the initial public offering have been 
   included in the calculation of common and common equivalent shares 
   outstanding as if they were outstanding for all periods presented using 
   the Treasury Stock method and an initial public offering price of $5.00 
   per share.  Options and warrants granted before the aforementioned 
   twelve-month period and subsequent to the Company's initial public 
   offering have been included in the calculation of common and common 
   equivalent shares outstanding when dilutive.

   In February 1997, the Financial Accounting Standards Board issued
   Statement of Accounting Standards No. 128, "Earnings per Share"
   ("FAS 128"), which requires the presentation of basic earnings per share
   in financial statements for reporting periods ending subsequent to
   December 15, 1997. Early adoption of FAS 128 is not permitted.  The
   adoption of FAS 128 is not expected to have a material impact on the
   Company's financial statements.

   As of September 30,1997, the Company had outstanding warrants and options
   to purchase 2,176,334 and 135,755 shares of Common Stock, respectively,
   which are not included in the calculation of earnings per share for the
   three and nine month periods ended September 30, 1997, and would not be
   included in such calculation under the guidance prescribed by FAS 128, due
   to the anti-dilutive nature of these instruments.


4. 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
   provides for the sale and leaseback by the Company of up to $3,850,000 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 cannot
   be assigned, sold, transferred or otherwise disposed of prior to
   February 27, 1998. The warrants are currently exercisable and have been
   valued at $167,710 and are being amortized over the term of the lease.

   Rent expense under non-cancellable operating leases, including the FINOVA
   leases, was $722,117 for the nine months ended September 30,1997.

   Future minimum payments under non-cancellable operating leases, including 
   the FINOVA lease agreement, at September 30, 1997, are as follows:

<TABLE>
<CAPTION>

                                 Year ending
                                 December 31,      Commitment
                                -------------     -------------
<S>                                 <C>            <C>
                                    1997           $  267,500
                                    1998            1,009,000
                                    1999            1,009,000
                                    2000            1,009,000
                                    2001              213,000
                                                  -------------
                                                   $3,507,500
                                                  =============

</TABLE>

   Litigation

   The Company is currently engaged in a dispute with Theodore Konopelski
   ("Konopelski"), a director and former employee and officer of the Company
   The dispute involves the termination of Konopelski's employment for 
   cause. An arbitration proceeding was instituted by Konopelski in 
   Syracuse, New York challenging his termination under his employment 
   contract.  Konopelski is seeking damages in the aggregate of $500,000.
   The arbitration is in process and the Company believes the termination 
   was proper and that no amount should be awarded to Konopelski.  
   Subsequent to the commencement of the arbitration, the Company brought 
   an action against Konopelski in the New York Supreme Court (Broome 
   County) alleging violation by Konopelski of his obligations under the 
   terms of a non-disclosure agreement between Konopelski and the Company. 
   The Court issued a temporary restraining order barring Konopelski from 
   making any disclosures or using confidential information or trade 
   secrets. Subsequently, the court ruled that the issue of the non-disclosure
   agreement was not in their jurisdiction and rescinded the temporary
   restraining order and referred the issue of the non-disclosure agreement to
   the arbitration process.

   Mr. Konepelski was not proposed for reelection as a Director and was not
   reelected as a Director of the Company at the annual meeting of Stockholders
   held on June 20, 1997

   The Company believes it will prevail in the arbitration as well as in all 
   matters with respect to the enforcement of Konopelski's non-disclosure
   obligations.

   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 litigations are presently in the discovery stage.
   The Company believes the counter claim is without merit and is
   rigorously defending such action and that the ultimate outcome of such
   action will not have a material impact on the financial condition of the
   Company.

5. Subsequent Events

   October 1997 Private Placement

   On October 27, 1997, the Company completed a private placement of 10 Units,
   each Unit consisting of 200,000 shares of its Series A 8% Convertible
   Preferred Stock ("Series A Preferred Stock") for the aggregate purchase
   price of $3,500,000.  Pursuant to the terms of the Private Placement, one
   half of the purchase price of each Unit was paid on October 27, 1997 with
   the balance payable on or before the second closing, which is scheduled to
   occur on December 11, 1997.  One half of each Unit has been delivered with
   the remaining half to be delivered upon payment of the second half of the
   purchase price.  The net proceeds to the Company, after deduction of
   placement agency fees of $525,000, is estimated to be $2,975,000.  The net
   proceeds of this financing will be used for working capital and general
   corporate purposes.

   The Series A Preferred Stock underlying the Units are convertible at the
   option of the holder into Common Stock on a one for one basis prior to
   December 5, 1997 and, after December 5, 1997, at 70% of the average Market
   Price of the Company's Common Stock for the five consecutive trading days
   immediately prior to the conversion date.  The market price (the"Market
   Price") for any such conversion date shall be the closing bid price of the
   Common Stock on such date as reported by the National Association of
   Securities Dealers' Automated Quotation System.

   The Company has the right to cause the conversion the Series A Preferred
   Stock subsequent to the filing and declaration of effectiveness of a
   registration statement with the Securities and Exchange Commission covering
   the shares of Common Stock underlying the Series A Preferred Stock and upon
   30 days notice to the holders of the Series A Preferred Stock.  In such
   case, the conversion rate would be 70% of the average Market Price of the
   Company's Common Stock for the five consecutive trading days immediately
   prior to the conversion date.  The Company expects to file a Registration
   Statement ("the Registration Statement") with the Securities and Exchange
   Commission covering the aforementioned shares, as well as up to 750,000
   shares issuable upon exercise of warrants issued to Marketing Direct
   Concepts, Inc. ("MDC") (described below) and 55,000 shares issued to
   attorneys for the Company in payment for certain outstanding legal fees of
   $96,250 in the aggregate, on or before November 11,1997.

   Any delay in filing the Registration Statement beyond November 11, 1997
   would delay on a day for day basis the December 11, 1997 closing date.
   Also, if such Registration Statement is not effective by February 4, 1998
   the Company is required to issue each Unit holder 10,000 shares of Common
   Stock for each Unit owned and an additional 10,000 shares of Common Stock
   per Unit owned for each additional 30 day delay in the effectiveness of the
   Registration Statement beyond February 4, 1998.

   During the twelve month following October 27,1997, the Company has agreed to
   grant the Placement Agent a fifteen day right of first refusal to obtain
   equity financing on behalf of the Company on the same terms as are offered
   by a bona fide third party or third party agent for such financing.  The
   Company has also granted the Placement Agent the option during the ninety
   day period following December 11, 1997 to have its investors purchase one
   million additional shares of Common Stock for an aggregate purchase price of
   $1,750,000 less commissions and expenses estimated at $262,500 payable to
   the Placement Agent.


   Financial Public Relations Agreement

   The Company has entered into a one year agreement (the"MDC Consulting
   Agreement") with Marketing Direct Concepts, Inc. ("MDC"), in connection with
   services related to the October 1997 Private Placement, for ongoing
   services.  Under the MDC Consulting Agreement, the Company will receive a
   range of public relations services, including the establishment of
   contact with a number of brokers, the preparation of certain reports, the
   establishment of a Web site and the arrangement of broker teleconferences.

   In consideration for MDC services, the Company will be obligated to pay a
   fee of $195,000 plus 40,000 shares of non-registered Common Stock, 150,000
   three year Warrants at exercise prices at or above the closing bid price on
   the Company's Common Stock as of October 27, 1997, and, after the second
   closing, 600,000 three year Warrants exercisable at $3.4688.  It is
   anticipated that the shares underlying the Warrants issued to MDC will be
   included in the Registration Statement.

<PAGE>

Item 2.  Managements Discussion and Analysis

   The following information should be read in conjunction with the 
   unaudited financial statements included herein.  See Item 1.

 OVERVIEW

  Certain statements in this Quarterly Report on Form 10-QSB constitute or may
  constitute "forward-looking statements" within the meaning of the Private
  Securities Litigation Reform Act of 1995 (the"Litigation Reform Act").  The
  Company desires to avail itself of certain "safe harbor" provisions of the
  Litigation Reform Act and is therefor including this special note to enable
  the Company to do so.  Forward-looking statements included in this Quarterly
  Report on Form 10-QSB or hereafter included in other publically available
  documents filed with the Securities & Exchange Commission (the "Commission"),
  reports to the Company's stockholders and other publically available
  statements issued or released by the Company involve known and unknown risk,
  uncertainties, and other factors which could cause the Company's actual
  results, performance (financial or operating) or achievements to differ from
  the future results, performance (financial or operating) or achievements
  express or implied by such forward-looking statements.  Such future results
  are based upon management's best estimate based upon current conditions and
  the most recent results of operations.  These risks include, but are not
  limited to, need for additional capital, certain patent and technology
  considerations, competition and technological changes, government
  regulations, dependence upon key personnel and other risks detailed in the
  Company's Commission filings, each of which could adversely affect the
  Company's business and the accuracy of the forward-looking statements
  contained herein.  Additional information concerning certain risks and
  uncertainties that would cause actual results to differ materially from those
  projected or suggested in the forward-looking statements as contained in the
  Company's filings with the Commission, including those risks and
  uncertainties discussed in the Company's final Prospectus, dated March 19,
  1996, included as part of the Company's Registration Statement on Form S-1
  (Reg. No. 333-754), in the Section entitled "Risk Factors".


  The Company has begun the production of its products at its new facility
  in Binghamton, New York. 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 prototypes.  As
  a result, the Company had not generated any significant product sales through
  March 31, 1997.  The Company has completed the construction and equipping of
  the first phase of its manufacturing facility and has begun production of its
  products and the generation of sales revenues.  In addition, the Company has
  and will continue to secure licensing agreements for the production,
  marketing and sale of technologically improved products which complement its
  product line.

 RESULTS OF OPERATIONS

  Three months ended September 30, 1997, compared to three months ended
  September 30, 1996.


  Effective April 1, 1997, the Company was no longer considered to be a
  Development Stage Enterprise.  During the period in which the Company was
  considered a Development Stage Enterprise, sales of prototype units and the
  costs associated therewith were insignificant and were offset against
  research and development expenses.

  Sales were $147,916 compared to $0 for the same period in the prior year,
  primarily the result of the Company being in commercial production during the
  three months ended September 30, 1997.  In the same period in the prior year,
  the Company was not in commercial production but rather using subcontractors
  to produce prototype products.  Sales of these prototype products during the
  three months ended September 30, 1996 were insignificant and offset against
  research and development expenses.

  Cost of Sales, which includes materials, production labor and certain
  overheads was $517,466 as compared to $0 for the same period in the prior
  year.  The increase is primarily associated with increased levels of
  production labor, materials and overhead associated with the production
  process.  Cost of sales levels are expected to exceed sales levels until
  sales levels commensurate with production capacity are achieved.  The
  Company expects sales levels to increase in the future, thus steadily moving
  the production levels to full capacity. 

  Research and development expenditures were $30,571 for the three months
  ended September 30, 1997 as compared to $282,859 for the three months ended 
  September 30, 1996. The decrease of approximately $252,000 is primarily 
  associated with decreased activity associated with the development of the
  production process and prototype products.  Pure research and development
  expenses were lower as a result of concentration on the production process
  and commercial operating activities.
  
  General and administrative expenses were $606,220 for the three months
  ended September 30, 1997 as compared to $393,337 for the same period in 1996.
  The increase of approximately $213,000 is attributable to increased levels
  of employment, increased levels of employee benefits and overheads associated
  with higher levels of employment, increased levels of marketing expenses
  associated with sales efforts, increased legal and professional fees,
  increased equipment costs (leasing and depreciation), increased utility costs
  and increases in office supplies and expense.

  Interest income was $14,318 for the three months ended September 30, 1997,
  a decrease of approximately $65,000.  The decrease is attributable to lower
  average invested cash balances during the current three months.  Average
  cash balances decreased as a result of increased operating costs and the
  lack of appreciable sales revenue to offset such operating expenses.


  Nine months ended September 30, 1997 compared to nine months ended September
  30, 1996.


  Increases in sales ($326,724) and increases in cost of sales ($871,043) are
  attributable to the commencement of commercial production during the nine
  month period ended September 30, 1997.  During the nine month period ended
  September 30, 1996, sales of prototype products and the costs thereof were
  insignificant and were reported as a charge to research and development
  expenses.

  Research and development expenses for the nine month period ended September
  30, 1997 were at approximately the same level as for the comparable period in
  1996.  Since the commencement of commercial production during the quarter
  ended June 30, 1997, research and development expenditures have declined and
  are expected to be minimal in the near term.

  Selling, general and administrative expenses increased approximately
  $1,404,000 for the nine months ended September 30, 1997, as compared to the
  nine months ended September 30, 1996 as a result of increased levels of
  employment, increased insurance costs as a result of increased investment in
  capital assets, increased marketing expense associated with the increased
  sales effort, increased professional fees associated with ongoing litigation,
  patent filings and protection of the Company's patents and ongoing public
  reporting requirements, increased lease expense associated with increased
  levels of leasing and increased facilities cost.

  Interest income decreased approximately $93,000 as a result of lower levels
  of invested cash due to operating needs and the lack of significant sales
  revenues.

LIQUIDITY AND CAPITAL RESOURCES

  The Company's cash requirements have been significant and are expected to 
  remain significant. The Company's cash and cash equivalents at September 30,
  1997 were $638,504 as compared to $4,266,168 at December 31, 1996, a
  decrease of $3,627,664 for the period ended September 30, 1997.

  The net cash used in operating activities for the nine month period ended
  September 30, 1997 of $3,809,538 was used to fund the operating loss of 
  $3,375,551 and net changes in other working capital of $568,168, offset 
  by net non-cash expenditures of $134,181.

  Net cash provided by investing activities of $172,706 is primarily the result
  of the sale and leaseback transaction entered into with FINOVA and the 
  timing of the same.

  Although cash expenditures have been significant over the period and are
  expected to increase, additional cash flow is expected to result from
  increased production levels and increased sales of the Company's products.
  However the timing of these sales cannot be predicted nor assured.

  In connection with expected cash needs, the Company entered into a privately
  placed equity financing arrangement on October 27, 1997 which would result in
  net proceeds of approximately $2,975,000 through December 31, 1997. The
  arrangement also provides an option whereby the Company could receive an
  additional $1,487,500. The details of this financing are discussed in Note 5
  of the Notes to Financial Statements. The equity financing will provide a
  needed source of working capital. Also, the Company is in the process of
  securing funding for its anticipated facilities expansion which the Company
  believes lead to significantly increased production capabilities and
  efficiency.
  

<PAGE>


                          PART II. - OTHER INFORMATION

Item 1. Legal Proceedings.

     The Company is involved in litigation described in Note 4 in the 
     Notes to the Financial Statements.  


Item 2. Change in Securities.

     See Note 5 of Notes to Financial Statements
     

Item 3. Defaults Upon Senior Securities.

     None


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

     None


Item 5. Other Information.

     Effective October 31, 1997, Mr. Michael P. Murphy resigned from the
     Board of Directors of Semiconductor Laser International Corporation


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

         (a)   Exhibits.

               No. 11   Statement re: Computation of Weighted Average
                          Shares Outstanding

               No. 27   Financial Data Schedule

         (b)   Reports on Form 8-K.
               
                     None

<PAGE>

                                 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 6, 1997               By:/s/ Geoffrey T Burnham
                                          ----------------------------
                                          Geoffrey T. Burnham
                                          Chairman, President and 
                                            Chief Executive Officer


  Date: November 6, 1997               By:/s/ Nicholas L.Prioletti, Jr.
                                          -----------------------------
                                          Nicholas L. Prioletti, Jr.
                                          Chief Financial Officer, 
                                            Principal Financial Officer
                                            and Principal Accounting 
                                            Officer